Winnebago Industries Inc. President and CEO Michael Happe and Vice President and CFO Sarah Nielsen talked with investors today (March 22) about the significant results the Eden Prairie, Minn., company posted during its fiscal second quarter.
As reported in this morning’s (March 22) earnings release, Winnebago’s revenues for the quarter, which ended Feb. 25, were $370.5 million, up 64.2% from the same period of 2016, while gross profit rose 95.1% to $49.3 million and operating income was up 110.1% to $28.4 million. Net income was $15.3 million, or 48 cents per diluted share, representing an increase of 63.3% compared to $9.4 million, or 35 cents per diluted share, in the same period last year.
“These are dynamic and exciting times for Winnebago,” Happe said during the hour-long conference call. The company, he noted, now has a much more balanced RV portfolio, thanks in large part to the $500 million acquisition of Middlebury, Ind.-based Grand Design RV Co. last November.
“The second quarter marked the first full period with Grand Design RV as part of the Winnebago family,” he said. “Our overall towables segment in the second quarter accounted for 46% of our roughly $370 million in overall revenue.” That compares, he said, to 90% of revenue in the same quarter of 2016 coming from motorized RVs.
The acquisition — and continued growth — of Grand Design, coupled with the gains in the separate Middlebury-based Winnebago Towables brand, have diversified Winnebago’s product lines significantly, he noted. Winnebago now claims about 5% of the towable market, up from 1% a year ago, Happe said, and the company plans to get into double-digit towable market share.
Happe was careful to note that Winnebago will not clone its towable brands.
On the legacy motorized side of Winnebago’s business, Nielsen said overall shipments were up about 3%, adding that the average selling price was down 5.6% thanks to a shift from Class A motorhomes to more Class C and Class B units resulting in a 3% decline in motorized revenue.
In addition to diversifying its product offerings, Winnebago is diversifying itself geographically. Historically run in Forest City, Iowa, Winnebago in February opened its new Eden Prairie executive offices southwest of downtown Minneapolis. On the manufacturing side, Winnebago’s Junction City, Ore., plant is expanding diesel production, and an additional line has been added in Lake Mills, Iowa.
“Less than a decade ago, almost 100% of Winnebago’s assets were located in the great state of Iowa. We now have more than 1,000 employees in other states, mainly Indiana and Oregon,” he noted.
He also said there’s room for growth at the company’s Oregon campus. “We have a campus out there that could someday be used for other product,” Happe noted, pointing out that 30% of the company’s towable units are sold west of the Rockies. “We’re not sitting here today announcing anything, but we’re not restricting the Junction City campus — or even the West Coast — from taking on towable production.”
The move of the company’s executive team to the Twin Cities area, Happe said, “will allow us to compete for the leadership talent we need in the future.”
The company’s executives and board are also working on developing a long-term plan. “We may not ultimately be the biggest RV manufacturer in North America, but we will work towards being the most trusted supplier in the space and one that is materially larger and more profitable,” he said. “We have acknowledged that when the timing is right, we will seek to identify strategic and profitable diversification opportunities within the outdoor lifestyle sector. Those could reside inside or outside the recreational vehicle market.”