WINNEBAGO INDUSTRIES INC - FORM 8-K - EX-99.1 - 2ND QUARTER EARNINGS RELEASE - March 17, 2011

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Contact: Sheila Davis - PR/IR Mgr. - 641-585-6803 - sdavis@winnebagoind.com
 
WINNEBAGO INDUSTRIES REPORTS RESULTS FOR
SECOND QUARTER FISCAL 2011
-- Net income of $3.3 million --
 
 
FOREST CITY, IOWA, March 17, 2011 - Winnebago Industries, Inc. (NYSE:WGO), one of the leading United States (U.S.) recreation vehicle manufacturers, today reported results for the Company's second quarter and first six months of Fiscal 2011.
 
Revenues for the second quarter of Fiscal 2011 ended February 26, 2011 were $106.6 million, a decrease of 3.6 percent, versus $110.5 million for the second quarter of Fiscal 2010. The Company reported an operating profit of $4.1 million for the quarter, versus an operating loss of $1.9 million for the second quarter of Fiscal 2010. Net income for the second quarter was $3.3 million versus net income of $706,000 for the second quarter of Fiscal 2010. On a diluted per share basis, the Company had net income of $0.11 for the second quarter of Fiscal 2011 versus net income of $0.02 for the second quarter of Fiscal 2010. The net income for the second quarter of Fiscal 2010 reflected the positive impact of $2.2 million in tax benefits associated with various tax planning initiatives and tax settlements.
 
Most notably, the second quarter of Fiscal 2011 was positively impacted by the results of the the annual physical inventory of work-in-process recorded during the quarter, due to lower actual inventory scrap and production loss than recent historical experience, which had the effect of increasing gross profit and inventories by $3.5 million. The quarter was also favorably impacted by higher average selling prices due to mix and less promotional incentives as compared to the second quarter of Fiscal 2010.
 
Revenues for the first six months of Fiscal 2011 were $230.3 million, an increase of 20.2 percent, compared to $191.5 million for the first six months of Fiscal 2010. The Company reported an operating profit of $9.0 million for the first six months of Fiscal 2011, compared to an operating loss of $7.8 million for the same period of Fiscal 2010. The net income for the first six months of Fiscal 2011 was $7.1 million, or $0.24 per diluted share, versus a net loss of $638,000, or $.02 per diluted share, for the first six months of the last fiscal year.
 
"I am very pleased with our results given the continuing challenges with the U.S. economy and our ability to overcome very tough shipment comparisons with the second quarter last fiscal year," said Winnebago Industries' Chairman and CEO Bob Olson. "During the second quarter last year, we had significantly ramped up our production to meet our dealers' increased demands for product as they grew their inventories from the lows experienced during the depths of the recession. Increased show traffic and retail sales within the past few months are indicative of an improved economy and consumer confidence level within the U.S. We are very pleased to see this positive dynamic in the marketplace as we enter the important spring market. We remain cautious, however, in light of the volatility of fuel prices due primarily to the violence and turmoil in the Middle East, as well as increasing commodity costs."
 
According to Winnebago Industries' President Randy Potts, the integration of SunnyBrook RV into Winnebago Industries' operations is progressing according to schedule. "SunnyBrook RV is now operating as Winnebago Industries Towables and is a separate subsidiary of the Company," said Potts. "We have been adding staff strategically within Winnebago Industries Towables to strengthen the SunnyBrook brand, while creating a separate and unique Winnebago brand. We plan to introduce new Winnebago towable products this summer and will soon begin to market these products to our Winnebago brand dealers. On the motorized side, we are seeing continued strength in our Class A gas and diesel products in the marketplace. We have also experienced a great deal of interest in our newly redesigned Class B ERA and will begin shipping them within the next few weeks."
 
Winnebago Industries' dealer inventory increased 7.8 percent compared to the end of the second quarter of Fiscal 2010, with 2,179 of the Company's Class A, B and C motor homes on dealers' lots at the end of the second quarter of Fiscal 2011. While Winnebago Industries' sales order backlog was 957 Class A, B and C motor homes at the end of the second quarter of Fiscal 2011, a decrease of 17.4 percent compared to the end of the second quarter of Fiscal 2010, the backlog was up 37.1 percent 
sequentially over the 698 units reported for the first quarter of Fiscal 2011.
 
Conference Call
Winnebago Industries, Inc. will conduct a conference call in conjunction with this release at 9 a.m. Central Time today, Thursday, March 17, 2011. 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://www.winnebagoind.com/investor.html. The event will be archived and available for replay for the next 90 days.
 
