Winnebago's stock slides after earnings fall short of estimates

By Ciara Linnane

Outdoor industry market is still challenged by retail spending patterns and inventories

Winnebago Industries Inc.'s stock fell 4% Thursday, after the recreational vehicle maker's fiscal third-quarter earnings fell short of estimates.

Eden Prairie, Minn.-based Winnebago (WGO) had net income of $29.0 million, or 96 cents a share, for the quarter to May 25, down from $59.1 million, or $1.71 a share, in the year-earlier period.

Adjusted for one-time items, EPS came to $1.13, below the $1.31 FactSet consensus.

Revenue fell 12.7% to $786.0 million, also below the $798.0 million FactSet consensus.

"While outdoor industry market conditions remain challenged given inconsistent retail patterns and sustained dealer discipline relative to field inventory levels, we are generally pleased with the resiliency of our portfolio, as our teams balance the pursuit of long-term share, profitability and customer satisfaction across our premium brands," said CEO Michael Happe in prepared remarks.

On a call with analysts, Happe said retail demand has remained sluggish against a background of high interest rates and inflation with limited evidence that economic conditions are improving for its outdoor recreation consumer as the company moves into its fiscal fourth quarter.

"While this environment necessitates near-term caution and discipline, the secular future growth of outdoor recreation engagement by consumers is undoubtedly a key driver for the health of our business long term," Happe said, according to a FactSet transcript.

The company is expecting the retail market to remain under pressure in the fourth quarter.

"Our commitment remains steadfast," Chief Financial Officer Bryan Hughes told analysts. "We will use our capacity wisely, maintain our premium positioning, introduce exciting new products tailored to our customer base's preferred price points, and prioritize long-term profitability across our brand."

By segment, towable RV revenue rose 0.6% to $386.3 million. The segment ended the quarter with a $153.1 million backlog, down 35% from a year ago.

Motorhome RV revenue fell 20% to $299 million and ended with a backlog of $354.9 million, down 55.7% from a year ago.

Marine revenue fell 31.% to $87.9 million and the backlog fell 57.6% to $62 million.

"We have made strong progress during the fiscal year to reduce aging RV field inventory in a fiscally responsible manner; our teams continue to work closely with our dealer partners to monitor the complexion of their inventory and match production and shipments with retail demand," said Happe.

The company is looking forward to the release in the fourth quarter of its Grand Design Lineage motorhome product, as well as the Winnebago Connect intelligent control system, which will be introduced on the Winnebago Navion line.

"Both strategies open new growth opportunities for our organization," said Happe.

The stock has fallen 25% in the year to date, while the S&P 500 has gained 15%.

-Ciara Linnane

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06-20-24 1206ET

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