August 4, 2021

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Winnebago Industries Announces Strong Third Quarter Fiscal 2021 Results


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— Record Quarterly Revenues of $960.7 million Driven by Strong End Consumer Demand and Consistent Execution —

— RV Market Share Gains Continue, Rising to 12.5% (+40 Basis Points) on a Fiscal Year to Date Basis thru April —

— Record Reported Diluted EPS of $2.05; Record Adjusted Diluted EPS of $2.16 —

— Record Backlogs Reflect Sustained Levels of Strong End Consumer Demand —

EDEN PRAIRIE, Minn., June 23, 2021 (GLOBE NEWSWIRE) — Winnebago Industries, Inc. (NYSE: WGO), a leading outdoor lifestyle product manufacturer, today reported financial results for the Company’s third quarter of Fiscal 2021.

Third Quarter Fiscal 2021 ResultsRevenues for the Fiscal 2021 third quarter ended May 29, 2021, were $960.7 million, an increase of 138.7% compared to $402.5 million for the Fiscal 2020 period, and a sequential increase of 14.4% over the Fiscal 2021 second quarter. Gross profit was $169.6 million, an increase of 429.6% compared to $32.0 million for the Fiscal 2020 period, and an increase of 8.3% on a sequential basis, driven primarily by increased revenues as a result of the pandemic-driven shutdown of operations for a six week period in the third quarter of Fiscal 2020. Gross profit margin increased 970 basis points year-over-year, driven primarily by operating leverage, pricing, including lower discounts and allowances, and favorable segment mix. Operating income was $102.4 million for the quarter compared to a loss of $(8.2) million in the third fiscal quarter of last year and increased 2.5% sequentially. Fiscal 2021 third quarter net income was $71.3 million compared to a net loss of $(12.4) million in the prior year fiscal quarter, and net income of $69.1 million in the Fiscal 2021 second quarter. Reported earnings per diluted share was $2.05, compared to a net loss per diluted share of $(0.37) in the same period last year, and earnings per diluted share of $2.04 in the Fiscal 2021 second quarter. Consolidated adjusted earnings per diluted share was $2.16 for the Fiscal 2021 third quarter compared to adjusted loss per diluted share of $(0.26) in the same period last year, and adjusted earnings per diluted share of $2.12 for the Fiscal 2021 second quarter. Consolidated Adjusted EBITDA was $109.8 million for the quarter, compared to $4.1 million in the third quarter of Fiscal 2020 and $108.0 million in the Fiscal 2021 second quarter.

President and Chief Executive Officer Michael Happe commented, “Winnebago Industries’ record fiscal third quarter results continued our sequential growth trajectory, which is a testament to the sustained strength of consumer engagement in the outdoor lifestyle as well as the tremendous appeal of our premium brands. Throughout the quarter, we capitalized on the prime spring selling season to gain share and drive higher consumer engagement, further cultivating our pipeline of lifelong customers. I’m also proud of the Winnebago Industries team who has been able to maintain our commitment to manufacturing excellence amid incredible demand and drive operational leverage that is producing continued, strong profitability. We are very pleased with our results and will maintain our focus on executing our proven strategy to build a differentiated, premier outdoor company and drive long-term value for end customers, dealers, employees and shareholders.”

TowableRevenues for the Towable segment were $555.7 million for the third quarter of Fiscal 2021, up 194.2% over the prior year period and 26.5% sequentially, driven by heightened consumer demand for our Grand Design and Winnebago branded products. Segment Adjusted EBITDA was $80.1 million, up 387.1% over the prior year period and 28.5% over the Fiscal 2021 second quarter. Adjusted EBITDA margin of 14.4% increased 570 basis points year-over-year and 20 basis points sequentially, primarily due to robust operating leverage and lower levels of discounting. Backlog increased to $1,522.1 million, reflecting an increase of 264.9% over the prior year period, and 26.1% over the Fiscal 2021 second quarter, due to continued strong consumer demand combined with extremely low levels of dealer inventory.

