WINNEBAGO INDUSTRIES INC - FORM 8-K - EX-99.1 - 3RD QUARTER EARNINGS RELEASE FOR PERIOD ENDING MAY 30 2015 - June 25, 2015

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News Release
Contact: Samantha Dugan - Investor Relations - 641-585-6160 - sdugan@wgo.net
Media Contact: Sam Jefson - Public Relations Specialist - 641-585-6803 - sjefson@wgo.net

WINNEBAGO INDUSTRIES ANNOUNCES THIRD QUARTER FISCAL 2015 RESULTS
- Strong Quarterly Operating Cash Flow Generation of $52.6 Million -
-- Board of Directors Approve Quarterly Cash Dividend of $0.09 Per Share --

FOREST CITY, IOWA, June 25, 2015 - Winnebago Industries, Inc. (NYSE:WGO), a leading United States recreation vehicle manufacturer, today reported financial results for the Company's third quarter of Fiscal 2015.

Third Quarter Fiscal 2015 Results
Revenues for the Fiscal 2015 third quarter ended May 30, 2015, were $266.5 million, an increase of 7.6%, versus $247.7 million for the Fiscal 2014 period. Operating income was $16.1 million for the current quarter compared to $15.6 million in the third quarter of last year. Fiscal 2015 third quarter net income was $11.5 million, or $0.43 per diluted share, versus $11.4 million, or $0.42 per diluted share, in the same period last year.

Gross margin improved on a sequential quarter basis as motorized manufacturing inefficiencies moderated. However, on a year-over-year basis gross margin was slightly lower, a result of costs related to inefficiencies, partly offset by improved towable results. Operating expenses increased in the third quarter of Fiscal 2015 compared to the third quarter of Fiscal 2014 and included $0.8 million of incremental general and administrative expenses associated with two previously disclosed strategic initiatives related to Enterprise Resource Planning (ERP) implementation and strategic sourcing, as well as $0.5 million for the impairment of fixed assets in relation to the Company’s corporate plane, which is being held for sale. Additionally, the Fiscal 2014 third quarter included a gain on life insurance of $0.7 million.
 
Compared to the same period of last year, motorhome revenues increased 7.4% in the Fiscal 2015 third quarter, primarily a result of motorhome unit shipment growth of 11.4%, partly offset by lower average selling price (ASP) of 3.1%. In the Fiscal 2015 period, motorized unit volume growth was partly attributable to a greater level of units recognized as revenue from the Apollo rental program compared to the Fiscal 2014 third quarter, as the 2015 rental program did not impose a repurchase obligation on Winnebago. In the Fiscal 2014 third quarter, a majority of the Apollo rental units were recognized as operating leases due to the repurchase obligation. Year over year, in the Fiscal 2015 third quarter, towable revenue grew 15.9%, comprised of a 12.4% increase in ASP and 2.1% growth in unit shipments.

First Nine Months Fiscal 2015 Results
Revenues for the first nine months of Fiscal 2015 were $725.5 million, an increase of 3.8%, from $699.2 million for the same period of Fiscal 2014. The sales growth was primarily comprised of motorhome unit growth of 5.3% and towable ASP and unit growth of 11.6% and 6.0%, respectively. Net income in the Fiscal 2015 first nine months was $29.5 million, or $1.09 per diluted share, versus $32.1 million, or $1.16 per diluted share, last year. Winnebago motorhome retail registrations increased 12% on a trailing 12-month basis, while Winnebago towable retail registrations increased 8% on a trailing 12-month basis, based on internally reported retail information.






Quarterly Cash Dividend
On June 17, 2015, the Company’s board of directors approved a quarterly cash dividend of $0.09 per share payable on August 5, 2015 to common stockholders of record at the close of business on July 22, 2015.

Management Comments
Chairman, CEO and President Randy Potts commented, “Year over year, third quarter results came in quite strong, despite costs related to our two strategic initiatives, an impairment charge and the absence of the life insurance gain from last year. Our continued investment in an ERP system and strategic sourcing project are progressing on schedule, and while they have an impact on our near-term earnings, we anticipate they will benefit us in the future through improved efficiencies. We also made additional investments to expand motorized capacity through the purchase of a facility in Waverly, Iowa. In addition, to further our commitment to our towables business, we purchased our previously leased towables assembly facilities in Middlebury, Indiana.

