Winnebago Industries Announces Fourth Quarter and Fiscal Year 2017 Results
-- Quarterly Revenues Increased 73% and Full Year Revenues Increased 59% on Strong Towable Segment Growth --
-- Quarterly EPS of
-- Gross Margins Increased 410 Basis Points in Fourth Quarter and 280 Basis Points in Full Year --
-- Board Approved Quarterly Cash Dividend of $0.10 per Share and
Fourth Quarter Fiscal 2017 Results
Revenues for the Fiscal 2017 fourth quarter ended
President and Chief Executive Officer
Full Year Fiscal 2017 Results
Year over year, Fiscal 2017 revenues of
Significant items related to the Grand Design acquisition that are impacting income before income taxes in the fourth quarter of Fiscal 2017 and for the fiscal year:
- Additional transaction costs related to the acquisition were minimal in the fourth quarter. For the full year, transaction costs were
$6.6 million , or$0.14 per diluted share, net of tax.
- For the fourth quarter, amortization expenses of
$2.1 million were recorded related to the definite-lived intangible assets acquired, or$0.04 per diluted share, net of tax. For the full year, amortization expenses of$24.7 million were recorded, or$0.53 per diluted share, net of tax. We expect ongoing amortization expense will be approximately$2.0 million per quarter through Fiscal 2021.
- Interest expense of
$5.3 million was recorded in the fourth quarter related to the debt associated with the acquisition of Grand Design, or$0.11 per diluted share, net of tax. For the full year, interest expense of$16.8 million was recorded, or$0.36 per diluted share, net of tax.
Motorized
In the fourth quarter, revenues for the Motorized segment were
For the full year Fiscal 2017, revenues for the Motorized segment were
Towable
Revenues for the Towable segment were
For the full year Fiscal 2017, revenues for the Towable segment were
Balance Sheet and Cash Flow
As of
Quarterly Cash Dividend
On October 18, 2017, the Company’s Board of Directors approved a quarterly cash dividend of
Share Repurchase Authorization
On
Mr. Happe continued, "As we head into Fiscal 2018 as a larger, broader, and more profitable organization, we will continue our work to build a company that can generate materially more value in the future. We have very strong brands, and our long-term aspiration is to be the undisputed leader in the market. We are seeing a tremendous amount of interest from dealers and customers in the five new product offerings recently introduced:
- Class A Diesel Horizon, offering a fresh interior with contemporary styling unlike any other offering at its price point;
- Class A Gas Intent, which strengthens Winnebago's position in the Class A value segment;
- Class B Revel, which is an off-road four-by-four that targets a previously unmet market;
- Minnie Plus fifth wheel from our Winnebago-branded Towable division which extends the popular Minnie series into the fifth wheel market with open floor plans, modest weights, and a mid-profile design; and finally,
- Reflection fifth wheel, a new half-ton offering from Grand Design that provides maximum towability at a value price point.
As announced last quarter, the Company's Board of Directors approved a facilities expansion for Grand Design, and good progress has been made on that project, which is scheduled to increase production midway through Fiscal 2018. In addition, we are pleased to announce today that the Board of Directors has recently approved a
