Winnebago Industries, Inc. has reported financial results for the Company’s fourth quarter and full year Fiscal 2020 after a profitable 12 months with an unpredictable start.
Financial Summary:
— Quarterly Revenues Up 39.1% Year-Over-Year, Driven by Strong End Consumer Demand
— Fourth Quarter Gross Margin Expansion of 90 Basis Points
— Reported Quarterly Diluted EPS of $1.25; Adjusted EPS of $1.45 Up 45.0% Over Prior Year
— Cash Flow From Operations of $270.4 million for the Fiscal Year Up 102.2% Over Prior Year
Fourth Quarter Fiscal 2020 Results
Revenues for the Fiscal 2020 fourth quarter ended August 29, 2020, were $737.8 million, an increase of 39.1% compared to $530.4 million for the Fiscal 2019 period. Revenues for Newmar, which was acquired in the first quarter of Fiscal 2020, were $126.3 million. Revenues excluding Newmar were $611.5 million, reflecting an organic increase of 15.3% compared to the Fiscal 2019 period primarily driven by growth in the Towable segment. Gross profit was $122.5 million compared to $83.2 million for the Fiscal 2019 period. Gross profit margin increased 90 basis points in the quarter, driven by Motorhome segment lower input costs and Towable segment fixed cost leverage, partially offset by segment mix. Operating income was $68.4 million for the quarter, an increase of 52.8% compared to $44.8 million for the fourth quarter last year, driven by Towable segment revenue growth and the addition of Newmar. Fiscal 2020 fourth quarter net income was $42.5 million, an increase of 33.2% compared to $31.9 million in the fourth quarter of last year, driven by the growth in operating income partially offset by increased interest expense. The increase in interest expense is related to the convertible bond issued to finance the acquisition of Newmar, and separately, the write-off of certain debt issuance costs associated with the termination of the company’s Term Loan B which was refinanced by a bond issuance during the quarter. Earnings per diluted share was $1.25, an increase of 23.8% compared to $1.01 in the same period last year. Adjusted earnings per diluted share was $1.45 for the fourth quarter, an increase of 45.0% compared to adjusted earnings per diluted share of $1.00 in the same period last year. Fiscal 2020 fourth quarter consolidated adjusted earnings per diluted share excludes costs totaling $6.6 million, or $0.20 per diluted share, after tax, driven by debt issuance costs written off due to the termination of the Term Loan B, and the non-cash portion of interest expense related to the convertible bond. Consolidated Adjusted EBITDA was $76.5 million for the quarter, compared to $50.8 million last year, representing an increase of 50.5%.
President and Chief Executive Officer Michael Happe commented, “In the face of the unprecedented impacts of the COVID-19 pandemic, our strong fourth quarter finish to the year was a testament to the incredible resolve of our world-class team, the strength of our portfolio of leading outdoor lifestyle brands, and our efficiency in quickly and safely resuming operations to meet tremendous consumer demand. We added motorized scale through the acquisition of Newmar and continued to grow our RV market share throughout the year by leveraging strong dealer relationships, exciting new products and record consumer interest. Winnebago Industries also generated expanded margins and stronger cash flows, while delivering a quality product and customer experience in collaboration with our channel partners. Looking ahead, we enter our 2021 fiscal year with four premier brand platforms, strong operational momentum, a record backlog, and the financial flexibility to manage through the ongoing uncertainty in the environment. Our efforts continue to rally around building an extraordinary outdoor lifestyle company, and creating value for our end customers, dealers, employees and shareholders. I want to thank all of our Winnebago Industries employees for their resilience and commitment during these unique times and focusing on giving our customers a safe and memorable experience with our products in the outdoors.”
Full Year Fiscal 2020 Results
Fiscal 2020 revenues of $2.4 billion increased 18.6% from $2.0 billion in Fiscal 2019. Revenues for Newmar, which was acquired in the first quarter of Fiscal 2020, were $388.4 million. Revenues excluding Newmar were $2.0 billion, roughly flat with Fiscal 2019 as a result of the impacts of the COVID-19 pandemic and related suspension of manufacturing operations during the Fiscal 2020 third quarter and disruptions across the dealer network, supply chain, and end consumers. Gross profit margin decreased 220 basis points, primarily due to the mix impact of adding Newmar as well as the related purchase accounting impacts, and the impact of COVID-19 during the fiscal third quarter. Operating income was $113.8 million for Fiscal 2020, compared to $155.3 million in Fiscal 2019. Net income for Fiscal 2020 was $61.4 million, a decrease of 45.0% compared to $111.8 million in Fiscal 2019 due to the impact of COVID-19 and increased interest expense. The increase in interest expense is related to the convertible bond issued to finance the acquisition of Newmar, and separately, the write-off of certain debt issuance costs associated with the termination of the company’s Term Loan B which was refinanced by a bond issuance during the fourth quarter. Fiscal 2020 earnings per diluted share was $1.84, a decrease of 47.7% compared to earnings per diluted share of $3.52 in Fiscal 2019. Adjusted earnings per diluted share was $2.58 for Fiscal 2020, compared to adjusted earnings per diluted share of $3.45 in the same period last year. Fiscal 2020 consolidated adjusted earnings per diluted share excludes costs totaling $25.0 million, or $0.75 per diluted share, after tax, related to the non-cash portion of interest expense associated with the convertible bond, Newmar acquisition-related costs, debt issuance costs written off due to the termination of the Term Loan B and restructuring costs. Adjusted earnings per diluted share was also impacted by the share consideration issued in the Newmar acquisition. Fiscal 2020 consolidated Adjusted EBITDA was $168.1 million, a decrease of 6.4% from $179.7 million in Fiscal 2019.