“We are pleased with growth of 11% in our motorized bookings over the trailing twelve months, which is aligned with our retail registration growth over the same period. We are also pleased with the continued impressive performance by our towables group where we experienced six consecutive quarters of profitability, including growth in both revenues and operating income. With our lineup of industry leading recreation vehicles, coupled with favorable consumer demand and RVIA’s current projection for further industry growth through calendar 2016, we believe we are well positioned to generate improved financial results.”

Chief Financial Officer Sarah Nielsen added, “By using $34 million of cash from operations in the first six months of Fiscal 2015, primarily through investments in inventory and receivables, we were able to generate strong operating cash flow of $52.6 million in the third quarter resulting in cash provided by operating activities of $18.6 million year to date compared to $10.2 million this time last year. Meanwhile, notwithstanding $9.0 million of capital expenditures during the third quarter largely attributable to the purchase of facilities in Indiana and Iowa, we ended the quarter with no debt and a cash position of $49.2 million. We remain on target for planned capital expenditures of $15 to $20 million for this fiscal year.”

Conference Call
Winnebago Industries, Inc. will conduct a conference call to discuss third quarter Fiscal 2015 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://investor.wgo.net. 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 motorhomes, travel trailers, fifth wheel products, and transit buses. 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 increases in interest rates, availability of credit, low consumer confidence, availability of labor, 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, 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 merger and acquisition activities, unexpected expenses related to ERP and Strategic Sourcing projects, compliance with environmental or other regulatory requirements 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 Income
(In thousands, except percent and per share data)

 
Quarter Ended
 
May 30, 2015
 
May 31, 2014
Net revenues
$
266,510

 
100.0
%
 
$
247,747

 
100.0
%
Cost of goods sold
238,327

 
89.4
%
 
221,266

 
89.3
%
Gross profit
28,183

 
10.6
%
 
26,481

 
10.7
%
Operating expenses:
 
 
 
 
 
 
 
Selling
5,150

 
1.9
%
 
4,887

 
2.0
%
General and administrative
6,453

 
2.4
%
 
6,005

 
2.4
%
Impairment on fixed assets
462

 
0.2
%
 
—

 
—
%
Total operating expenses
12,065

 
4.5
%
 
10,892

 
4.4
%
Operating income
16,118

 
6.0
%
 
15,589

 
6.3
%
Non-operating income
—

 
—
%
 
735

 
0.3
%
Income before income taxes
16,118

 
6.0
%
 
16,324

 
6.6
%
Provision for taxes
4,616

 
1.7
%
 
4,939

 
2.0
%
Net income
$
11,502

 
4.3
%
 
$
11,385

 
4.6
%
Income per common share:
 
 
 
 
 
 
 
Basic
$
0.43

 
 
 
$
0.42

 
 
Diluted
$
0.43

 
 
 
$
0.42

 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
26,932

 
 
 
27,209

 
 
Diluted
27,030

 
 
 
27,319

 
 

Percentages may not add due to rounding differences.


 
Nine Months Ended
 
May 30, 2015
 
May 31, 2014
Net revenues
$
725,456

 
100.0
%
 
$
699,228

 
100.0
 %
Cost of goods sold
648,629

 
89.4
%
 
623,940

 
89.2
 %
Gross profit
76,827

 
10.6
%
 
75,288

 
10.8
 %
Operating expenses:
 
 
 
 
 
 
 
Selling
14,703

 
2.0
%
 
13,709

 
2.0
 %
General and administrative
19,154

 
2.6
%
 
16,577

 
2.4
 %
Impairment (gain) on fixed assets
462

 
0.1
%
 
(629
)
 
(0.1
)%
Total operating expenses
34,319

 
4.7
%
 
29,657

 
4.2
 %
Operating income
42,508

 
5.9
%
 
45,631

 
6.5
 %
Non-operating income
35

 
—
%
 
752

 
0.1
 %
Income before income taxes
42,543

 
5.9
%
 
46,383

 
6.6
 %
Provision for taxes
13,050

 
1.8
%
 
14,259

 
2.0
 %
Net income
$
29,493

 
4.1
%
 
$
32,124

 
4.6
 %
Income per common share:
 
 
 
 
 
 
 
Basic
$
1.09

 
 
 
$
1.17

 
 
Diluted
$
1.09

 
 
 
$
1.16

 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
26,942

 
 
 
27,552

 
 
Diluted
27,042

 
 
 
27,666

 
 

Percentages may not add due to rounding differences.





