Winnebago Industries Announces Third Quarter Fiscal 2020 Results
-- March to May Period Impacted by Shutdown and Restart of Operations Due to Global Pandemic --
-- Focus on
-- RV Market Share Growth Continues – Witnessing Positive Retail Momentum in June --
-- YTD Operating Cash Flow Up 96% Over Prior Year --
-- Liquidity Remains Strong with Cash Balances Rising During the Quarter to
Third Quarter Fiscal 2020 Results
Revenues for the Fiscal 2020 third quarter ended
President and Chief Executive Officer
Towable
Revenues for the Towable segment were
related to the significant revenue decline. Backlog increased 86.7%, in units, over the prior year, reflecting a strong rebound in dealer demand in May as April was the period most impacted by COVID-19.
Motorhome
In the third quarter, revenues for the Motorhome segment increased 27.1% to
Despite challenges posed by the COVID-19 pandemic, the operational integration of
Balance Sheet and Cash Flow
As of
Quarterly Cash Dividend
On
Conference Call
About
Forward Looking Statements
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, business interruptions, any unexpected expenses related to enterprise resource planning, impacts of public health crises, such as COVID-19, risks related to compliance with debt covenants and leverage ratios, cyber-attacks, 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
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Condensed Consolidated Statements of Income (Unaudited)
(in thousands, except per share data)
Three Months Ended | |||||||||||||||||
Net revenues | $ | 402,458 | 100.0 | % | $ | 528,940 | 100.0 | % | |||||||||
Cost of goods sold | 370,434 | 92.0 | % | 442,356 | 83.6 | % | |||||||||||
Gross profit | 32,024 | 8.0 | % | 86,584 | 16.4 | % | |||||||||||
Selling, general, and administrative expenses | 33,271 | 8.3 | % | 35,332 | 6.7 | % | |||||||||||
Amortization of intangible assets | 6,926 | 1.7 | % | 2,278 | 0.4 | % | |||||||||||
Total operating expenses | 40,197 | 10.0 | % | 37,610 | 7.1 | % | |||||||||||
Operating (loss) income | (8,173 | ) | (2.0 | ) | % | 48,974 | 9.3 | % | |||||||||
Interest expense | 8,440 | 2.1 | % | 4,446 | 0.8 | % | |||||||||||
Non-operating income | (74 | ) | — | % | (360 | ) | (0.1 | ) | % | ||||||||
(Loss) income before income taxes | (16,539 | ) | (4.1 | ) | % | 44,888 | 8.5 | % | |||||||||
(Benefit) provision for income taxes | (4,186 | ) | (1.0 | ) | % | 8,717 | 1.6 | % | |||||||||
Net (loss) income | $ | (12,353 | ) | (3.1 | ) | % | $ | 36,171 | 6.8 | % | |||||||
Income (loss) per common share: | |||||||||||||||||
Basic | $ | (0.37 | ) | $ | 1.15 | ||||||||||||
Diluted | $ | (0.37 | ) | $ | 1.14 | ||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||
Basic | 33,625 | 31,493 | |||||||||||||||
Diluted | 33,625 | 31,644 | |||||||||||||||
Nine Months Ended | |||||||||||||||||
Net revenues | $ | 1,617,726 | 100.0 | % | $ | 1,455,278 | 100.0 | % | |||||||||
Cost of goods sold | 1,427,307 | 88.2 | % | 1,231,269 | 84.6 | % | |||||||||||
Gross profit | 190,419 | 11.8 | % | 224,009 | 15.4 | % | |||||||||||
Selling, general, and administrative expenses | 126,540 | 7.8 | % | 106,303 | 7.3 | % | |||||||||||
Amortization of intangible assets | 18,514 | 1.1 | % | 7,204 | 0.5 | % | |||||||||||
Total operating expenses | 145,054 | 9.0 | % | 113,507 | 7.8 | % | |||||||||||
Operating income | 45,365 | 2.8 | % | 110,502 | 7.6 | % | |||||||||||