MotorhomeIn the third quarter of Fiscal 2021, revenues for the Motorhome segment were $385.3 million, up 89.2% from the prior year period, driven by continued strong consumer demand for both Winnebago and Newmar branded motorhomes. Segment Adjusted EBITDA was $37.5 million compared to a loss of $(10.8) million in the same period last year and $51.0 million in the prior quarter. Adjusted EBITDA margin increased 1,500 basis points over the prior year to 9.7%, driven by operating leverage and low levels of discounting. Backlog increased to $2,180.1 million, an increase of 323.3% over the prior year period, and 20.0% over the prior quarter, as dealers continue to experience significant reductions in inventories due to extremely high levels of consumer demand.

Balance Sheet and Cash FlowAs of May 29, 2021, the Company had total net outstanding debt of $524.5 million ($600.0 million of debt, net of convertible note discount of $63.9 million and net of debt issuance costs of $11.6 million) and working capital of $613.0 million. Cash flow from operations was $148.0 million in the first nine months of Fiscal 2021, a decrease of $14.5 million from the same period in Fiscal 2020 due to strong improvement in income during the current year-to-date period that was more than offset by year-over-year changes in working capital required to support increased production and rapid sales growth.

Quarterly Cash DividendOn May 19, 2021, the Company’s Board of Directors approved a quarterly cash dividend of $0.12 per share payable on June 30, 2021, to common stockholders of record at the close of business on June 16, 2021.

Mr. Happe continued, “As we enter the final quarter of Fiscal 2021, we are pleased with the strength of our business and the unique appeal of our leading brands. We remain focused on working with our suppliers to sustain strong levels of production and with our dealer network to replenish their inventories in the face of record backlog. We are also continuing to invest in our business to ensure we are best positioned to meet the persistent, elevated demand we anticipate in quarters to come, driven by the secular and ongoing growth in outdoor lifestyle products and a positive change in consumer preferences for leisure and family activities. I am also incredibly proud of Winnebago Industries’ unwavering commitment to stewardship of the environment and the communities in which we live and operate. During the quarter, we announced our participation in the United Nations Global Compact – a corporate sustainability initiative designed to advance universal principles on human rights, labor, environment and anti-corruption – and initiated a partnership with Habitat for Humanity, a global housing nonprofit, to support its community-based neighborhood revitalization efforts. These organizations’ missions are clearly aligned with Winnebago Industries’ values and enable more communities to safely and equitably enjoy the outdoors where they live, work and play.”

Conference CallWinnebago Industries, Inc. will discuss Fiscal 2021 third quarter earnings results during a conference call scheduled for 9:00 a.m. Central Time today. Members of the news media, investors and the general public are invited to access a live broadcast of the conference call via the Investor Relations page of the Company’s website at http://investor.wgo.net. The event will be archived and available for replay for the next 90 days.

About Winnebago IndustriesWinnebago Industries, Inc. is a leading North American manufacturer of outdoor lifestyle products under the Winnebago, GrandDesign, Newmar and Chris-Craft brands, which are used primarily in leisure travel and outdoor recreation activities. TheCompany builds quality motorhomes, travel trailers, fifth-wheel products and boats. Winnebago Industries has multiple facilities in Iowa, Indiana, Minnesota and Florida. The Company’s common stock is listed on the New York Stock Exchange and tradedunder the symbol WGO. For access to Winnebago Industries’ investor relations material or to add your name to an automaticemail list for Company news releases, visit http://investor.wgo.net.

Forward-Looking StatementsThis press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements are inherently uncertain. A number of factors could cause actual results to differ materially from these statements, including, but not limited to increases in interest rates, availability of credit, low consumer confidence, availability of labor, significant increase in repurchase obligations, inadequate liquidity or capital resources, availability and price of fuel, a slowdown in the economy, increased material and component costs, availability of chassis and other key component parts, sales order cancellations, slower than anticipated sales of new or existing products, new product introductions by competitors, the effect of global tensions, integration of operations relating to mergers and acquisitions activities, business interruptions, any unexpected expenses related to enterprise resource planning (“ERP”), risks related to compliance with debt covenants, and other factors. Additional information concerning certain risks and uncertainties that could cause actual results to differ materially from that projected or suggested is contained in the Company’s filings with the Securities and Exchange Commission (“SEC”) over the last 12 months, copies of which are available from the SEC or from the Company upon request. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this release or to reflect any changes in the Company’s expectations after the date of this release or any change in events, conditions or circumstances on which any statement is based, except as required by law.

