In this globalized world, people have become more and more busy. So, recreation as well as travelling has become a part of life. When recreation comes, one company that strikes in mind is Winnebago Industries Inc. (WGO, Financial). Winnebago – "The Most Recognized Name in Motor Homes" – is a leading U.S. manufacturer of recreation vehicles, which are used primarily in leisure travel and outdoor recreation activities.
Headquartered in Forest City, Iowa, this company and its subsidiary builds quality motor homes, travel trailers, fifth wheel products and transit buses which are sold through independent dealers under the Winnebago, Itasca and Era brand names. The company markets its recreation vehicles on a wholesale basis to a diversified dealer organization located throughout the U.S. and Canada. Other products manufactured by the company consist primarily of original equipment manufacturing (OEM) parts, including extruded aluminum and other component products for other manufacturers and commercial vehicles.
Winnebago motorhome owners take extra comfort on their many adventures knowing they are backed by the industry's best service after the sale. From extensive warranties to 24-hour roadside assistance, Winnebago has the dedication to get you to your destination. For more than 50 years, Winnebago Industries has been the industry standard for quality and innovation. Today, Winnebago Industries is the leading United States manufacturer of motorhomes and related products and services.
A look at the numbers
Revenues for the third quarter were $266.5 million, which marked an increase of 7.6%, from $247.7 million during the prior year quarter.
Operating income was $16.1 million for the current quarter, which was $15.6 million during the prior year quarter.
Net income was $11.5 million, or $0.43 per diluted share, which was $11.4 million, or $0.42 per diluted share, during the prior year quarter.
Gross margin improved on a sequential quarter basis as motorized manufacturing inefficiencies moderated.
Operating expenses increased in the third quarter of fiscal 2015 compared to the third quarter of 2014.
Compared to the same period of last year, motorhome revenues increased 7.4% in the fiscal 2015 third quarter, primarily a result of motorhome unit shipment growth of 11.4%, partly offset by lower average selling price (ASP) of 3.1%.
Year over year, in the fiscal 2015 third quarter, towable revenue grew 15.9%, comprised of a 12.4% increase in ASP and 2.1% growth in unit shipments.
Capex was $9.0 million.
Dividend
The company recently declared a quarterly cash dividend of $0.09 per share.
Strong attributes of third quarter
- Third quarter results came in quite strong, despite costs related to two strategic initiatives and an impairment charge.
- The company is benefiting from investment in an ERP system and strategic sourcing project.
- Improved efficiencies.
- Healthy balance sheet.
Focus
The company is currently focusing on the following:
- Solid pricing power.
- Continual innovation.
- Investment in research and development.
- It has a robust pipeline.
- It is constantly evolving.
- Committed to quality.
Management
Recently Randy Potts retired as chairman of the board and as CEO and president of the Company, effective Aug. 6. The company’s board of directors has named former Chairman and CEO Robert Olson, age 64, to serve as interim CEO while the board conducts a search for the company's next CEO. Prior to his role as chairman and CEO, Olson served in various management positions with the company, including general manager of fabrication, vice president of manufacturing and senior vice president of operations; in 2007 the board elected him president. With over 45 years of experience with Winnebago, his knowledge of the company and the market will be of great value to the company during this period of transition.
(Source: Company’s Website)
Opportunities for the company
- Capacity for additional volume unit.
- Strong brand equity.
- RV markets continue to recover.
- Margin expansion opportunities.
- New products provide avenues for additional growth.
Being in the news
WGO has surged to become the top manufacturer in Class B van retail sales for the year, according to information released by Statistical Surveys Inc. (SSI). Through April year-to-date results released by SSI, Winnebago’s Class B touring coaches are the leaders in the category with a 30.6% market share.
It recently launched Winnebago GoLife Calendar. It provides all of the information needed to plan your next travel adventure. The calendar offers a glimpse at planned RV rallies, shows, events, and tours nationwide. Information compiled is designed to give any recreational vehicle enthusiast a valuable resource to discover events and places to visit.
With market share of 43.2% in calendar 2014 in this segment, Winnebago has essentially created a new market for customers interested in compact, fuel efficient motorhomes.
On a concluding note
Overall Winnebago is a solid company backed by good fundamentals and huge cash flows. The company’s strength is in multiple areas such as large market size and opportunity, improved demand, improving financials, strong financial returns and healthy balance sheet. Winnebago’s vertical integration contributes to operational excellence.
The company experienced six consecutive quarters of profitability, including growth in both revenues and operating income. With a lineup of industry leading recreation vehicles, coupled with favorable consumer demand and RVIA’s current projection for further industry growth through calendar 2016, the company is well-positioned to generate improved financial results.
The new products have really sparked a growing trend of buyers who want to enjoy the RV lifestyle, but also want an easy-to-drive, fuel-efficient and highly maneuverable full-featured motorhomes. According to Statistical Surveys, Inc., 5,441 motorhomes were retailed in the compact motorhome category in calendar 2014, 2,382 (43.8%) of which were Winnebago motorhomes. Since 2006, 27,939 have been retailed in the compact motorhome category, 13,750 (49.2%) of which were Winnebago products.
It posted solid third-quarter results. Time is now in favour of this company. I am therefore pretty bullish that this leading manufacturer will continue this trend and won’t let its valued investors down in the long run.
