WINNEBAGO INDUSTRIES INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 EARNINGS RELEASE - June 22, 2016

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

WINNEBAGO INDUSTRIES ANNOUNCES THIRD-QUARTER FISCAL 2016 RESULTS
-- Gross Margins Expand by 70 Basis Points on a YTD basis--
-- Board of Directors Approved Regular Quarterly Cash Dividend of $0.10 Per Share --

FOREST CITY, IOWA, June 22, 2016 - Winnebago Industries, Inc. (NYSE:WGO), a leading United States recreation vehicle manufacturer, today reported financial results for the Company's third quarter of Fiscal 2016.

Third Quarter Fiscal 2016 Results
Revenues for the Fiscal 2016 third quarter ended May 28, 2016, were $272.1 million, an increase of 2.1%, compared to $266.5 million for the Fiscal 2015 period. Operating income was $20.6 million for the current quarter, an improvement of 27.8% compared to $16.1 million in the third quarter of last year. Fiscal 2016 third quarter net income was $14.4 million, or $0.53 per diluted share, an increase of 25.5% compared to $11.5 million, or $0.43 per diluted share, in the same period last year.

President and Chief Executive Officer Michael Happe commented, “Continued strong growth in our towables business, combined with a moderate climb in our motorized shipments drove increased revenues for the quarter. The motorized team made solid progress this past quarter in driving a higher level of manufacturing output and addressing the heavy order backlog we carried into the spring, while also working to deliver more consistent levels of product quality. Our towables plan of widening the product line-up, increasing points of distribution, and elevating our service levels is also gaining further traction. Both businesses had positive retail trends versus a year ago, with motorized registrations in our third quarter pushing toward a high single-digit percentage comparison and towables driving a retail increase of more than 40%.

"In addition to growing revenues, our team has been successful in driving a steady increase in gross margin percentage, with particular focus on reducing labor variances and material costs. We are also pleased to have reached a positive legal settlement in the third quarter on our Australian trademark case that will allow us to refocus our efforts on exclusively expanding the Winnebago brand and market share in that region. In the fourth quarter, we will look to put the finishing touches on a refreshed vision for Winnebago’s future, build stronger momentum around new product introductions for Fiscal 2017, and ensure the investments we are making in new systems, facilities, talent, and business processes are positioned to produce a strong future return for this iconic brand.”

Third quarter Fiscal 2016 consolidated revenues improved year over year due primarily to higher shipments of 12.4% in motorized units and 62.4% in towables. Current quarter revenues were impacted by the Company's exit of aluminum extrusion sales to outside customers offset by accelerated deliveries of rental units into the third quarter, which also impacted backlog.

Third quarter gross margin improved year over year, primarily due to our strategic sourcing initiative resulting in lower raw material costs and favorable product mix, partially offset by higher warranty expense.





Quarterly Cash Dividend
On June 15, 2016, the Company’s board of directors approved a quarterly cash dividend of $0.10 per share payable on July 27, 2016, to common stockholders of record at the close of business on July 13, 2016.

Conference Call
Winnebago Industries, Inc. will conduct a conference call to discuss third quarter Fiscal 2016 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. is a leading U.S. manufacturer of recreation vehicles, which are used primarily in leisure travel and outdoor recreation activities. The Company builds quality motorhomes, 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.

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 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
 
May 28, 2016
 
May 30, 2015
Net revenues
$
272,077

 
100.0
%
 
$
266,510

 
100.0
%
Cost of goods sold
241,820

 
88.9
%
 
238,327

 
89.4
%
Gross profit
30,257

 
11.1
%
 
28,183

 
10.6
%
Operating expenses:
 
 
 
 
 
 
 
Selling
4,770

 
1.8
%
 
5,150

 
1.9
%
General and administrative
4,894

 
1.8
%
 
6,453

 
2.4
%
Impairment of fixed assets
—

 
—
%
 
462

 
0.2
%
Total operating expenses
9,664

 
3.6
%
 
12,065

 
4.5
%
Operating income
20,593

 
7.6
%
 
16,118

 
6.0
%
Non-operating income
77

 
—
%
 
—

 
—
%
Income before income taxes
20,670

 
7.6
%
 
16,118

 
6.0
%
Provision for taxes
6,232

 
2.3
%
 
4,616

 
1.7
%
Net income
$
14,438

 
5.3
%
 
$
11,502

 
4.3
%
Income per common share:
 
 
 
 
 
 
 
Basic
$
0.54

 
 
 
$
0.43

 
 
Diluted
$
0.53

 
 
 
$
0.43

 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
26,892

 
 
 
26,932

 
 
Diluted
27,004

 
 
 
27,030

 
 

Percentages may not add due to rounding differences.


 
Nine Months Ended
 
May 28, 2016
 
May 30, 2015
Net revenues
$
711,972

 
100.0
%
 
$
725,456

 
100.0
%
Cost of goods sold
631,191

 
88.7
%
 
648,629

 
89.4
%
Gross profit
80,781

 
11.3
%
 
76,827

 
10.6
%
Operating expenses:
 
 
 
 
 
 
 
Selling
14,714

 
2.1
%
 
14,703

 
2.0
%
General and administrative
19,212

 
2.7
%
 
19,154

 
2.6
%
Impairment of fixed assets
—

 
—
%
 
462

 
0.1
%
Total operating expenses
33,926

 
4.8
%
 
34,319

 
4.7
%
Operating income
46,855

 
6.6
%
 
42,508

 
5.9
%
Non-operating income
194

 
—
%
 
35

 
—
%
Income before income taxes
47,049

 
6.6
%
 
42,543

 
5.9
%
Provision for taxes
14,699

 
2.1
%
 
13,050

 
1.8
%
Net income
$
32,350

 
4.5
%
 
$
29,493

 
4.1
%
Income per common share:
 
 
 
 
 
 
 
Basic
$
1.20

 
 
 
$
1.09

 
 
Diluted
$
1.20

 
 
 
$
1.09

 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
26,935

 
 
 
26,942

 
 
Diluted
27,029

 
 
 
27,042

 
 

Percentages may not add due to rounding differences.





