N@N

Winnebago Industries, Inc.: Winnebago Industries Reports Results for the Second Quarter/First Six Months of Fiscal Year 2009

^{Published on 2009-03-19 05:26:11, Last Modified on 2009-03-19 05:29:54 - Market Wire}
 

FOREST CITY, IA--(Marketwire - March 19, 2009) - Winnebago Industries, Inc. (NYSE: [ WGO ]), the nation's top-selling motor home manufacturer, today reported financial results for the Company's second quarter and first six months of fiscal year 2009 ended February 28, 2009.

Revenues for the second quarter were $31.8 million, a decrease of 80.6 percent, versus revenues of $164.2 million for the second quarter last year. The Company reported an operating loss of $18.6 million for the second quarter of fiscal 2009 versus operating income of $2.5 million for the second quarter of fiscal 2008. Net loss for the second quarter was $10.4 million versus net income of $2.5 million for the second quarter of fiscal 2008. On a diluted per share basis, the Company had a net loss of 36 cents for the second quarter of fiscal 2009, versus net income of 9 cents for the second quarter last year.

Revenues for the first 26 weeks of fiscal 2009 were $101.2 million, a decrease of 73 percent, versus revenues of $379.3 million for the first 27 weeks of fiscal 2008. The Company reported an operating loss of $35.5 million for the first 26 weeks of fiscal 2009, versus operating income of $16.0 million for the first 27 weeks of fiscal 2008. Net loss for the first 26 weeks of fiscal 2009 was $20.0 million, or 69 cents per diluted share, versus net income of $12.5 million, or 43 cents per diluted share, for the first 27 weeks of the last fiscal year.

The second quarter of fiscal 2009 was negatively impacted by the continued decline in motor home delivery volumes, increased incentives at the wholesale and retail levels and a less favorable mix of products sold. In turn, lower motor home volume resulted in inefficiencies due to reduced utilization of manufacturing facilities. The Company did benefit however, from a reduction of inventories of $10.5 million during the second quarter. Also during the second quarter, the Company elected to participate in a "no net cost" loan program for $9.1 million through UBS AG, secured by a portion of the Auction Rate Securities (ARS) owned by the Company in an account with them. As a result, cash and cash equivalents at the end of the quarter were $27.5 million.

"We anticipate continued softness in motor home sales until we see improvement in the credit markets at the wholesale and retail levels and in consumer confidence levels," said Winnebago Industries' Chairman, CEO and President Bob Olson. Wholesale shipments within the motor home industry have fallen dramatically, with the decline accelerating throughout recent periods. Industry-wide wholesale shipments of Class A and Class C motor homes dropped 49.5 percent in calendar year 2008, 75.2 percent in the fourth calendar quarter and 80.6 percent in the month of January 2009. Statistical Surveys, the retail reporting service for the RV industry, reported a similar decline with industry-wide retail sales of Class A and Class C motor homes down 41.6 percent for calendar 2008, 54.8 percent for the fourth calendar quarter and 58.4 percent in the month of January 2009. Winnebago Industries continues to lead the industry in retail sales of Class A and Class C motor homes combined with the Winnebago and Itasca brands achieving 18.5 percent market share for calendar 2008, versus 18.6 percent market share for calendar 2007.

"The contraction in wholesale shipments is evident when looking at our dealers' inventory of Winnebago, Itasca and ERA products," said Olson. "Total combined dealer inventory of Winnebago Industries' products on our dealer partners' lots was 2,918 motor homes at the end of the second quarter of fiscal 2009, a sequential reduction of 11 percent compared to inventory at the end of the first quarter of fiscal 2009 and a 40 percent reduction compared to dealer inventory at the end of the second quarter of fiscal 2008. Even with a depressed retail market, I continue to believe that once our dealers' floorplan lenders provide the dealers with sufficient credit to enable them to reorder product to more closely match retail sell-through, we will experience an increase in deliveries."

"Extremely challenging market conditions have resulted in a severe decline in our revenues in the first half of fiscal 2009," said Winnebago Industries' Vice President, CFO Sarah Nielsen. "As a result, maintaining liquidity and conserving capital are the primary goals of management in order to enhance our financial flexibility. We have taken several steps to conserve capital and maintain liquidity thus far in fiscal 2009, such as considerable reduction of inventory levels, the establishment of a line of credit, participation in the UBS 'no net cost' loan program, and the suspension of cash dividend payments starting in the second quarter of fiscal 2009. We have also continued to reduce our fixed cost structure over the past 12 months; we anticipate fixed cost reductions in excess of $21 million to be achieved in fiscal 2009. Specifically, actions taken thus far include the reduction of our total headcount by nearly 50%, salary reductions, the elimination of 2009 stock grants to key management and the board, elimination of bonuses, reductions of the 401(k) match and two mandatory unpaid weeks off (one during the second quarter and one to occur during the fourth quarter). Other fixed costs have been eliminated through many strategic actions, including the closure of our Charles City manufacturing facility, cancellation of certain promotional events typically held and reduced spending throughout the Company. Additional cost reduction activities will continue during these challenging market conditions."

