Winnebago to Acquire Towable RV Manufacturer Grand Design
Founded in 2012 by
The acquisition is expected to be immediately accretive to Winnebago's growth profile, profit margins and earnings per share (EPS), excluding transaction costs and before giving effect to anticipated synergies. The transaction is expected to close by the end of Winnebago's first fiscal quarter of 2017, subject to regulatory approvals and other customary closing conditions.
"Grand Design has built a tremendous reputation and position in our industry by delivering quality products and high levels of customer satisfaction, and we are excited to welcome them to the Winnebago family," said
Mr. Happe continued, "I look forward to working closely with Don, along with the rest of the Grand Design team. With a shared focus on quality products, dealer relationships and customer service and satisfaction, together we will be even better positioned to serve dealers and customers well into the future."
(1) Represents unaudited financial information
"We are proud to have partnered with Don and the entire Grand Design team and congratulate them on the exciting new partnership with Winnebago," said
(Pro forma metrics represent unaudited financial information)
- The combined company will have approximately
$1.4 billionin pro forma revenue along with a broader and more balanced portfolio well-positioned to deliver growth, improved profitability and value.
- The transaction is expected to be accretive to Winnebago's growth profile, profit margins and EPS, excluding transaction costs and before giving effect to anticipated synergies.
- Annual run-rate cost synergies are anticipated to be
$7 million, phased in over three years, to be achieved through identified opportunities in purchasing and the elimination of redundant processes with additional upside potential from sharing of manufacturing best practices.
$500 millionpurchase price includes tax assets valued at over $75 million. After adjusting for the value of the tax assets, the purchase price implies a multiple of 7.1x Grand Design's last twelve months EBITDA of $60 million.
- Winnebago expects to fund the transaction through a combination of
$395 millionin cash and $105 millionin newly issued Winnebago shares. J.P. Morgan has agreed to provide committed financing for the transaction. Upon closing, Winnebago expects to have a debt to EBITDA ratio of approximately 2.5x, inclusive of anticipated annual run rate synergies.
- The combined company is expected to generate significant cash flow that will facilitate rapid debt reduction. Winnebago expects to reduce its debt to EBITDA ratio to below 1.5x by the end of Fiscal 2018.
- Immediately following the transaction, Grand Design shareholders will own approximately 14.5% of Winnebago shares outstanding.
Don Clarkwill continue to lead the Grand Design towables business post-closing as its President; he will also serve as a Vice President for Winnebago and be a member of the Executive Leadership Team.
- Grand Design will operate as a distinct business unit within Winnebago with headquarters remaining in
Middlebury, Indiana, and its portfolio of brands will remain in place.
Preliminary Fourth-Quarter Fiscal 2016 Results
In connection with today's transaction announcement, Winnebago also announced preliminary results for the fourth quarter of Fiscal 2016.
Revenues for the fourth quarter of Fiscal 2016 are expected to be approximately
As previously announced, Winnebago will release its full financial results for the fourth quarter of Fiscal 2016 on
The preliminary quarterly results provided today are unaudited and subject to change as fiscal year end information is finalized.
Winnebago will conduct a conference call to discuss the transaction at
J.P. Morgan acted as financial advisor to Winnebago and
Winnebago 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 has received the
About Grand Design
Grand Design was founded in 2012 and is one of the fastest-growing RV companies in the industry. Since its founding, Grand Design has shipped 25,000 units and has sold over 21,000 units at retail. Grand Design manufactures the market leading Reflection fifth wheel and travel trailer, flagship Solitude extended stay fifth wheel, luxury Momentum toy hauler and lightweight Imagine travel trailer product lines.
Founded in 1984,
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, any unexpected expenses related to ERP, risks relating to the consummation of our acquisition of Grand Design including, the possibility that the closing conditions to the contemplated transaction may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant a necessary regulatory approval; delay in closing the transaction or the possibility of non-consummation of the transaction; the potential for regulatory authorities to require divestitures in connection with the proposed transaction, the failure to consummate the debt transactions contemplated by the transaction with Grand Design, the possibility that we might have to pay a
The following information provides reconciliations of non-GAAP financial measures from operations, which are presented in the accompanying news release, to the most comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the U.S. ("GAAP"). The Company has provided non-GAAP financial measures, which are not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in the accompanying news release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented in the news release. The non-GAAP financial measures in the accompanying news release may differ from similar measures used by other companies. The following tables reconcile the non-GAAP measure of Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") referred to in this press release to the most directly comparable GAAP measure reflected in the Company's financial statements.
|LTM Through August 2016|
|Provision for Taxes||20,702||158||20,860|
|Depreciation & Amortization||5,745||798||6,543|
|(1) Unaudited financial information|
|(2) Reported Net Income excluding stock compensation|