About Winnebago Industries
Winnebago Industries, Inc., The Most Recognized Name In Motor Homes®, is a leading U.S. manufacturer of recreation vehicles, which are used primarily in leisure travel and outdoor recreation activities. The Company builds quality motor homes, travel trailers and fifth wheel products under the Winnebago, Itasca, ERA and SunnyBrook brand names. Winnebago Industries has received the Quality Circle Award from the Recreation Vehicle Dealers Association every year since the award's inception in

 
 

1996. The Company's common stock is listed on the New York and Chicago Stock Exchanges and traded under the symbol WGO. Options for the Company's common stock are traded on the Chicago Board Options Exchange. For access to Winnebago Industries' investor relations material or to add your name to an automatic email list for Company news releases, visit, http://www.winnebagoind.com/investor.html.
 
This news release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements are inherently uncertain. A number of factors could cause actual results to differ materially from these statements, including, but not limited to interest rates and availability of credit, low consumer confidence, significant increase in repurchase obligations, inadequate liquidity or capital resources, availability and price of fuel, a further or continued slowdown in the economy, availability of chassis and other key component parts, sales order cancellations, slower than anticipated sales of new or existing products, new product introductions by competitors, the effect of global tensions, integration of operations relating to mergers and acquisitions activities and other factors. Additional information concerning certain risks and uncertainties that could cause actual results to differ materially from that projected or suggested is contained in the Company's filings with the Securities and Exchange Commission (SEC) over the last 12 months, copies of which are available from the SEC or from the Company upon request. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements contained in this release or to reflect any changes in the Company's expectations after the date of this release or any change in events, conditions or circumstances on which any statement is based, except as required by law.
# # #
 

 
 

Winnebago Industries, Inc.
Unaudited Consolidated Statements of Operations
(In thousands, except percent and per share data)
 
 
Quarter Ended
 
February 26, 2011
 
February 27, 2010
Net revenues
$
106,593
 
 
100.0
%
 
$
110,529
 
 
100.0
 %
Cost of goods sold
95,269
 
 
89.4
%
 
105,745
 
 
95.7
 %
Gross profit
11,324
 
 
10.6
%
 
4,784
 
 
4.3
 %
Operating expenses:
 
 
 
 
 
 
 
Selling
3,254
 
 
3.1
%
 
3,102
 
 
2.8
 %
General and administrative
4,020
 
 
3.8
%
 
3,540
 
 
3.2
 %
Total operating expenses
7,274
 
 
6.8
%
 
6,642
 
 
6.0
 %
Operating income (loss)
4,050
 
 
3.8
%
 
(1,858
)
 
(1.7
)%
Non-operating income
322
 
 
0.3
%
 
364
 
 
0.3
 %
Income (loss) before taxes
4,372
 
 
4.1
%
 
(1,494
)
 
(1.4
)%
Provision (benefit) for taxes
1,057
 
 
1.0
%
 
(2,200
)
 
(2.0
)%
Net income
$
3,315
 
 
3.1
%
 
$
706
 
 
0.6
 %
Income per common share:
 
 
 
 
 
 
 
Basic
$
0.11
 
 
 
 
$
0.02
 
 
 
Diluted
$
0.11
 
 
 
 
$
0.02
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
29,118
 
 
 
 
29,080
 
 
 
Diluted
29,120
 
 
 
 
29,091
 
 
 
 
 
 
Six Months Ended
 
February 26, 2011
 
February 27, 2010
Net revenues
$
230,304
 
 
100.0
 %
 
$
191,546
 
 
100.0
 %
Cost of goods sold
207,781
 
 
90.2
 %
 
186,238
 
 
97.2
 %
Gross profit
22,523
 
 
9.8
 %
 
5,308
 
 
2.8
 %
Operating expenses:
 
 
 
 
 
 
 
Selling
6,521
 
 
2.8
 %
 
6,331
 
 
3.3
 %
General and administrative
7,671
 
 
3.3
 %
 
6,812
 
 
3.6
 %
Gain on sale
(644
)
 
(0.3
)%
 
—
 
 
—
 %
Total operating expenses
13,548
 
 
5.9
 %
 
13,143
 
 
6.9
 %
Operating income (loss)
8,975
 
 
3.9
 %
 
(7,835
)
 
(4.1
)%
Non-operating income
474
 
 
0.2
 %
 
131
 
 
0.1
 %
Income (loss) before income taxes
9,449
 
 
4.1
 %
 
(7,704
)
 