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, any unexpected expenses related to ERP, risks relating to the integration of our acquisition of Grand Design including: risks inherent in the achievement of cost synergies and the timing thereof; risks related to the disruption of the transaction to Winnebago and Grand Design and its management; the effect of integration on Grand Design's ability to retain and hire key personnel and maintain relationships with customers, suppliers and other third parties, risk related to compliance with debt covenants and leverage ratios, 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 (
Winnebago Industries, Inc. Condensed Consolidated Statements of Income (In thousands, except percent and per share data) |
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Three Months Ended | ||||||||||||||
August 26, 2017 | August 27, 2016 | |||||||||||||
Net revenues | $ | 454,936 | 100.0 | % | $ | 263,254 | 100.0 | % | ||||||
Cost of goods sold | 381,354 | 83.8 | % | 231,387 | 87.9 | % | ||||||||
Gross profit | 73,582 | 16.2 | % | 31,867 | 12.1 | % | ||||||||
SG&A: | ||||||||||||||
Selling | 10,104 | 2.2 | % | 5,108 | 1.9 | % | ||||||||
General and administrative | 17,707 | 3.9 | % | 9,466 | 3.6 | % | ||||||||
Postretirement health care benefit income | — | — | % | (1,593 | ) | (0.6 | )% | |||||||
Transaction costs | 218 | — | % | — | — | % | ||||||||
Amortization of intangible assets | 2,082 | 0.5 | % | — | — | % | ||||||||
Total SG&A expenses | 30,111 | 6.6 | % | 12,981 | 4.9 | % | ||||||||
Operating income | 43,471 | 9.6 | % | 18,886 | 7.2 | % | ||||||||
Interest expense | 5,266 | 1.2 | % | — | — | % | ||||||||
Non-operating income | (193 | ) | — | % | (263 | ) | (0.1 | )% | ||||||
Income before income taxes | 38,398 | 8.4 | % | 19,149 | 7.3 | % | ||||||||
Provision for income taxes | 13,475 | 3.0 | % | 6,003 | 2.3 | % | ||||||||
Net income | $ | 24,923 | 5.5 | % | $ | 13,146 | 5.0 | % | ||||||
Income per common share: | ||||||||||||||
Basic | $ | 0.79 | $ | 0.49 | ||||||||||
Diluted | $ | 0.79 | $ | 0.49 | ||||||||||
Weighted average common shares outstanding: | ||||||||||||||
Basic | 31,591 | 26,896 | ||||||||||||
Diluted | 31,718 | 27,036 |
Percentages may not add due to rounding differences.
Year Ended | ||||||||||||||
August 26, 2017 | August 27, 2016 | |||||||||||||
Net revenues | $ | 1,547,119 | 100.0 | % | $ | 975,226 | 100.0 | % | ||||||
Cost of goods sold | 1,324,542 | 85.6 | % | 862,577 | 88.4 | % | ||||||||
Gross profit | 222,577 | 14.4 | % | 112,649 | 11.6 | % | ||||||||
SG&A: | ||||||||||||||
Selling | 35,668 | 2.3 | % | 19,823 | 2.0 | % | ||||||||
General and administrative | 55,347 | 3.6 | % | 33,209 | 3.4 | % | ||||||||
Postretirement health care benefit income | (24,796 | ) | (1.6 | )% | (6,124 | ) | (0.6 | )% | ||||||
Transaction costs | 6,592 | 0.4 | % | — | — | % | ||||||||
Amortization of intangible assets | 24,660 | 1.6 | % | — | — | % | ||||||||
Total SG&A expenses | 97,471 | 6.3 | % | 46,908 | 4.8 | % | ||||||||
Operating income | 125,106 | 8.1 | % | 65,741 | 6.7 | % | ||||||||
Interest expense | 16,837 | 1.1 | % | — | — | % | ||||||||
Non-operating income | (330 | ) | — | % | (457 | ) | — | % | ||||||
Income before income taxes | 108,599 | 7.0 | % | 66,198 | 6.8 | % | ||||||||
Provision for taxes | 37,269 | 2.4 | % | 20,702 | 2.1 | % | ||||||||
Net income | $ | 71,330 | 4.6 | % | $ | 45,496 | 4.7 | % | ||||||
Income per common share: | ||||||||||||||
Basic | $ | 2.33 | $ | 1.69 | ||||||||||
Diluted | $ | 2.32 | $ | 1.68 | ||||||||||
Weighted average common shares outstanding: | ||||||||||||||
Basic | 30,648 | 26,925 | ||||||||||||
Diluted | 30,766 | 27,033 |
Percentages may not add due to rounding differences.
