Winnebago 2Q Income up 52.6%; Sales Rise 29%
Driven by strong motorhome performance, Winnebago Industries Inc. reported a 52.6% increase in net income on 29.2% growth in revenue for its second quarter, ended March 1.
Sales during the period totaled $228.8 million versus $177.2 million the previous year while earnings rose to $9.6 million, or 35 cents per diluted share, from $6.3 million, or 22 cents per diluted share. Second-quarter operating income rose 58.2% to $14 million.
The Forest City, Iowa-based builder reported that 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 15.4% gain in sales 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% in the 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.
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% as a result of product mix. Comparing the first half of fiscal 2014 to the same period the previous year, operating income rose 59.6% to $30 million, net income grew 51.6% to $20.7 million, and diluted earnings per increased 54.2% to 74 cents from 48 cents.
As previously announced, Winnebago received a large incremental rental order from Apollo Motorhome Holidays, an RV rental company, to be delivered during the 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.
The company said that 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.
To view the full report click Q2_2014 Earnings Release.