Investors Like Winnebago Backlog, Ignore Loss

Winnebago Industries Inc. reported a net loss for its fiscal second quarter, as profit margins were driven down by heavy discounting coupled with a rise in raw material costs.

Interestingly, Wall Street seemed to focus on Winnebago’s healthy order backlog. In a conference call today (March 15) following the Forest City, Iowa-based company’s earnings release, Winnebago’s President, Chairman and CEO Randy Potts noted that “we are better positioned with the model year changeover, which occurs in the third quarter, being essentially sold out of current model year products.” Winnebago shares were up significantly in yesterday’s trading.

Regarding Winnebago’s discounting, Potts explained that it implemented cost-cutting to “secure additional volume in the quarter and minimize production shutdowns, which would have resulted in additional unabsorbed overheads and higher inventory.”

He added, “A winter seasonal slowdown in conjunction with the excess motorized industry capacity created a competitive environment that negatively impacted earnings.”

A rise in raw material costs also dented Winnebago’s bottom line. Potts noted that the company opted not to pass on those costs, again pointing to the “competitive nature of the marketplace.”

As a result, Winnebago reported that gross profit margins shrank to 5.2% from 10.6% in the same period last year.

While admitting the quarter was “disappointing,” Potts said there are reasons to be positive about the remainder of the fiscal year. “We are cautiously optimistic about growth in the general economy, given the improvement in consumer confidence, employment and housing starts,” he said.

Winnebago also will be resurrecting its Dealer Days in May after a four-year absence, according to Potts. “This gives us the opportunity to showcase all of our redesigned products for dealers,” he said.

While profits were down, Winnebago posted 23.5% growth in revenue during the second quarter, in part driven by its towable division. The company purchased Sunnybrook RV Inc. in late 2010 then followed with the launch of its Winnebago towable brand last summer.

Winnebago delivered 562 towable units, up from 85 units in the previous year. The company is expecting continued improvement in travel trailer and fifth-wheel sales, particularly heading into the prime selling season.

Motorhome deliveries also increased, up 10.1% in the quarter to 1,001 units compared with 909 the year prior. All categories outpaced the previous year.

Aggressive Pricing Signals Winnebago 2Q Loss

Increased discounting impacted earnings for Winnebago Industries Inc.’s fiscal second quarter ended Feb. 25 as the Forest City, Iowa-based builder reported a net loss while revenue, boosted by sales from its towable division, rose 23.5%.

Revenues during the three-month period were $131.6 million versus $106.6 million for the second quarter of fiscal 2011. Included within consolidated revenues was $14.5 million associated with towable products, compared to $1.8 million the previous year.

The company reported an operating loss of $1.2 million for the quarter versus an operating profit of $4.1 million for the second quarter last year. Net loss for the second quarter was $912,000 versus net income of $3.3 million the previous year. On a diluted per share basis, the company had a net loss of 3 cents compared to net income of 11 cents for the second quarter of fiscal 2011.

Although revenues were higher as compared to the prior year primarily due to an increase in wholesale deliveries, the second quarter was negatively impacted by increased discounts and continued aggressive pricing strategies. The additional motorhome wholesale volume prevented shortened work weeks that were experienced in the first quarter and also resulted in reduced inventory levels which significantly improved operating cash flows as compared to the prior year. The second quarter included a $3.5 million pre-tax benefit from the results of an annual physical inventory of work-in-process, due to lower actual inventory scrap and production loss.

Revenues for the first six months were $263.4 million, an increase of 14.4%, compared to $230.3 million a year ago. The company reported an operating loss of $537,000 in the period versus an operating profit of $9 million for the same period last year. Net income for the first six months was $123,000, or zero cents per diluted share, versus net income of $7.1 million, or 24 cents per diluted share, for the first six months of the last fiscal year.

“While we saw an increase in year over year wholesale shipments of both our motorhomes and towables in the second quarter, we are disappointed with our financial results,” said Winnebago Industries Chairman, CEO and President Randy Potts. “However, we believe that we are better positioned for the future with a stronger sales order backlog as compared to the prior year. Our motorhome order position of current model year product is nearly sold out at this time and we are excited about the new 2013 product launch starting in our third quarter. We are cautiously optimistic about growth in the general economy, given the improvement in consumer confidence, employment and housing starts.”

Winnebago Industries will conduct a conference call in conjunction with this release at 9 a.m. (Central) 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.winnebagoind.com/investor.html. The event will be archived and available for replay for the next 90 days.

