Winnebago Industries Announces Third Quarter Fiscal 2018 Results
-- Record Quarterly Revenues Increased 18% on Continued Strong Towable Segment Growth --
-- Record Quarterly Diluted EPS of
-- Gross Margins Increased 30 Basis Points Over Prior Year --
Third Quarter Fiscal 2018 Results
Revenues for the Fiscal 2018 third quarter ended May 26, 2018, were
President and Chief Executive Officer
Mr. Happe added, “During the quarter, and as previously announced, we distributed a portion of our tax reform savings to our hardworking
Motorized
In the third quarter, revenues for the Motorized segment were
Towable
Revenues for the Towable segment were
Balance Sheet and Cash Flow
As of May 26, 2018, the Company had total outstanding debt of
Tax Reform Impact
Quarterly Cash Dividend
On May 23, 2018, the Company’s board of directors approved a quarterly cash dividend of
Mr. Happe continued, “As we enter the final quarter of Fiscal 2018, there is much to be excited about at
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 ERP, risks 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 (Unaudited) | ||||||||||||||
(In thousands, except percent and per share data) | ||||||||||||||
Three Months Ended | ||||||||||||||
May 26, 2018 | May 27, 2017 | |||||||||||||
Net revenues | $ | 562,261 | 100.0 | % | $ | 476,364 | 100.0 | % | ||||||
Cost of goods sold | 476,747 | 84.8 | % | 405,560 | 85.1 | % | ||||||||
Gross profit | 85,514 | 15.2 | % | 70,804 | 14.9 | % | ||||||||
Operating expenses: | ||||||||||||||
Selling | 13,100 | 2.3 | % | 10,141 | 2.1 | % | ||||||||
General and administrative | 21,404 | 3.8 | % | 15,194 | 3.2 | % | ||||||||
Transaction costs | 800 | 0.1 | % | 450 | 0.1 | % | ||||||||
Amortization of intangible assets | 1,933 | 0.3 | % | 10,159 | 2.1 | % | ||||||||
Total SG&A | 37,237 | 6.6 | % | 35,944 | 7.5 | % | ||||||||
Operating income | 48,277 | 8.6 | % | 34,860 | 7.3 | % | ||||||||
Interest expense | 4,172 | 0.7 | % | 5,265 | 1.1 | % | ||||||||
Non-operating income | (100 | ) | — | % | (54 | ) | — | % | ||||||
Income before income taxes | 44,205 | 7.9 | % | 29,649 | 6.2 | % | ||||||||
Provision for income taxes | 11,684 | 2.1 | % | 10,258 | 2.2 | % | ||||||||
Net income | $ | 32,521 | 5.8 | % | $ | 19,391 | 4.1 | % | ||||||
Income per common share: | ||||||||||||||
Basic | $ | 1.03 | $ | 0.61 | ||||||||||
Diluted | $ | 1.02 | $ | 0.61 | ||||||||||
Weighted average common shares outstanding: | ||||||||||||||
Basic | 31,582 | 31,587 | ||||||||||||
Diluted | 31,753 | 31,691 |
Nine Months Ended | ||||||||||||||
May 26, 2018 | May 27, 2017 | |||||||||||||
Net revenues | $ | 1,480,641 | 100.0 | % | $ | 1,092,183 | 100.0 | % | ||||||
Cost of goods sold | 1,264,635 | 85.4 | % | 943,188 | 86.4 | % | ||||||||
Gross profit | 216,006 | 14.6 | % | 148,995 | 13.6 | % | ||||||||
Operating expenses: | ||||||||||||||
Selling | 37,443 | 2.5 | % | 25,564 | 2.3 | % | ||||||||
General and administrative | 57,088 | 3.9 | % | 37,640 | 3.4 | % | ||||||||
Postretirement health care benefit income | — | — | % | (24,796 | ) | (2.3 | )% | |||||||
Transaction costs | 850 | 0.1 | % | 6,374 | 0.6 | % | ||||||||
Amortization of intangible assets | 5,921 | 0.4 | % | 22,578 | 2.1 | % | ||||||||
Total SG&A | 101,302 | 6.8 | % | 67,360 | 6.2 | % | ||||||||
Operating income | 114,704 | 7.7 | % | 81,635 | 7.5 | % | ||||||||
Interest expense | 13,871 | 0.9 | % | 11,571 | 1.1 | % | ||||||||
Non-operating income | (212 | ) | — | % | (137 | ) | — | % | ||||||
Income before income taxes | 101,045 | 6.8 | % | 70,201 | 6.4 | % | ||||||||
Provision for taxes | 28,478 | 1.9 | % | 23,794 | 2.2 | % | ||||||||
Net income | $ | 72,567 | 4.9 | % | $ | 46,407 | 4.2 | % | ||||||
Income per common share: | ||||||||||||||
Basic | $ | 2.30 | $ | 1.53 | ||||||||||
Diluted | $ | 2.28 | $ | 1.52 | ||||||||||
Weighted average common shares outstanding: | ||||||||||||||
Basic | 31,617 | 30,333 | ||||||||||||
Diluted | 31,825 | 30,448 |
Percentages may not add due to rounding differences.
