Increased discounting impacted earnings for Winnebago Industries Inc.’s fiscal second quarter ended Feb. 25 as the Forest City, Iowa-based builder reported a net loss while revenue, boosted by sales from its towable division, rose 23.5%.
Revenues during the three-month period were $131.6 million versus $106.6 million for the second quarter of fiscal 2011. Included within consolidated revenues was $14.5 million associated with towable products, compared to $1.8 million the previous year.
The company reported an operating loss of $1.2 million for the quarter versus an operating profit of $4.1 million for the second quarter last year. Net loss for the second quarter was $912,000 versus net income of $3.3 million the previous year. On a diluted per share basis, the company had a net loss of 3 cents compared to net income of 11 cents for the second quarter of fiscal 2011.
Although revenues were higher as compared to the prior year primarily due to an increase in wholesale deliveries, the second quarter was negatively impacted by increased discounts and continued aggressive pricing strategies. The additional motorhome wholesale volume prevented shortened work weeks that were experienced in the first quarter and also resulted in reduced inventory levels which significantly improved operating cash flows as compared to the prior year. The second quarter included a $3.5 million pre-tax benefit from the results of an annual physical inventory of work-in-process, due to lower actual inventory scrap and production loss.
Revenues for the first six months were $263.4 million, an increase of 14.4%, compared to $230.3 million a year ago. The company reported an operating loss of $537,000 in the period versus an operating profit of $9 million for the same period last year. Net income for the first six months was $123,000, or zero cents per diluted share, versus net income of $7.1 million, or 24 cents per diluted share, for the first six months of the last fiscal year.
“While we saw an increase in year over year wholesale shipments of both our motorhomes and towables in the second quarter, we are disappointed with our financial results,” said Winnebago Industries Chairman, CEO and President Randy Potts. “However, we believe that we are better positioned for the future with a stronger sales order backlog as compared to the prior year. Our motorhome order position of current model year product is nearly sold out at this time and we are excited about the new 2013 product launch starting in our third quarter. We are cautiously optimistic about growth in the general economy, given the improvement in consumer confidence, employment and housing starts.”
Winnebago Industries will conduct a conference call in conjunction with this release at 9 a.m. (Central) 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://www.winnebagoind.com/investor.html. The event will be archived and available for replay for the next 90 days.
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