Revenues for the first quarter, ended Nov. 29, were $224.4 million, an increase of 0.8% versus $222.7 million for the fiscal 2014 first quarter. Net income was $9.9 million, or 37 cents per diluted share, versus $11.1 million, or 40 cents per diluted share, last year while operating income was $14.4 million compared to $16 million.
The Forest City, Iowa-based builder reported that year-over-year, first quarter financial results were negatively impacted by labor constraints and supply chain disruptions, which impacted production and delayed the completion and shipment of motorized units. As a result of these operational events, the company incurred significant production variances in the quarter compared to the same period a year ago, primarily in the form of higher labor-related expenses, including an increase in workers compensation expense, all of which negatively impacted variable costs and margins in the quarter.
Chairman, CEO and President Randy Potts commented, “We faced significant operational challenges in the first quarter because of variances attributed in large part to labor-related inefficiencies and supply chain disruptions, which impacted our ability to finish and ship all of the units we otherwise would have. We are disappointed with the effect these issues, along with the corresponding increased expenses, had on our first quarter profitability. We have made significant progress and will continue to work to resolve these issues throughout the second quarter. On a positive note, we are encouraged with the 12% increase sequentially in backlog from the fourth quarter of fiscal 2014. Further, with double-digit growth in motorhome retail registrations, both year-over-year and on a rolling 12-month basis, consumer demand for our products remains very strong. We look forward to improving results as fiscal 2015 progresses.”
Motorhome unit shipments grew 1.3% in the quarter, however revenue declined 0.7%, a result of lower motorhome average sales prices (ASP) of 2.2% due to product mix. Towables operating income improved $0.9 million and was positively impacted by revenue growth of 29.2%, comprised of a 15.8% improvement in ASP and a 12.8% increase in units.
Compared to the same period last year, the company’s motorhome retail registrations increased 19% in the first quarter and 30% on a rolling 12-month basis, based on internally reported retail information.
“Operating cash flow in the first quarter was impacted by higher inventory levels, primarily the result of increased raw materials and work in process inventory and is reflective of both the strong demand for our products and the operational issues that we experienced during the quarter,” said CFO Sarah Nielsen. “As we resolve operational issues, we anticipate improvements in working capital related to this matter in the second quarter. However, at the same time, we also expect similar working capital needs as we prepare for the rental build season.”
Winnebago also reported its board on Dec. 17 approved a quarterly cash dividend of 9 cents per share payable on Feb. 4, 2015, to common stockholders of record at the close of business on Jan. 21, 2015. During first quarter, the company also repurchased approximately 272,000 shares of its common stock for approximately $6 million, at an average price of $21.86 per share. At Nov. 29, 2014, the company had authority to repurchase shares worth up to $7.6 million remaining under its stock repurchase program, which has no time restriction.
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