Forest City Iowa-based Winnebago Industries Inc. today (June 20) reported an 18% increase in revenue while net income soared 67.7% during the company’s fiscal third quarter, ended May 26.
Sales totaled $562.3 million compared to $476.4 million for the fiscal 2017 period. Net income was $32.5 million, or $1.02 per diluted share, compared to $19.4 million, or 61 cents per share, in the same period last year.
• Gross profit was $85.5 million, an increase of 20.8% compared to $70.8 million a year ago.
• Gross profit margin was 15.2% in the quarter, an increase of 30 basis points versus 14.9% last year, driven by the continuation of accelerated growth in the towable segment.
• Operating income was $48.3 million for the quarter, an improvement of 38.5% compared to $34.9 million in the third quarter of last year.
• Consolidated adjusted EBITDA was $53.4 million for the quarter, compared to $47.3 million last year, an increase of 12.7% driven by strong towable segment revenue and profit growth.
During the quarter, the company utilized a portion of its tax reform benefit for employee bonuses and making a contribution to its foundation, leading to a one-time expense of $3.4 million, or 11cents per share, net of tax.
President and Chief Executive Officer Michael Happe commented, “Winnebago Industries delivered strong top and bottom-line growth, margin expansion and market share gains in the quarter. New product performance, our evolving portfolio mix, and agility in managing cost pressures all contributed nicely to our third quarter results. The towable segment saw strong organic top-line growth and increased profitability, in addition to delivering another period of retail market share expansion. Our strong performance to-date in Fiscal 2018 and confidence in our market share trends for towable RVs is reflected in our capacity expansion efforts during the quarter, as we broke ground on our Winnebago-branded towable expansion project and started up a new Grand Design RV production line.
“We look forward to having additional capacity to deliver more of the towable products our customers love as well as to bring new innovative products to market. Our motorized business also saw continued progress with adjusted EBITDA strengthening from our previous quarter, as multiple investments in the business start to generate the moderate improvement we anticipated. While inflationary pressures have been building and will continue to do so, our teams are working hard to mitigate these through numerous cost savings initiatives and select price increases where necessary. Our new product launches across both segments are performing well, driving healthy backlog increases, and we remain comfortable with our current dealer inventory levels which are supported by our strong retail performance and increases in market share.”
In the third quarter, revenues for the motorized segment were $249.2 million, up 3.1% from the previous year. Segment adjusted EBITDA was $9.3 million, down 36% from the prior year. Adjusted EBITDA margin was 3.7%, a decrease of 230 basis points versus the same period last year, but an improvement of 170 basis points compared to 2.0% in the second quarter of fiscal 2018. The margin impact of the one-time tax reform reinvestments mentioned earlier was dilutive to adjusted EBITDA by 120 basis points in the quarter. Backlog increased 31.4% over the prior year, reflecting the strength of our recently introduced products.
Revenues for the towable segment were $313 million for the quarter, up 33.4% from the previous year, driven by strong organic growth across the Grand Design RV and Winnebago-branded product lines. Segment Adjusted EBITDA was $44 million, up 34.4% over the prior year. Adjusted EBITDA margin was 14.1%, an increase of 10 basis points, driven by higher volumes and a favorable product mix. The margin impact of the one-time tax reform investments mentioned earlier was dilutive to adjusted EBITDA by 60 basis points in the quarter. Backlog remains strong, growing 15.1% and compared to a strong backlog in the prior year, while retail sales continue to yield market share gains by outpacing the industry for both brands.
Happe continued, “As we enter the final quarter of fiscal 2018, there is much to be excited about at Winnebago Industries even as we navigate several external pressures. As mentioned earlier, we experienced inflationary input cost pressures during our fiscal third quarter and we expect those pressures to continue into the fourth quarter. As always, we will work closely with our supplier base, and internally on cost savings initiatives, to lessen the impacts on our dealer network and end customers of any necessary increases. In the quarter, we announced the launch of an all-electric, zero-emission commercial vehicle platform in conjunction with a strategic partnership with Motiv Power Systems, a U.S. market leader in medium-duty electric vehicle chassis. And earlier this month, but after the close of our fiscal third quarter, we announced our acquisition of Chris-Craft, an iconic marine brand and an industry leader in recreational boating.
“The addition of a premium marine brand aligns with our strategic initiative to expand the Winnebago Industries portfolio within the outdoor lifestyle market and provides a new revenue platform in an exciting marine market that will enable us to continue to drive improved profitability and shareholder value over the long term. Our improved RV portfolio and strategic investments continue to benefit the business as a whole, and we look forward to realizing the strategic and financial benefits of a broader, more balanced and diversified portfolio of products uniquely positioned across the outdoor lifestyle and leisure travel industries.”
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