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EX-99.1 - EXHIBIT - WINNEBAGO INDUSTRIES INC | a8kq22014earningsrelease.pdf |
8-K - 8-K - WINNEBAGO INDUSTRIES INC | a8kq22014earningsrelease.htm |
News Release |
Contact: Sheila Davis - PR/IR Mgr. - 641-585-6803 - sdavis@wgo.net
Winnebago Industries Announces Second-Quarter Fiscal 2014 Results
Revenue Increased 29%, Contributing to Earnings Per Share Growth of 59%
Despite Weather-Related Challenges
FOREST CITY, IOWA, March 27, 2014 - Winnebago Industries, Inc. (NYSE:WGO), a leading United States (U.S.) recreation vehicle manufacturer, today reported financial results for the Company's second quarter fiscal period ended March 1, 2014.
Second-Quarter Fiscal 2014 Results
Revenues for the Fiscal 2014 second quarter were $228.8 million, an increase of 29.2%, versus $177.2 million for the Fiscal 2013 second quarter. Comparing the Fiscal 2014 second quarter to the same period of Fiscal 2013, operating income rose 58.2% to $14.0 million, net income grew 52.6% to $9.6 million, and diluted earnings per share increased 59.1% to $0.35 from $0.22.
Earnings growth in the second quarter was driven by motorhome unit growth, coupled with gross margin improvement and incremental leverage of operating expenses. However, the improvement in earnings was mitigated due to various factors, including severe winter weather conditions that caused inefficiencies and brought about greater expenses.
Revenue growth in the second quarter was primarily comprised of motorhome unit growth of 44.8%, partially offset by lower motorhome average selling prices (ASPs) of 9.8% as a result of product mix. Year over year, second-quarter Class A unit deliveries grew 26.8%, Class B unit deliveries improved 108.4% and Class C unit deliveries increased 62.4%.
Additionally, second-quarter towable unit deliveries grew 4.9% and towable ASPs improved 9.4%, contributing to towable revenue growth of 15.4% and a positive earnings contribution. Year-over-year, second-quarter travel trailer towable unit deliveries increased 5.7% and fifth wheel towable unit deliveries increased 1.8%.
Gross profit as a percentage of revenues improved to 10.0% in the Fiscal 2014 second quarter compared to 9.7% in the same period of Fiscal 2013, an improvement of 30 basis points. The increase was primarily attributable to greater delivery volumes, partially offset by higher costs due to weather-related production delays, a temporary component outsourcing program, and higher utility expenses.
Operating expenses as a percentage of revenues were leveraged during the quarter and contributed 50 basis points to the improvement in operating income margin, when excluding a gain on a sale of real estate of $629,000.
As previously announced, Winnebago received a large incremental rental order from Apollo Motorhome Holidays, an RV rental company, to be delivered during the Company’s Fiscal 2014 third quarter. The order is for approximately 500 units, however, Winnebago has contractually agreed to repurchase up to two thirds of the units at specified prices after one season of rental use. Therefore, only one third of the order will be reported as typical motorhome sales during the third quarter. The other two thirds of the units will be accounted for as lease revenue on a straight line basis over the period the units are held by Apollo due to the repurchase option. As a result, only one third of these units are reported in unit order backlog as of March 1, 2014.
First Six-Months Fiscal 2014 Results
Revenues for the 26 weeks of Fiscal 2014 were $451.5 million, an increase of 21.8%, from $370.7 million for the 27 weeks of Fiscal 2013. The sales growth was primarily comprised of motorhome unit growth of 37.5%, partially offset by lower motorhome ASPs of 10.0% as a result of product mix. Comparing the first half of Fiscal 2014 to the same period of Fiscal 2013, operating income rose 59.6% to $30.0 million, net income grew 51.6% to $20.7 million, and diluted earnings per increased 54.2% to $0.74 from $0.48.
Share Repurchase Update
During the Fiscal 2014 second quarter, the Company repurchased 615,715 shares of its common stock for approximately $15.9 million, at an average price of $25.86 per share. At March 1, 2014, the Company had authority to repurchase shares worth up to $18.4 million remaining under its stock repurchase program, which has no time restriction.
Management Comments
Chairman, CEO and President Randy Potts commented, “We achieved strong results for the quarter, notwithstanding challenges associated with the severe winter weather. Although we scheduled four additional production days to satisfy motorized backlog, the severe weather conditions caused numerous work delays and closures at both our Iowa and Indiana facilities, which led to the loss of multiple production days, and contributed to increased expenses due to inefficiencies that limited margin expansion and earnings growth. The improved results are testimony to the hard work of our team and improved dealer and retail consumer demand for our products.
"The Winnebago brand was recognized as the number one selling motorhome brand in 2013 by Statistical Surveys and has received this outstanding recognition every year since motorhome retail registrations were first reported in 1974. With favorable demand for our strong product lineup, including several new product introductions, we are optimistic for continued growth within the motorhome market."