Winnebago Industries, Inc. Condensed Consolidated Balance Sheets (In thousands) |
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Aug 26, 2017 |
Aug 27, 2016 |
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ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 35,945 | $ | 85,583 | ||||
Receivables, net | 124,539 | 66,184 | ||||||
Inventories | 142,265 | 122,522 | ||||||
Prepaid expenses and other assets | 11,388 | 6,300 | ||||||
Total current assets | 314,137 | 280,589 | ||||||
Total property and equipment, net | 71,560 | 55,931 | ||||||
Other assets: | ||||||||
Goodwill | 242,728 | 1,228 | ||||||
Other intangible assets, net | 228,440 | — | ||||||
Investment in life insurance | 27,418 | 26,492 | ||||||
Deferred income taxes | 12,736 | 18,753 | ||||||
Other assets | 5,493 | 7,725 | ||||||
Total assets | $ | 902,512 | $ | 390,718 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 79,194 | $ | 44,134 | ||||
Current maturities of long-term debt | 2,850 | — | ||||||
Income taxes payable | 7,450 | 19 | ||||||
Accrued expenses | 77,664 | 48,796 | ||||||
Total current liabilities | 167,158 | 92,949 | ||||||
Non-current liabilities: | ||||||||
Long-term debt, less current maturities | 271,726 | — | ||||||
Unrecognized tax benefits | 1,606 | 2,461 | ||||||
Deferred compensation and postretirement health care benefits, net of current portion | 19,270 | 26,949 | ||||||
Other | 1,078 | — | ||||||
Total non-current liabilities | 293,680 | 29,410 | ||||||
Shareholders' equity | 441,674 | 268,359 | ||||||
Total liabilities and shareholders' equity | $ | 902,512 | $ | 390,718 |
Winnebago Industries, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) |
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Year Ended | ||||||||
Aug 26, 2017 |
Aug 27, 2016 |
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Operating activities: | ||||||||
Net income | $ | 71,330 | $ | 45,496 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 7,315 | 5,745 | ||||||
Amortization of intangible assets | 24,660 | — | ||||||
Amortization of debt issuance costs | 1,596 | — | ||||||
LIFO expense | 1,722 | 1,153 | ||||||
Stock-based compensation | 2,977 | 3,293 | ||||||
Deferred income taxes | 8,360 | 2,233 | ||||||
Postretirement benefit income and deferred compensation expenses | (23,379 | ) | (4,292 | ) | ||||
Other | (1,257 | ) | (935 | ) | ||||
Change in assets and liabilities: | ||||||||
Inventories | (6,165 | ) | (11,510 | ) | ||||
Receivables, prepaid and other assets | (27,597 | ) | 1,217 | |||||
Income taxes and unrecognized tax benefits | 7,045 | 85 | ||||||
Accounts payable and accrued expenses | 33,697 | 14,253 | ||||||
Postretirement and deferred compensation benefits | (3,177 | ) | (3,992 | ) | ||||
Net cash provided by operating activities | 97,127 | 52,746 | ||||||
Investing activities: | ||||||||
Purchases of property, plant and equipment | (13,993 | ) | (24,551 | ) | ||||
Proceeds from the sale of property | 223 | 18 | ||||||
Acquisition of business, net of cash acquired | (392,473 | ) | — | |||||
Other | 858 | 1,141 | ||||||
Net cash used in investing activities | (405,385 | ) | (23,392 | ) | ||||
Financing activities: | ||||||||