To view the entire report click here.

 

Winnebago Remains Cautious on Hiring Workers

Editor’s Note: The following is an excerpt from a story by KIM TV, Mason City, Iowa, examining the local employment situation. Winnebago Industries Inc.’s Randy Potts offers comments on the builder’s outlook.

Winnebago Industries Inc. Chairman, President and CEO Randy Potts is looking forward to the day he can bring on a large number of workers at the company’s Forest City complex.

“Where we’re at right now is very slight increases in manufacturing levels. Going into the spring we’ll be watching that carefully,” Potts says.

Winnebago currently has about 2,000 workers right. Before what Potts termed the ‘Great Recession,’ the company employed well over 4,000. He says what his business needs is what any business needs: demand.

“At some point we’ll add staff to accommodate production changes but the business has to come here first,” Potts says. “We need to see the orders for the product, we need to have the need for the production people before we’re going to hire them. We’re not going to hire them on speculation.”

Potts says there are a few indicators that will let him know the economy is improving enough for him to expand his work force. The main indicator is housing. He says he looks not only for the number of people going through foreclosure, but the number of people who owe more on their mortgage than their homes are worth.

Potts also looks to housing starts. He says when that part of the economy solidifies, spending – and demand – will pick up across the economy.

For now, though, there are jobs to be had for those looking for work. Potts says it’s up to the worker to be the most ideal candidate for a job.

“It’s important for job seekers to present themselves in such a way that they’re attractive to employers, that they build the case for why they’re the right person to hire – very fundamental things – and that hasn’t changed at all,” he said.

 

Winnebago Hosts Sendoff for Retiring Bob Olson

Friends, colleagues and community members will gather today (Feb. 24) at Winnebago Industries Inc.’s manufacturing complex in Forest City, Iowa, providing an official sendoff to long-time executive Bob Olson as he closes the door on a 43-year career.

“I started at Winnebago in August of 1969,” Olson, 60, told RVBUSINESS.com. “My 18th birthday was July 17 and I was looking to make a little money before I headed to college. Well, obviously I never left.”

Olson, instead, found his calling installing windows on Winnebago’s assembly line. “My first day, I put in all the windows upside down,” he recalled. “I put in some overtime getting them all right side up. In just six months, though, I was moved to the new facility, which is the company’s current complex. By then, I knew that I wanted to stay at Winnebago.”

After serving in several management capacities, he took the reins from Bruce Hertzke in May of 2008 as Winnebago’s chairman, president and CEO, fulfilling Winnebago’s succession plan. In turn, Randy Potts officially takes over all three top-level positions today.

“I’m going to stay on as a member of the Winnebago board,” said Olson, a long-time resident of Forest City. “I also will continue as a member of the RVIA board and co-chair of the Go RVing Coalition while Randy gets completely acclimated with his responsibilities at Winnebago.”

The informal open house marking his retirement is scheduled for 2:30-5:30 p.m. today. Olson told RVBUSINESS.com that he is viewing his exit with mixed emotions.

“On the one hand, you are looking forward to retirement,” he said. “On the other hand, you’re hoping it never ends. But this is something that my wife, Kathy, and I have been thinking about for a long time. When you leave something like this, you want to have some plans in place to take away the boredom.”

 

Fittingly, the couple will be launching Olson’s retirement behind the wheel of a Winnebago Journey motorhome. “On Monday, we’ll leave for a Winnebago rally in Orlando, Fla.,” Olson said. “We haven’t had that many opportunities to use the motorhome because of work. But we’re going to be your typical RVers – heading to a warmer climate in the winter and traveling around this great country of ours.”

He also plans to spend more time with family. His son, Shawn, works in quality control for Winnebago while his daughter, Angie, is a teacher in Omaha, Neb. Both are married with two children each.

“It’s been a great run,” Olson said. “But I’m really looking forward to the next chapter.”

 

 

 

 

Major RV Stocks See Surge Despite Soft Market

A weak job market and rebounding gasoline prices make it an unlikely time for a renaissance in the recreational vehicle trade.

But, according to a report by Investors Business Daily, the industry’s top players are on a tear.

Thor Industries Inc. shares climbed in eight of the past nine weeks, posting a gain of about 50% since a Nov. 29 low. Winnebago Industries Inc. gained in nine of the past 11 weeks, and is up more than 65% from a Nov. 25 low.