Winnebago Industries, Inc.
Unaudited Consolidated Balance Sheets
(In thousands)

 
May 30,
2015
 
Aug 30,
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
49,215

 
$
57,804

Receivables, net
65,198

 
69,699

Inventories
122,575

 
112,848

Net investment in operating leases
—

 
15,978

Prepaid expenses and other assets
8,450

 
5,718

Income taxes receivable and prepaid
190

 
5

Deferred income taxes
5,907

 
9,641

Total current assets
251,535

 
271,693

Total property and equipment, net
34,646

 
25,135

Investment in life insurance
25,843

 
25,126

Deferred income taxes
24,164

 
24,029

Goodwill
1,228

 
1,228

Other assets
9,329

 
11,091

Total assets
$
346,745

 
$
358,302

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
29,547

 
$
33,111

Income taxes payable
—

 
2,927

Accrued expenses
44,606

 
47,631

Operating lease repurchase obligations
—

 
16,050

Total current liabilities
74,153

 
99,719

Non-current liabilities:
 
 
 
Unrecognized tax benefits
2,619

 
3,024

Postretirement health care and deferred compensation benefits, net of current portion
59,211

 
62,811

Total non-current liabilities
61,830

 
65,835

Stockholders' equity
210,762

 
192,748

Total liabilities and stockholders' equity
$
346,745

 
$
358,302





Winnebago Industries, Inc.
Unaudited Consolidated Statements of Cash Flows
(In thousands)
 
Nine Months Ended
 
May 30,
2015
May 31,
2014
Operating activities:
 
 
Net income
$
29,493

$
32,124

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
3,284

2,962

LIFO expense
1,041

934

Asset impairment
462

—

Stock-based compensation
1,739

1,694

Deferred income taxes
2,793

464

Postretirement benefit income and deferred compensation expenses
(587
)
(752
)
Provision for doubtful accounts
—

1

Gain on disposal of property
(20
)
(712
)
Gain on life insurance
—

(726
)
Increase in cash surrender value of life insurance policies
(657
)
(651
)
Change in assets and liabilities:
 
 
Inventories
(10,768
)
(6,128
)
Receivables, prepaid and other assets
3,581

(26,349
)
Investment in operating leases, net of repurchase obligations
(72
)
(429
)
Income taxes and unrecognized tax benefits
(2,375
)
1,986

Accounts payable and accrued expenses
(6,308
)
8,851

Postretirement and deferred compensation benefits
(3,049
)
(3,080
)
Net cash provided by operating activities
18,557

10,189

 
 
 
Investing activities:
 
 
Proceeds from the sale of investments
—

2,350

Proceeds from life insurance
—

1,737

Purchases of property and equipment
(14,174
)
(7,005
)
Proceeds from the sale of property
43

2,403

Other
435

(1,123
)
Net cash used in investing activities
(13,696
)
(1,638
)
 
 
 
Financing activities:
 
 
Payments for purchase of common stock
(6,166
)
(24,324
)
Payments of cash dividends
(7,324
)
—

Proceeds from exercise of stock options
—

2,080

Borrowings on loans
22,000

—

Repayment of loans
(22,000
)
—

Other
40

(94
)
Net cash used in financing activities
(13,450
)
(22,338
)
 
 
 
Net decrease in cash and cash equivalents
(8,589
)
(13,787
)
Cash and cash equivalents at beginning of period
57,804

64,277

Cash and cash equivalents at end of period
$
49,215

$
50,490

 
 
 
Supplemental cash flow disclosure:
 