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

 
May 28,
2016
 
Aug 29,
2015
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
71,253

 
$
70,239

Receivables, net
65,474

 
66,936

Inventories
130,136

 
112,165

Prepaid expenses and other assets
6,670

 
6,882

Deferred income taxes
—

 
9,995

Total current assets
273,533

 
266,217

Total property and equipment, net
52,799

 
37,250

Investment in life insurance
26,739

 
26,172

Deferred income taxes
17,946

 
21,994

Other assets
9,020

 
10,541

Total assets
$
380,037

 
$
362,174

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
47,748

 
$
33,158

Income taxes payable
—

 
2,314

Accrued expenses
45,050

 
46,138

Total current liabilities
92,798

 
81,610

Non-current liabilities:
 
 
 
Unrecognized tax benefits
2,333

 
2,511

Postretirement health care and deferred compensation benefits, net of current portion
25,988

 
57,090

Total non-current liabilities
28,321

 
59,601

Shareholders' equity
258,918

 
220,963

Total liabilities and shareholders' equity
$
380,037

 
$
362,174





Winnebago Industries, Inc.
Unaudited Consolidated Statements of Cash Flows
(In thousands)
 
Nine Months Ended
 
May 28,
2016
May 30,
2015
Operating activities:
 
 
Net income
$
32,350

$
29,493

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
4,243

3,284

LIFO expense
1,280

1,041

Asset impairment
—

462

Stock-based compensation
1,818

1,739

Deferred income taxes
2,717

2,793

Postretirement benefit income and deferred compensation expenses
(3,053
)
(587
)
Provision for doubtful accounts
37

—

Loss (gain) on disposal of property
10

(20
)
Gain on life insurance
(118
)
—

Increase in cash surrender value of life insurance policies
(609
)
(657
)
Change in assets and liabilities:
 
 
Inventories
(19,251
)
(10,768
)
Receivables, prepaid and other assets
1,905

3,581

Investment in operating leases, net of repurchase obligations
—

(72
)
Income taxes and unrecognized tax benefits
(766
)
(2,375
)
Accounts payable and accrued expenses
14,345

(6,308
)
Postretirement and deferred compensation benefits
(3,167
)
(3,049
)
Net cash provided by operating activities
31,741

18,557

 
 
 
Investing activities:
 
 
Purchases of property, plant and equipment
(19,928
)
(14,174
)
Proceeds from the sale of property
21

43

Proceeds from life insurance
295

—

Other
76

435

Net cash used in investing activities
(19,536
)
(13,696
)
 
 
 
Financing activities:
 
 
Payments for purchase of common stock
(3,058
)
(6,166
)
Payments of cash dividends
(8,173
)
(7,324
)
Borrowings on loans
—

22,000

Repayment of loans
—

(22,000
)
Other
40

40

Net cash used in financing activities
(11,191
)
(13,450
)
 
 
 
Net increase (decrease) in cash and cash equivalents
1,014

(8,589
)
Cash and cash equivalents at beginning of period
70,239

57,804

Cash and cash equivalents at end of period
$
71,253

$
49,215

 
 
 
Supplemental cash flow disclosure:
 
 
Income taxes paid, net
$
13,137

$
12,361

Interest paid
$
—

$
10

 
 
 
Non-cash transactions:
 
 
Capital expenditures in accounts payable
$
397

$
—







Winnebago Industries, Inc.
Unaudited Deliveries
 
Quarter Ended
 
Change
(In units)
May 28,
2016
Product
Mix % (1)
 
May 30,
2015
Product
Mix % (1)
 
Units
%
Change
Class A
654

22.4
%
 
886

34.1
%
 
(232
)
(26.2
)%
Class B
334

11.5
%
 
270

10.4
%
 
64

23.7
 %
Class C
1,929

66.1
%
 
1,440

55.5
%
 
489

34.0
 %
Total motorhomes
2,917

100.0
%
 
2,596

100.0
%
 
321

12.4
 %
 
 
 
 
 
 
 
 
 
Travel trailer
1,042

86.5
%
 
598

80.6
%
 
444

74.2
 %
Fifth wheel
163

13.5
%
 
144

19.4
%
 
19

13.2
 %
    Total Towables
1,205

100.0
%
 
742

100.0
%
 
463

62.4
 %
(1) Percentages may not add due to rounding differences.


Unaudited Backlog(1)  
 
As Of
 
 
 
May 28,
2016
 
May 30,
2015
 
Change
Motorhomes
1,513

 
2,279

 
(766
)
(33.6
)%
Towables
412

 
179

 
233

130.2
 %
 
 
 
 
 
 
 
Approximate backlog revenue dollars (in 000's):
 
 
 
 
 
Motorhomes
$
134,495

 
$
196,915

 
$
(62,420
)
(31.7
)%
Towables
8,058

 
4,512

 
3,546

78.6
 %
(1) 
We include in our backlog all accepted purchase orders from dealers to be shipped within the next six months. Orders in backlog can be canceled or postponed at the option of the dealer at any time without penalty and, therefore, backlog may not necessarily be an accurate measure of future sales.

Unaudited Dealer Inventory
 
Units As Of
 
 
 
May 28,
2016
 
May 30,
2015
Change
Motorhomes
4,585

 
4,501

 
84

1.9
%
Towables
2,358

 
1,823

 
535

29.3
%


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