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Baird: Winnebago’s Product Mix Fuels Demand

Editor’s Note: The investment firm of Robert W. Baird & Co. issued a client newsletter following Thursday’s release of Winnebago Industries Inc.’s fiscal third quarter report. Portions of the Baird newsletter follow.

Robust backlog highlights impressive quarter. Winnebago drove home an impressive quarter, highlighted by strong retail growth and robust dealer orders. Big picture, bullish fundamental outlook is unchanged. We expect better shipments as consumer demand grows (fueled by new products and less negative equity) and confident dealers restock depleted inventory.

Strong retail and dealer demand. Winnebago reported an excellent quarter. The budding RV recovery is now in full bloom as once-reluctant consumers are starting to buy. We believe that the negative equity cloud (consumers that were under water in their RV, home and retirement portfolio) has begun to lift, stimulating better replacement demand. Better home values and a stronger stock market have helped – but Winnebago is also leading with new products that dealers crave. Confident dealers continue to replenish depleted dealer inventory, fueling robust orders and a stunning backlog.

Revenue. Revenue surged 40% on strong retail and dealer demand.

Retail. Implied motorhome retail jumped 23%, ahead of our forecast (strong rental).

Inventory. Dealer inventory increased 36%; checks confirm room for further restocking.

Backlog. The motorhome backlog surged 130%.

Dealer confidence and new products fuel huge backlog. The motorhome backlog increased 130% to 2,846 units, nearly 2 times our Q4 shipment forecast. The abnormally high backlog is a function of strong retail demand, confident dealers, new products, and the limited availability of motorhome chassis, which has encouraged some dealers to order aggressively to ensure some deliveries.


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