 
Income taxes paid
$
12,631

$
11,814

Interest paid
$
10

$
—







Winnebago Industries, Inc.
Unaudited Deliveries
 
Quarter Ended
 
Change
(In units)
May 30,
2015
Product
Mix % (1)
 
May 31,
2014
Product
Mix % (1)
 
Units
%
Change
Class A gas
601

23.2
%
 
786

33.7
%
 
(185
)
(23.5
)%
Class A diesel
285

11.0
%
 
280

12.0
%
 
5

1.8
 %
Total Class A
886

34.1
%
 
1,066

45.7
%
 
(180
)
(16.9
)%
Class B
270

10.4
%
 
224

9.6
%
 
46

20.5
 %
Class C
1,440

55.5
%
 
1,041

44.7
%
 
399

38.3
 %
Total motorhomes
2,596

100.0
%
 
2,331

100.0
%
 
265

11.4
 %
 
 
 
 
 
 
 
 
 
Travel trailer
598

80.6
%
 
598

82.3
%
 
—

—
 %
Fifth wheel
144

19.4
%
 
129

17.7
%
 
15

11.6
 %
    Total Towables
742

100.0
%
 
727

100.0
%
 
15

2.1
 %
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
Change
(In units)
May 30,
2015
Product
Mix % (1)
 
May 31,
2014
Product
Mix % (1)
 
Units
%
Change
Class A gas
1,740

25.9
%
 
2,085

32.6
%
 
(345
)
(16.5
)%
Class A diesel
883

13.1
%
 
1,133

17.7
%
 
(250
)
(22.1
)%
Total Class A
2,623

39.0
%
 
3,218

50.4
%
 
(595
)
(18.5
)%
Class B
735

10.9
%
 
524

8.2
%
 
211

40.3
 %
Class C
3,373

50.1
%
 
2,649

41.4
%
 
724

27.3
 %
Total motorhomes
6,731

100.0
%
 
6,391

100.0
%
 
340

5.3
 %
 
 
 
 
 
 
 
 
 
Travel trailer
1,567

82.8
%
 
1,468

82.2
%
 
99

6.7
 %
Fifth wheel
326

17.2
%
 
318

17.8
%
 
8

2.5
 %
Total Towables
1,893

100.0
%
 
1,786

100.0
%
 
107

6.0
 %
(1) Percentages may not add due to rounding differences.

Unaudited Backlog
 
As Of
 
Change
 
May 30, 2015
 
May 31, 2014
 
 
%
 
Units
% (1)
 
Units
% (1)
 
Units
Change
Class A gas
584

25.6
%
 
752

31.9
%
 
(168
)
(22.3
)%
Class A diesel
157

6.9
%
 
280

11.9
%
 
(123
)
(43.9
)%
Total Class A
741

32.5
%
 
1,032

43.8
%
 
(291
)
(28.2
)%
Class B
243

10.7
%
 
264

11.2
%
 
(21
)
(8.0
)%
Class C
1,295

56.8
%
 
1,061

45.0
%
 
234

22.1
 %
Total motorhome backlog(2)
2,279

100.0
%
 
2,357

100.0
%
 
(78
)
(3.3
)%
 
 
 
 
 
 
 
 
 
Travel trailer
155

86.6
%
 
224

73.9
%
 
(69
)
(30.8
)%
Fifth wheel
24

13.4
%
 
79

26.1
%
 
(55
)
(69.6
)%
    Total towable backlog (2)
179

100.0
%
 
303

100.0
%
 
(124
)
(40.9
)%
 
 
 
 
 
 
 
 
 
Total approximate backlog revenue dollars (in 000's):
 
 
 
 
 
 
Motorhomes
$
196,915

 
 
$
219,676

 
 
$
(22,761
)
(10.4
)%
Towables
4,512

 
 
6,072

 
 
(1,560
)
(25.7
)%
(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 at any time without penalty and, therefore, backlog may not necessarily be an accurate measure of future sales.
Unaudited Dealer Inventory
 
Units As Of
 
 
 
May 30,
2015
May 31,
2014
Change
Motorhomes
4,501

 
3,798

 
703

18.5
%
Towables
1,823

 
1,775

 
48

2.7
%


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