WINNEBAGO INDUSTRIES INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 EARNINGS RELEASE - October 15, 2015

Attached files

file filename
EX-99.1 - PRINTABLE PDF OF FORM 8-K AND EXHIBIT 99.1 EARNINGS RELEASE - WINNEBAGO INDUSTRIES INCa2015q4earningsrelease.pdf
8-K - FORM 8-K FOR PERIOD ENDING AUGUST 29, 2015 - WINNEBAGO INDUSTRIES INCa8kq42015earningsrelease.htm


News Release
Media Contact: Sam Jefson, Public Relations Specialist - 641-585-6803 - sjefson@wgo.net
Investor Relations Contact: Samantha Dugan - 641-585-6160 - sdugan@wgo.net

WINNEBAGO INDUSTRIES ANNOUNCES FOURTH QUARTER AND FISCAL 2015 RESULTS
-- Full Year Fiscal 2015 Operating Cash Flow Increased by 95% Versus Last Year --
-- Board of Directors Approved 11% Increase in Quarterly Cash Dividend to $0.10 Per Share --

FOREST CITY, IOWA, October 15, 2015 - Winnebago Industries, Inc. (NYSE:WGO), a leading United States recreation vehicle manufacturer, today reported financial results for the Company's fourth quarter and full year Fiscal 2015.

Fourth Quarter Fiscal 2015 Results
Revenues for the Fiscal 2015 fourth quarter ended August 29, 2015, were $251.0 million, an increase of 2.1%, versus $245.9 million for the Fiscal 2014 period. Operating income was $16.9 million for the current quarter compared to $18.3 million in the fourth quarter of last year. Fiscal 2015 fourth quarter net income was $11.7 million, or $0.43 per diluted share, versus $12.9 million, or $0.48 per diluted share, in the same period last year.
    
Fourth quarter gross margin improved sequentially from the third quarter due in part to improved manufacturing efficiencies within the motorized group. However, year-over-year fourth quarter gross margin declined due to unfavorable trends in warranty expense, the establishment of a warranty recall reserve and costs related to motorized manufacturing inefficiencies. These costs were partly offset by the reinstatement of tariff rebates on certain imported materials, lower commodity related expense, greater absorption of fixed costs and the realization of cost-saving benefits related to the Company’s strategic sourcing initiative.

Operating expenses increased in the Fiscal 2015 fourth quarter compared to last year due mainly to incremental general and administrative expenses associated with two previously disclosed strategic initiatives related to ERP implementation and strategic sourcing, as well as costs related to a retirement agreement with the Company’s former CEO.

Fourth quarter Fiscal 2015 revenue growth year over year was driven by improved towables revenues of 36.7%, as a result of a 26.3% average selling price (ASP) increase and unit growth of 7.5%. Compared to last year, fourth quarter Fiscal 2015 motorized unit shipment volumes were essentially flat.

Year over year, motorhome retail registrations increased 28% in the Fiscal 2015 fourth quarter and 16% on a rolling 12-month basis, while towable retail registrations increased 21% in the Fiscal 2015 fourth quarter and 14% on a rolling 12-month basis, based on internally reported retail information.

Full Year Fiscal 2015 Results
Fiscal 2015 revenues were $976.5 million, an increase of 3.3% from $945.2 million for Fiscal 2014. The sales growth was primarily comprised of motorhome unit growth of 3.9% and towables ASP and unit growth of 15.9% and 6.4%, respectively. Net income for Fiscal 2015 was $41.2 million, or $1.52 per diluted share, versus $45.1 million, or $1.64 per diluted share, last year. During Fiscal 2015, investments related to the new ERP system and strategic sourcing initiatives aggregated $7.0 million, of which $3.8 million was expensed.


1



Quarterly Cash Dividend
On October 14, 2015, the Company’s board of directors approved an 11% increase to the quarterly cash dividend to $0.10 per share, payable on November 25, 2015 to common stockholders of record at the close of business on November 11, 2015.