Interest expense | 23,140 | 1.4 | % | 13,293 | 0.9 | % | |||||||||||
Non-operating income | (460 | ) | — | % | (1,330 | ) | (0.1 | ) | % | ||||||||
Income before income taxes | 22,685 | 1.4 | % | 98,539 | 6.8 | % | |||||||||||
Provision for taxes | 3,702 | 0.2 | % | 18,609 | 1.3 | % | |||||||||||
Net income | $ | 18,983 | 1.2 | % | $ | 79,930 | 5.5 | % | |||||||||
Income per common share: | |||||||||||||||||
Basic | $ | 0.57 | $ | 2.53 | |||||||||||||
Diluted | $ | 0.57 | $ | 2.52 | |||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||
Basic | 33,102 | 31,546 | |||||||||||||||
Diluted | 33,289 | 31,722 |
Percentages may not add due to rounding differences.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 152,480 | $ | 37,431 | |||
Receivables, net | 163,590 | 158,049 | |||||
Inventories, net | 190,359 | 201,126 | |||||
Prepaid expenses and other assets | 21,566 | 14,051 | |||||
Total current assets | 527,995 | 410,657 | |||||
Total property, plant, and equipment, net | 175,431 | 127,572 | |||||
Other assets: | |||||||
348,058 | 274,931 | ||||||
Other intangible assets, net | 408,358 | 256,082 | |||||
Investment in life insurance | 27,336 | 26,846 | |||||
Operating lease assets | 29,790 | — | |||||
Other assets | 16,072 | 8,143 | |||||
Total assets | $ | 1,533,040 | $ | 1,104,231 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 81,998 | $ | 81,635 | |||
Income taxes payable | — | — | |||||
Accrued expenses | 132,509 | 107,217 | |||||
Current maturities of long-term debt | 13,668 | 8,892 | |||||
Total current liabilities | 228,175 | 197,744 | |||||
Non-current liabilities: | |||||||
Long-term debt, less current maturities | 451,306 | 245,402 | |||||
Deferred income taxes | 16,708 | 12,032 | |||||
Unrecognized tax benefits | 6,269 | 3,591 | |||||
Operating lease liabilities | 27,366 | — | |||||
Deferred compensation benefits, net of current portion | 11,454 | 12,878 | |||||
Other | 6,952 | 372 | |||||
Total non-current liabilities | 520,055 | 274,275 | |||||
Stockholders' equity | 784,810 | 632,212 | |||||
Total liabilities and stockholders' equity | $ | 1,533,040 | $ | 1,104,231 |
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended | ||||||||
(in thousands) | ||||||||
Operating activities: | ||||||||
Net income | $ | 18,983 | $ | 79,930 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 11,854 | 9,788 | ||||||
Amortization of intangibles | 18,514 | 7,204 | ||||||
Non-cash interest expense, net | 7,440 | — | ||||||
Amortization of debt issuance costs | 2,181 | 1,186 | ||||||
Last in, first-out expense | 1,450 | 1,544 | ||||||
Stock-based compensation | 3,332 | 5,735 | ||||||
Deferred income taxes | 365 | 362 | ||||||
Other, net | 516 | 1,265 | ||||||
Change in assets and liabilities: | ||||||||
Receivables | 31,440 | (20,961 | ) | |||||
Inventories | 91,938 | 2,701 | ||||||
Prepaid expenses and other assets | 159 | (653 | ) | |||||
Accounts payable | (13,528 | ) | 3,954 | |||||
Income taxes and unrecognized tax benefits | (2,622 | ) | (13,898 | ) | ||||
Accrued expenses and other liabilities | (9,585 | ) | 4,692 | |||||
Net cash provided by operating activities | 162,437 | 82,849 | ||||||
Investing activities: | ||||||||
Purchases of property and equipment | (28,582 | ) | (31,681 | ) | ||||
Acquisition of business, net of cash acquired | (260,965 | ) | (702 | ) | ||||
