EX-99.1 2 q42014earningsrelease.htm EXHIBIT Q4 2014 Earnings Release


News Release
Contact: Sheila Davis - PR/IR Mgr. - 641-585-6803 - sdavis@wgo.net

WINNEBAGO INDUSTRIES ANNOUNCES FOURTH QUARTER AND FISCAL 2014 RESULTS
-- Full-Year Revenues Increased 18% and Earnings Per Share Increased 45% --
-- Board of Directors Approved Quarterly Cash Dividend of $0.09 Per Share --

FOREST CITY, IOWA, October 16, 2014 - Winnebago Industries, Inc. (NYSE:WGO), a leading United States recreation vehicle manufacturer, today reported financial results for the Company's fourth quarter and Fiscal 2014.

Fourth Quarter Fiscal 2014 Results
Revenues for the Fiscal 2014 fourth quarter ended August 30, 2014 were $245.9 million, an increase of 14.8%, versus $214.2 million for the Fiscal 2013 fourth quarter. Comparing the Fiscal 2014 fourth quarter to the same period of Fiscal 2013, operating income rose 19.2% to $18.3 million, net income grew 21.8% to $12.9 million and diluted earnings per share increased 26.3% to $0.48 from $0.38.

Fourth quarter earnings improved year over year primarily as a result of higher motorhome unit sales, a significant improvement in towables profitability and operating expense leverage. Motorhome revenue grew 15.0% driven by motorhome unit growth of 25.1%, partially offset by lower motorhome average selling prices (ASP) of 8.4% as a result of product mix. Towables operating income improved by $1.4 million and was positively impacted by towables revenue growth of 8.6%, comprised of a 9.9% improvement in ASP and a 0.8% increase in units.

Operating expenses as a percentage of revenues were favorably leveraged during the quarter and contributed 50 basis points to the improvement in operating income margin.

Compared to the same periods of last year, the Company’s motorhome retail registrations increased 17% in the Fiscal 2014 fourth quarter and 28% on a rolling 12-month basis, based on internally reported retail information.

Full-Year Fiscal 2014 Results
Revenues for the 52-weeks of Fiscal 2014 were $945.2 million, an increase of 17.7%, from $803.2 million for the 53-weeks of Fiscal 2013. Comparing Fiscal 2014 to Fiscal 2013, operating income rose 43.9% to $63.9 million, net income grew 41.0% to $45.1 million, and diluted earnings per share increased 45.1% to $1.64 from $1.13.

Reinstatement of Quarterly Cash Dividend
As announced on October 15, the Company’s board of directors approved a quarterly cash dividend of $0.09 per share. The first quarterly dividend of $0.09 per share will be paid on November 26, 2014, to common stockholders of record at the close of business on November 12, 2014.

Management Comments
Chairman, CEO and President Randy Potts commented, “Demand for our products resulted in industry-leading unit volume growth and market share gains for Winnebago motorized products through the first seven months of calendar 2014 according to Statistical Surveys. The motorized growth and profitability within our towables business contributed to an outstanding fiscal year for the company resulting in year over year earnings per share growth of 45%. With a strong product lineup and increasing confidence in our towables group, we believe we are well positioned to leverage future growth opportunities.”

Chief Financial Officer Sarah Nielsen added, “We generated $13.0 million in operating cash flow during the fourth quarter of Fiscal 2014 primarily as a result of improved profitability. We did experience an increase in receivables of $13.4 million in the fourth quarter due to a greater level of units in transit, however, this was offset by non-cash expenses and other changes in working capital. With no debt and nearly $58 million in cash, our balance sheet is very strong, supporting future growth opportunities as well as potential stock repurchases and our recently announced quarterly cash dividend.”

Conference Call
Winnebago Industries, Inc. will conduct a conference call to discuss fourth-quarter and Fiscal 2014 results at 9 a.m. Central Time 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.wgo.net/investor.html. The event will be archived and available for replay for the next 90 days.


About Winnebago Industries
Winnebago Industries, Inc., "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. The Company builds quality motor homes,




travel trailers, fifth wheel products, and transit buses. Winnebago Industries has received the Quality Circle Award from the Recreation Vehicle Dealers Association every year since 1996. The Company's common stock is listed on the New York and Chicago Stock Exchanges and traded under the symbol WGO. Options for the Company's common stock are traded on the Chicago Board Options Exchange. For access to Winnebago Industries' investor relations material or to add your name to an automatic email list for Company news releases, visit http://www.wgo.net/investor.html.

