WINNEBAGO INDUSTRIES INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - March 26, 2015

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

WINNEBAGO INDUSTRIES ANNOUNCES SECOND QUARTER FISCAL 2015 RESULTS
- Revenues, Gross Profit and Gross Margin Improved Over Prior Year -
-- Board of Directors Approve Quarterly Cash Dividend of $0.09 Per Share --

FOREST CITY, IOWA, March 26, 2015 - Winnebago Industries, Inc. (NYSE:WGO), a leading United States recreation vehicle manufacturer, today reported financial results for the Company's second quarter of Fiscal 2015.

Second Quarter Fiscal 2015 Results
Revenues for the Fiscal 2015 second quarter ended February 28, 2015 were $234.5 million, an increase of 2.5%, versus $228.8 million for the Fiscal 2014 period. Operating income was $11.9 million for the current quarter compared to $14.0 million in the second quarter of last year. Fiscal 2015 second quarter net income was $8.1 million, or $0.30 per diluted share, versus $9.6 million, or $0.35 per diluted share, in the same period last year.

Although labor-related constraints and expenses continued into the second quarter, Fiscal 2015 second quarter gross profit as a percentage of sales improved 30 basis points year over year. This increase primarily reflected improved product mix, higher absorption of fixed costs and the absence of weather-related expenses that occurred in last year’s second quarter. Operating expenses increased in the Fiscal 2015 second quarter compared to last year mainly attributable to $1.5 million of incremental general and administrative expenses associated with two strategic initiatives that commenced during the quarter related to ERP implementation and strategic sourcing, as well as increased legal and equipment maintenance costs.

Compared to the same period of last year, motorhome revenue increased 2.4% in the Fiscal 2015 second quarter, primarily a result of motorhome unit shipment growth of 2.4%. Towables operating income improved $302,000 due mainly to revenue growth of 11.8%, comprised of a 7.7% increase in ASP and 5.2% growth in unit shipments.

Year over year, motorhome retail registrations increased 18% in the Fiscal 2015 second quarter and 29% on a rolling 12-month basis, based on internally reported retail information.

First Six Months Fiscal 2015 Results
Revenues for the first six months of Fiscal 2015 were $458.9 million, an increase of 1.7%, from $451.5 million for the same period of Fiscal 2014. The sales growth was primarily comprised of Towables ASP and unit growth of 11.2% and 8.7%, respectively, and motorhome unit shipments improvement of 1.8%. Net income in the Fiscal 2015 first six months was $18.0 million, or $0.67 per diluted share, versus $20.7 million, or $0.74 per diluted share, last year.

Quarterly Cash Dividend
On March 18, 2015, the Company’s board of directors approved a quarterly cash dividend of $0.09 per share payable on May 6, 2015 to common stockholders of record at the close of business on April 22, 2015.

Management Comments
Chairman, CEO and President Randy Potts commented, “During the second quarter, we grew revenues and improved gross profit margin despite continuing to work through the labor-related constraints and challenges we saw last quarter. We also incurred higher operating expenses, in large part attributable to the commencement of our new ERP system and strategic sourcing projects, which we believe will improve Winnebago’s efficiency and profitability once complete. Year-over-year motorized unit bookings grew 59% in the quarter, contributing to a very healthy backlog. Additionally, motorhome retail registrations grew 18% in the second quarter over last year, which we believe is confirmation of continued favorable consumer demand for our products. These factors, coupled with continued positive Towables results, should generate improved long-term results for our Company.”

Chief Financial Officer Sarah Nielsen added, “Operating cash flow for the second quarter was affected by an increase in receivables of approximately $13 million due to timing of invoicing in the quarter. We also ended the quarter with elevated inventory levels, in part as a result of the rental build season. In the second half of Fiscal 2015, we expect to generate positive cash flow through the continued strength of our operating results, as well as favorable changes in working capital.”

“Finally, with our commitment and confidence in the Company’s Towables business, we decided to purchase the currently leased Towables assembly facilities in Middlebury, Ind., for approximately $5.4 million. This purchase, which will provide future cost savings, is included in our planned capital expenditures of $15 to $20 million for this fiscal year. We anticipate that we will close this transaction in April.”





Conference Call
Winnebago Industries, Inc. will conduct a conference call to discuss second quarter Fiscal 2015 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://investor.wgo.net. 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 Motorhomes®", 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, unexpected expenses related to ERP and Strategic Sourcing projects 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
 
February 28, 2015
 
March 1, 2014
Net revenues
$
234,543

 
100.0
%
 
$
228,811

 
100.0
 %
Cost of goods sold
210,285

 
89.7
%
 
205,966

 
90.0
 %
Gross profit
24,258

 
10.3
%
 
22,845

 
10.0
 %
Operating expenses:
 
 
 
 
 
 
 
Selling
4,846

 
2.1
%
 
4,489

 
2.0
 %
General and administrative
7,464

 
3.2
%
 
4,949

 
2.2
 %
Gain on real estate
—

 
—
%
 
(629
)
 