Proceeds from the sale of property | — | 134 | ||||||
Other, net | 141 | 1,752 | ||||||
Net cash provided by (used in) investing activities | (289,406 | ) | (30,497 | ) | ||||
Financing activities: | ||||||||
Borrowings on credit agreement | 1,495,209 | 342,549 | ||||||
Repayments of credit agreement | (1,495,209 | ) | (375,438 | ) | ||||
Proceeds from issuance of convertible senior notes | 300,000 | — | ||||||
Purchase of convertible note hedge | (70,800 | ) | — | |||||
Proceeds from issuance of warrants | 42,210 | — | ||||||
Payments on long-term debt | (6,500 | ) | — | |||||
Payments of offering costs | (10,761 | ) | — | |||||
Payments of cash dividends | (10,881 | ) | (10,201 | ) | ||||
Payments for repurchase of common stock | — | (7,724 | ) | |||||
Other, net | (1,250 | ) | 296 | |||||
Net cash provided by (used in) financing activities | 242,018 | (50,518 | ) | |||||
Net increase in cash and cash equivalents | 115,049 | 1,834 | ||||||
Cash and cash equivalents at beginning of year | 37,431 | 2,342 | ||||||
Cash and cash equivalents at end of year | $ | 152,480 | $ | 4,176 | ||||
Supplement cash flow disclosure: | ||||||||
Income taxes paid, net | $ | 6,240 | $ | 33,852 | ||||
Interest paid | $ | 14,961 | $ | 10,335 | ||||
Non-cash transactions: | ||||||||
Issuance of |
$ | 92,572 | $ | — | ||||
Capital expenditures in accounts payable | $ | 255 | $ | 9 |
(in thousands)
Supplemental Information by Reportable Segment (Unaudited) - Towable
(in thousands, except unit data)
Three Months Ended | ||||||||||||||||||||||
(in thousands) | % of Revenues | % of Revenues | $ Change | % Change | ||||||||||||||||||
Net revenues | $ | 188,898 | $ | 346,811 | $ | (157,913 | ) | (45.5 | ) | % | ||||||||||||
Adjusted EBITDA | 16,451 | 8.7 | % | 57,172 | 16.5 | % | (40,721 | ) | (71.2 | ) | % | |||||||||||
Three Months Ended | ||||||||||||||||||||||
Unit deliveries | Product Mix(1) | Product Mix(1) | Unit Change | % Change | ||||||||||||||||||
Travel trailer | 3,537 | 60.3 | % | 6,185 | 59.5 | % | (2,648 | ) | (42.8 | ) | % | |||||||||||
Fifth wheel | 2,324 | 39.7 | % | 4,216 | 40.5 | % | (1,892 | ) | (44.9 | ) | % | |||||||||||
Total towables | 5,861 | 100.0 | % | 10,401 | 100.0 | % | (4,540 | ) | (43.6 | ) | % | |||||||||||
Nine Months Ended | ||||||||||||||||||||||
(in thousands) | % of Revenues | % of Revenues | $ Change | % Change | ||||||||||||||||||
Net revenues | $ | 813,611 | $ | 890,335 | $ | (76,724 | ) | (8.6 | ) | % | ||||||||||||
Adjusted EBITDA | 86,982 | 10.7 | % | 121,638 | 13.7 | % | (34,656 | ) | (28.5 | ) | % | |||||||||||
Nine Months Ended | ||||||||||||||||||||||
Unit deliveries | Product Mix(1) | Product Mix(1) | Unit Change | % Change | ||||||||||||||||||
Travel trailer | 15,319 | 60.8 | % | 16,564 | 60.5 | % | (1,245 | ) | (7.5 | ) | % | |||||||||||
Fifth wheel | 9,874 | 39.2 | % | 10,818 | 39.5 | % | (944 | ) | (8.7 | ) | % | |||||||||||
Total towables | 25,193 | 100.0 | % | 27,382 | 100.0 | % | (2,189 | ) | (8.0 | ) | % | |||||||||||
($ in thousands) | Change | % Change | ||||||||||||||||||||
Backlog(2) | ||||||||||||||||||||||
Units | 13,235 | 7,089 | 6,146 | 86.7 | % | |||||||||||||||||
Dollars | $ | 417,176 | $ | 237,708 | $ | 179,468 | 75.5 | % | ||||||||||||||
Dealer Inventory | ||||||||||||||||||||||
Units | 15,562 | 18,984 | (3,422 | ) | (18.0 | ) | % |
(1) Percentages may not add due to rounding differences.
