Recreational vehicles maker Winnebago (WGO) reported strong earnings and revenue growth for the fourth quarter, supported by higher demand for its towable vehicles. Following the announcement, the company’s stock gained about 8% in premarket trading Wednesday.
Revenues of the specialty automaker surged 18% year-over-year to $536.2 million in the fourth quarter, with contributions from both the operating segments. The top-line particularly benefitted from a 26.2% growth in the towables business that witnessed significant organic growth in the Winnebago-branded and Grand Design RV divisions. Revenues of the motorhome division advanced 2.5%.
Net income rose to $29.79 million or $0.94 per share from $24.92 million or $0.79 per share in the fourth quarter of 2017. Both revenues and earnings topped Wall Street estimates, continuing the recent trend.
During the quarter, margins suffered slightly due to higher material and labor costs, which was partially offset by the recent cost savings initiatives and pricing actions.
In the fourth quarter, the company ventured into the marine marker with a strategic acquisition. Looking ahead, the management plans to achieve better operational efficiency through investments in talent acquisition, new product development and capacity addition.
“Winnebago Industries enters Fiscal 2019 as a larger, increasingly diversified, and more profitable organization. Our expectation going forward is to exceed the growth projections of the industries we compete in. We remain comfortable with our own dealer inventories across the whole of our businesses,” said CEO Michael Happe.
Winnebago’s stock fell about 43% since the beginning of the year, all along underperforming the market. The stock opened Wednesday’s trading higher and gained more than 8% after the earnings report.