ContactsSteve Stuber, Investor [email protected](952) 828-8461Media: Sam Jefson, Public Relations [email protected](641) 585-6803

Winnebago Industries, Inc.Consolidated Statements of Income (Unaudited)(in thousands, except per share data)

  Three Months Ended
  May 29, 2021   May 30, 2020
Net revenues $ 960,737       100.0 %   $ 402,458       100.0   %
Cost of goods sold 791,125       82.3 %   370,434       92.0   %
Gross profit 169,612       17.7 %   32,024       8.0   %
Selling, general, and administrative expenses 63,586       6.6 %   33,271       8.3   %
Amortization 3,590       0.4 %   6,926       1.7   %
Total operating expenses 67,176       7.0 %   40,197       10.0   %
Operating income (loss) 102,436       10.7 %   (8,173 )     (2.0 ) %
Interest expense 10,229       1.1 %   8,440       2.1   %
Non-operating income (93 )     %   (74 )       %
Income (loss) before income taxes 92,300       9.6 %   (16,539 )     (4.1 ) %
Provision (benefit) for income taxes 21,005       2.2 %   (4,186 )     (1.0 ) %
Net income (loss) $ 71,295       7.4 %   $ (12,353 )     (3.1 ) %
Earnings (loss) per common share              
Basic $ 2.12           $ (0.37 )      
Diluted $ 2.05           $ (0.37 )      
Weighted average common shares outstanding              
Basic 33,552           33,625        
Diluted 34,772           33,625        
               
  Nine Months Ended
  May 29, 2021   May 30, 2020
Net revenues $ 2,593,754       100.0 %   $ 1,617,726       100.0   %
Cost of goods sold 2,130,556       82.1 %   1,427,307       88.2   %
Gross profit 463,198       17.9 %   190,419       11.8   %
Selling, general, and administrative expenses 165,001       6.4 %   126,540       7.8   %
Amortization 10,771       0.4 %   18,514       1.1   %
Total operating expenses 175,772       6.8 %   145,054       9.0   %
Operating income 287,426       11.1 %   45,365       2.8   %
Interest expense 30,222       1.2 %   23,140       1.4   %
Non-operating income (310 )     %   (460 )       %
Income before income taxes 257,514       9.9 %   22,685       1.4   %
Provision for income taxes 59,728       2.3 %   3,702       0.2   %
Net income $ 197,786       7.6 %   $ 18,983       1.2   %
Earnings per common share              
Basic $ 5.89           $ 0.57        
Diluted $ 5.83           $ 0.57        
Weighted average common shares outstanding              
Basic 33,565           33,102        
Diluted 33,943           33,289        

Percentages may not add due to rounding differences.

Winnebago Industries, Inc. Condensed Consolidated Balance Sheets(in thousands)

  May 29, 2021   August 29, 2020
  (Unaudited)    
Assets      
Current assets      
Cash and cash equivalents $ 405,841     $ 292,575  
Receivables, net 228,199     220,798  
Inventories, net 333,018     182,941  
Prepaid expenses and other assets 21,559     17,296  
Total current assets 988,617     713,610  
Property, plant, and equipment, net 177,578     174,945  
Goodwill 348,058     348,058  
Other intangible assets, net 393,997     404,768  
Investment in life insurance 28,381     27,838  
Operating lease assets 27,318     29,463  
Other long-term assets 15,821     15,018  
Total assets $ 1,979,770     $ 1,713,700  
       
Liabilities and Shareholders’ Equity      
Current liabilities      
Accounts payable $ 173,008     $ 132,490  
Income taxes payable     8,840  
Accrued expenses 202,602     159,060  
Total current liabilities 375,610     300,390  
Long-term debt, net 524,450     512,630  
Deferred income taxes 14,852     15,608  
Unrecognized tax benefits 6,538     6,511  
Long-term operating lease liabilities 25,391     27,048  
Deferred compensation benefits, net of current portion 9,920     11,130  
Other long-term liabilities 12,751     12,917  
Total liabilities 969,512     886,234  
Shareholders’ equity 1,010,258     827,466  
Total liabilities and shareholders’ equity $ 1,979,770     $ 1,713,700  