(2) We include in our backlog all accepted orders from dealers to generally be shipped within the next six months. Orders in backlog can be cancelled 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.
Supplemental Information by Reportable Segment (Unaudited) - Motorhome
(in thousands, except unit data)
Three Months Ended | ||||||||||||||||||||||
(in thousands) | % of Revenues | % of Revenues | $ Change | % Change | ||||||||||||||||||
Net revenues | $ | 203,590 | $ | 160,239 | $ | 43,351 | 27.1 | % | ||||||||||||||
Adjusted EBITDA | (10,789 | ) | (5.3 | ) | % | 381 | 0.2 | % | (11,170 | ) | (2,931.8 | ) | % | |||||||||
Three Months Ended | ||||||||||||||||||||||
Unit deliveries | Product Mix(1) | Product Mix(1) | Unit Change | % Change | ||||||||||||||||||
Class A | 428 | 27.4 | % | 378 | 19.3 | % | 50 | 13.2 | % | |||||||||||||
Class B | 694 | 44.4 | % | 515 | 26.2 | % | 179 | 34.8 | % | |||||||||||||
Class C | 440 | 28.2 | % | 1,069 | 54.5 | % | (629 | ) | (58.8 | ) | % | |||||||||||
Total motorhomes | 1,562 | 100.0 | % | 1,962 | 100.0 | % | (400 | ) | (20.4 | ) | % | |||||||||||
Nine Months Ended(2) | ||||||||||||||||||||||
(in thousands, except ASP) | % of Revenues | % of Revenues | $ Change | % Change | ||||||||||||||||||
Net revenues | $ | 755,023 | $ | 506,229 | $ | 248,794 | 49.1 | % | ||||||||||||||
Adjusted EBITDA | 13,488 | 1.8 | % | 16,716 | 3.3 | % | (3,228 | ) | (19.3 | ) | % | |||||||||||
Nine Months Ended | ||||||||||||||||||||||
Unit deliveries | Product Mix(1) | Product Mix(1) | Unit Change | % Change | ||||||||||||||||||
Class A | 1,803 | 31.0 | % | 1,329 | 23.7 | % | 474 | 35.7 | % | |||||||||||||
Class B | 2,287 | 39.3 | % | 1,847 | 33.0 | % | 440 | 23.8 | % | |||||||||||||
Class C | 1,734 | 29.7 | % | 2,430 | 43.3 | % | (696 | ) | (28.6 | ) | % | |||||||||||
Total motorhomes | 5,824 | 100.0 | % | 5,606 | 100.0 | % | 218 | 3.9 | % | |||||||||||||
($ in thousands) | Change | % Change | ||||||||||||||||||||
Backlog(3) | ||||||||||||||||||||||
Units | 4,131 | 2,074 | 2,057 | 99.2 | % | |||||||||||||||||
Dollars | $ | 515,035 | $ | 182,354 | $ | 332,681 | 182.4 | % | ||||||||||||||
Dealer Inventory | ||||||||||||||||||||||
Units | 5,013 | 4,235 | 778 | 18.4 | % |
(1) Percentages may not add due to rounding differences.
(2)
(3) We include in our backlog all accepted orders from dealers to generally be shipped within the next six months. Orders in backlog can be cancelled 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.