Payments for purchase of common stock | (1,530 | ) | (3,066 | ) | ||||
Payments of cash dividends | (12,738 | ) | (10,891 | ) | ||||
Payments of debt issuance costs | (11,020 | ) | — | |||||
Borrowings on credit facility | 366,400 | — | ||||||
Repayment of credit facility | (82,400 | ) | — | |||||
Other | (92 | ) | (53 | ) | ||||
Net cash provided by (used in) financing activities | 258,620 | (14,010 | ) | |||||
Net (decrease) increase in cash and cash equivalents | (49,638 | ) | 15,344 | |||||
Cash and cash equivalents at beginning of period | 85,583 | 70,239 | ||||||
Cash and cash equivalents at end of period | $ | 35,945 | $ | 85,583 | ||||
Supplemental cash flow disclosure: | ||||||||
Income taxes paid, net | $ | 21,421 | $ | 18,449 | ||||
Interest paid | $ | 11,893 | $ | — | ||||
Non-cash transactions: | ||||||||
Issuance of Winnebago common stock for acquisition of business | $ | 124,066 | $ | — | ||||
Capital expenditures in accounts payable | $ | 1,021 | $ | 903 |
Winnebago Industries, Inc. Supplemental Information by Reportable Segment - Motorized (In thousands, except unit data) |
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Quarter Ended | ||||||||||||||||||||
Aug 26, 2017 |
% of Revenue |
Aug 27, 2016 |
% of Revenue |
Change | ||||||||||||||||
Net revenues | $ | 226,191 | $ | 236,652 | $ | (10,461 | ) | (4.4 | )% | |||||||||||
Adjusted EBITDA | 12,210 | 5.4 | % | 17,683 | 7.5 | % | (5,473 | ) | (31.0 | )% | ||||||||||
Unit deliveries | Aug 26, 2017 |
Product Mix % (1) |
Aug 27, 2016 |
Product Mix % (1) |
Change | |||||||||||||||
Class A | 920 | 39.0 | % | 684 | 28.1 | % | 236 | 34.5 | % | |||||||||||
Class B | 393 | 16.6 | % | 408 | 16.7 | % | (15 | ) | (3.7 | )% | ||||||||||
Class C | 1,048 | 44.4 | % | 1,344 | 55.2 | % | (296 | ) | (22.0 | )% | ||||||||||
Total motorhomes | 2,361 | 100.0 | % | 2,436 | 100.0 | % | (75 | ) | (3.1 | )% | ||||||||||
Year Ended | ||||||||||||||||||||
Aug 26, 2017 |
% of Revenue |
Aug 27, 2016 |
% of Revenue |
Change | ||||||||||||||||
Net revenues | $ | 861,922 | $ | 885,814 | $ | (23,892 | ) | (2.7 | )% | |||||||||||
Adjusted EBITDA | 43,948 | 5.1 | % | 57,365 | 6.5 | % | (13,417 | ) | (23.4 | )% | ||||||||||
Unit deliveries | Aug 26, 2017 |
Product Mix % (1) |
Aug 27, 2016 |
Product Mix % (1) |
Change | |||||||||||||||
Class A | 3,182 | 34.4 | % | 2,925 | 31.4 | % | 257 | 8.8 | % | |||||||||||
Class B | 1,541 | 16.6 | % | 1,239 | 13.3 | % | 302 | 24.4 | % | |||||||||||
Class C | 4,537 | 49.0 | % | 5,143 | 55.3 | % | (606 | ) | (11.8 | )% | ||||||||||
Total motorhomes | 9,260 | 100.0 | % | 9,307 | 100.0 | % | (47 | ) | (0.5 | )% | ||||||||||
As Of | ||||||||||||||||||||
Backlog (2) | Aug 26, 2017 |
Aug 27, 2016 |
Change | |||||||||||||||||
Units | 1,293 | 1,139 | 154 | 13.5 | % | |||||||||||||||
Dollars | $ | 122,142 | $ | 107,621 | $ | 14,521 | 13.5 | % | ||||||||||||
Dealer Inventory | ||||||||||||||||||||
Units | 4,282 | 4,345 | (63 | ) | (1.4 | )% |
(1) Percentages may not add due to rounding differences.
(2) We include in our backlog 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 dealer at any time without penalty and, therefore, backlog may not necessarily be an accurate measure of future sales.