(0.3
)%
Total operating expenses
12,310

 
5.2
%
 
8,809

 
3.8
 %
Operating income
11,948

 
5.1
%
 
14,036

 
6.1
 %
Non-operating income (expense)
28

 
—
%
 
(74
)
 
—
 %
Income before income taxes
11,976

 
5.1
%
 
13,962

 
6.1
 %
Provision for taxes
3,880

 
1.7
%
 
4,369

 
1.9
 %
Net income
$
8,096

 
3.5
%
 
$
9,593

 
4.2
 %
Income per common share:
 
 
 
 
 
 
 
Basic
$
0.30

 
 
 
$
0.35

 
 
Diluted
$
0.30

 
 
 
$
0.35

 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
26,924

 
 
 
27,595

 
 
Diluted
27,018

 
 
 
27,724

 
 

Percentages may not add due to rounding differences.


 
Six Months Ended
 
February 28, 2015
 
March 1, 2014
Net revenues
$
458,946

 
100.0
%
 
$
451,481

 
100.0
 %
Cost of goods sold
410,302

 
89.4
%
 
402,674

 
89.2
 %
Gross profit
48,644

 
10.6
%
 
48,807

 
10.8
 %
Operating expenses:
 
 
 
 
 
 
 
Selling
9,553

 
2.1
%
 
8,822

 
2.0
 %
General and administrative
12,701

 
2.8
%
 
10,572

 
2.3
 %
Gain on real estate
—

 
—
%
 
(629
)
 
(0.1
)%
Total operating expenses
22,254

 
4.8
%
 
18,765

 
4.2
 %
Operating income
26,390

 
5.8
%
 
30,042

 
6.7
 %
Non-operating income
35

 
—
%
 
17

 
—
 %
Income before income taxes
26,425

 
5.8
%
 
30,059

 
6.7
 %
Provision for taxes
8,434

 
1.8
%
 
9,320

 
2.1
 %
Net income
$
17,991

 
3.9
%
 
$
20,739

 
4.6
 %
Income per common share:
 
 
 
 
 
 
 
Basic
$
0.67

 
 
 
$
0.75

 
 
Diluted
$
0.67

 
 
 
$
0.74

 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
26,946

 
 
 
27,723

 
 
Diluted
27,048

 
 
 
27,850

 
 

Percentages may not add due to rounding differences.





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

 
Feb 28,
2015
 
Aug 30,
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
7,938

 
$
57,804

Receivables, net
75,636

 
69,699

Inventories
149,841

 
112,848

Net investment in operating leases
—

 
15,978

Prepaid expenses and other assets
8,215

 
5,718

Income taxes receivable and prepaid
8,808

 
5

Deferred income taxes
1,975

 
9,641

Total current assets
252,413

 
271,693

Total property and equipment, net
28,370

 
25,135

Investment in life insurance
25,650

 
25,126

Deferred income taxes
23,762

 
24,029

Goodwill
1,228

 
1,228

Other assets
9,508

 
11,091

Total assets
$
340,931

 
$
358,302

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
34,215

 
$
33,111

Income taxes payable
—

 
2,927

Accrued expenses
42,341

 
47,631

Operating lease repurchase obligations
—

 
16,050

Total current liabilities
76,556

 
99,719

Non-current liabilities:
 
 
 
Unrecognized tax benefits
2,756

 
3,024

Postretirement health care and deferred compensation benefits, net of current portion
59,630

 
62,811

Total non-current liabilities
62,386

 
65,835

Stockholders' equity
201,989

 
192,748

Total liabilities and stockholders' equity
$
340,931

 
$
358,302





Winnebago Industries, Inc.
Unaudited Consolidated Statements of Cash Flows
(In thousands)
 
Six Months Ended
 
Feb 28,
2015
Mar 1,
2014
Operating activities:
 
 
Net income
$
17,991

$
20,739

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
2,125

1,966

LIFO expense
626

608

Stock-based compensation
1,348

1,388

Deferred income taxes including valuation allowance
7,127

(152
)
Postretirement benefit income and deferred compensation expenses
(338
)
(405
)
Provision (benefit) for doubtful accounts
2

(1
)
Gain on disposal of property
(35
)
(702
)
Increase in cash surrender value of life insurance policies
(462
)
(440
)
Change in assets and liabilities:
 
 
Inventories
(37,619
)
(12,356
)
Receivables, prepaid and other assets
(7,560
)
(40,056
)
Investment in operating leases, net of repurchase obligations
(72
)
—

Income taxes and unrecognized tax benefits
(11,258
)
1,269

Accounts payable and accrued expenses
(4,075
)
536

Postretirement and deferred compensation benefits
(1,852
)
(1,924
)
Net cash used by operating activities
(34,052
)
(29,530
)
 
 
 
Investing activities:
 
 
Proceeds from the sale of investments
—

2,350

Purchases of property and equipment
(5,154
)
(3,772
)
Proceeds from the sale of property
43

