Earnings: RV industry slump pulls down Winnebago Q2 sales, profit

Recreational vehicle maker Winnebago Industries, Inc. (WGO) posted its second-quarter 2019 earnings before the opening bell on March 25.

Revenue slumped 7.6% to $432.7 million, while gross profit slipped 1.8% to $66.4 million.

Gross profit margin rose by 100 basis points in the quarter, driven by revenue mix, pricing and Motorhome segment operational improvements.

Operating income fell 18% to $28.9 million, with a fall in RV unit sales.

Net income slipped 2.2% to $21.6 million, while earnings declined 1.4% to 68 cents per diluted share.

The results beat analyst estimates of 56 cents-a-share on expected revenue of about $426 million.

“Although Company sales decreased modestly, we continued to materially outpace the industry and expand our year-over-year margins, primarily due to the improved product vitality and profitability of our Motorhome segment and the continued strength and momentum of our Towables segment,” said CEO Michael Happe.

RV SALES DROWN WINNEBAGO

According to Winnebago chief Michael Happe, “challenging macro conditions within the RV industry” led to the poor RV sales, with dealers cutting down their overall inventory levels in the quarter.

In the second quarter, revenues for the Motorhome segment slumped 17.3% to $164.7 million, on lower Class A and Class C unit sales, partially offset by a modest rise in Class B unit sales.

As of Feb. 23, 2019, Winnebago had a total outstanding debt of $276.9 million and a working capital of $175.3 million. The debt-to-equity ratio slipped to 48.5% from 54.5% as of August 25, 2018, and the ratio of net debt to Adjusted EBITDA was 1.6x as of the end of the quarter. Cash flow from operations was $51.9 million for the first six months of fiscal 2019, an increase of $36.9 million from the same period in fiscal 2018.

Additionally, on March 8, 2019, the Winnebago board of directors approved a quarterly dividend of $0.11 per share. This cash dividend is payable on April 17, 2019, to stockholders of record at close of business on April 3, 2019.

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