Before the market opened on June 24, Winnebago Industries Inc. (WGO, Financial) released its results for third-quarter 2020, which ended May 30. The American manufacturer of motorhomes posted earnings and revenue that declined from last year, but surpassed analysts’ expectations.
Snapshot of the quarter
The Forest City, Iowa-based company recorded a quarterly net loss per diluted share of 26 cents after reporting a profit of $1.14 in the same period last year. Analysts had called for a loss of 41 cents per share. Revenue of $402.5 million slumped roughly 24% year over year, but edged past analysts’ expectations of $325.9 million.
Reflecting on the quarter, President and CEO Michael Happe said:
“Despite the Covid-19 disruption and ongoing related obstacles, we have not lost our focus on quality, innovation and customer service. We have grown market share, strengthened dealer and supplier relationships, and maintained key investments in initiatives critical to our future. Our portfolio of premium outdoor brands continues to perform well and be desired by channel partners and end consumers alike.”
At the end of the quarter, the recreational vehicle maker had total outstanding debt of $465 million. In May, the board of directors approved a quarterly cash dividend of 11 cents per share, which is payable on July 1.
Segment performance
The towable division reported revenue of $188.9 million, which was down 45.5% over the past year. The decline was highly driven by postponement of manufacturing operations as well as disruptions in the consumer buying pattern owing to the coronavirus pandemic. The Grand Design RV business got a boost in May, however, thanks to the overall strength of the towable product portfolio coupled with increased customer demand as the shelter-at-home orders were eased. In addition, the company’s share of the towable market in North America rose to 10.7% on a trailing three-month basis through April.
The segment's adjusted Ebitda of $16.5 million plunged 71.2% year over year. The backlog soared 86.2%, in units, due to robust dealer demand in May.
Revenue for the motorhome segment amounted to $203.6 million, up 27.1%. The growth was primarily driven by contributions from Newmar, which is a leading manufacturer of Class A and Super C motorhomes. Winnebago acquired Newmar on Nov. 8. Segment revenue tumbled 27.9%, barring Newmar. Class B product line-up, including Revel, Travato and Solis models, witnessed impressive underlying demand in spite of the challenges posed by the pandemic.
The segment experienced a negative adjusted Ebitda of $10.8 million, compared with adjusted Ebitda of $11.2 million the year before. Backlog rose 99.2%, in units, reflecting the positive impact of Newmar as well as strong dealer demand in May.
Looking ahead
Looking ahead to the fourth quarter of fiscal 2020, the company expects to see increased demand for outdoor and recreational products.
“As states navigate the reopening of their communities, people are increasingly looking toward RVing and boating as ways to socially distance in a safe and memorable way," Happe said. "As indicated by our robust backlogs as compared to last year and our second fiscal quarter of 2020, Winnebago Industries’ RV, Marine, and Specialty Vehicles brands and businesses remain poised for strong growth and are solidly positioned to offer great value to our end consumers.”
Disclosure: I do not hold any positions in the stocks mentioned.
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