Winnebago Industries Inc. today (March 25) reported declines in revenues and net income for the Forest City, Iowa-based company’s fiscal second quarter, ended Feb. 23.
Revenues during the period totaled $432.7 million, a decrease of 7.6% compared to $468.4 million for the fiscal 2018 period, while gross profit was $66.4 million, a decrease of 1.8% compared to $67.7 million. Gross profit margin increased 100 basis points in the quarter, driven by revenue mix, pricing and motorhome segment operational improvements, partially offset by inflationary cost pressures and heightened dealer incentives.
Operating income was $28.9 million for the quarter, a decrease of 18% compared to $35.3 million in the second quarter of last year, driven primarily by the decline in RV unit sales. Fiscal 2019 second quarter net income totaled $21.6 million, a decline of 2.2% compared to $22.1 million in the same period last year.
Earnings per diluted share were 68 cents, a decrease of 1.4% compared to earnings per diluted share of 69 cents in the same period last year. Net income and earnings per share were favorably impacted by discrete tax items totaling $2.5 million, or 8%. Consolidated adjusted EBITDA was $34.5 million for the quarter, compared to $39.4 million last year, a decrease of 12.4%.
President and Chief Executive Officer Michael Happe commented, “Our solid consolidated second quarter results represent the growing strength of our brands in the marketplace. We continued to make progress advancing our competitive position, gaining market share and increasing the overall appeal of our products with customers, despite challenging macro conditions within the RV industry as dealers continued to reduce their overall inventory levels in the quarter.
“Although company sales decreased modestly, we continued to materially outpace the industry and expand our year-over-year margins, primarily due to the improved product vitality and profitability of our motorhome segment and the continued strength and momentum of our towables segment. Our Chris-Craft business also continues to grow and establish a presence for our enterprise in the growing marine industry. We continue to remain confident in the potential of our multibranded lineup and the opportunities we have to further leverage our strong position and outperform the markets in which we compete.”
In the second quarter, revenues for the motorhome segment were $164.7 million, down 17.3% from the prior year driven primarily by a decline in Class A and Class C unit sales, partially offset by an increase in Class B unit sales. Segment adjusted EBITDA was $4.4 million, down 23.4% from the prior year. Adjusted EBITDA margin decreased 30 basis points, driven primarily by the decline in sales, and further impacted by investments in SG&A, partially offset by favorable product mix. Backlog decreased 38.6%, in dollars, versus the prior year, reflecting dealers continuing to right-size inventory levels and prior year Class B new product order timing.
Revenues for the towable segment were $250.7 million for the second quarter, down 5.9% from the prior year, driven by dealer network efforts to reduce inventory levels and comparing against very strong shipments in the prior year, partially offset by pricing. Segment Adjusted EBITDA was $33.6 million, down 7.3% from the prior year. Adjusted EBITDA margin of 13.4% decreased 20 basis points, reflecting pricing actions taken during the last twelve months which did not fully recover increases to cost inputs. Backlog levels remained strong at over 8,000 units but declined 5.7%, in dollars, versus the prior year, reflecting the positive impact of utilizing additional capacity added during calendar 2018 and dealers continuing to right-size inventory levels.
Happe continued, “As we move into the second half of fiscal 2019, Winnebago Industries is positioned within the outdoor lifestyle market to drive consolidated share growth and long-term value for shareholders. While the RV industry has been challenged over the past six months, we believe the wholesale shipment and retail sales equation will approach a new equilibrium during our fiscal third quarter. We are well positioned to capitalize on the upcoming retail season across all of our brands.
“As demonstrated by the strong showing of our new product launches at the recent RVX show, including the new Class B Winnebago Boldt. the Class C Winnebago View. the Grand Design Transcend XPlor travel trailer and our award-winning Winnebago all-electric specialty vehicle. We continue to expect our prospects to remain strong and result in continued share gains. Our efforts to strengthen and expand our core RV business as well as diversify into new, profitable markets, demonstrated by our entrance into the marine industry with the integration of Chris-Craft, have created significant momentum that we aspire to build on through the second half of fiscal 2019. The Chris-Craft team has had a strong start to Calendar Year 2019 via the introduction of several new models and positive results at the retail shows across the country.”