Winnebago Industries, Inc. | ||||||||
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
(In thousands) | ||||||||
May 26, 2018 |
Aug 26, 2017 |
|||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 39,029 | $ | 35,945 | ||||
Receivables, net | 148,948 | 124,539 | ||||||
Inventories | 177,378 | 142,265 | ||||||
Prepaid expenses and other assets | 8,408 | 11,388 | ||||||
Total current assets | 373,763 | 314,137 | ||||||
Total property and equipment, net | 82,481 | 71,560 | ||||||
Other assets: | ||||||||
Goodwill | 244,684 | 242,728 | ||||||
Other intangible assets, net | 222,519 | 228,440 | ||||||
Investment in life insurance | 28,130 | 27,418 | ||||||
Deferred income taxes | 7,043 | 12,736 | ||||||
Other assets | 7,090 | 5,493 | ||||||
Total assets | $ | 965,710 | $ | 902,512 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 88,397 | $ | 79,194 | ||||
Current maturities of long-term debt | — | 2,850 | ||||||
Income taxes payable | 6,186 | 7,450 | ||||||
Accrued expenses | 95,823 | 77,664 | ||||||
Total current liabilities | 190,406 | 167,158 | ||||||
Non-current liabilities: | ||||||||
Long-term debt, less current maturities | 251,798 | 271,726 | ||||||
Unrecognized tax benefits | 1,703 | 1,606 | ||||||
Deferred compensation benefits, net of current portion | 15,732 | 19,270 | ||||||
Other | 250 | 1,078 | ||||||
Total non-current liabilities | 269,483 | 293,680 | ||||||
Shareholders' equity | 505,821 | 441,674 | ||||||
Total liabilities and shareholders' equity | $ | 965,710 | $ | 902,512 |
Winnebago Industries, Inc. | ||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||
(In thousands) | ||||||||
Nine Months Ended | ||||||||
May 26, 2018 |
May 27, 2017 |
|||||||
Operating activities: | ||||||||
Net income | $ | 72,567 | $ | 46,407 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation | 6,679 | 5,287 | ||||||
Amortization of intangible assets | 5,921 | 22,578 | ||||||
Amortization of debt issuance costs | 1,222 | 889 | ||||||
LIFO expense | 1,238 | 897 | ||||||
Stock-based compensation | 4,983 | 2,206 | ||||||
Deferred income taxes | 4,807 | 6,396 | ||||||
Postretirement benefit income and deferred compensation expenses | 852 | (23,687 | ) | |||||
Other | (658 | ) | (946 | ) | ||||
Change in assets and liabilities: | ||||||||
Inventories | (36,351 | ) | (7,497 | ) | ||||
Receivables, prepaid and other assets | (21,275 | ) | (21,336 | ) | ||||
Income taxes and unrecognized tax benefits | (1,081 | ) | 5,806 | |||||
Accounts payable and accrued expenses | 24,506 | 32,778 | ||||||
Postretirement and deferred compensation benefits | (2,398 | ) | (2,428 | ) | ||||
Net cash provided by operating activities | 61,012 | 67,350 | ||||||
Investing activities: | ||||||||
Purchases of property, plant and equipment | (18,123 | ) | (9,740 | ) | ||||
Proceeds from the sale of property | 316 | 219 | ||||||
Acquisition of business, net of cash acquired | — | (394,694 | ) | |||||
Other | (83 | ) | 684 | |||||
Net cash used in investing activities | (17,890 | ) | (403,531 | ) | ||||
Financing activities: | ||||||||
Payments for purchase of common stock | (6,481 | ) | (1,367 | ) | ||||
