Attached files
| file | filename |
|---|---|
| 8-K - 8-K FOR PERIOD ENDED OCTOBER 3, 2016 - WINNEBAGO INDUSTRIES INC | wgo8koct2016release.htm |
| EX-99.3 - EXH 99.3 FACT SHEET - WINNEBAGO INDUSTRIES INC | exh993factsheet.htm |
| EX-99.1 - EXH 99.1 PRESS RELEASE - WINNEBAGO INDUSTRIES INC | exh991oct2016release.htm |
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A c q u i s i t i o n o f G r a n d D e s i g n
R e c r e a t i o n a l V e h i c l e s
O c t o b e r 3 , 2 0 1 6
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Forward Looking Statements
This presentation 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 mergers and acquisitions activities, any unexpected expenses related to ERP, risks relating to the
consummation of our acquisition of Grand Design including, the possibility that the closing conditions to the contemplated
transaction may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant a
necessary regulatory approval; delay in closing the transaction or the possibility of non-consummation of the transaction;
the potential for regulatory authorities to require divestitures in connection with the proposed transaction, the failure to
consummate the debt transactions contemplated by the transaction with Grand Design, the possibility that we might have
to pay a $35 million termination fee to Grand Design or additional damages for failing to close the transaction; the
occurrence of any event that could give rise to termination of the agreement; the risk that shareholder litigation in
connection with the contemplated transaction may affect the timing or occurrence of the contemplated transaction or result
in significant costs of defense, indemnification and liability; risks inherent in the achievement of cost synergies and the
timing thereof; risks related to the disruption of the transaction to Winnebago and Grand Design and its management; the
effect of announcement of the transaction on Grand Design’s ability to retain and hire key personnel and maintain
relationships with customers, suppliers and other third parties, risks related to integration of the two companies 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 presentation or to reflect any changes in the Company's expectations after the date of this
presentation or any change in events, conditions or circumstances on which any statement is based, except as required by
law.
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Accelerates Winnebago’s expansion in the attractive towables segment
Provides greater scale and a more balanced portfolio across motorized and
towable RVs
Combines the industry’s fastest growing brand with the most well-known brand,
strengthening Winnebago’s position across the RV industry
Broadens and enhances dealer network, with limited current overlap
Expands Winnebago’s expertise and depth of talent through addition of Grand
Design’s world-class leadership team
Common focus on quality, value and service creates ideal cultural fit
Immediately accretive to growth, margins and EPS(1)
Compelling Strategic Acquisition
Driving Growth and Long-Term Value for Shareholders
(1) Accretion includes non-cash amortization of acquired intangible assets, but excludes
transaction costs and identified synergies
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Grand Design Overview
Grand Design is a rapidly growing manufacturer of premium towable fifth-wheel and travel trailers
Strategic
Focus
Long-term value
Customer focus
Owner involvement
Experienced workforce
Superior service
Class-leading warranty
Experienced
Leadership
(Co-Founders Have
80 Years of
Combined Industry
Expertise)
Don Clark: CEO & Co-
Founder
Ron and Bill Fenech: Co-
Founders
Cam Boyer: CFO
Gerald McCarthy: VP,
Service Operations
Nate Goldenberg: GM,
Momentum and Solitude
Micah Staley: GM,
Reflection and Imagine
Source: Company data and RVIA.
* 2016 financial data as of LTM from August of 2016
Net Sales $428M
2016 Financial Overview*
EBITDA ~$60M
2.5%
7.0%
8.5%
9.1%
2013 2014 2015 2016
YTD
Towable Fifth Wheel
Market Share
EBITDA Margin 14%
$85
$238
$336
$428
2013 2014 2015 2016*
Revenue
(in millions)
TOP TIER
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Attractive, Premium Towable Product Portfolio
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Product
Category
Fifth Wheel Toy Hauler
Luxury Extended Stay
Fifth Wheel
Mid-Profile Fifth Wheel Upscale Travel Trailer Lightweight Travel Trailer
Brands
Models
Year of
introduction
2013 2013 2013 2014 2015
Luxury
Interior
Superior
Consumer
Value
Extraordinary living and
extreme play
A Brand new Era in
Extended Stay
A celebration of Luxury,
value and Towability
Towing light without
compromise
Significantly Increases Winnebago’s Portfolio of Towable RVs
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Strong Pairing with Winnebago’s Towable Business
$55
$58
$72
$89
2013 2014 2015 2016
Winnebago Towable Revenue
(in millions)
Fifth Wheel
Travel
Trailers
Toy Haulers
(1) Note: Represents unaudited financial information
(1)
Winnebago Towable Products
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Grand Design’s Business Model
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Product
Strategy
Dealer
Strategy
Quality and
Service
Strategy
One brand per market segment and no “cloning” of models
Cross-functional R&D led by GMs and Product Managers–constant market
feedback loop
One dealer per market representing all products
Strict adherence to MSRP advertising
Does not partner with internet-based dealers
Equalized pricing for all dealers
Rigorous ~200 point pre-delivery inspection (“PDI”) process
Organization-wide focus on quality and customer service
Dedicated training and support provided to territory dealers
Central administration of all supplier warranties with immediately available service
professionals
Winnebago’s Primary Focus is Retaining Grand Design’s Promise to
Prioritize Dealer and Customer Satisfaction
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Towable RV Market is Large and Growing
217
228
258
283
313
327
2010 2011 2012 2013 2014 2015
Towable Unit Shipments to
Retailers
(in thousands)
Source: RVIA 2015 Industry Profile
$7.4
$4.8
RV Industry
(in billions)
Towables Motorized
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Balanced Portfolio Across Motorized and Towable RVs
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Snapshot of Combined Company
Greater
Scale
(Revenue $mm)
Balanced
Revenue
Base
Enhanced
Margins
(EBITDA Margin)
$975
$1,403 $428
7.4%
14.0%
9.4%
91%
9%
100%
63%
37%
Motorized
Towables
Source: Company data and filings. Note: Winnebago and Grand Design LTM 08/16. EBITDA margin excludes the impact of synergies.