Chief Financial Officer Sarah Nielsen said, “Our operating cash flow for the second quarter was impacted by a receivables increase of approximately $27 million. The harsh winter weather conditions caused significant disruptions to our independent transportation company, which prevented them from delivering product timely to our dealers, and as a result increased our receivables. We anticipate positive operating cash flow in the third quarter as those receivables are reduced.”
Conference Call
Winnebago Industries, Inc. will conduct a conference call to discuss second-quarter results at 9 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://www.wgo.net/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 Motorhomes®", is a leading U.S. manufacturer of recreation vehicles, which are used primarily in leisure travel and outdoor recreation activities. The Company and its subsidiary build quality motorhomes, travel trailers, fifth wheel products and transit buses under the Winnebago, Itasca, Winnebago Touring Coach, SunnyBrook and Metro brand names. Winnebago Industries has received the Quality Circle Award from the Recreation Vehicle Dealers Association every year since 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.wgo.net/investor.html.
This press 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 availability of chassis and other key component parts, increases in interest rates, availability of credit, low consumer confidence, significant increase in repurchase obligations, inadequate liquidity or capital resources, availability and price of fuel, a slowdown in the economy, increased material and component costs, sales order cancellations, slower than anticipated sales of new or existing products, new product introductions by competitors, a breach of our information technology systems, 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.
Consolidated Statements of Operations
(In thousands, except percent and per share data)
(Unaudited)
Three Months Ended | |||||||||||||
March 1, 2014 | March 2, 2013 | ||||||||||||
Net revenues | $ | 228,811 | 100.0 | % | $ | 177,166 | 100.0 | % | |||||
Cost of goods sold | 205,966 | 90.0 | % | 159,975 | 90.3 | % | |||||||
Gross profit | 22,845 | 10.0 | % | 17,191 | 9.7 | % | |||||||
Operating expenses | |||||||||||||
Selling | 4,489 | 2.0 | % | 3,831 | 2.2 | % | |||||||
General and administrative | 4,949 | 2.2 | % | 4,488 | 2.5 | % | |||||||
Gain on sale of real estate | (629 | ) | (0.3 | )% | — | — | % | ||||||
Total operating expenses | 8,809 | 3.8 | % | 8,319 | 4.7 | % | |||||||
Operating income | 14,036 | 6.1 | % | 8,872 | 5.0 | % | |||||||
Non-operating expense | (74 | ) | — | % | (19 | ) | — | % | |||||
Income before income taxes | 13,962 | 6.1 | % | 8,853 | 5.0 | % | |||||||
Provision for taxes | 4,369 | 1.9 | % | 2,568 | 1.4 | % | |||||||
Net income | $ | 9,593 | 4.2 | % | $ | 6,285 | 3.5 | % | |||||
Income per common share: | |||||||||||||
Basic | $ | 0.35 | $ | 0.22 | |||||||||
Diluted | $ | 0.35 | $ | 0.22 | |||||||||
Weighted average common shares outstanding: | |||||||||||||
Basic | 27,595 | 28,084 | |||||||||||
Diluted | 27,724 | 28,191 |
Percentages may not add due to rounding differences.
Six Months(1) Ended | |||||||||||||
March 1, 2014 | March 2, 2013 | ||||||||||||
Net revenues | $ | 451,481 | 100.0 | % | $ | 370,720 | 100.0 | % | |||||
Cost of goods sold | 402,674 | 89.2 | % | 332,782 | 89.8 | % | |||||||
Gross profit | 48,807 | 10.8 | % | 37,938 | 10.2 | % | |||||||
Operating expenses | |||||||||||||
Selling | 8,822 | 2.0 | % | 8,792 | 2.4 | % | |||||||
General and administrative | 10,572 | 2.3 | % | 10,300 | 2.8 | % | |||||||
(Gain) loss on sale of real estate | (629 | ) | (0.1 | )% | 28 | — | % | ||||||
Total operating expenses | 18,765 | 4.2 | % | 19,120 | 5.2 | % | |||||||
Operating income | 30,042 | 6.7 | % | 18,818 | 5.1 | % | |||||||
Non-operating income | 17 | — | % | 595 | 0.2 | % | |||||||
Income before income taxes | 30,059 | 6.7 | % | 19,413 | 5.2 | % | |||||||
Provision for taxes | 9,320 | 2.1 | % | 5,737 | 1.5 | % | |||||||
Net income | $ | 20,739 | 4.6 | % | $ | 13,676 | 3.7 | % | |||||
Income per common share: | |||||||||||||
Basic | $ | 0.75 | $ | 0.49 | |||||||||
Diluted | $ | 0.74 | $ | 0.48 | |||||||||
Weighted average common shares outstanding: | |||||||||||||
Basic | 27,723 | 28,196 | |||||||||||
Diluted | 27,850 | 28,280 |
Percentages may not add due to rounding differences.
