A surge in outdoor activities because of the coronavirus pandemic fueled new interest in recreational vehicles, helping Winnebago Industries post solid results for its fourth quarter and fiscal year.
New consumers driven to the RVing lifestyle fuel solid growth for Winnebago
Fourth-quarter earnings for the recreational vehicle company exceeded expectations, as people turned to outdoor activities during the coronavirus pandemic.
October 22, 2020 at 12:06AM
The maker of motor homes, towable RVs and travel trailers reported Wednesday that fourth quarter revenue increased 39% to $739 million.
Winnebago — based in Forest City, Iowa, but with its management offices in Eden Prairie — said some of that increase is tied to the acquisition of luxury motor home maker Newmar Corp. last November.
Absent the acquisition, though, the company's revenue still increased 15% in the quarter, with the strongest performance in the towable RV segment.
"In the face of the unprecedented impacts of the COVID-19 pandemic, our strong fourth quarter finish to the year was a testament to the incredible resolve of our world-class team, the strength of our portfolio of leading outdoor lifestyle brands, and our efficiency in quickly and safely resuming operations to meet tremendous consumer demand," said Winnebago Chief Executive Michael Happe in a news release.
The pandemic fueled a resurgent interest in outdoor pursuits and products from bicycles to motor homes. The RV Industry Association recently projected that total RV shipments across the industry for 2020 would be 424,400 units, a 4.5% growth in units over 2019, despite an industrywide shutdown of almost two months due to the coronavirus pandemic.
The industry group sees see the sales trends continuing into next year, projecting a record 507,200 units sold in 2021, a 19.5% increase over the projected 2020 total.
"This new forecast confirms what we have been seeing across the country as people turn to RVs as a way to have the freedom to travel and experience an active outdoor lifestyle while also controlling their environment," said RV Industry Association President Craig Kirby in a news release.
Airline travel and hotel stays are down due to the pandemic, as companies curtailed discretionary travel and others curtailed recreation travel. However, some families have turned to RVing as an alternative to maintain social distance and other recommendations to stem the spread of the virus.
"Our consumers combined the imperative of the safety of their families with their strong desire to be immersed in the experiences they could control, and consequently flocked to the outdoor recreation lifestyle like never before," Happe told analysts on the company earnings call Wednesday.
Winnebago earned $42.5 million, or $1.25 per share, in the fourth quarter, an increase over the $31.9 million, or $1.01 per share, earned in the same quarter last year.
Adjusted EPS for the fourth quarter was $1.45 per share, a 45% increase over the year-ago quarter, and more than 50% better than the 93 cents per share analysts were expecting.
For the full fiscal year, Winnebago had total revenue of $2.4 billion, including $388.4 million in revenue from the Newmar acquisition. The company earned $61.4 million, or $1.84 per share, compared to $111.8 million, or $3.52 per share in fiscal 2019.
Adjusted EPS for fiscal 2020 was $2.58 per share down from the $3.45 in fiscal 2019. The adjusted EPS excludes financing and acquisition related costs.
Winnebago in November 2019 acquired Newmar for $270 million in cash plus 2 million shares of Winnebago stock, to boost its share of the motor home market. Revenue for the motor home segment was $302 million in the fourth quarter, a 50% increase over the fourth quarter last year fueled by the contribution of $126 million in revenue from Newmar during the quarter.
The towables segment, which represents 56% of overall fourth quarter revenue, saw its revenue increase 35% during the quarter to $414 million. The company said backlog for orders in the towables segment increased to a record $748 million, as dealers saw sizable inventory reductions in order to meet surging consumer demand in the fourth quarter.
Winnebago hasn't provided earnings guidance for 2021, but Happe also expressed confidence that the renewed interest in all things outdoors will continue into 2021.
"As we look ahead to fiscal 2021, we are encouraged by the ongoing outdoor recreation demand trends we are experiencing," Happe said in the news release. "We have built a strong and growing position in the RV market, and our customers continue to view all our brands as a trusted and safe way to have extraordinary experiences as they travel, live, work and play in the outdoors."
Shares of Winnebago closed at $50.39 per share, down 11.7% Wednesday, as Happe mentioned on the earnings call that there are supply chain concerns in the RV and marine markets but that sourcing teams are addressing them. Shares have traded between $16.94 and $72.65 per share over the last 52 weeks.
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The governor said it may be 2027 or 2028 by the time the market catches up to demand.