Towable Fourth Quarter and Full Year Fiscal 2020 Results
Revenues for the Towable segment were $414.0 million for the fourth quarter, up 34.8% over the prior year, primarily driven by strong consumer demand for outdoor experiences, particularly in Grand Design products. Segment Adjusted EBITDA was $61.3 million, up 45.8% over the prior year period. Adjusted EBITDA margin of 14.8% increased 110 basis points, primarily due to leverage, but also benefiting from profitability initiatives. Backlog increased to a record $747.9 million, up 219.2% over the prior year, as dealers have experienced sizable reductions to their inventory as they have encountered extremely high levels of consumer demand in the fourth quarter.
For the full year Fiscal 2020, revenues for the Towable segment were $1.23 billion, up 2.5% from Fiscal 2019. Segment Adjusted EBITDA for the full year was $148.3 million, down 9.4% from Fiscal 2019 driven by the impact of COVID-19 during the Fiscal 2020 third quarter. Adjusted EBITDA margin of 12.1% decreased 160 basis points for the full year.
Motorhome Fourth Quarter and Full Year Fiscal 2020 Results
In the fourth quarter, revenues for the Motorhome segment were $301.8 million, up 50.4% from the prior year, driven by the addition of Newmar. Revenues excluding Newmar were $175.5 million, down 12.6%, as strong class B sales were more than offset by sales declines in class A and class C. Segment Adjusted EBITDA was $19.5 million, up 81.2% from the prior year due to improved profitability in the Winnebago branded business and the addition of Newmar, partially offset by the organic revenue decline and class mix. Adjusted EBITDA margin of 6.4% increased 100 basis points. Backlog increased to a record $1.1 billion, up 535.8% over the prior year, reflecting extremely high levels of consumer demand.
For the full year Fiscal 2020, revenues for the Motorhome segment were $1.1 billion, up 49.5% from Fiscal 2019. Revenues excluding Newmar were $668.4 million, down 5.4% from Fiscal 2019, as a result of manufacturing and distribution disruption due to the COVID-19 pandemic. Segment Adjusted EBITDA for the full year was $32.9 million, up 20.0% from Fiscal 2019 driven by the addition of Newmar partially offset by the impact of COVID-19 during the Fiscal 2020 third quarter. Adjusted EBITDA margin of 3.1% was down 80 basis points for the full year due to the impact of COVID-19 during the Fiscal 2020 third quarter partially offset by the addition of Newmar.
Balance Sheet and Cash Flow
As of August 29, 2020, the Company had total outstanding debt of $512.6 million ($600.0 million of debt, net of convertible note discount of $74.3 million, and net of debt issuance costs of $13.1 million) and working capital of $413.2 million. Cash flow from operations was $270.4 million for the full year Fiscal 2020, resulting in an increase of $136.7 million, or 102.2%, from the $133.8 million generated in Fiscal 2019.
Quarterly Cash Dividend
On August 19, 2020, the Company’s board of directors approved a quarterly cash dividend of $0.12 per share payable on September 30, 2020, to common stockholders of record at the close of business on September 16, 2020. This represents a 9% increase from the prior dividend of $0.11 per share.
Mr. Happe continued, “As we look ahead to Fiscal 2021, we are encouraged by the ongoing outdoor recreation demand trends we are experiencing. We have built a strong and growing position in the RV market, and our customers continue to view all our brands as a trusted and safe way to have extraordinary experiences as they travel, live, work, and play in the outdoors. I’m incredibly proud of the progress we have made over the last several years expanding Winnebago Industries’ portfolio while simultaneously enhancing the quality of our product lineup and service levels and the profitability we are able to achieve. During fiscal year 2020, we continued to expand our family of outstanding brands with the acquisition of Newmar, and when combined with our Winnebago, Grand Design RV, and Chris-Craft brands, we believe we have four of the most respected brands in the outdoors industry. We have expanded our leadership team capabilities as well in the past year, through the acquisition of Newmar and also through adding new talent to the team in Huw Bower to lead our Winnebago Outdoors business, as announced at the end of September. Going forward, we are committed to managing our Company in a highly disciplined fashion so that we are best positioned to build on our momentum in the marketplace, capture the numerous opportunities we believe lie ahead and deliver further value to the customers and communities we serve. Finally, Fiscal 2020 also marks an inflection point in our efforts to improve on our corporate responsibility obligations. It is our strong intention that through these initiatives, our Winnebago Industries team will emerge as an even stronger leader in our communities, and in so doing, will make a meaningful contribution to an improvement in the many dimensions of social justice.”