Payments of cash dividends | (9,557 | ) | (9,554 | ) | ||||
Payments of debt issuance costs | — | (11,020 | ) | |||||
Borrowings on credit facility | 19,700 | 366,400 | ||||||
Repayment of credit facility | (43,700 | ) | (69,400 | ) | ||||
Other | — | (92 | ) | |||||
Net cash (used in) provided by financing activities | (40,038 | ) | 274,967 | |||||
Net increase (decrease) in cash and cash equivalents | 3,084 | (61,214 | ) | |||||
Cash and cash equivalents at beginning of period | 35,945 | 85,583 | ||||||
Cash and cash equivalents at end of period | $ | 39,029 | $ | 24,369 | ||||
Supplemental cash flow disclosure: | ||||||||
Income taxes paid, net | $ | 24,833 | $ | 11,811 | ||||
Interest paid | $ | 11,935 | $ | 7,288 | ||||
Non-cash transactions: | ||||||||
Issuance of Winnebago common stock for acquisition of business | $ | — | $ | 124,066 | ||||
Capital expenditures in accounts payable | $ | 607 | $ | 279 | ||||
Accrued dividend | $ | — | $ | 3,184 |
Winnebago Industries, Inc. | |||||||||||||||||||
Supplemental Information by Reportable Segment (Unaudited) - Motorized | |||||||||||||||||||
(In thousands, except unit data) | |||||||||||||||||||
Quarter Ended | |||||||||||||||||||
May 26, 2018 |
% of Revenue | May 27, 2017 |
% of Revenue | Change | |||||||||||||||
Net revenues | $ | 249,245 | $ | 241,670 | $ | 7,575 | 3.1 | % | |||||||||||
Adjusted EBITDA | 9,319 | 3.7 | % | 14,567 | 6.0 | % | (5,248 | ) | (36.0 | )% | |||||||||
Unit deliveries | May 26, 2018 |
Product Mix %(1) |
May 27, 2017 |
Product Mix %(1) |
Change | ||||||||||||||
Class A | 722 | 25.3 | % | 797 | 28.5 | % | (75 | ) | (9.4 | )% | |||||||||
Class B | 606 | 21.2 | % | 471 | 16.9 | % | 135 | 28.7 | % | ||||||||||
Class C | 1,528 | 53.5 | % | 1,524 | 54.6 | % | 4 | 0.3 | % | ||||||||||
Total motorhomes | 2,856 | 100.0 | % | 2,792 | 100.0 | % | 64 | 2.3 | % | ||||||||||
Nine Months Ended | |||||||||||||||||||
May 26, 2018 |
% of Revenue | May 27, 2017 |
% of Revenue | Change | |||||||||||||||
Net revenues | $ | 641,602 | $ | 635,732 | $ | 5,870 | 0.9 | % | |||||||||||
Adjusted EBITDA | 16,518 | 2.6 | % | 36,521 | 5.7 | % | (20,003 | ) | (54.8 | )% | |||||||||
Unit deliveries | May 26, 2018 |
Product Mix %(1) |
May 27, 2017 |
Product Mix %(1) |
Change | ||||||||||||||
Class A | 2,326 | 32.8 | % | 2,263 | 32.8 | % | 63 | 2.8 | % | ||||||||||
Class B | 1,387 | 19.6 | % | 1,148 | 16.6 | % | 239 | 20.8 | % | ||||||||||
Class C | 3,372 | 47.6 | % | 3,488 | 50.6 | % | (116 | ) | (3.3 | )% | |||||||||
Total motorhomes | 7,085 | 100.0 | % | 6,899 | 100.0 | % | 186 | 2.7 | % | ||||||||||
As Of | |||||||||||||||||||
Backlog(2) | May 26, 2018 |
May 27, 2017 |
Change | ||||||||||||||||
Units | 2,155 | 1,640 | 515 | 31.4 | % | ||||||||||||||
Dollars | $ | 193,079 | $ | 141,998 | $ | 51,081 | 36.0 | % | |||||||||||
Dealer Inventory | |||||||||||||||||||
Units | 4,750 | 4,670 | 80 | 1.7 | % |
(1) Percentages may not add due to rounding differences.
(2) We include in our backlog all accepted orders from dealers generally to 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.