Management Comments
Sarah Nielsen, Chief Financial Officer, commented, “Fiscal 2015 results were driven by strong performance in our class B and C motorized products as well as significantly improved results from the towables group, where both revenue and operating income grew. During the year we made considerable progress on both of our strategic initiatives and saw early benefits from our strategic sourcing project, which we anticipate will enhance gross margin by up to 50 basis points in Fiscal 2016. Additionally, we continued our efforts to improve labor capacity within motorized through the purchase of a facility in Waverly, Iowa. In Fiscal 2016, we will be exiting our bus and aluminum extrusion operations, which we believe will improve profitability and should add production capacity for our higher margin motorhome business.

Nielsen added, “Our operating cash flow doubled during the fourth quarter and is up by 95% for the full year of Fiscal 2015. We are pleased with this performance particularly during a period where we have made significant long-term investments aimed at benefiting the Company in the future.”

Nielsen concluded, “We maintain a positive long-term outlook for the business and are encouraged with the continued consumer demand for our products, as well as with RVIA’s expectation for continued industry growth of approximately 3% in calendar 2016. With industry leading products, a solid balance sheet and several strategic actions underway, we are well positioned to generate long-term shareholder value.”

Conference Call
Winnebago Industries, Inc. will conduct a conference call to discuss fourth quarter and Fiscal 2015 results at 9:00 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 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, and fifth wheel products. 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://investor.wgo.net.


2


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, any 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.
# # #

3


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

 
Quarter Ended
 
August 29, 2015
 
August 30, 2014
Net revenues
$
251,049

 
100.0
%
 
$
245,935

 
100.0
%
Cost of goods sold
222,996

 
88.8
%
 
217,226

 
88.3
%
Gross profit
28,053

 
11.2
%
 
28,709

 
11.7
%
Operating expenses:
 
 
 
 
 
 
 
Selling
4,458

 
1.8
%
 
4,584

 
1.9
%
General and administrative
6,684

 
2.7
%
 
5,847

 
2.4
%
Total operating expenses
11,142

 
4.4
%
 
10,431

 
4.2
%
Operating income
16,911

 
6.7
%
 
18,278

 
7.4
%
Non-operating income
80

 
—
%
 
16

 
—
%
Income before income taxes
16,991

 
6.8
%
 
18,294

 
7.4
%
Provision for taxes
5,274

 
2.1
%
 
5,365

 
2.2
%
Net income
$
11,717

 
4.7
%
 
$
12,929

 
5.3
%
Income per common share:
 
 
 
 
 
 
 
Basic
$
0.43

 
 
 
$
0.48

 
 
Diluted
$
0.43

 
 
 
$
0.48

 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
26,937

 
 
 
27,064

 
 
Diluted
27,056

 
 
 
27,181

 
 


 
Year Ended
 
August 29, 2015
 
August 30, 2014
Net revenues
$
976,505

 
100.0
%
 
$
945,163

 
100.0
 %
Cost of goods sold
871,625

 
89.3
%
 
841,166

 
89.0
 %
Gross profit
104,880

 
10.7
%
 
103,997

 
11.0
 %
Operating expenses:
 
 
 
 
 
 
 
Selling
19,161

 
2.0
%
 
18,293

 
1.9
 %
General and administrative
25,838

 
2.6
%
 
22,424

 
2.4
 %
Loss (gain) on fixed assets
462

 
—
%
 
(629
)
 
(0.1
)%
Total operating expenses
45,461

 
4.7
%
 
40,088

 
4.2
 %
Operating income
59,419

 
6.1
%
 
63,909

 
6.8
 %
Non-operating income
115

 
—
%
 
768

 
0.1
 %
Income before income taxes
59,534

 
6.1
%
 
64,677

 
6.8
 %
Provision for taxes
18,324

 
1.9
%
 
19,624

 
2.1
 %
Net income
$
41,210

 
4.2
%
 
$
45,053

 
4.8
 %
Income per common share:
 
 
 
 
 
 
 
Basic
$
1.53

 
 
 
$
1.64

 
 
Diluted
$
1.52

 
 
 
$
1.64

 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
26,941

 
 
 
27,430

 
 
Diluted
27,051

 
 
 
27,545

 
 
Percentages may not add due to rounding differences.