"While several major competitors are in very difficult financial circumstances, we are confident of our financial strength and competitive position in this economic recession," continued Olson. "We have enviable brand strength, quality products and financial stability to withstand the downturn. In the short-term, however, we anticipate added competitive pressure from deeply discounted product in the marketplace from struggling manufacturers, in addition to the challenges from the ongoing turmoil in the credit markets. It is my belief that once the housing and stock markets recover, along with the shoring up of personal balance sheets with increased savings, consumer's sense of wealth will improve and more normal spending patterns will prevail."

Winnebago Industries will conduct a conference call in conjunction with this release at 9 a.m. Central Time today, Thursday, March 19, 2009. Members of the news media, investors and the general public are invited to access a live broadcast of the conference call via the Investor Relations page of the Company's website at [ http://www.winnebagoind.com/investor.html ]. The event will be archived and available for replay for the next 90 days.

About Winnebago Industries

Winnebago Industries, Inc. is the nation's top-selling manufacturer of motor homes which are self-contained recreation vehicles used primarily in leisure travel and outdoor recreation activities. The Company builds quality motor homes under the Winnebago, Itasca and ERA brand names with state-of-the-art computer-aided design and manufacturing systems on automotive-styled assembly lines. The Company's common stock is listed on the New York and Chicago Stock Exchanges and traded under the symbol WGO. Options for the Company's common stock are traded on the Chicago Board Options Exchange. For access to Winnebago Industries' investor relations material or to add your name to an automatic email list for Company news releases, visit, [ http://www.winnebagoind.com/investor.html ].

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements are inherently uncertain. A number of factors could cause actual results to differ materially from these statements, including, but not limited to interest rates and availability of credit, low consumer confidence, availability and price of fuel, a further slowdown in the economy, availability of chassis and other key component parts, sales order cancellations, slower than anticipated sales of new or existing products, new product introductions by competitors, the effect of global tensions, and other factors. Additional information concerning certain risks and uncertainties that could cause actual results to differ materially from that projected or suggested is contained in the Company's filings with the Securities and Exchange Commission (SEC) over the last 12 months, copies of which are available from the SEC or from the Company upon request.