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements are inherently uncertain. A number of factors could cause actual results to differ materially from these statements, including, but not limited to increases in interest rates, availability of credit, low consumer confidence, availability of labor, significant increase in repurchase obligations, inadequate liquidity or capital resources, availability and price of fuel, a slowdown in the economy, increased material and component costs, availability of chassis and other key component parts, sales order cancellations, slower than anticipated sales of new or existing products, new product introductions by competitors, the effect of global tensions, integration of operations relating to mergers and acquisitions activities and other factors. Additional information concerning certain risks and uncertainties that could cause actual results to differ materially from that projected or suggested is contained in the Company's filings with the Securities and Exchange Commission (SEC) over the last 12 months, copies of which are available from the SEC or from the Company upon request. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements contained in this release or to reflect any changes in the Company's expectations after the date of this release or any change in events, conditions or circumstances on which any statement is based, except as required by law.
# # #




Winnebago Industries, Inc.
Unaudited Consolidated Statements of Income
(In thousands, except percent and per share data)

 
Quarter Ended
 
August 30, 2014
 
August 31, 2013
Net revenues
$
245,935

 
100.0
%
 
$
214,246

 
100.0
 %
Cost of goods sold
217,226

 
88.3
%
 
188,750

 
88.1
 %
Gross profit
28,709

 
11.7
%
 
25,496

 
11.9
 %
Operating expenses:
 
 
 
 
 
 
 
Selling
4,584

 
1.9
%
 
4,669

 
2.2
 %
General and administrative
5,847

 
2.4
%
 
5,495

 
2.6
 %
Total operating expenses
10,431

 
4.2
%
 
10,164

 
4.7
 %
Operating income
18,278

 
7.4
%
 
15,332

 
7.2
 %
Non-operating income (expense)
16

 
—
%
 
(43
)
 
—
 %
Income before income taxes
18,294

 
7.4
%
 
15,289

 
7.1
 %
Provision for taxes
5,365

 
2.2
%
 
4,673

 
2.2
 %
Net income
$
12,929

 
5.3
%
 
$
10,616

 
5.0
 %
Income per common share:
 
 
 
 
 
 
 
Basic
$
0.48

 
 
 
$
0.38

 
 
Diluted
$
0.48

 
 
 
$
0.38

 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
27,064

 
 
 
27,912

 
 
Diluted
27,181

 
 
 
28,019

 
 


 
Year(1) Ended
 
August 30, 2014
 
August 31, 2013
Net revenues
$
945,163

 
100.0
 %
 
$
803,165

 
100.0
%
Cost of goods sold
841,166

 
89.0
 %
 
718,534

 
89.5
%
Gross profit
103,997

 
11.0
 %
 
84,631

 
10.5
%
Operating expenses:
 
 
 
 
 
 
 
Selling
18,293

 
1.9
 %
 
18,318

 
2.3
%
General and administrative
22,424

 
2.4
 %
 
21,887

 
2.7
%
(Gain) loss on sale of real estate
(629
)
 
(0.1
)%
 
28

 
—
%
Total operating expenses
40,088

 
4.2
 %
 
40,233

 
5.0
%
Operating income
63,909

 
6.8
 %
 
44,398

 
5.5
%
Non-operating income
768

 
0.1
 %
 
696

 
0.1
%
Income before income taxes
64,677

 
6.8
 %
 
45,094

 
5.6
%
Provision for taxes
19,624

 
2.1
 %
 
13,141

 
1.6
%
Net income
$
45,053

 
4.8
 %
 
$
31,953

 
4.0
%
Income per common share:
 
 
 
 
 
 
 
Basic
$
1.64

 
 
 
$
1.14

 
 
Diluted
$
1.64

 
 
 
$
1.13

 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
27,430

 
 
 
28,075

 
 
Diluted
27,545

 
 
 
28,170

 
 
Percentages may not add due to rounding differences.

(1) The fiscal year ended August 30, 2014 and August 31, 2013 contained 52 weeks and 53 weeks, respectively.




