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Winnebago (WGO) Q2 Earnings & Sales Top Estimates, Decline Y/Y

Zacks Equity Research
·4-min read

Winnebago Industries WGO reported adjusted earnings of 93 cents per share for second-quarter fiscal 2024 (ended Feb 24, 2024), beating the Zacks Consensus Estimate of 86 cents but plummeting 50.5% year over year. The recreational vehicle (“RV”) maker reported revenues of $703.6 million for the quarter under review, outpacing the Zacks Consensus Estimate of $703 million. The top line, however, fell 18.8% year over year.

Segmental Performance

Towable RV: Revenues in the Towable RV segment fell 16.9% year over year to $284.7 million, primarily due to a reduction in unit volumes and average selling price. The metric also missed our estimate of $303.4 million. Total deliveries from the segment came in at 6,747 units, decreasing 9.3% year over year but beating our estimate of 6,330 units. Adjusted EBITDA declined 31.8% to $26.8 million owing to deleverage and increased warranty costs. The figure, however, came ahead of our estimate of $24.5 million. The segment’s backlog was $222.3 million (5,273 units), decreasing 20.1%.

Motorhome RV: Revenues in the Motorhome RV segment slid 16.2% year over year to $338.4 million due to a decline in unit volume, high discounts and an unfavorable product mix. The top line, however, outpaced our estimate of $272.3 million. Total deliveries from the Motorhome RV segment came in at 1,811 units, down 16.4% year over year but surpassing our estimate of 1,446 units. The segment recorded an adjusted EBITDA of $26 million, down 38.9% due to deleveraging, high warranty costs, operational challenges and increased discounts. The metric, however, beat our estimate of $17 million. The backlog was $452.2 million (2,582 units), down 48.2% from the prior year.

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Marine: Revenues in the segment were $69.8 million, decreasing 38.2% year over year, primarily due to lower unit sales and unfavorable product mix. The metric also lagged our estimate of $86.5 million. The total deliveries from the segment came in at 862 units, down 32% year over year and lagged our estimate of 1,003 units. The segment recorded an adjusted EBITDA of $4.4 million, down 69.7% year over year due to deleverage and higher discounts. The metric lagged our estimate of $6.9 million. The backlog for the Marine segment was $102.9 million (1,194 units), down 57%.

Financials

Winnebago had cash and cash equivalents of $265.7 million as of Feb 24, 2024. Long-term debt (excluding current maturities) increased to $694.8 million from $592.4 million recorded on Aug 26, 2023. During the quarter, Winnebago completed a $350 million offering of convertible senior notes for refinancing maturing obligations due in 2025.

Future Growth Targets

Winnebago has set ambitious mid-cycle organic growth goals. It targets net revenues between $4.5 billion and $5.0 billion, gross margin of 18-18.5%, and adjusted EBITDA margin in the band of 11-11.5%.

The company aims to secure a North American RV market share exceeding 13% and a U.S. aluminum pontoon market share of 13% while striving for an organic non-RV revenue mix comprising 15% to 20% of total revenues. Free cash flow is anticipated to be within the range of $325 million to $375 million.

Peer Releases

THOR Industries, Inc. THO reported fiscal second-quarter 2024 results on Mar 6. Earnings per share of 40 cents missed the Zacks Consensus Estimate of 69 cents and contracted 20% year over year. The company registered revenues of $2.21 billion for the quarter under review, lagging the Zacks Consensus Estimate of $2.30 billion. The top line declined 5.9% year over year.

As of Jan 31, 2024, Thor had cash and cash equivalents of $340.2 million and long-term debt of $1.39 billion. It projects its fiscal 2024 consolidated net sales in the range of $10-$10.5 billion.

REV Group, Inc. REVG reported fiscal first-quarter 2024 results on Mar 6. Earnings per share of 25 cents surpassed the Zacks Consensus Estimate of 9 cents and rocketed 108% year over year. The company registered revenues of $586 million for the quarter under review, outpacing the Zacks Consensus Estimate of $577 million. In the year-ago period, revenues totaled $583.5 million.

As of Jan 31, 2024, REV Group had cash and cash equivalents of $87.9 million. It projects its fiscal 2024 consolidated net sales in the range of $2.45-$2.55 billion.

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