Non-GAAP Reconciliation (Unaudited)
(in thousands, except per share data)
Non-GAAP financial measures, which are not calculated or presented in accordance with accounting principles generally accepted in
The following table reconciles Diluted income per share to Adjusted diluted income per share:
Three Months Ended | Nine Months Ended | ||||||||||||||
(in thousands)(1) | |||||||||||||||
Diluted income per share | $ | (0.37 | ) | $ | 1.14 | $ | 0.57 | $ | 2.52 | ||||||
Pretax acquisition-related costs(2) | (0.01 | ) | — | 0.29 | — | ||||||||||
Pretax acquisition-related fair-value inventory step-up | — | — | 0.14 | — | |||||||||||
Pretax non-cash interest expense(3) | 0.10 | — | 0.22 | — | |||||||||||
Restructuring expense | 0.04 | 0.03 | 0.04 | 0.04 | |||||||||||
Research and development tax credits | — | (0.04 | ) | — | (0.10 | ) | |||||||||
Tax impact of adjustments(4) | (0.03 | ) | (0.01 | ) | (0.15 | ) | (0.01 | ) | |||||||
Adjusted diluted income per share | $ | (0.26 | ) | $ | 1.14 | $ | 1.12 | $ | 2.45 |
(1) Per share numbers may not foot due to rounding
(2) Represents transaction-closing costs.
(3) Non-cash interest expense associated with the Convertible Notes issued related to our acquisition of
(4) Income tax charge calculated using the statutory tax rate for the
The following table reconciles net income to consolidated EBITDA and Adjusted EBITDA.
Three Months Ended | Nine Months Ended | ||||||||||||||
(in thousands) | |||||||||||||||
Net (loss) income | $ | (12,353 | ) | $ | 36,171 | $ | 18,983 | $ | 79,930 | ||||||
Interest expense | 8,440 | 4,446 | 23,140 | 13,293 | |||||||||||
Provision for income taxes | (4,186 | ) | 8,717 | 3,702 | 18,609 | ||||||||||
Depreciation | 4,134 | 3,520 | 11,854 | 9,788 | |||||||||||
Amortization of intangible assets | 6,926 | 2,278 | 18,514 | 7,204 | |||||||||||
EBITDA | 2,961 | 55,132 | 76,193 | 128,824 | |||||||||||
Acquisition-related fair-value inventory step-up | — | — | 4,810 | — | |||||||||||
Acquisition-related costs | (189 | ) | — | 9,761 | — | ||||||||||
Restructuring expenses | 1,376 | 1,102 | 1,247 | 1,321 | |||||||||||
Non-operating income | (74 | ) | (360 | ) | (460 | ) | (1,330 | ) | |||||||
Adjusted EBITDA | $ | 4,074 | $ | 55,874 | $ | 91,551 | $ | 128,815 |
We have provided non-GAAP performance measures of Adjusted diluted income per share, EBITDA, and Adjusted EBITDA as comparable measures to illustrate the effect of non-recurring transactions occurring during the reported periods and improve comparability of our results from period to period. Adjusted diluted income per share is defined as income per share adjusted for items that impact the comparability of our results from period to period. EBITDA is defined as net income before interest expense, provision for income taxes, and depreciation and amortization expense. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation and amortization expense, and other adjustments made in order to present comparable results from period to period. We believe Adjusted diluted income per share and Adjusted EBITDA provide meaningful supplemental information about our operating performance because these measures exclude amounts that we do not consider part of our core operating results when assessing our performance. Examples of items excluded from Adjusted income per share include acquisition-related costs, acquisition-related fair-value inventory step-up, non-cash interest expense, and the tax impact of the adjustments. Examples of items excluded from Adjusted EBITDA include acquisition-related fair-value inventory step-up, acquisition-related costs, restructuring expenses, and non-operating income.
Management uses these non-GAAP financial measures (a) to evaluate our historical and prospective financial performance and trends as well as our performance relative to competitors and peers; (b) to measure operational profitability on a consistent basis; (c) in presentations to the members of our board of directors to enable our board of directors to have the same measurement basis of operating performance as is used by management in its assessments of performance and in forecasting and budgeting for our company; (d) to evaluate potential acquisitions; and (e) to ensure compliance with covenants and restricted activities under the terms of our debt agreements. We believe these non-GAAP financial measures are frequently used by securities analysts, investors, and other interested parties to evaluate companies in our industry.
Source: Winnebago Industries, Inc.