Winnebago Industries, Inc.
Unaudited Consolidated Balance Sheets
(In thousands)

 
August 30,
2014
 
August 31,
2013
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
57,804

 
$
64,277

Receivables, net
69,699

 
29,145

Inventories
112,848

 
112,541

Investment in operating leases
15,978

 
—

Prepaid expenses and other assets
5,718

 
8,277

Income taxes receivable
5

 
1,868

Deferred income taxes
9,641

 
7,742

Total current assets
271,693

 
223,850

Total property and equipment, net
25,135

 
20,266

Long-term investments
—

 
2,108

Investment in life insurance
25,126

 
25,051

Deferred income taxes
24,029

 
25,649

Goodwill
1,228

 
1,228

Other assets
11,091

 
10,993

Total assets
$
358,302

 
$
309,145

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
33,111

 
$
28,142

Operating lease repurchase obligations
16,050

 
—

Income taxes payable
2,927

 
—

Accrued expenses
47,631

 
42,212

Total current liabilities
99,719

 
70,354

Long-term liabilities:
 
 
 
Unrecognized tax benefits
3,024

 
3,988

Postretirement health care and deferred compensation benefits, net of current portion
62,811

 
64,074

Total long-term liabilities
65,835

 
68,062

Stockholders' equity
192,748

 
170,729

Total liabilities and stockholders' equity
$
358,302

 
$
309,145





Winnebago Industries, Inc.
Unaudited Consolidated Statements of Cash Flows
(In thousands)
 
Year(1) Ended
 
August 30,
2014
August 31,
2013
Operating activities:
 
 
Net income
$
45,053

$
31,953

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
3,997

4,764

LIFO expense (income)
1,456

(1,180
)
Postretirement benefit income and deferred compensation expenses
(979
)
245

Stock-based compensation
3,386

3,009

    Provision for doubtful accounts
(19
)
25

Deferred income taxes including valuation allowance
(48
)
1,790

Gain on life insurance
(726
)
(536
)
Loss on sale of investment
—

45

    Increase in cash surrender value of life insurance policies
(805
)
(1,030
)
    Gain on disposal of property
(691
)
(95
)
Change in assets and liabilities:
 
 
Inventories
(1,763
)
(24,267
)
Receivables, prepaid and other assets
(38,233
)
(8,908
)
Investment in operating leases, net of repurchase obligations
72

—

     Income taxes and unrecognized tax benefits
5,625

(194
)
Accounts payable and accrued expenses
10,919

8,939

Postretirement and deferred compensation benefits
(4,008
)
(4,322
)
Net cash provided by operating activities
23,236

10,238

 
 
 
Investing activities:
 
 
Proceeds from the sale of investments
2,350

7,300

Proceeds from life insurance
1,737

1,004

Purchases of property and equipment
(10,476
)
(4,422
)
Proceeds from the sale of property
2,423

734

Payments of COLI borrowings
—

(1,371
)
Other
(1,402
)
822

Net cash (used in) provided by investing activities
(5,368
)
4,067

 
 
 
Financing activities:
 
 
Payments for purchase of common stock
(26,340
)
(12,718
)
Proceeds from exercise of stock options
2,080

75

    Other
(81
)
(68
)
Net cash used in financing activities
(24,341
)
(12,711
)
 
 
 
Net (decrease) increase in cash and cash equivalents
(6,473
)
1,594

Cash and cash equivalents at beginning of period
64,277

62,683

Cash and cash equivalents at end of period
$
57,804

$
64,277

 
 
 
Supplemental cash flow disclosure:
 
 
Income taxes paid
$
14,061

$
11,500


(1) The fiscal year ended August 30, 2014 and August 31, 2013 contained 52 weeks and 53 weeks, respectively.