Winnebago Industries, Inc.Consolidated Statements of Cash Flows (Unaudited)(in thousands)

  Nine Months Ended
(in thousands) May 29, 2021   May 30, 2020
Operating Activities      
Net income $ 197,786       $ 18,983    
Adjustments to reconcile net income to net cash provided by (used in) operating activities:      
Depreciation 13,476       11,854    
Amortization 10,771       18,514    
Non-cash interest expense, net 10,372       7,440    
Amortization of debt issuance costs 1,852       2,181    
Last in, first-out expense 2,321       1,450    
Stock-based compensation 11,719       3,332    
Deferred income taxes (765 )     365    
Other, net (4,412 )     516    
Change in operating assets and liabilities:      
Receivables, net (7,384 )     31,440    
Inventories, net (152,398 )     91,938    
Prepaid expenses and other assets 1,010       159    
Accounts payable 40,817       (13,528 )  
Income taxes and unrecognized tax benefits (12,771 )     (2,622 )  
Accrued expenses and other liabilities 35,560       (9,585 )  
Net cash provided by (used in) operating activities 147,954       162,437    
       
Investing Activities      
Purchases of property, plant and equipment (23,596 )     (28,582 )  
Acquisition of business, net of cash acquired       (260,965 )  
Proceeds from sale of property, plant and equipment 12,450          
Other, net (224 )     141    
Net cash provided by (used in) investing activities (11,370 )     (289,406 )  
       
Financing Activities      
Borrowings on long-term debt 2,629,932       1,795,209    
Repayments on long-term debt (2,629,932 )     (1,501,709 )  
Purchase of convertible bond hedge       (70,800 )  
Proceeds from issuance of warrants       42,210    
Payments of cash dividends (12,136 )     (10,881 )  
Payments for repurchases of common stock (12,109 )     (1,789 )  
Payments of debt issuance costs (224 )     (10,761 )  
Other, net 1,151       539    
Net cash provided by (used in) financing activities (23,318 )     242,018    
       
Net increase in cash and cash equivalents 113,266       115,049    
Cash and cash equivalents at beginning of period 292,575       37,431    
Cash and cash equivalents at end of period $ 405,841       $ 152,480    
       
       
       
Supplement Disclosure:      
Income taxes paid, net $ 71,090       $ 6,240    
Interest paid 14,618       14,961    
       
Non-cash investing and financing activities:      
Issuance of Winnebago common stock for acquisition of business $       $ 92,572    
Capital expenditures in accounts payable 121       255    
Dividends declared not yet paid 4,273       126    

Winnebago Industries, Inc.Supplemental Information by Reportable Segment (Unaudited) – Towable(in thousands, except unit data)

  Three Months Ended
  May 29, 2021   % of Revenues   May 30, 2020   % of Revenues   $ Change   % Change
Net revenues $ 555,749         $ 188,898         $ 366,851       194.2   %
Adjusted EBITDA 80,130     14.4 %   16,451     8.7 %   63,679       387.1   %
                       
  Three Months Ended
Unit deliveries May 29, 2021   Product Mix(1)   May 30, 2020   Product Mix(1)   Unit Change   % Change
Travel trailer 11,089     66.4 %   3,537     60.3 %   7,552       213.5   %
Fifth wheel 5,620     33.6 %   2,324     39.7 %   3,296       141.8   %
Total towables 16,709     100.0 %   5,861     100.0 %   10,848       185.1   %
                       
  Nine Months Ended
  May 29, 2021   % of Revenues   May 30, 2020   % of Revenues   $ Change   % Change
Net revenues $ 1,449,934         $ 813,611         $ 636,323       78.2   %
Adjusted EBITDA 205,639     14.2 %   86,982     10.7 %   118,657       136.4   %
                       