(1) The six months ended March 1, 2014 and March 2, 2013 contained 26 weeks and 27 weeks, respectively.
Winnebago Industries, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
March 1, 2014 | August 31, 2013 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 16,258 | $ | 64,277 | |||
Receivables, net | 69,628 | 29,145 | |||||
Inventories | 124,289 | 112,541 | |||||
Prepaid expenses and other assets | 8,029 | 8,277 | |||||
Income taxes receivable and prepaid | 1,061 | 1,868 | |||||
Deferred income taxes | 8,264 | 7,742 | |||||
Total current assets | 227,529 | 223,850 | |||||
Total property and equipment, net | 20,411 | 20,266 | |||||
Long-term investments | — | 2,108 | |||||
Investment in life insurance | 25,587 | 25,051 | |||||
Deferred income taxes | 24,087 | 25,649 | |||||
Goodwill | 1,228 | 1,228 | |||||
Other assets | 10,284 | 10,993 | |||||
Total assets | $ | 309,126 | $ | 309,145 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 28,867 | $ | 28,142 | |||
Accrued expenses | 40,769 | 42,212 | |||||
Total current liabilities | 69,636 | 70,354 | |||||
Long-term liabilities: | |||||||
Unrecognized tax benefits | 3,641 | 3,988 | |||||
Postretirement health care and deferred compensation benefits | 59,611 | 64,074 | |||||
Total long-term liabilities | 63,252 | 68,062 | |||||
Stockholders' equity | 176,238 | 170,729 | |||||
Total liabilities and stockholders' equity | $ | 309,126 | $ | 309,145 |
Winnebago Industries, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months (1) Ended | |||||||
March 1, 2014 | March 2, 2013 | ||||||
Operating activities: | |||||||
Net income | $ | 20,739 | $ | 13,676 | |||
Adjustments to reconcile net income to net cash used in operating activities: | |||||||
Depreciation and amortization | 1,966 | 2,178 | |||||
LIFO expense | 608 | 551 | |||||
Stock-based compensation | 1,388 | 996 | |||||
Deferred income taxes including valuation allowance | (152 | ) | (1,550 | ) | |||
Postretirement benefit income and deferred compensation expenses | (405 | ) | 284 | ||||
(Benefit) provision for doubtful accounts | (1 | ) | 6 | ||||
Gain on sale of property | (702 | ) | (26 | ) | |||
Gain on life insurance | — | (509 | ) | ||||
Increase in cash surrender value of life insurance policies | (440 | ) | (547 | ) | |||
Change in assets and liabilities: | |||||||
Inventories | (12,356 | ) | (37,401 | ) | |||
Receivables, prepaid and other assets | (40,056 | ) | (6,334 | ) | |||
Income taxes and unrecognized tax benefits | 1,269 | 1,618 | |||||
Accounts payable and accrued expenses | 536 | 3,052 | |||||
Postretirement and deferred compensation benefits | (1,924 | ) | (2,136 | ) | |||
Net cash used in operating activities | (29,530 | ) | (26,142 | ) | |||
Investing activities: | |||||||
Proceeds from the sale of investments, at par | 2,350 | 250 | |||||
Proceeds from life insurance | — | 974 | |||||
Purchases of property and equipment | (3,772 | ) | (2,443 | ) | |||
Proceeds from the sale of property | 2,392 | 614 | |||||
Payments of COLI borrowings | — | (1,371 | ) | ||||
Other | (105 | ) | 151 | ||||
Net cash provided by (used in) investing activities | 865 | (1,825 | ) | ||||
Financing activities: | |||||||
Payments for purchase of common stock | (21,484 | ) | (8,367 | ) | |||
Proceeds from exercise of stock options | 2,080 | — | |||||
Other | 50 | (114 | ) | ||||
Net cash used in financing activities | (19,354 | ) | (8,481 | ) | |||
Net decrease in cash and cash equivalents | (48,019 | ) | (36,448 | ) | |||
Cash and cash equivalents at beginning of period | 64,277 | 62,683 | |||||
Cash and cash equivalents at end of period | $ | 16,258 | $ | 26,235 | |||
Supplemental cash flow disclosure: | |||||||
Income taxes paid, net of refunds | $ | 8,200 | $ | 5,670 |
(1) The six months ended March 1, 2014 and March 2, 2013 contained 26 weeks and 27 weeks, respectively.