Winnebago Industries, Inc. | |||||||||||||||||||
Supplemental Information by Reportable Segment (Unaudited) - Towable | |||||||||||||||||||
(In thousands, except unit data) | |||||||||||||||||||
Quarter Ended | |||||||||||||||||||
May 26, 2018 |
% of Revenue | May 27, 2017 |
% of Revenue | Change | |||||||||||||||
Net revenues | $ | 313,016 | $ | 234,694 | $ | 78,322 | 33.4 | % | |||||||||||
Adjusted EBITDA | 44,042 | 14.1 | % | 32,761 | 14.0 | % | 11,281 | 34.4 | % | ||||||||||
Unit deliveries | May 26, 2018 |
Product Mix %(1) |
May 27, 2017 |
Product Mix %(1) |
Change | ||||||||||||||
Travel trailer | 6,063 | 62.1 | % | 4,359 | 58.5 | % | 1,704 | 39.1 | % | ||||||||||
Fifth wheel | 3,703 | 37.9 | % | 3,092 | 41.5 | % | 611 | 19.8 | % | ||||||||||
Total towables | 9,766 | 100.0 | % | 7,451 | 100.0 | % | 2,315 | 31.1 | % | ||||||||||
Nine Months Ended | |||||||||||||||||||
May 26, 2018 |
% of Revenue | May 27, 2017 |
% of Revenue | Change | |||||||||||||||
Net revenues | $ | 839,039 | $ | 456,451 | $ | 382,588 | 83.8 | % | |||||||||||
Adjusted EBITDA | 111,636 | 13.3 | % | 54,557 | 12.0 | % | 57,079 | 104.6 | % | ||||||||||
Unit deliveries | May 26, 2018 |
Product Mix %(1) |
May 27, 2017 |
Product Mix %(1) |
Change | ||||||||||||||
Travel trailer | 16,495 | 61.3 | % | 8,914 | 59.9 | % | 7,581 | 85.0 | % | ||||||||||
Fifth wheel | 10,428 | 38.7 | % | 5,960 | 40.1 | % | 4,468 | 75.0 | % | ||||||||||
Total towables | 26,923 | 100.0 | % | 14,874 | 100.0 | % | 12,049 | 81.0 | % | ||||||||||
As Of | |||||||||||||||||||
Backlog(2) | May 26, 2018 |
May 27, 2017 |
Change | ||||||||||||||||
Units | 9,968 | 8,657 | 1,311 | 15.1 | % | ||||||||||||||
Dollars | $ | 313,513 | $ | 269,965 | $ | 43,548 | 16.1 | % | |||||||||||
Dealer Inventory | |||||||||||||||||||
Units | 15,986 | 9,520 | 6,466 | 67.9 | % |
(1) Percentages may not add due to rounding differences.
(2) We include in our backlog all accepted orders from dealers generally to 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)
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 | Nine Months Ended | |||||||||||||||
(In thousands) | May 26, 2018 |
May 27, 2017 |
May 26, 2018 |
May 27, 2017 |
||||||||||||
Net income | $ | 32,521 | $ | 19,391 | $ | 72,567 | $ | 46,407 | ||||||||
Interest expense | 4,172 | 5,265 | 13,871 | 11,571 | ||||||||||||
Provision for income taxes | 11,684 | 10,258 | 28,478 | 23,794 | ||||||||||||
Depreciation | 2,351 | 1,859 | 6,679 | 5,287 | ||||||||||||
Amortization of intangible assets | 1,933 | 10,159 | 5,921 | 22,578 | ||||||||||||
EBITDA | 52,661 | 46,932 | 127,516 | 109,637 | ||||||||||||
Postretirement health care benefit income | — | — | — | (24,796 | ) | |||||||||||
Transaction costs | 800 | 450 | 850 | 6,374 | ||||||||||||
Non-operating income | (100 | ) | (54 | ) | (212 | ) | (137 | ) | ||||||||
Adjusted EBITDA | $ | 53,361 | $ | 47,328 | $ | 128,154 | $ | 91,078 |
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 and 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 its 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 their 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 Credit Facility. 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: Steve Stuber - Investor Relations - 952-828-8461 - srstuber@wgo.net
Media Contact: Sam Jefson - Public Relations Specialist - 641-585-6803 - sjefson@wgo.net
Source: Winnebago Industries, Inc.