Winnebago Industries Inc. reported that revenues for the fiscal third quarter, ended May 25, were $528.9 million, a decrease of 5.9% compared to $562.3 million for the year-ago period.
Third-quarter net income was $36.2 million, an increase of 11.2% compared to $32.5 million in the same period last year. Earnings per diluted share were $1.14, an increase of 11.8% compared to earnings per diluted share of $1.02 in the same period last year.
Gross profit was $86.6 million, an increase of 1.3% compared to $85.5 million for the fiscal 2018 period. Gross profit margin increased 120 basis points in the quarter, driven by continued strong margin performance in the towable segment.
Operating income was $49 million for the quarter, up 1.4% compared to $48.3 million in the third quarter of last year, and was unfavorably impacted by the restructuring costs associated with moving the company’s diesel manufacturing from Junction City, Ore., to Northern Iowa, totaling $1.1 million. Consolidated adjusted EBITDA was $55.9 million for the quarter, compared to $53.4 million last year, resulting in an increase of 4.7%.
President and Chief Executive Officer Michael Happe commented, “We are pleased to deliver another quarter of solid consolidated results highlighted by continued margin expansion and market share gains. Winnebago Industries’ third quarter results are a testament to the strength and resiliency of our brand portfolio amid a challenging and highly competitive RV market. We continue to focus on manufacturing high-quality products, maintaining disciplined production management and enhancing channel relationships.
“Despite a moderate decrease in overall sales in a difficult RV wholesale market, consolidated margin continued to expand, primarily due to the strength of our dual-branded towable segment.”
In the third quarter, revenues for the motorhome segment were $160.2 million, down 34.6% from the prior year driven by decreases in both Class C and Class A unit sales as dealers continue to lower their inventories. Class B unit sales and motorhome segment profitability were also down versus the prior year due to a temporary, but material, disruption in chassis supply by one of our strategic suppliers, which had a significant impact on shipment availability for two of our most popular Class B units.
Supply is improving during the early part of our fourth quarter, the company reported. Despite these headwinds, our retail performance in the Class B category has remained robust. Segment adjusted EBITDA was $0.4 million, down 96.7% from the prior year. Adjusted EBITDA margin decreased 460 basis points, driven primarily by deleverage, an unfavorable mix due to the decline in sales of our most profitable products, and continued discounting in the marketplace. Backlog decreased 5.6%, in dollars, compared to the prior year reflecting dealers efforts to right-size inventory levels, partially offset by an increase in several Class B products due to the temporary disruption in chassis supply.
Revenues for the towable segment were $346.8 million for the third quarter, up 10.8% from the prior year, driven particularly by the strength of the Grand Design RV brand. Segment Adjusted EBITDA was $57.2 million, up 26.0% over the prior year. Adjusted EBITDA margin of 16.5% increased 200 basis points, reflecting an increase in unit sales, pricing actions taken over the past twelve months, and effectively managing input cost pressures. Backlog decreased 24.2%, in dollars, compared to the prior year, reflecting the positive impact of utilizing additional capacity added during calendar 2018 and dealers continuing to normalize inventory levels.
Happe continued, “As we transition into the final quarter of fiscal 2019, we are well positioned to continue our positive momentum with top line sales and share gains. Our North American RV retail share is approaching 10%, up from 3% just three years ago. The imbalance between industry wholesale shipments and retail sales continues to improve and will continue to do so in the back half of calendar 2019. The materials cost environment remains volatile, as newly implemented and pending tariffs start to impact cost inputs in the back half of calendar 2019.
We absorbed an unexpected challenge to our motorhome sales and profits during the quarter due primarily to a supply interruption of Class B chassis and we remain focused on seeing that situation improve. We are pleased with the recent pace of steady inbound RV orders from dealers. Additionally, Chris-Craft has launched several new models in the front half of 2019, which will continue their momentum forward in the marine industry. Our broader portfolio, combined with our operational resiliency as a company, are working to solidify our unique position within the outdoor lifestyle market and making Winnebago Industries a high-quality company that investors can trust to deliver value.”
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