 Winnebago Industries, Inc. Unaudited Consolidated Statements of Income (In thousands, except percent and per share data) Quarter Ended Quarter Ended February 28, 2009 March 1, 2008 -------------------- --------------------- % % Net revenues $ 31,808 100.0 $ 164,203 100.0 Cost of goods sold 43,600 137.1 152,034 92.6 --------- --------- ---------- --------- Gross (deficit) profit (11,792) (37.1) 12,169 7.4 --------- --------- ---------- --------- Operating expenses Selling 2,816 8.8 4,258 2.6 General and administrative 4,003 12.6 5,457 3.3 --------- --------- ---------- --------- Total operating expenses 6,819 21.4 9,715 5.9 --------- --------- ---------- --------- Operating (loss) income (18,611) (58.5) 2,454 1.5 Financial income 633 2.0 1,236 0.7 --------- --------- ---------- --------- (Loss) income before income taxes (17,978) (56.5) 3,690 2.2 (Credit) provision for taxes (7,597) (23.9) 1,173 0.7 --------- --------- ---------- --------- Net (loss) income $ (10,381) (32.6) $ 2,517 1.5 ========= ========= ========== ========= (Loss) income per common share: Basic $ (0.36) $ 0.09 Diluted $ (0.36) $ 0.09 Weighted average common shares outstanding Basic 29,037 28,964 Diluted 29,046 29,034 26 Weeks Ended 27 Weeks Ended February 28, 2009 March 1, 2008 -------------------- -------------------- % % Net revenues $ 101,206 100.0 $ 379,345 100.0 Cost of goods sold 121,892 120.4 341,536 90.0 --------- --------- ---------- --------- Gross (deficit) profit (20,686) (20.4) 37,809 10.0 --------- --------- ---------- --------- Operating expenses Selling 6,481 6.4 9,863 2.6 General and administrative 8,334 8.2 11,908 3.1 --------- --------- ---------- --------- Total operating expenses 14,815 14.6 21,771 5.7 --------- --------- ---------- --------- Operating (loss) income (35,501) (35.0) 16,038 4.3 Financial income 1,157 1.1 2,476 0.6 --------- --------- ---------- --------- (Loss) income before income taxes (34,344) (33.9) 18,514 4.9 (Credit) provision for taxes (14,367) (14.2) 6,035 1.6 --------- --------- ---------- --------- Net (loss) income $ (19,977) (19.7) $ 12,479 3.3 ========= ========= ========== ========= (Loss) income per common share: Basic $ (0.69) $ 0.43 Diluted $ (0.69) $ 0.43 Weighted average common shares outstanding Basic 29,032 29,165 Diluted 29,041 29,245 Winnebago Industries, Inc. Unaudited Consolidated Condensed Balance Sheets (In thousands) Feb. 28, 2009 Aug. 30, 2008 ------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 27,454 $ 17,851 Short-term investments - - - 3,100 Receivables, net 8,237 9,426 Inventories 72,778 110,596 Income taxes receivable 19,477 6,618 Prepaid and other 13,301 15,290 ------------- ------------- Total current assets 141,247 162,881 Property and equipment, net 37,091 40,097 Long-term investments, less impairments 33,476 37,538 Deferred income taxes 28,342 26,862 Investment in life insurance 22,492 22,123 Other assets 11,550 15,954 ------------- ------------- Total assets $ 274,198 $ 305,455 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 7,182 $ 15,631 Short-term ARS borrowings 9,100 - - - Income taxes payable 30 76 Accrued expenses 32,213 38,626 ------------- ------------- Total current liabilities 48,525 54,333 ------------- ------------- Long-term liabilities: Unrecognized tax benefit 8,943 9,469 Postretirement health care and deferred compensation benefits, net of current portion 63,047 67,729 ------------- ------------- Total long-term liabilities 71,990 77,198 Stockholders' equity 153,683 173,924 ------------- ------------- Total liabilities and stockholders' equity $ 274,198 $ 305,455 ============= ============= Winnebago Industries, Inc. Unaudited Condensed Statements of Cash Flows (In thousands) 26 Weeks Ended 27 Weeks Ended Feb. 28, 2009 Mar. 1, 2008 -------------- -------------- Operating activities: Net (loss) income $ (19,977) $ 12,479 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation 4,146 5,179 Stock-based compensation 526 2,910 Postretirement benefit income and deferred compensation 711 716 Deferred income taxes (503) 98 Increase in cash surrender value of life insurance policies (513) (459) Other 158 36 Change in assets and liabilities: Inventories 37,818 (27,269) Receivables and prepaid assets 1,290 (1,603) Accounts payable and accrued expenses (11,734) (8,456) Income taxes (receivable) payable and unrecognized tax benefits (12,756) 4,451 Postretirement and deferred compensation benefits (1,424) (715) -------------- -------------- Net cash used in operating activities (2,258) (12,633) -------------- -------------- Investing activities: Purchases of investments - - - (228,069) Proceeds from the sale or maturity of investments 8,500 276,519 Purchases of property and equipment (1,344) (2,469) Other (744) (622) -------------- -------------- Net cash provided by investing activities 6,412 45,359 -------------- -------------- Financing activities: Payments for purchase of common stock (162) (17,527) Payments of cash dividends (3,489) (7,024) Borrowings on ARS portfolio 9,100 - - - Proceeds from issuance of treasury stock - - - 472 -------------- -------------- Net cash provided by (used in) financing activities 5,449 (24,079) -------------- -------------- Net increase in cash and cash equivalents 9,603 8,647 Cash and cash equivalents at beginning of period 17,851 6,889 -------------- -------------- Cash and cash equivalents at end of period $ 27,454 $ 15,536 ============== ============== Winnebago Industries, Inc. Unaudited Motor Home Deliveries Quarter Ended Quarter Ended Change Feb. 28, 2009 Mar. 1, 2008 Units % ------------- ------------- ------ ------ Class A Gas 77 551 (474) (86.0) Class A Diesel 45 287 (242) (84.3) ------------- ------------- ------ ------ Total Class A 122 838 (716) (85.4) Class B 8 1 7 700.0 Class C 185 858 (673) (78.4) ------------- ------------- ------ ------ Total deliveries 315 1,697 (1,382) (81.4) ============= ============= ====== ====== 26 Weeks 27 Weeks Change Ended Ended Feb. 28, 2009 Mar. 1, 2008 Units % ------------- ------------- ------ ------ Motor home unit deliveries Class A Gas 242 1,387 (1,145) (82.6) Class A Diesel 163 650 (487) (74.9) ------------- ------------- ------ ------ Total Class A 405 2,037 (1,632) (80.1) Class B 43 1 42 NM Class C 523 1,814 (1,291) (71.2) ------------- ------------- ------ ------ Total deliveries 971 3,852 (2,881) (74.8) ============= ============= ====== ====== Winnebago Industries, Inc. Unaudited Sales Order Backlog and Dealer Inventory (Units) As of Increase/ % Feb. 28, 2009 Mar. 1, 2008 (Decrease) Change ------------- ------------ ---------- ------ Class A Gas 67 367 (300) (81.7) Class A Diesel 27 103 (76) (73.8) ------------- ------------ ---------- ------ Total Class A 94 470 (376) (80.0) Class B 9 178 (169) (94.9) Class C 232 944 (712) (75.4) ------------- ------------ ---------- ------ Total backlog* 335 1,592 (1,257) (79.0) ============= ============ ========== ====== Total approximate revenue dollars (in thousands) $ 27,389 $ 123,137 $ (95,748) (77.8) Dealer inventory 2,918 4,837 (1,919) (39.7) 

* The Company includes in its backlog all accepted orders from dealers to be shipped within the next six months. Orders in backlog can be cancelled or postponed at the option of the purchaser at any time without penalty and, therefore, backlog may not necessarily be an accurate measure of future sales.