  Nine Months Ended
Unit deliveries May 29, 2021   Product Mix(1)   May 30, 2020   Product Mix(1)   Unit Change   % Change
Travel trailer 29,125     65.6 %   15,319     60.8 %   13,806       90.1   %
Fifth wheel 15,306     34.4 %   9,874     39.2 %   5,432       55.0   %
Total towables 44,431     100.0 %   25,193     100.0 %   19,238       76.4   %
                       
(in thousands, except units) May 29, 2021       May 30, 2020       Change   % Change
Backlog(2)                      
Units 46,646         13,235         33,411       252.4   %
Dollars $ 1,522,069         $ 417,176         $ 1,104,893       264.9   %
Dealer Inventory                      
Units 11,647         15,562         (3,915 )     (25.2 ) %

(1)  Percentages may not add due to rounding differences.(2)  Backlog includes all accepted orders from dealers to be shipped generally within the next six months. Orders in backlog can be cancelled or postponed at the option of the dealer at any time without penalty; therefore, backlog may not necessarily be an accurate measure of future sales.

Winnebago Industries, Inc.Supplemental Information by Reportable Segment (Unaudited) – Motorhome (in thousands, except unit data)

  Three Months Ended
  May 29, 2021   % of Revenues   May 30, 2020   % of Revenues   $ Change   % Change
Net revenues $ 385,257         $ 203,590           $ 181,667       89.2   %
Adjusted EBITDA 37,467     9.7 %   (10,789 )     (5.3 ) %   48,256       447.3   %
                       
  Three Months Ended
Unit deliveries May 29, 2021   Product Mix(1)   February 29, 2020   Product Mix(1)   Unit Change   % Change
Class A 745     27.3 %   428       27.4   %   317       74.1   %
Class B 1,384     50.8 %   694       44.4   %   690       99.4   %
Class C 598     21.9 %   440       28.2   %   158       35.9   %
Total motorhomes 2,727     100.0 %   1,562       100.0   %   1,165       74.6   %
                       
                       
  Nine Months Ended
  May 29, 2021   % of Revenues   May 30, 2020   % of Revenues   $ Change   % Change
Net revenues $ 1,090,221         $ 755,023           $ 335,198       44.4   %
Adjusted EBITDA 118,779     10.9 %   13,488       1.8   %   105,291       780.6   %
                       
                       
  Nine Months Ended
Unit deliveries May 29, 2021   Product Mix(1)   May 30, 2020   Product Mix(1)   Unit Change   % Change
Class A 2,047     25.8 %   1,803       31.0   %   244       13.5   %
Class B 3,901     49.1 %   2,287       39.3   %   1,614       70.6   %
Class C 1,994     25.1 %   1,734       29.7   %   260       15.0   %
Total motorhomes 7,942     100.0 %   5,824       100.0   %   2,118       36.4   %
                       
                       
(in thousands, except units) May 29, 2021       May 30, 2020       Change   % Change
Backlog(2)                      
Units 18,145         4,131           14,014       339.2   %
Dollars $ 2,180,149         $ 515,035           $ 1,665,114       323.3   %
Dealer Inventory                      
Units 2,429         5,013           (2,584 )     (51.5 ) %

(1)  Percentages may not add due to rounding differences.(2)  Backlog includes all accepted orders from dealers to be shipped generally within the next six months. Orders in backlog can be cancelled or postponed at the option of the dealer at any time without penalty; therefore, backlog may not necessarily be an accurate measure of future sales.

Winnebago Industries, Inc.Non-GAAP Reconciliation (Unaudited)(in thousands, except per share data)

Non-GAAP financial measures, which are not calculated or presented in accordance with accounting principles generally accepted in the United States (“GAAP”), have been provided as information supplemental and in addition to the financial measures presented in the accompanying news release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented in the news release. The non-GAAP financial measures presented may differ from similar measures used by other companies.