4


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

 
August 29,
2015
 
August 30,
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
70,239

 
$
57,804

Receivables, net
66,936

 
69,699

Inventories
112,165

 
112,848

Investment in operating leases
—

 
15,978

Prepaid expenses and other assets
6,882

 
5,723

Deferred income taxes
9,995

 
9,641

Total current assets
266,217

 
271,693

Total property and equipment, net
37,250

 
25,135

Investment in life insurance
26,172

 
25,126

Deferred income taxes
21,994

 
24,029

Goodwill
1,228

 
1,228

Other assets
9,313

 
11,091

Total assets
$
362,174

 
$
358,302

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
33,158

 
$
33,111

Operating lease repurchase obligations
—

 
16,050

Income taxes payable
2,314

 
2,927

Accrued expenses
46,138

 
47,631

Total current liabilities
81,610

 
99,719

Long-term liabilities:
 
 
 
Unrecognized tax benefits
2,511

 
3,024

Postretirement health care and deferred compensation benefits, net of current portion
57,090

 
62,811

Total long-term liabilities
59,601

 
65,835

Stockholders' equity
220,963

 
192,748

Total liabilities and stockholders' equity
$
362,174

 
$
358,302


5


Winnebago Industries, Inc.
Unaudited Consolidated Statements of Cash Flows
(In thousands)
 
Year Ended
 
August 29,
2015
August 30,
2014
Operating activities:
 
 
Net income
$
41,210

$
45,053

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
4,513

3,997

LIFO expense
1,244

1,456

Postretirement benefit income and deferred compensation expenses
(843
)
(979
)
Stock-based compensation
3,097

3,386

Asset impairment
462

—

     Benefit for doubtful accounts
(1
)
(19
)
Deferred income taxes including valuation allowance
215

(48
)
Gain on life insurance
(11
)
(726
)
     Increase in cash surrender value of life insurance policies
(883
)
(805
)
    Gain on disposal of property
(14
)
(691
)
Change in assets and liabilities:
 
 
Inventories
(561
)
(1,763
)
Receivables, prepaid and other assets
2,458

(38,233
)
Investment in operating leases, net of repurchase obligations
(72
)
72

     Income taxes and unrecognized tax benefits
408

5,625

Accounts payable and accrued expenses
(1,880
)
10,919

Postretirement and deferred compensation benefits
(4,159
)
(4,008
)
Net cash provided by operating activities
45,183

23,236

 
 
 
Investing activities:
 
 
Proceeds from the sale of investments
—

2,350

Proceeds from life insurance
43

1,737

Purchases of property and equipment
(16,573
)
(10,476
)
Proceeds from the sale of property
65

2,423

Other
(52
)
(1,402
)
Net cash used in investing activities
(16,517
)
(5,368
)
 
 
 
Financing activities:
 
 
Payments for purchase of common stock
(6,519
)
(26,340
)
Payments of cash dividends
(9,765
)
—

Proceeds from exercise of stock options
—

2,080

Borrowings on loans
22,000

—
Repayments on loans
(22,000
)
—
     Other
53

(81
)
Net cash used in financing activities
(16,231
)
(24,341
)
 
 
 
Net increase (decrease) in cash and cash equivalents
12,435

(6,473
)
Cash and cash equivalents at beginning of period
57,804

64,277

Cash and cash equivalents at end of period
$
70,239

$
57,804

 
 
 
Supplemental cash flow disclosure:
 
 
Income taxes paid
$
17,658

$
14,061

Interest paid
10

—



6


Winnebago Industries, Inc.
Unaudited Deliveries
 
Quarter Ended
 
Change
(In units)
August 29,
2015
Product
Mix % (1)
 