Winnebago Industries, Inc.
Unaudited Deliveries
 
Quarter Ended
 
Change
(In units)
August 30,
2014
Product
Mix % (1)
 
August 31,
2013
Product
Mix % (1)
 
Units
%
Change
Class A gas
971

41.1
%
 
667

35.3
%
 
304

45.6
 %
Class A diesel
277

11.7
%
 
326

17.2
%
 
(49
)
(15.0
)%
Total Class A
1,248

52.8
%
 
993

52.5
%
 
255

25.7
 %
Class B
227

9.6
%
 
109

5.8
%
 
118

108.3
 %
Class C
889

37.6
%
 
788

41.7
%
 
101

12.8
 %
Total motor homes
2,364

100.0
%
 
1,890

100.0
%
 
474

25.1
 %
 
 
 
 
 
 
 
 
 
Travel trailer
584

80.8
%
 
605
84.4
%
 
(21
)
(3.5
)%
Fifth wheel
139

19.2
%
 
112
15.6
%
 
27

24.1
 %
    Total towables
723

100.0
%
 
717
100.0
%
 
6

0.8
 %
 
 
 
 
 
 
 
 
 
 
Year(3) Ended
 
Change
(In units)
August 30,
2014
Product
Mix % (1)
 
August 31,
2013
Product
Mix % (1)
 
Units
%
Change
Class A gas
3,056

34.9
%
 
2,446

35.9
%
 
610

24.9
 %
Class A diesel
1,410

16.1
%
 
1,315

19.3
%
 
95

7.2
 %
Total Class A
4,466

51.0
%
 
3,761

55.1
%
 
705

18.7
 %
Class B
751

8.6
%
 
372

5.5
%
 
379

101.9
 %
Class C
3,538

40.4
%
 
2,688

39.4
%
 
850

31.6
 %
Total motor homes (2)
8,755

100.0
%
 
6,821

100.0
%
 
1,934

28.4
 %
 
 
 
 
 
 
 
 
 
Travel trailer
2,052

81.8
%
 
2,038

80.4
%
 
14

0.7
 %
Fifth wheel
457

18.2
%
 
497

19.6
%
 
(40
)
(8.0
)%
Total towables
2,509

100.0
%
 
2,535

100.0
%
 
(26
)
(1.0
)%
(1) Percentages may not add due to rounding differences.
(2) An additional 343 motorhomes were delivered in Fiscal 2014 but not included in wholesale deliveries as presented in the tables above as the units are subject to repurchase option.
(3) The fiscal year ended August 30, 2014 and August 31, 2013 contained 52 and 53 weeks, respectively.
Unaudited Backlog
 
As Of
 
Change
 
August 30, 2014
 
August 31, 2013
 
 
%
 
Units
% (1)
 
Units
% (1)
 
Units
Change
Class A gas
338

17.8
%
 
1,405

41.6
%
 
(1,067
)
(75.9
)%
Class A diesel
302

15.9
%
 
607

18.0
%
 
(305
)
(50.2
)%
Total Class A
640

33.7
%
 
2,012

59.5
%
 
(1,372
)
(68.2
)%
Class B
323

17.0
%
 
300

8.9
%
 
23

7.7
 %
Class C
936

49.3
%
 
1,068

31.6
%
 
(132
)
(12.4
)%
Total motor home backlog(2)
1,899

100.0
%
 
3,380

100.0
%
 
(1,481
)
(43.8
)%
 
 
 
 
 
 
 
 
 
Travel trailer
134

82.2
%
 
180

81.4
%
 
(46
)
(25.6
)%
Fifth wheel
29

17.8
%
 
41

18.6
%
 
(12
)
(29.3
)%
    Total towable backlog (2)
163

100.0
%
 
221

100.0
%
 
(58
)
(26.2
)%
 
 
 
 
 
 
 
 
 
Total approximate backlog revenue dollars (in 000's):
 
 
 
 
 
 
Motor home
$
172,575

 
 
$
346,665

 
 
$
(174,090
)
(50.2
)%
Towable
3,750

 
 
4,744

 
 
(994
)
(21.0
)%
(1) 
Percentages may not add due to rounding differences.
(2) 
Our backlog includes all accepted orders from dealers to be shipped within the next six months. Orders in backlog can be canceled or postponed at the option of the purchaser at any time without penalty and, therefore, backlog may not necessarily be an accurate measure of future sales.
Unaudited Dealer Inventory
 
Units As Of
 
 
 
August 30,
2014
 
August 31,
2013
 
Change
Motor homes
3,979

 
2,654

 
1,325

49.9
%
Towables
1,721

 
1,611

 
110
6.8
%