The following table reconciles diluted earnings per share to Adjusted diluted earnings per share:

  Three Months Ended   Nine Months Ended
  May 29, 2021   May 30, 2020   May 29, 2021   May 30, 2020
Diluted earnings (loss) per share $ 2.05       $ (0.37 )     $ 5.83       $ 0.57    
Acquisition-related costs(1,2)       (0.01 )           0.29    
Acquisition-related fair-value inventory step-up(2)                   0.14    
Non-cash interest expense(2,3) 0.10       0.10       0.31       0.22    
Restructuring expenses(2)       0.04             0.04    
Gain on sale of property, plant and equipment(2) (0.03 )           (0.14 )        
Impact of convertible share dilution(4) 0.05             0.01          
Tax impact of adjustments(5) (0.01 )     (0.03 )     (0.04 )     (0.15 )  
Adjusted diluted earnings (loss) per share(6) $ 2.16       $ (0.26 )     $ 5.97       $ 1.12    

(1)  Represents transaction-closing costs.(2)  Represents a pretax adjustment.(3)  Non-cash interest expense associated with the convertible notes issued as part of our acquisition of Newmar.(4) Represents the dilution of convertible notes which is economically offset by a call/spread overlay that was put in place upon issuance.(5)  Income tax charge calculated using the statutory tax rate for the U.S. of 21.0% for both periods presented.(6) Per share numbers may not foot due to rounding.

The following table reconciles net income to consolidated EBITDA and Adjusted EBITDA.

  Three Months Ended   Nine Months Ended
  May 29, 2021   May 30, 2020   May 29, 2021   May 30, 2020
Net income (loss) $ 71,295       $ (12,353 )     $ 197,786       $ 18,983    
Interest expense 10,229       8,440       30,222       23,140    
Provision (benefit) for income taxes 21,005       (4,186 )     59,728       3,702    
Depreciation 4,917       4,134       13,476       11,854    
Amortization 3,590       6,926       10,771       18,514    
EBITDA 111,036       2,961       311,983       76,193    
Acquisition-related fair-value inventory step-up                   4,810    
Acquisition-related costs       (189 )           9,761    
Restructuring expenses 19       1,376       112       1,247    
Gain on sale of property, plant and equipment (1,188 )           (4,753 )        
Non-operating income (93 )     (74 )     (310 )     (460 )  
Adjusted EBITDA $ 109,774       $ 4,074       $ 307,032       $ 91,551    

Non-GAAP performance measures of Adjusted diluted earnings per share, EBITDA and Adjusted EBITDA have been provided as comparable measures to illustrate the effect of non-recurring transactions occurring during the reported periods and to improve comparability of our results from period to period. Adjusted diluted earnings per share is defined as diluted earnings per share adjusted for after-tax items that impact the comparability of our results from period to period. EBITDA is defined as net income before interest expense, provision for income taxes, and depreciation and amortization expense. Adjusted EBITDA is defined as net income before interest expense, provision (benefit) for income taxes, depreciation and amortization expense and other pretax adjustments made in order to present comparable results from period to period. Management believes Adjusted diluted earnings per share and Adjusted EBITDA provide meaningful supplemental information about our operating performance because these measures exclude amounts that we do not consider part of our core operating results when assessing our performance. Examples of items excluded from Adjusted diluted earnings per share include acquisition-related costs, acquisition-related fair-value inventory step-up, non-cash interest expense, restructuring expenses, gain on sale of property, plant and equipment, impact of convertible share dilution and the tax impact of the adjustments. Examples of items excluded from Adjusted EBITDA include acquisition-related fair-value inventory step-up, acquisition-related costs, restructuring expenses, gain or loss on the sale of property, plant and equipment and non-operating income.

Management uses these non-GAAP financial measures (a) to evaluate historical and prospective financial performance and trends as well as assess performance relative to competitors and peers; (b) to measure operational profitability on a consistent basis; (c) in presentations to the members of our Board of Directors to enable our Board of Directors to have the same measurement basis of operating performance as is used by management in its assessments of performance and in forecasting and budgeting for the Company; (d) to evaluate potential acquisitions; and (e) to ensure compliance with restricted activities under the terms of our asset-based revolving (“ABL”) credit facility and outstanding notes. Management believes these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties to evaluate companies in our industry.

Source: Winnebago Industries, Inc.