Winnebago Industries Inc Reports Q2 Fiscal 2024 Results Amid Market Softness
Revenue: Decreased by 18.8% to $703.6 million compared to the same period last year.
Gross Margin: Fell to 15.0%, a 190 basis point decrease year-over-year.
Net Loss: Reported a net loss of $12.7 million, including a significant charge related to debt refinancing.
Adjusted EBITDA: Declined by 43.7% to $49.8 million, with margin at 7.1%.
Market Share: Barletta captures 7.9% share of U.S. Aluminum Pontoon Market, up 80 basis points YoY.
Debt Refinancing: Completed a $350 million offering of convertible senior notes for refinancing 2025 maturities.
Future Growth Targets: Announced mid-cycle organic growth targets, aiming for net revenues of $4.5 billion to $5.0 billion.
On March 21, 2024, Winnebago Industries Inc (NYSE:WGO), a prominent outdoor lifestyle product manufacturer, released its 8-K filing, detailing the financial outcomes for the second quarter of fiscal year 2024. The company, known for its diverse range of recreational vehicles including motorhomes, towables, and boats, reported a decrease in revenues and profitability, attributing the downturn to ongoing challenges in the RV and marine markets.
Winnebago Industries, headquartered in Eden Prairie, Minnesota, has a long-standing history dating back to 1958. The company has expanded its product line through strategic acquisitions, including SunnyBrook, Grand Design, Chris-Craft, Newmar, and Barletta. With a revenue of approximately $3.5 billion in fiscal 2023, Winnebago has solidified its presence in the industry, with towables accounting for 79% of the firm's RV unit volume, a significant increase from 31% in fiscal 2016. The company's total RV unit volume stood at 39,447 in fiscal 2023, and it continues to innovate with electric and autonomous technology.
Financial Performance and Challenges
Winnebago's second quarter saw revenues fall to $703.6 million, an 18.8% decrease from the previous year's $866.7 million. This decline was primarily due to lower unit sales and an unfavorable product mix. Gross profit also saw a reduction, dropping 28.3% to $105.3 million, resulting in a gross margin of 15.0%. The net loss of $12.7 million, or $0.43 per share, includes a charge of $32.7 million related to the refinancing of 2025 convertible senior notes. Adjusted for this charge, diluted earnings per share were $0.93. Adjusted EBITDA was reported at $49.8 million, a 43.7% decrease from the previous year, with an adjusted EBITDA margin of 7.1%.
"Winnebago Industries performed in line with our expectations for the quarter, navigating the effects of ongoing softness in the RV and marine markets, said President and Chief Executive Officer Michael Happe. Despite these macroeconomic challenges, we continue to demonstrate resilient profitability and an unwavering commitment to operational discipline that is reflected in the Companys diversified portfolio of premium brands, investments in new products and technologies, and healthy balance sheet."
Segment Performance and Future Outlook
The Towable RV segment experienced a revenue decrease of 16.9%, with adjusted EBITDA falling 31.8% and a backlog reduction of 20.1%. The Motorhome RV segment saw a 16.2% revenue decrease, a 38.9% decline in adjusted EBITDA, and a significant 48.2% drop in backlog. The Marine segment was not spared, with revenues down 38.2%, adjusted EBITDA plummeting 69.7%, and a decrease in backlog due to cautious dealer networks.
Despite the current market conditions, Winnebago Industries has set ambitious mid-cycle organic growth targets, aiming for net revenues between $4.5 billion and $5.0 billion, a gross margin of 18.0% to 18.5%, and an adjusted EBITDA margin of 11.0% to 11.5%. The company also aims to achieve a North American RV market share of over 13% and a U.S. aluminum pontoon market share of 13%, with organic non-RV revenue mix representing 15% to 20% of total revenue.
Winnebago's balance sheet remains robust, with total outstanding debt of $694.8 million and working capital of $649.0 million. Cash flow from operations was $25.2 million for the quarter. The successful refinancing of its convertible senior notes highlights the company's strong operating performance and credit profile, providing financial flexibility for future growth.
For more detailed financial information and to access the live broadcast of the conference call discussing these results, please visit the Investor Relations page of Winnebago Industries' website at http://investor.wgo.net.
Explore the complete 8-K earnings release (here) from Winnebago Industries Inc for further details.
This article first appeared on GuruFocus.
