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Winnebago logoWinnebago Industries Inc. reported lower net income on slightly higher sales for its fiscal second quarter, ended Feb. 28.

Revenues for the second quarter were $234.5 million, an increase of 2.5%, versus $228.8 million for the fiscal 2014 period. Operating income was $11.9 million for the current quarter compared to $14.0 million in the second quarter of last year. Fiscal 2015 second quarter net income was $8.1 million, or 30 cents per diluted share, versus $9.6 million, or 35 cents per diluted share, in the same period last year.

Chief Financial Officer Sarah Nielsen noted, “Operating cash flow for the second quarter was affected by an increase in receivables of approximately $13 million due to timing of invoicing in the quarter. We also ended the quarter with elevated inventory levels, in part as a result of the rental build season. In the second half of fiscal 2015, we expect to generate positive cash flow through the continued strength of our operating results, as well as favorable changes in working capital.”

“Finally, with our commitment and confidence in the company’s towables business, we decided to purchase the currently leased towables assembly facilities in Middlebury, Ind., for approximately $5.4 million. This purchase, which will provide future cost savings, is included in our planned capital expenditures of $15 to $20 million for this fiscal year. We anticipate that we will close this transaction in April.”

Although labor-related constraints and expenses continued into the second quarter, gross profit as a percentage of sales improved 30 basis points year over year. This increase primarily reflected improved product mix, higher absorption of fixed costs and the absence of weather-related expenses that occurred in last year’s second quarter. Operating expenses increased in the fiscal 2015 second quarter compared to last year mainly attributable to $1.5 million of incremental general and administrative expenses associated with two strategic initiatives that commenced during the quarter related to ERP implementation and strategic sourcing, as well as increased legal and equipment maintenance costs.

Chairman, CEO and President Randy Potts commented, “During the second quarter, we grew revenues and improved gross profit margin despite continuing to work through the labor-related constraints and challenges we saw last quarter. We also incurred higher operating expenses, in large part attributable to the commencement of our new ERP system and strategic sourcing projects, which we believe will improve Winnebago’s efficiency and profitability once complete. Year-over-year motorized unit bookings grew 59% in the quarter, contributing to a very healthy backlog. Additionally, motorhome retail registrations grew 18% in the second quarter over last year, which we believe is confirmation of continued favorable consumer demand for our products. These factors, coupled with continued positive towables results, should generate improved long-term results for our company.”

Compared to the same period of last year, motorhome revenue increased 2.4% in the second quarter, primarily a result of motorhome unit shipment growth of 2.4%. Towables operating income improved $302,000 due mainly to revenue growth of 11.8%, comprised of a 7.7% increase in ASP and 5.2% growth in unit shipments.

Year over year, motorhome retail registrations increased 18% in the second quarter and 29% on a rolling 12-month basis, based on internally reported retail information.

Revenues for the first six months were $458.9 million, an increase of 1.7%, from $451.5 million for the same period of fiscal 2014. The sales growth was primarily comprised of towables ASP and unit growth of 11.2% and 8.7%, respectively, and motorhome unit shipments improvement of 1.8%. Net income in the first six months was $18.0 million, or 67 cetns per diluted share, versus $20.7 million, or 74 cents per diluted share, last year.

The company noted that on March 18, Winnebago’s board of directors approved a quarterly cash dividend of $0.09 per share payable on May 6, 2015 to common stockholders of record at the close of business on April 22.