Winnebago Industries Inc. Chairman, President and CEO Bruce Hertzke is upbeat about the industry’s future because the popularity of the RV lifestyle now extends to people who are both younger and older than the huge Baby Boom Generation.
“We used to sell to people in the 55 to 65 age group,” Hertzke said during an interview last week on WallSt.net, an investor-oriented website. “But people are living a lot longer and are a lot healthier, so now the age group of 65 to 75 using motorhomes is just as large as the group (aged) 55 to 65.
“And, because of the popularity, we’re getting a lot of people as young as 35 who are buying motorhomes to support other habits like tailgating or motorsports or hobbies like riding dune buggies,” Hertzke continued. “So, we have three very favorable demographic cycles that are helping the industry and Winnebago definitely is benefitting from that.”
In order to gain market share, Winnebago completed four major building expansions in the last four years and increased its output capacity by 30%, he said.
“All these expansions are totally paid for,” Hertzke said. “Winnebago’s balance sheet is very strong. We have positioned ourselves for future growth because of expanded production capability and we have everything paid for so we can continue being on the leading edge of technology and development.
“We’re very proud of our balance sheet, it’s very clean, there’s no goodwill,” he continued. “We generate, in good years, somewhere between $45 and $55 million of free cash flow. With everything paid for, we’ll be in a very strong position to continue to expand and stay on the leading of technology and development.”
Winnebago, which achieved a record $845 million sales during its fiscal year 2003, which ended Aug. 30, also is increasing shareholder value by buying-back shares owned by the family of the late John K. Hanson, the company’s founder.
“The buy-back of our stock naturally increases the earnings per share which continues to enhance shareholder value,” Hertzke said during the WallSt.net interview. “We purchased 1.45 million shares from the family (during October). This was stock originally issued to the founding family that had never been traded. With us buying it back, it definitely improves the earnings potential for the company.
“We’ve bought back over 40% of the company’s stock in the last five to six years and we’re retired all that,” Hertzke said. “So, we really enhanced the other shareholders’ value considerably though the repurchases.”