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Winnebago Industries Inc. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: October 25, 2011 01:17PM
Winnebago Industries Inc. (WGO) filed Annual Report for the period ended 2011-08-27.
Highlight of Business Operations:Selling expenses increased $1.5 million, or 12.0%, in Fiscal 2011. The expense increase was primarily due to operating expenses associated with Towables and increases in advertising and wage-related expenses. As a percent of net revenues, selling expenses were 2.9% and 2.8% in Fiscal 2011 and Fiscal 2010, respectively.
We saw improvement in Fiscal 2011 in nearly all aspect of our business, but most notably in our operating performance with operating income of $11.3 million as compared to $520,000 in the prior year. This improvement primarily occurred during the first two quarters of Fiscal 2011, but deteriorated during the second half of Fiscal 2011 due to a softening in the overall RV market and in the general economy. Our increased revenues in Fiscal 2011 allowed for greater absorption of our fixed costs and improved labor efficiencies, which had a favorable effect on our profit margins. The most significant reason for the increased motor home revenue was the increase to our average selling price. Our motor home average selling price increased 6.7% due to a stronger mix of higher-priced product sold, which has also positively impacted our margins. As evidenced in the table above, our retail registrations were up nearly 10% over the prior fiscal year.
Working capital at August 27, 2011 and August 28, 2010 was $113.5 million and $91.3 million, respectively, an increase of $22.2 million. We currently expect cash on hand, funds generated from operations (if any) and the availability under the credit facility to be sufficient to cover both short-term and long-term operating requirements. We anticipate capital expenditures in Fiscal 2012 of approximately $4.4 million, primarily for manufacturing equipment and facilities.
General and administrative expenses decreased $2.3 million, or 14.9%, in Fiscal 2010. This decrease was due primarily to reductions in legal expenses of $1.5 million and lower depreciation expense of $550,000. As a percent of net revenues, general and administrative expenses were 2.9% for Fiscal 2010 compared to 7.2% for Fiscal 2009. The decrease in percentage of net revenues was caused by the significant difference in revenue levels between the two fiscal periods.
Cash used in operating activities was $10.1 million for the fiscal year ended August 27, 2011 compared to cash provided by operating activities of $33.0 million for the fiscal year ended August 28, 2010. The combination of a net income of $11.8 million in the current year and increases in non-cash charges (e.g., depreciation, LIFO, stock-based compensation) provided $21.0 million of operating cash compared to of $16.6 million in the prior year period. However, in Fiscal 2011, changes in assets and liabilities (primarily inventory increases) used an additional $31.1 million of operating cash. In Fiscal 2010, changes in assets and liabilities (primarily income tax refunds) provided an additional $16.4 million of operating cash.
Stocks Discussed: WGO,