• Revenue: Down 18% compared with Q1 fiscal '24.
• Operating Expenses: Increased 1.3% from Q1 last year.
• SG&A Spend: Down 4.6% sequentially.
• Adjusted EBITDA Margin: Down from the prior year period.
• Marine Segment Revenue: Increased year-over-year.
• Marine Segment Adjusted EBITDA Margin: Improved 110 basis points to 9.3%.
• Net Debt-to-EBITDA Ratio: Approximately 3 times.
• Free Cash Flow: Negative $26.7 million.
• Dividend: Quarterly cash dividend of $0.34 per share.
• Stock Repurchase: Approximately $30 million worth of stock repurchased.
• Fiscal Year 2025 Revenue Guidance: $2.9 billion to $3.2 billion.
• Adjusted EPS Guidance: $3.10 to $4.40 per diluted share.

• Warning! GuruFocus has detected 4 Warning Signs with WGO.

Release Date: December 20, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Winnebago Industries Inc (NYSE:WGO) reported strong performance in its Marine segment, with revenue and margin growth driven by Barletta and Chris-Craft brands gaining market share.
• The company is executing a disciplined approach to managing production capacity, output, and costs, positioning itself for a market recovery in the second half of fiscal 2025.
• Winnebago Industries Inc (NYSE:WGO) is introducing new products, such as the Grand Design's Lineage Series M and Series F, which have received positive market feedback.
• The company is maintaining a healthy balance sheet with prudent capital spending and robust liquidity, supporting its long-term growth strategy.
• Winnebago Industries Inc (NYSE:WGO) is focused on strategic investments to drive long-term growth and value, including leadership changes to improve operational efficiencies in its Motorhome and Towables businesses.

Negative Points

• The RV industry continues to face a challenging operating environment with soft retail demand and cautious dealer networks, impacting segment revenues and profitability.
• Winnebago Industries Inc (NYSE:WGO) reported an 18% decline in revenues compared to the first quarter of fiscal 2024, driven by lower unit volumes in the Towables and Motorhome RV segments.
• The company experienced increased warranty expenses related to recalls in the Motorhome segment, impacting gross margins.
• Winnebago Industries Inc (NYSE:WGO) saw a decline in total market share by 50 basis points to 10.9% over the trailing 12 months.
• The company is facing competitive pressures with significant discounting in the marketplace, affecting profitability in its Motorhome segment.

Q & A Highlights

Q: Can you frame the health of your RV and marine dealer networks and any risks to Winnebago due to dealer pressure? A: Michael Happe, CEO: Most of our dealers are managing well despite industry challenges. We maintain regular contact with dealers and inventory lenders to monitor financial health. In Q1, we saw minimal financial impact from dealer health issues. Bryan Hughes, CFO: Financial impact is muted as we can efficiently relocate inventory from struggling dealers to others due to high demand for our brands.

Q: You undershipped the RV industry significantly in the quarter. Is this affecting retail market share for your brands? A: Michael Happe, CEO: We focus on maintaining appropriate inventory levels and quality in the field. We are not correlating retail results with shipment share trends. We believe we have enough inventory to compete for retail market share and are improving inventory aging.

Q: Can you provide metrics around Grand Design Motorized and the timing of Series F production ramp-up? A: Michael Happe, CEO: The Grand Design Motorized lineup, including the new Series F Super C, will begin production ramp-up in Q2, with most impact in the latter half of fiscal '25. We expect over $100 million in revenue opportunity for Grand Design Motorized in fiscal '25.

Q: Retail has been stronger recently. What is driving this, and have you seen an uptick in dealer orders? A: Michael Happe, CEO: We see positive signs like improved consumer confidence and retail trends. October RV retail turned positive for the first time in over 40 months. While dealer orders haven't increased significantly, our Towables business has seen a backlog uptick.

Q: How should we contextualize the guidance given Q1 results and expectations for Q2? A: Michael Happe, CEO: Our guidance range is thoughtfully considered, reflecting confidence in capturing various scenarios. We narrowed the range slightly, acknowledging Q1 results but remain optimistic about the next three quarters due to positive market indicators.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.