Winnebago Industries Inc. today reported a 26.4% increase in revenue for its fiscal second quarter, ended Feb. 24, rising to $468.4 million compared to $370.5 million in the year-ago period.
Second quarter net income grew 44.6% to $22.1 million, or 69 cents per diluted share, from $15.3 million, or 48 cents per share, in the same period last year.
President and CEO Michael Happe commented, “The second quarter marked another period of solid consolidated results for Winnebago Industries, including strong sales growth, overall market share accretion, and margin improvement, as we continue to build a more balanced full-line RV portfolio. Our towables segment outpaced the industry with robust organic growth and impressive profitability across the Winnebago and Grand Design brands. The towables backlog position and retail performance remain strong, with reasonable field inventory levels driven by our market momentum, increasing share of dealer lots, and further product line expansion.
“We continue to make incremental progress facing the market in our motorized segment, with encouraging double-digit percentage retail growth in the quarter and a strong increase in our motorized backlog driven by improving product line vitality and appeal. However, there remains much work ahead on motorized profitability improvement as we work to drive a return on the current costs and investments associated with the turnaround strategy.”
Gross profit in the second quarter was $67.7 million, an increase of 37.2% compared to $49.3 million for the fiscal 2017 period. Gross profit margin increased 110 basis points in the quarter, driven by the continuation of accelerated growth in the towable segment, which accounted for 57% of revenues in the quarter. Operating income was $35.3 million for the quarter, an improvement of 24.2% compared to $28.4 million in the second quarter of last year.
As a result of the recently enacted Tax Cuts and Jobs Act, a favorable $2.3 million net tax benefit was recorded in the quarter, impacting earnings per diluted share by 7 cents. Consolidated Adjusted EBITDA was $39.4 million for the quarter, compared to $29.1 million last year, an increase of 35.5%.
Happe added, “During the quarter, we recorded a tax reform benefit and expect a similar favorable tax rate for the remainder of Fiscal 2018. We are committed to passing a portion of the tax savings to our hard-working Winnebago Industries employees in the form of a bonus and other selective wage adjustments, making a donation to our foundation, and accelerating facility improvements over the coming months which will create better work environments. As always, I want to sincerely thank each and every one of our employees for their tremendous efforts and dedication to building a stronger future for our company.”
In the second quarter, revenues for the motorized segment were $202 million, up 1.5% from the previous year. Segment Adjusted EBITDA was $4 million, down 62.7% from the prior year. Adjusted EBITDA margin decreased 340 basis points, driven by manufacturing start-up investments, increased material costs, and product mix shifts. For the second quarter, backlog increased 42.5%, or over 900 units, compared to the same period last year. This healthy increase reflects the strength of its recently introduced new products, the company said.
Revenues for the towable segment were $266.4 million for the quarter, up 55.2% over the prior year, driven by strong organic growth across the Grand Design RV and Winnebago-branded lines. Segment Adjusted EBITDA was $35.3 million, up 93.8% over the prior year. Adjusted EBITDA margin increased 270 basis points, due to fixed cost leverage on the strong sales growth. Backlog remains strong at over 9,000 units, while retail sales continue to outpace the industry for both brands.
Happe noted, “As we move into the second half of fiscal 2018, we are well-positioned to capitalize on the upcoming retail season with an improving product line across both brands, increased capacity within our Grand Design business, and a focus to provide our customers with a high level of product quality and service support. We remain cautiously optimistic about the retail prospects for the RV industry this year and believe Winnebago and Grand Design inventory levels are appropriate in relation to our momentum and the addition of new products entering the market. Initial interest in our recently announced product introductions has been strong, with significant enthusiasm from dealers for the new Grand Design Transcend introductory-level travel trailer and the Revel 4×4 Class B van from Winnebago.
“We also recently unveiled the new Winnebago Class C Outlook motorhome earlier this month at our national dealer meeting. Our strategic investments specific to ERP implementation and Grand Design campus expansion are on schedule and we are nearing the kick-off of our Winnebago-branded Towable capacity expansion project. Our balance sheet continues to improve and there is strategic focus on identifying new paths to profitable growth around our vision to become a trusted leader in outdoor lifestyle solutions.”
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