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Transaction Overview
Consideration
Total consideration of $500 million, including tax assets valued at over $75 million
$395 million cash
$105 million in new Winnebago shares issued to the sellers (4.6 million shares)
Implied multiple of 7.1x LTM EBITDA after adjusting for value of tax assets
Grand Design shareholders will own approximately 14.5% of Winnebago shares outstanding
Financial Impact
Broader revenue opportunities, increased scale mitigates risk across the economic cycle
Immediately accretive to Winnebago’s growth, margins and EPS(1)
Anticipated annual run-rate cost synergies of $7 million, phased in over three years
Identified opportunities in purchasing and elimination of redundant processes
Additional upside potential from sharing of manufacturing best practices
Enhanced cash flow generation
Leverage
Profile
Expected debt to EBITDA ratio of approximately 2.5x following transaction(2)
Prioritize delevering the business immediately following the acquisition
Expected to de-lever to under 1.5x Debt/EBITDA by the end of Fiscal 2018
Closing
Expected to close by the end of Winnebago’s first quarter of 2017, subject to regulatory approvals
and other customary closing conditions
Organizational
Structure
Grand Design will operate as a standalone unit within Winnebago
Grand Design management team will remain in place and continue to operate out of Middlebury, IN
Grand Design CEO, Don Clark will report directly to Winnebago CEO Mike Happe
(1) Accretion includes non-cash amortization of acquired intangible assets, but excludes transaction costs and identified synergies
(2) Represents unaudited financial estimate; EBITDA inclusive of $7mm of annual run rate synergies
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Pro Forma Balance Sheet Financing
$500 million in total consideration
Includes tax assets valued at over $75 million
Financing structure
– Equity to sellers $105 million
– Draw on new ABL facility $53 million
– Term loan $300 million
– Cash on hand $60 million(1)
J.P. Morgan has provided committed
financing
Pro forma debt-to-EBITDA ratio of
2.5x(2)
Equity issued to sellers preserves balance sheet
flexibility
Over $75 million in liquidity at close
$26 million of remaining cash on hand
Over $50 million undrawn capacity on new ABL
facility
Strong combined cash flow supports
rapid delevering
1.5x debt-to-EBITDA target by the end of fiscal
2018
Financing and Liquidity
(1) Includes $18 million in expenses related to the transaction
(2) Note: Represents unaudited financial estimate; EBITDA inclusive of $7mm of annual run rate synergies
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Advancing Our Strategic Priorities
Create Connected Customer Advocacy
Elevate Excellence in Operations
Expand to New Markets
Streamline and Strengthen the Core
Revitalize and Leverage Iconic Brands
Build a Performance Culture
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• The following information provides reconciliations of non-GAAP financial measures from operations, which are presented in the
accompanying presentation, to the most comparable financial measures calculated and presented in accordance with accounting
principles generally accepted in the U.S. (“GAAP”). The company has provided non-GAAP financial measures, which are not
calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in
the accompanying presentation that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures
should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the
GAAP financial measures presented in the presentation. The non-GAAP financial measures in the accompanying presentation may
differ from similar measures used by other companies. The following tables reconcile the non-GAAP measure of Earnings Before
Interest, Taxes, Depreciation and Amortization (“EBITDA”) referred to in this presentation to the most directly comparable GAAP
measure reflected in the Company’s financial statements.
Reconciliation of Non-GAAP Measures
(1) Unaudited financial estimate
(2) Reported Net Income excluding stock based compensation
LTM Through August 2016
WGO(1) GD(1)(2) Pro Forma
Net Income $ 45,496 $ 59,131 $ 104,627
Interest Expense - - -
Provision for Taxes 20,702 158 20,860
Depreciation & Amortization 5,745 798 6,543
EBITDA $ 71,943 $ 60,087 $ 132,030