Manufactured housing and park model builder Cavco Industries Inc.’s stock rose five of the past eight weeks, and has added more than 45% since Dec. 19 and more than 80% since Aug. 10. Drew Industries, an RV amd MH components supplier, spiked 8% Monday after a fat fourth-quarter earnings win.

On Feb. 2, Thor released preliminary results for its fiscal second quarter, pointing to 12% overall sales growth. The company gave no sales forecast, but analysts’ consensus estimate calls for a 140% EPS gain when the company reports March 5.

A statement from Chairman, CEO and President Peter Orthwein cited some positive trends.

“Sales momentum remains strong,” he said, adding that results from January trade shows indicated “rebounding consumer confidence, access to credit and low interest rates.”

Brett Jordan, an analyst with Avon Partners, said a large piece of Thor’s momentum owed to a promotion with GE Capital. Starting in mid-September, around Open House in Elkhart, Ind., GE and Thor combined to cover the interest on loans to dealers restocking their floor inventories.

“You could argue that there was a fair amount of unseasonable demand for their product since the dealers were being subsidized to take it,” Jordan said.

Jordan also sees a cyclical component to the stock’s gains. That would help explain why shares of Winnebago, which did not participate in the promotion, are also going great guns.

Craig Kennison, analyst with R.W. Baird & Co., says recreational vehicle stocks often act as an early economic indicator, and the gains could be tied to a changing stance among larger investors. Kennison said he’d been fielding calls from active investors “doing fresh work on the sector,” possibly linked to rising consumer-confidence data.

“More broadly, we’ve seen investors shift from a defensive profile to a more aggressive stance, which has helped the riskier side of the consumer space,” he wrote in a report.

 

Winnebago Winner Enjoys Super Bowl Weekend

Winnebago Industries Inc. announced that Joe Hale, sales associate for McClain’s RV in Ft. Worth, Texas, was the winner of the company’s “Touchdown Diesel Sales Promotion.” Hale’s name was drawn from all of the dealer sales personnel who sold qualifying Winnebago and Itasca Class A diesel-powered motorhomes during the program period of Sept. 1 to Dec. 31. Hale and his wife, Judith, enjoyed a Super Bowl weekend in Indianapolis, attending pre-game festivities and the big game on Sunday courtesy of Winnebago Industries. “Thanks to Winnebago Industries, Judy and I experienced the trip of a lifetime,” said Hale. “We had an absolutely great time from the moment we arrived on Friday, with Saturday’s NFL Experience where we had the opportunity to interact with NFL personnel and throw passes, to the game itself on Sunday. Our Super Bowl tickets were unbelievable – 17 rows off the ground floor of the stadium – and the people were fabulous. With seven innovative floorplans, including the new 36M and 42QD, Winnebago said it has become the second largest Class A diesel manufacturer in the U.S., with market share more than doubling over the last four years. According to Statistical Surveys Inc., Winnebago’s Class A diesel market share grew from 8.1% in calendar year 2008 to 17.4% calendar year to date through November 2011.

Winnebago Names Jass as Distribution Manager

Forest City, Iowa-based Winnebago Industries Inc. announced the appointment of Todd Jass to the position of warehouse, distribution and production control manager.

According to a news release, Jass replaces Ron Berry as warehouse and distribution manager, who retired from the company after 39 years of service, in addition to retaining management of production and inventory control functions.

In his new position, Jass is responsible for Winnebago’s warehouse operations, interplant material handling, over-the-road truck fleet operations, as well as the salvage department. In addition, Jass will continue to manage production and inventory control functions within the company.

A 28-year veteran of Winnebago Industries, Jass most recently served as a production manager in the motorhome assembly plant. Other prior positions include senior buyer, material analyst, production control coordinator and parts distribution supervisor.

Jass earned an associate of arts degree from North Iowa Area Community College, Mason City, Iowa.

 

 

Guaranty RV Tops Western Region Itasca Dealers

Guaranty RV Super Centers has been recognized as the No. 1 Itasca retail dealer in the western area by Winnebago Industries, Inc.

“We’re proud of our team here at Guaranty RV. We always strive for complete customer satisfaction,” said Shannon Nill, owner of Guaranty RV, in a press release. “As long as our customers are happy, we know we’re doing our job right. We’re extremely pleased to be rewarded with such a prestigious honor.”

This year, Guaranty RV was one of 20 dealers honored with the Top 10 Itasca motorhome retail dealers in recognition of  “excellence in customer satisfaction as it relates to the customers sales and service experience with the dealer.”

