EDEN PRAIRIE, Minn., – Winnebago Industries, Inc. (NYSE: WGO), a leading outdoor lifestyle product manufacturer, today reported financial results for the company’s Fiscal 2023 third quarter.
- Diversified outdoor portfolio continues to demonstrate resiliency and strong profitability
- Strong cash flow from operations of $139.6 million
- Completed acquisition of Lithionics Battery, accelerating innovation capabilities in diverse battery solutions
Third Quarter Fiscal 2023 Results
Revenues for the Fiscal 2023 third quarter ended May 27, 2023, were $900.8 million, a decrease of 38.2% compared to $1.5 billion for the Fiscal 2022 period, driven by lower unit sales related to RV retail market conditions and higher discounts and allowances compared to prior year, partially offset by carryover price increases. Gross profit was $151.4 million, a decrease of 44.5% compared to $273.0 million for the Fiscal 2022 period. Gross profit margin decreased 190 basis points in the quarter to 16.8%, driven by deleverage and higher discounts and allowances compared to prior year. Operating income was $80.5 million for the quarter, a decrease of 54.5% compared to $176.7 million for the third quarter of last year. Fiscal 2023 third quarter net income was $59.1 million, a decrease of 49.6% compared to $117.2 million in the prior year quarter. Reported earnings per diluted share was $1.71, compared to reported earnings per diluted share of $3.57 in the same period last year. Adjusted earnings per diluted share was $2.13, a decrease of 48.4% compared to adjusted earnings per diluted share of $4.13 in the same period last year. Consolidated Adjusted EBITDA was $96.4 million for the quarter, a decrease of 49.7%, compared to $191.7 million last year.
President and Chief Executive Officer Michael Happe commented, “In the midst of challenging market conditions, our team continues to successfully navigate a dynamic environment with a dual focus on taking care of our customers and operating the business with discipline, resulting in ongoing value for our shareholders. Our diverse portfolio of premium brands across the outdoor recreation industry continues to drive resiliency in our consolidated results, as top-line declines in our RV segments were offset by robust profitability in towable RVs and continued growth in our marine businesses. The Barletta brand, in particular, remains a bright spot in our portfolio, delivering strong market share gains in aluminum pontoons. Overall, we benefited from our highly variable cost structure and managed SG&A spending proactively, delivering double digit adjusted EBITDA margin amid challenging RV market conditions. During the quarter we also announced and closed the strategic vertical technology acquisition of Lithionics Battery, which will accelerate our innovation capabilities in diverse battery solutions, advance our overall electrical supply ecosystem and create opportunities for our RV and marine customers to enjoy fully immersive, off-the-grid outdoor experiences. I want to personally thank all of our Winnebago Industries team members for their hard work and determination during the quarter, and for continuing to reinforce and project our golden threads of quality, innovation, and service.”
Revenues for the Towable RV segment were $384.1 million for the third quarter, down 52.3% compared to $805.6 million in the prior year, primarily driven by a decline in unit volume associated with retail market conditions and higher discounts and allowances compared to prior year. Segment Adjusted EBITDA was $53.8 million, down 54.3% compared to the prior year period. Adjusted EBITDA margin of 14% decreased 60 basis points compared to the prior year period, primarily from deleverage and higher discounts and allowances compared to prior year, partially offset by favorable warranty experience. Adjusted EBITDA margin was up 250 basis points sequentially, as Towable RV segment profitability continued to demonstrate resiliency during a period of sales declines and significant margin pressure from deleverage. Backlog decreased to $236 million, down 82% from the prior year when dealers were focused on replenishing their inventories.
Revenues for the Motorhome RV segment were $374.4 million for the third quarter, down 27.5% from the prior year. This was primarily driven by a decline in unit volume and higher discounts and allowances compared to prior year, partially offset by price increases related to higher chassis costs. Segment Adjusted EBITDA was $26.8 million, down 58.3% compared to the prior year. Adjusted EBITDA margin of 7.2% decreased 530 basis points compared to the prior year due to deleverage, higher discounts and allowances, and productivity and operational efficiency challenges that were primarily related to an ERP system implementation. Backlog decreased to $800.4 million, down 65% from the prior year, driven by normalizing levels of dealer inventories.
Revenues for the Marine segment were $129 million for the third quarter, up 1.9% due to carryover price increases. This was partially offset by a decline in unit volume. Segment Adjusted EBITDA was $17.3 million, down 12.5% compared to the prior year. Adjusted EBITDA margin was 13.4%, down 230 basis points compared to the prior year, primarily due to higher discounts and allowances compared to prior year. Backlog for the Marine segment decreased to $146.3 million, down 40.4% compared to the prior year period, primarily due to normalizing levels of dealer inventories.
Balance Sheet and Cash Flow
As of May 27, 2023, the company had total outstanding debt of $591.7 million ($600 million of debt, net of debt issuance costs of $8.3 million) and working capital of $574.7 million. Cash flow from operations was $139.6 million in the third quarter of Fiscal 2023.
Quarterly Cash Dividend and Share Repurchase
On May 17, 2023, the company’s Board of Directors approved a quarterly cash dividend of $0.27 per share payable on June 28, 2023, to common stockholders of record at the close of business on June 14, 2023. Winnebago Industries executed share repurchases of $20 million during the third quarter.
Mr. Happe continued, “Looking ahead, we will continue to actively manage production levels across our business to match dealer appetite for our brands, ongoing seasonal retail conditions, and our market share aspirations. We are entering our fourth and final quarter of Fiscal 2023 with a strong balance sheet, having completed multiple inorganic and organic investments in support of future growth strategies and a sequentially improved inventory and working capital position. We are closely tracking and adjusting to market conditions, with a focus on maintaining solid profitability, market competitiveness, and a preferred lot position for our premium brands with our channel partners. Our $20 million of share repurchases in the third quarter and regular quarterly dividend payment of $0.27 (50% higher than prior year) underscores our confidence in the long-term strength and trajectory of our business. We are committed to investing in innovation, product differentiation over the long-term, ongoing operational efficiency enhancements, disciplined execution and strong cost management as we continue to drive sustainable value creation for all of our stakeholders.”
Reportable Segment Name Changes
In the third quarter of Fiscal 2023, we changed the name of our “Towable” segment to “Towable RV” and our “Motorhome” segment to “Motorhome RV”. These name changes had no impact on the composition of our segments, or previously reported results of operations, financial position, cash flows or segment results.
Winnebago Industries, Inc. will discuss Fiscal 2023 third quarter earnings results during a conference call scheduled for 9:00 a.m. Central Time today. Members of the news media, investors and the general public are invited to access a live broadcast of the conference call via the Investor Relations page of the company’s website at http://investor.wgo.net. The event will be archived and available for replay for the next 90 days.