August 30,
2014
Product
Mix % (1)
 
Units
%
Change
Class A gas
597

25.2
%
 
971

41.1
%
 
(374
)
(38.5
)%
Class A diesel
222

9.4
%
 
277

11.7
%
 
(55
)
(19.9
)%
Total Class A
819

34.6
%
 
1,248

52.8
%
 
(429
)
(34.4
)%
Class B
256

10.8
%
 
227

9.6
%
 
29

12.8
 %
Class C
1,291

54.6
%
 
889

37.6
%
 
402

45.2
 %
Total motor homes
2,366

100.0
%
 
2,364

100.0
%
 
2

0.1
 %
 
 
 
 
 
 
 
 
 
Travel trailer
615

79.2
%
 
584
80.8
%
 
31

5.3
 %
Fifth wheel
162

20.8
%
 
139
19.2
%
 
23

16.5
 %
    Total towables
777

100.0
%
 
723
100.0
%
 
54

7.5
 %
 
 
 
 
 
 
 
 
 
 
Year Ended
 
Change
(In units)
August 29,
2015
Product
Mix % (1)
 
August 30,
2014
Product
Mix % (1)
 
Units
%
Change
Class A gas
2,337

25.7
%
 
3,056

34.9
%
 
(719
)
(23.5
)%
Class A diesel
1,105

12.1
%
 
1,410

16.1
%
 
(305
)
(21.6
)%
Total Class A
3,442

37.8
%
 
4,466

51.0
%
 
(1,024
)
(22.9
)%
Class B
991

10.9
%
 
751

8.6
%
 
240

32.0
 %
Class C
4,664

51.3
%
 
3,538

40.4
%
 
1,126

31.8
 %
Total motor homes (2)
9,097

100.0
%
 
8,755

100.0
%
 
342

3.9
 %
 
 
 
 
 
 
 
 
 
Travel trailer
2,182

81.7
%
 
2,052

81.8
%
 
130

6.3
 %
Fifth wheel
488

18.3
%
 
457

18.2
%
 
31

6.8
 %
Total towables
2,670

100.0
%
 
2,509

100.0
%
 
161

6.4
 %
(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 were subject to repurchase option.
Unaudited Backlog
 
As Of
 
Change
 
August 29, 2015
 
August 30, 2014
 
 
%
 
Units
% (1)
 
Units
% (1)
 
Units
Change
Class A gas
400

22.8
%
 
338

17.8
%
 
62

18.3
 %
Class A diesel
143

8.2
%
 
302

15.9
%
 
(159
)
(52.6
)%
Total Class A
543

31.0
%
 
640

33.7
%
 
(97
)
(15.2
)%
Class B
291

16.6
%
 
323

17.0
%
 
(32
)
(9.9
)%
Class C
920

52.5
%
 
936

49.3
%
 
(16
)
(1.7
)%
Total motor home backlog(2)
1,754

100.0
%
 
1,899

100.0
%
 
(145
)
(7.6
)%
 
 
 
 
 
 
 
 
 
Travel trailer
236

95.2
%
 
134

82.2
%
 
102

76.1
 %
Fifth wheel
12

4.8
%
 
29

17.8
%
 
(17
)
(58.6
)%
    Total towable backlog (2)
248

100.0
%
 
163

100.0
%
 
85

52.1
 %
 
 
 
 
 
 
 
 
 
Total approximate backlog revenue dollars (in 000's):
 
 
 
 
 
 
Motor home
$
156,353

 
 
$
172,575

 
 
$
(16,222
)
(9.4
)%
Towable
6,171

 
 
3,750

 
 
2,421

64.6
 %
(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 29,
2015
 
August 30,
2014
 
Change
Motor homes
4,072

 
3,979

 
93

2.3
 %
Towables
1,663

 
1,721

 
(58)
(3.4
)%

7

Stock widget

Investing forum

WINNEBAGO INDUSTRIES INC Reports