(4.0
)%
Provision (benefit) for taxes
2,348
 
 
1.0
 %
 
(7,066
)
 
(3.7
)%
Net income (loss)
$
7,101
 
 
3.1
 %
 
$
(638
)
 
(0.3
)%
Income (loss) per common share:
 
 
 
 
 
 
 
Basic
$
0.24
 
 
 
 
$
(0.02
)
 
 
Diluted
$
0.24
 
 
 
 
$
(0.02
)
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
29,115
 
 
 
 
29,077
 
 
 
Diluted
29,118
 
 
 
 
29,088
 
 
 
 

 
 

Winnebago Industries, Inc.
Unaudited Consolidated Balance Sheets
(In thousands)
 
 
February 26,
2011
 
August 28,
2010
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
62,787
 
 
$
74,691
 
Receivables, net
20,870
 
 
18,798
 
Inventories
71,655
 
 
43,526
 
Prepaid expenses and other assets
4,828
 
 
4,570
 
Income taxes receivable
132
 
 
132
 
Total current assets
160,272
 
 
141,717
 
Property, plant, and equipment, net
24,427
 
 
25,677
 
Assets held for sale
1,201
 
 
4,254
 
Long-term investments
10,891
 
 
17,785
 
Investment in life insurance
23,254
 
 
23,250
 
Goodwill
1,228
 
 
—
 
Amortizable intangible assets
759
 
 
—
 
Other assets
16,878
 
 
14,674
 
Total assets
$
238,910
 
 
$
227,357
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
20,932
 
 
$
19,725
 
Income taxes payable
947
 
 
99
 
Accrued expenses
32,225
 
 
30,548
 
Total current liabilities
54,104
 
 
50,372
 
Long-term liabilities:
 
 
 
Unrecognized tax benefits
5,637
 
 
5,877
 
Postretirement health care and deferred compensation benefits, net of current portion
75,840
 
 
73,581
 
Total long-term liabilities
81,477
 
 
79,458
 
Stockholders' equity
103,329
 
 
97,527
 
Total liabilities and stockholders' equity
$
238,910
 
 
$
227,357
 
 

 
 

Winnebago Industries, Inc.
Unaudited Consolidated Statements of Cash Flows
(In thousands)
 
 
 
Six Months Ended
 
February 26,
2011
 
February 27,
2010
Operating activities:
 
 
 
Net income (loss)
$
7,101
 
 
$
(638
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation and amortization
2,845
 
 
3,296
 
Stock-based compensation
124
 
 
291
 
Deferred income taxes including valuation allowance
583
 
 
—
 
Postretirement benefit income and deferred compensation expense
690
 
 
624
 
Reduction for doubtful accounts
(10
)
 
(60
)
Increase in cash surrender value of life insurance policies
(300
)
 
(535
)
(Gain) loss on the sale or disposal of property
(708
)
 
1
 
Gain on life insurance
(372
)
 
—
 
Other
58
 
 
44
 
Change in assets and liabilities:
 
 
 
Inventories
(24,207
)
 
(12,974
)
Receivables and prepaid assets
(1,368
)
 
(8,347
)
Income taxes and unrecognized tax benefits
610
 
 
15,983
 
Accounts payable and accrued expenses
326
 
 
8,975
 
Postretirement and deferred compensation benefits
(1,854
)
 
(1,758
)
Net cash (used in) provided by operating activities
(16,482
)
 
4,902
 
 
 
 
 
Investing activities:
 
 
 
Proceeds from the sale of investments at par
6,450
 
 
4,700
 
Proceeds from life insurance
659
 
 
—
 
Purchases of property and equipment
(1,279
)
 
(943
)
Proceeds from the sale of property
3,793
 
 
46
 
Cash paid for acquisition, net of cash acquired
(4,694
)
 
—
 
Other
(461
)
 
(442
)
Net cash provided by investing activities
4,468
 
 
3,361
 
 
 
 
 
Financing activities:
 
 
 
Payments for purchases of common stock
(89
)
 
(249
)
Payments on ARS portfolio
—
 
 
(2,780
)
Proceeds from issuance of stock options
75
 
 
94
 
Other
124
 
 
(285
)
Net cash provided by (used in) financing activities
110
 
 
(3,220
)
 
 
 
 
Net (decrease) increase in cash and cash equivalents
(11,904
)
 
5,043
 
Cash and cash equivalents at beginning of period
74,691
 
 
36,566
 
Cash and cash equivalents at end of period
$
62,787
 
 
$
41,609
 
 
 
 
 
Supplement cash flow disclosure:
 