2,392

Other
294

(105
)
Net cash (used in) provided by investing activities
(4,817
)
865

 
 
 
Financing activities:
 
 
Payments for purchase of common stock
(6,141
)
(21,484
)
Payments of cash dividends
(4,883
)
—

Proceeds from exercise of stock options
—

2,080

Borrowings on loans
22,000

—

Repayment of loans
(22,000
)
—

Other
27

50

Net cash used in financing activities
(10,997
)
(19,354
)
 
 
 
Net decrease in cash and cash equivalents
(49,866
)
(48,019
)
Cash and cash equivalents at beginning of period
57,804

64,277

Cash and cash equivalents at end of period
$
7,938

$
16,258

 
 
 
Supplemental cash flow disclosure:
 
 
Income taxes paid
$
12,565

$
8,200

Interest paid
$
10

$
—







Winnebago Industries, Inc.
Unaudited Deliveries
 
Quarter Ended
 
Change
(In units)
Feb 28,
2015
Product
Mix % (1)
 
Mar 1,
2014
Product
Mix % (1)
 
Units
%
Change
Class A gas
524

24.9
%
 
589

28.7
%
 
(65
)
(11.0
)%
Class A diesel
286

13.6
%
 
456

22.2
%
 
(170
)
(37.3
)%
Total Class A
810

38.5
%
 
1,045

50.9
%
 
(235
)
(22.5
)%
Class B
277

13.2
%
 
198

9.6
%
 
79

39.9
 %
Class C
1,017

48.3
%
 
812

39.5
%
 
205

25.2
 %
Total motor homes
2,104

100.0
%
 
2,055

100.0
%
 
49

2.4
 %
 
 
 
 
 
 
 
 
 
Travel trailer
508

84.0
%
 
463

80.5
%
 
45

9.7
 %
Fifth wheel
97

16.0
%
 
112

19.5
%
 
(15
)
(13.4
)%
    Total towables
605

100.0
%
 
575

100.0
%
 
30

5.2
 %
 
 
 
 
 
 
 
 
 
 
Six Months Ended
 
Change
(In units)
Feb 28,
2015
Product
Mix % (1)
 
Mar 1,
2014
Product
Mix % (1)
 
Units
%
Change
Class A gas
1,139

27.5
%
 
1,299

32.0
%
 
(160
)
(12.3
)%
Class A diesel
598

14.5
%
 
853

21.0
%
 
(255
)
(29.9
)%
Total Class A
1,737

42.0
%
 
2,152

53.0
%
 
(415
)
(19.3
)%
Class B
465

11.2
%
 
300

7.4
%
 
165

55.0
 %
Class C
1,933

46.7
%
 
1,608

39.6
%
 
325

20.2
 %
Total motor homes
4,135

100.0
%
 
4,060

100.0
%
 
75

1.8
 %
 
 
 
 
 
 
 
 
 
Travel trailer
969

84.2
%
 
870

82.2
%
 
99

11.4
 %
Fifth wheel
182

15.8
%
 
189

17.8
%
 
(7
)
(3.7
)%
Total towables
1,151

100.0
%
 
1,059

100.0
%
 
92

8.7
 %
(1) Percentages may not add due to rounding differences.

Unaudited Backlog
 
As Of
 
Change
 
February 28, 2015
 
March 1, 2014
 
 
%
 
Units
% (1)
 
Units
% (1)
 
Units
Change
Class A gas
487

21.4
%
 
1,129

38.9
%
 
(642
)
(56.9
)%
Class A diesel
229

10.1
%
 
274

9.4
%
 
(45
)
(16.4
)%
Total Class A
716

31.5
%
 
1,403

48.4
%
 
(687
)
(49.0
)%
Class B
238

10.5
%
 
274

9.4
%
 
(36
)
(13.1
)%
Class C
1,321

58.1
%
 
1,223

42.2
%
 
98

8.0
 %
Total motor home backlog(2)
2,275

100.0
%
 
2,900

100.0
%
 
(625
)
(21.6
)%
 
 
 
 
 
 
 
 
 
Travel trailer
83

63.8
%
 
169

82.0
%
 
(86
)
(50.9
)%
Fifth wheel
47

36.2
%
 
37

18.0
%
 
10

27.0
 %
    Total towable backlog (2)
130

100.0
%
 
206

100.0
%
 
(76
)
(36.9
)%
 
 
 
 
 
 
 
 
 
Total approximate backlog revenue dollars (in 000's):
 
 
 
 
 
 
Motor home
$
216,228

 
 
$
260,095

 
 
$
(43,867
)
(16.9
)%
Towable
4,121

 
 
4,853

 
 
(732
)
(15.1
)%
(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
 
 
 
Feb 28,
2015
Mar 1,
2014
Change
Motor homes
4,778

 
3,907

 
871

22.3
%
Towables
1,877

 
1,772

 
105

5.9
%


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