Winnebago Industries, Inc. Supplemental Information by Reportable Segment - Towable (In thousands, except unit data) |
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Quarter Ended | ||||||||||||||||||||
Aug 26, 2017 |
% of Revenue |
Aug 27, 2016 |
% of Revenue |
Change | ||||||||||||||||
Net revenues | $ | 228,745 | $ | 26,602 | $ | 202,143 | 759.9 | % | ||||||||||||
Adjusted EBITDA | 35,589 | 15.6 | % | 817 | 3.1 | % | 34,772 | 4,256.1 | % | |||||||||||
Unit deliveries | Aug 26, 2017 |
Product Mix % (1) |
Aug 27, 2016 |
Product Mix % (1) |
Change | |||||||||||||||
Travel trailer | 4,736 | 62.3 | % | 1,051 | 85.9 | % | 3,685 | 350.6 | % | |||||||||||
Fifth wheel | 2,864 | 37.7 | % | 173 | 14.1 | % | 2,691 | 1,555.5 | % | |||||||||||
Total towables | 7,600 | 100.0 | % | 1,224 | 100.0 | % | 6,376 | 520.9 | % | |||||||||||
Year Ended | ||||||||||||||||||||
Aug 26, 2017 |
% of Revenue |
Aug 27, 2016 |
% of Revenue |
Change | ||||||||||||||||
Net revenues | $ | 685,197 | $ | 89,412 | $ | 595,785 | 666.3 | % | ||||||||||||
Adjusted EBITDA | 94,929 | 13.9 | % | 4,952 | 5.5 | % | 89,977 | 1,817.0 | % | |||||||||||
Unit deliveries | Aug 26, 2017 |
Product Mix % (1) |
Aug 27, 2016 |
Product Mix % (1) |
Change | |||||||||||||||
Travel trailer | 13,650 | 60.7 | % | 3,613 | 86.0 | % | 10,037 | 277.8 | % | |||||||||||
Fifth wheel | 8,824 | 39.3 | % | 586 | 14.0 | % | 8,238 | 1,405.8 | % | |||||||||||
Total towables | 22,474 | 100.0 | % | 4,199 | 100.0 | % | 18,275 | 435.2 | % | |||||||||||
As Of | ||||||||||||||||||||
Backlog (2) | Aug 26, 2017 |
Aug 27, 2016 |
Change | |||||||||||||||||
Units | 8,001 | 492 | 7,509 | 1,526.2 | % | |||||||||||||||
Dollars | $ | 229,706 | $ | 8,420 | $ | 221,286 | 2,628.1 | % | ||||||||||||
Dealer Inventory | ||||||||||||||||||||
Units | 9,545 | 2,156 | 7,389 | 342.7 | % |
(1) Percentages may not add due to rounding differences.
(2) We include in our backlog 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 dealer at any time without penalty and, therefore, backlog may not necessarily be an accurate measure of future sales.
Non-GAAP Reconciliation
We have 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 table reconciles net income to consolidated Adjusted EBITDA.
Quarter Ended | Year Ended | |||||||||||||||
(In thousands) | Aug 26, 2017 |
Aug 27, 2016 |
Aug 26, 2017 |
Aug 27, 2016 |
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Net income | $ | 24,923 | $ | 13,146 | $ | 71,330 | $ | 45,496 | ||||||||
Interest expense | 5,266 | — | 16,837 | — | ||||||||||||
Provision for income taxes | 13,475 | 6,003 | 37,269 | 20,702 | ||||||||||||
Depreciation | 2,028 | 1,502 | 7,315 | 5,745 | ||||||||||||
Amortization of intangible assets | 2,082 | — | 24,660 | — | ||||||||||||
EBITDA | 47,774 | 20,651 | 157,411 | 71,943 | ||||||||||||
Postretirement health care benefit income | — | (1,593 | ) | (24,796 | ) | (6,124 | ) | |||||||||
Legal settlement | — | (650 | ) | — | (3,400 | ) | ||||||||||
Transaction costs | 218 | 355 | 6,592 | 355 | ||||||||||||
Non-operating income | (193 | ) | (263 | ) | (330 | ) | (457 | ) | ||||||||
Adjusted EBITDA | $ | 47,799 | $ | 18,500 | $ | 138,877 | $ | 62,317 |
We have provided non-GAAP performance measures of EBITDA and Adjusted EBITDA as a comparable measure to illustrate the effect of non-recurring transactions occurring during the quarter and improve 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. We believe EBITDA and Adjusted EBITDA provide meaningful supplemental information about our operating performance because each measure excludes amounts that we do not consider part of our core operating results when assessing our performance. These types of adjustments are also specified in the definition of certain measures required under the terms of our credit facility. Examples of items excluded from Adjusted EBITDA include the postretirement health care benefit income from terminating the plan, a favorable legal settlement and the transaction costs related to our acquisition of Grand Design.
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 that publish similar measures; (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 their assessments of performance and in forecasting and budgeting for our company; and, (d) to evaluate potential acquisitions. We believe these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties to evaluate companies in our industry.
Contact: Ashis Bhattacharya - Investor Relations - 952-828-8414 - abhattacharya@wgo.net
Media Contact: Sam Jefson - Public Relations Specialist - 641-585-6803 - sjefson@wgo.net