Winnebago Industries, Inc. | ||||||||||||||
Deliveries | ||||||||||||||
Quarter Ended | Change | |||||||||||||
(In units) | March 1, 2014 | Product Mix % (1) | March 2, 2013 | Product Mix % (1) | Units | % | ||||||||
Class A gas | 589 | 28.7 | % | 503 | 35.4 | % | 86 | 17.1 | % | |||||
Class A diesel | 456 | 22.2 | % | 321 | 22.6 | % | 135 | 42.1 | % | |||||
Total Class A | 1,045 | 50.9 | % | 824 | 58.1 | % | 221 | 26.8 | % | |||||
Class B | 198 | 9.6 | % | 95 | 6.7 | % | 103 | 108.4 | % | |||||
Class C | 812 | 39.5 | % | 500 | 35.2 | % | 312 | 62.4 | % | |||||
Total motorhomes | 2,055 | 100.0 | % | 1,419 | 100.0 | % | 636 | 44.8 | % | |||||
Travel trailer | 463 | 80.5 | % | 438 | 79.9 | % | 25 | 5.7 | % | |||||
Fifth wheel | 112 | 19.5 | % | 110 | 20.1 | % | 2 | 1.8 | % | |||||
Total towables | 575 | 100.0 | % | 548 | 100.0 | % | 27 | 4.9 | % |
(1) Percentages may not add due to rounding differences.
Six Months(1) Ended | Change | |||||||||||||
(In units) | March 1, 2014 | Product Mix % (2) | March 2, 2013 | Product Mix % (1) | Units | % | ||||||||
Class A gas | 1,299 | 32.0 | % | 1,123 | 38.0 | % | 176 | 15.7 | % | |||||
Class A diesel | 853 | 21.0 | % | 666 | 22.6 | % | 187 | 28.1 | % | |||||
Total Class A | 2,152 | 53.0 | % | 1,789 | 60.6 | % | 363 | 20.3 | % | |||||
Class B | 300 | 7.4 | % | 185 | 6.3 | % | 115 | 62.2 | % | |||||
Class C | 1,608 | 39.6 | % | 979 | 33.2 | % | 629 | 64.2 | % | |||||
Total motor homes | 4,060 | 100.0 | % | 2,953 | 100.0 | % | 1,107 | 37.5 | % | |||||
Travel trailer | 870 | 82.2 | % | 846 | 76.6 | % | 24 | 2.8 | % | |||||
Fifth wheel | 189 | 17.8 | % | 259 | 23.4 | % | (70 | ) | (27.0 | )% | ||||
Total towables | 1,059 | 100.0 | % | 1,105 | 100.0 | % | (46 | ) | (4.2 | )% |
(1) The six months ended March 1, 2014 and March 2, 2013 contained 26 weeks and 27 weeks, respectively.
(2) Percentages may not add due to rounding differences.
Backlog | |||||||||||||||||
As Of | Change | ||||||||||||||||
March 1, 2014 | March 2, 2013 | ||||||||||||||||
Units | % (1) | Units | % (1) | Units | % | ||||||||||||
Class A gas | 1,129 | 38.9 | % | 1,216 | 44.2 | % | (87 | ) | (7.2 | )% | |||||||
Class A diesel | 274 | 9.4 | % | 375 | 13.6 | % | (101 | ) | (26.9 | )% | |||||||
Total Class A | 1,403 | 48.4 | % | 1,591 | 57.8 | % | (188 | ) | (11.8 | )% | |||||||
Class B | 274 | 9.4 | % | 121 | 4.4 | % | 153 | 126.4 | % | ||||||||
Class C | 1,223 | 42.2 | % | 1,040 | 37.8 | % | 183 | 17.6 | % | ||||||||
Total motorhome backlog(2) | 2,900 | 100.0 | % | 2,752 | 100.0 | % | 148 | 5.4 | % | ||||||||
Travel trailer | 169 | 82.0 | % | 325 | 85.3 | % | (156 | ) | (48.0 | )% | |||||||
Fifth wheel | 37 | 18.0 | % | 56 | 14.7 | % | (19 | ) | (33.9 | )% | |||||||
Total towable backlog (2) | 206 | 100.0 | % | 381 | 100.0 | % | (175 | ) | (45.9 | )% | |||||||
Total approximate backlog revenue dollars (in 000's): | |||||||||||||||||
Motorhome | $ | 260,095 | $ | 277,270 | $ | (17,175 | ) | (6.2 | )% | ||||||||
Towable | 4,853 | 8,105 | (3,252 | ) | (40.1 | )% |
(1) | Percentages may not add due to rounding differences. |
(2) | Our backlog includes all accepted 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 and, therefore, backlog may not necessarily be an accurate measure of future sales. |
Dealer Inventory | ||||||||||
Units As Of | Change | |||||||||
March 1, 2014 | March 2, 2013 | Units | % | |||||||
Motorhomes | 3,907 | 2,392 | 1,515 | 63.3 | % | |||||
Towables | 1,772 | 1,775 | (3 | ) | (0.2 | )% |