RV Maker Winnebago Profits Drive Higher With Remote Work and Freedom Seekers

Leading RV maker Winnebago reported better than expected fourth quarter (Aug) earnings on Tuesday before the bell. Thor Industries $THO, $WGO’s top competitor also reported solid earnings and revenue in its JulQ report from the easing of travel restrictions & lockdown inspired off-the-grid living.

Leading RV maker Winnebago reported better than expected fourth quarter (Aug) earnings on Tuesday before the bell. Thor Industries $THO, $WGO’s top competitor also reported solid earnings and revenue in its JulQ report from the easing of travel restrictions & lockdown inspired off-the-grid living.

Winnebago Classic

Winnebago Industries Inc NYSE: WGO: Reported Earnings Before Open Tuesday

$2.57 Beat $2.05 EPS Forecast and $1.036 Billion Beat $943 Million Forecast in Revenue

Earnings

Winnebago Q4 earnings crushed analysts’ earnings expectations, with EPS of $2.57, $0.52 higher than consensus. WGO has now beaten on earnings by at least $0.39 for five straight quarters. (One could argue the analysts are pretty poor judges).  Revenue grew 40.4% yr/yr to $1,036 million ahead of consensus $943 million. WGO is doing well at navigating supply chain headwinds.

Highlights

  • Motorhome sales improved 48.7% year over year to $448.9 million, thanks to strong demand for Newmar and Winnebago branded products.
  • Towable revenues soared 35.3% year over year to $560 million, primarily on solid consumer demand for Grand Design and Winnebago branded products, up from $543 million.
  • WGO’s backlog also continued to grow, more than doubling yr/yr in both segments and increasing 5.7% sequentially for Motorhomes and 12.0% for Towables.

Cash

Winnebago had cash and cash equivalents of $434.6 million as of Aug 28, 2021, up from $292.6 million on Aug 29, 2020. Long-term debt (excluding current maturities) totaled $528.6 million, slightly up from $512.6 million recorded on Aug 29, 2020.

Buybacks

During the quarter Winnebago repurchased shares of $35.4 million. In fiscal 2021 WGO returned $61.6 million to shareholders via dividends ($16.2 million) and buybacks ($45.4 million). Last week, Winnebago boosted shareholder value with the authorization of an additional $200 million of stock buyback.

Comparing Two RV’s Winnebago and Thor

Since Thor’s strong top-and-bottom-line beat for Q4 in late September $THO has traded from up 10% to down about 8%. With concerns growing on the economy since then coupled with concerns about rising interest rates and higher inflation. In this background there are concerns RV demand could be hurt. RVs are highly discretionary purchases, and consumers will put them off if monthly payments are too high.Comparing the two, THO reported a much wider earnings beat than WGO, which could provided headwinds to the stock after the market settled in today.

Outlook

WGO’s growing backlog indicates that demand for camping is not yet letting up, despite COVID restrictions easing or going away entirely around the US and Canada. WGO only sells its marine products internationally and most of it’s exposure is the US and Canada domesticmarkets for its primary products)

Much of the order backlog is due to deficient dealer inventory levels, it is a good indicator of consumer demand. THO expects elevated demand to continue even after dealers start to maintain inventory, which THO predicts should happen in CY23.

The concern is sales are discretionary and the demand for RVs continued its momentum by safe travel enthusiasts and millennials’ zeal for off-the-grid living. While these factors will positively impact Thor’s results for the quarter to be reported what are the expectations going forward?

Another headwind is supply constraints and the shortage of various RV components in Europe and North America. A tight labor market, and high commodity and SG&A costs are also likely to have hurt its fiscal fourth-quarter 2021 margins. Their are many variables for a reliable outlook with inflation jumping higher and the supply constraints that are well documented. Higher interest rates, higher gasoline and diesel prices as well increasing the costs of RVs are all headwinds.

With interest rates remaining at historically low levels RVs are more affordable to more people.

The pandemic paved the way for more remote work.

Rv’s provide access to freedom, thousands of wineries, farms, breweries, etc. for self-contained RVers, found in its survey of 10,000 campers that 23% of them worked remotely in their RV in 2021.  Remote work is here to stay even if COVID-19 goes away. 

On the plus side remote work is seeing more individuals purchase RVs and work remotely as they travel the country. Living off the grid has become very popular after the pandemic forced many to find alternative ways of using vacation and leisure time. Looking at both THO and WGO they both had strong quarters despite constrained global supply chains showing RV demand remains robust in the new world order.

 

 

Thor Q4 Earnings Highlights

 

  • In North America, towable-RV sales rose 46% to $1.73 billion and motorized-RV sales more than doubled to $823.1 million.
  • European sales were 31% higher at $969.9 million, the company said.
  • For the full fiscal year, Thor Industries sold more than 300,000 recreational vehicles.
  • North American order backlog grew 215.5% yr/yr to $13.3 bln;
  • European backlog, meanwhile, grew slightly less but more than doubled at 133.2% yr/yr to $1.53 bln.

The growing backlog indicates elevated demand, and THO expects this trend to continue even after dealers start to maintain inventory in CY23. The pandemic ignited a desire to get off the grid which bodes well for the RV industry even after normalcy resumes. As people begin to camp in their RVs for the first time, many may embrace the lifestyle. This creates a larger pool of RV owners who could eventually become seekers of upgrades, helping to bolster the used RV market.

About Winnebago

Winnebago Industries, Inc. is a leading North American manufacturer of outdoor lifestyle products under the Winnebago, Grand Design, Chris-Craft, Newmar and Barletta brands, which are used primarily in leisure travel and outdoor recreation activities. The Company builds quality motorhomes, travel trailers, fifth-wheel products, pontoons, inboard/outboard and sterndrive powerboats and commercial community outreach vehicles. Winnebago Industries has multiple facilities in Iowa, Indiana, Minnesota and Florida. The Company’s common stock is listed on the New York Stock Exchange and traded under the symbol WGO.

Source: Wiinebago

From The TradersCommunity Research Desk

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