 
 
Income taxes paid
$
1,153
 
 
$
21
 
 

 
 

Winnebago Industries, Inc.
Unaudited Deliveries
 
Quarter Ended
 
Change
(In units)
February 26,
2011
Product
Mix %
 
February 27,
2010
Product
Mix %
 
Units
%
Change
Class A gas
331
 
36.4
%
 
378
 
34.1
%
 
(47
)
(12.4
)%
Class A diesel
218
 
24.0
%
 
254
 
22.9
%
 
(36
)
(14.2
)%
Total Class A
549
 
60.4
%
 
632
 
57.0
%
 
(83
)
(13.1
)%
Class B
—
 
—
%
 
64
 
5.8
%
 
(64
)
(100.0
)%
Class C
360
 
39.6
%
 
413
 
37.2
%
 
(53
)
(12.8
)%
Total motor homes
909
 
100.0
%
 
1,109
 
100.0
%
 
(200
)
(18.0
)%
 
 
 
 
 
 
 
 
 
Fifth wheel
21
 
24.7
%
 
—
 
—
%
 
21
 
 
Travel trailer
64
 
75.3
%
 
—
 
—
%
 
64
 
 
    Total towables
85
 
100.0
%
 
—
 
—
%
 
85
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended
 
Change
(In units)
February 26,
2011
Product
Mix %
 
February 27,
2010
Product
Mix %
 
Units
%
Change
Class A gas
720
 
35.6
%
 
613
 
32.2
%
 
107
 
17.5
 %
Class A diesel
488
 
24.1
%
 
434
 
22.8
%
 
54
 
12.4
 %
Total Class A
1,208
 
59.7
%
 
1,047
 
55.0
%
 
161
 
15.4
 %
Class B
1
 
0.0
%
 
126
 
6.6
%
 
(125
)
(99.2
)%
Class C
815
 
40.3
%
 
730
 
38.4
%
 
85
 
11.6
 %
Total motor homes
2,024
 
100.0
%
 
1,903
 
100.0
%
 
121
 
6.4
 %
 
 
 
 
 
 
 
 
 
Fifth wheel
21
 
24.7
%
 
—
 
—
%
 
21
 
 
Travel trailer
64
 
75.3
%
 
—
 
—
%
 
64
 
 
    Total towables
85
 
100.0
%
 
—
 
—
%
 
85
 
 
 
Winnebago Industries, Inc.
Unaudited Backlog and Dealer Inventory
 
As Of
 
 
 
February 26, 2011
 
February 27, 2010
 
Increase
 
Units
% (1)
 
Units
% (1)
 
(Decrease)
Class A gas
253
 
26.4
%
 
372
 
32.1
%
 
(119
)
(32.0
)%
Class A diesel
157
 
16.4
%
 
263
 
22.7
%
 
(106
)
(40.3
)%
Total Class A
410
 
42.8
%
 
635
 
54.8
%
 
(225
)
(35.4
)%
Class B
82
 
8.6
%
 
16
 
1.4
%
 
66
 
412.5
 %
Class C
465
 
48.6
%
 
508
 
43.8
%
 
(43
)
(8.5
)%
    Total motor home backlog
957
 
100.0
%
 
1,159
 
100.0
%
 
(202
)
(17.4
)%
 
 
 
 
 
 
 
 
 
Total approximate motor home revenue dollars (in 000's) (2)
$
92,782
 
 
 
$
110,916
 
 
 
$
(18,134
)
(16.3
)%
Motor home dealer inventory (units)
2,179
 
 
 
2,022
 
 
 
157
 
7.8
 %
 
 
 
 
 
 
 
 
 
Fifth wheel
87
 
57.6
%
 
—
 
—
%
 
87
 
 
Travel trailer
64
 
42.4
%
 
—
 
—
%
 
64
 
 
    Total towable backlog
151
 
100.0
%
 
—
 
—
%
 
151
 
 
 
 
 
 
 
 
 
 
 
Total approximate towable revenue dollars (in 000's) (2)
$
3,551
 
 
 
$
—
 
 
 
$
3,551
 
100.0
 %
Towable dealer inventory (units)
905
 
 
 
—
 
 
 
905
 
100.0
 %
 
 
 
 
 
 
 
 
 
(1) Percentages may not add due to rounding differences.
(2) We include in our backlog all accepted purchase orders from dealers to be shipped within the next six months. Orders in backlog can be canceled or postponed at the option of the purchaser at any time without penalty and, therefore, backlog may not necessarily be an accurate measure of future sales

 

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