“Winnebago Industries values Guaranty RV and holds them in the highest regards. We are extremely proud to have Guaranty RV represent the Itasca line,” said Brion Brady, Winnebago district sales manager.” That commitment to providing excellent customer service is what separates Guaranty from the rest.”

 

 

Winnebago Announces Retirement of Bob Olson

Winnebago Indusries Inc. today (Jan. 12) announced the retirement of Bob Olson from the position of chairman, effective Feb 24.

Randy Potts, 53, will assume the role of chairman in addition to his current positions of CEO and president, in accordance with the Forest City, Iowa-based company’s succession plans. A 28-year veteran of Winnebago Industries, Potts joined the company in 1983 as a senior tool designer and has served in various engineering and management positions since that time.

In January 2011, he was elected to the position of president and was elected to the additional role of CEO in June 2011. Potts has also served as vice president, manufacturing and senior vice president, strategic planning in which he was responsible for new business development for the company. Potts is a graduate of Hawkeye Institute of Technology in Waterloo, Iowa.

Olson, 60, is a 43-year veteran of Winnebago Industries. While relinquishing his role as chairman, he will remain a member of the board and will also continue to serve in his role on the Executive Committee of the Recreation Vehicle Industry Association (RVIA) and as co-chair of the Go-RVing Coalition.

“I look forward to traveling more with my wife, Kathy, in our Winnebago Journey motorhome as we experience the RV lifestyle we have promoted the last 43 years,” said Olson. “I am also excited to continue to serve the company as a member of the board. Randy has done an outstanding job in leading Winnebago Industries since his promotions last year and I have every confidence in his ability to lead as we continue to move forward and grow in the future.”

“Bob has successfully led Winnebago Industries through some of the most challenging times in our company’s history,” said Potts. “We are greatly indebted to Bob for his exemplary service, his unwavering dedication and his passion for improving quality and performance in every area of our organization. I feel fortunate to have ready access to his expertise in his continued role as a member of our board and look forward to moving forward with the vision he has helped to chart for the company’s future.”

Winnebago Rolls Out Tag-Axle Journey, Meridian

Winnebago Industries Inc. has introduced the new tag-axle 42E to its 2012 Winnebago Journey and Itasca Meridian Class A diesel lineup.

“Our diesel products have never been better than in 2012,” said Winnebago Industries Vice President of Sales and Marketing Roger Martin. “In fact, over the last three years, we have more than doubled our diesel market share to become the second largest manufacturer of Class A diesels. Much of that is thanks to innovative, new floorplans like the 42E that offers amenities and spacious living that make them a cut above the competition.”

As the first tag-axle floorplan in the popular Journey and Meridian lineups, the new triple-slide 42E offers a bath-and-a-half layout with a full-wall slide on the passenger side of the coach that includes a 40-inch LCD HDTV, Euro Recliner with pull-out table, buffet with extendable dining table and chairs, four-door refrigerator, pantry and residential-style bedroom wardrobe. The living area also offers a Rest Easy extendable sectional sofa, tray ceiling design and polished ceramic tile for an inviting, upscale look.

The fully-equipped mid-coach galley features an innovative pull-out island for more prep space that also increases storage space with three drawers on full-extension slides. The spacious bedroom is set off by a “one-of-a-kind” wardrobe that features a full-length clothes rod, his-and-hers three-drawer units and an adjustable shoe shelf. A queen bed is nestled in

the slideout with dual nightstands and a new, power-adjustable king bed is optional. The private master bath in the rear of the coach features a spacious “BIG Shower” as well as plenty of storage, with a washer/dryer optional. A half bath sits mid-coach that is perfect for guests.

The 42E is built on Winnebago’s 44,320-pound GVWR Maxum lowered rail tag-axle chassis that features 220 cubic feet of easy-to-access exterior storage and superior ride and handling, and is powered by a 400-hp Cummins ISL 8.9L turbo-charged diesel engine.

“The new 42E is a great floorplan at a great price point,” said Mike Regan, president and general manager of Crestview RV Center in Buda, Texas. “I love the bath-and-a-half floorplan, and I think customers are really going to like the usability and layout of this coach.”

The 2012 Winnebago Journey and Itasca Meridian 42E make their retail market debut at this week’s Florida RV SuperShow in Tampa, Fla. For more information on the 2012 Winnebago Journey and Itasca Meridian, or to find a dealer, visit www.GoWinnebago.com or www.GoItasca.com.

 

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