UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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(Mark One) | |
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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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For the quarterly period ended November 28, 2020
27, 2021 | | | | | | | | | | | |
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
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| For the transition period from _________________ to _________________ | |
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| Commission File Number: | 001-06403 | |
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WINNEBAGO INDUSTRIES, INC. |
(Exact name of registrant as specified in its charter) |
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Iowa | | | 42-0802678 |
(State or other jurisdiction of incorporation or organization) | | | (I.R.S. Employer Identification No.) |
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P. O. Box 15213200 Pioneer Trail | Forest CityEden Prairie | IowaMinnesota | | | 5043655347 |
(Address of principal executive offices) | | | (Zip Code) |
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| | 641- | 585-3535952-829-8600 | |
(Registrant's telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, $0.50 par value per share | WGO | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ☒ Accelerated Filer ☐ Non-accelerated filer ☐
Smaller Reporting Company ☐ Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The numberAs of December 13, 2021, there were 33,344,672 shares of common stock, par value $0.50 per share, outstanding on December 10, 2020 was 33,554,500.outstanding.
Winnebago Industries, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended November 27, 2021
Table of Contents
PART I. FINANCIAL INFORMATION.INFORMATION
Item 1. Condensed Consolidated Financial Statements.Statements
Winnebago Industries, Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)
| | | Three Months Ended | | Three Months Ended |
(in thousands, except per share data) | (in thousands, except per share data) | November 28, 2020 | | November 30, 2019 | (in thousands, except per share data) | November 27, 2021 | | November 28, 2020 |
Net revenues | Net revenues | $ | 793,131 | | | $ | 588,458 | | Net revenues | $ | 1,155,740 | | | $ | 793,131 | |
Cost of goods sold | Cost of goods sold | 656,127 | | | 509,845 | | Cost of goods sold | 926,328 | | | 656,127 | |
Gross profit | Gross profit | 137,004 | | | 78,613 | | Gross profit | 229,412 | | | 137,004 | |
Selling, general, and administrative expenses | Selling, general, and administrative expenses | 48,399 | | | 51,105 | | Selling, general, and administrative expenses | 74,870 | | | 48,399 | |
Amortization of intangible assets | 3,590 | | | 3,614 | | |
Amortization | | Amortization | 8,172 | | | 3,590 | |
Total operating expenses | Total operating expenses | 51,989 | | | 54,719 | | Total operating expenses | 83,042 | | | 51,989 | |
Operating income | Operating income | 85,015 | | | 23,894 | | Operating income | 146,370 | | | 85,015 | |
Interest expense | 9,941 | | | 6,049 | | |
Non-operating loss (income) | 94 | | | (116) | | |
Interest expense, net | | Interest expense, net | 10,242 | | | 9,941 | |
Non-operating loss | | Non-operating loss | 6,357 | | | 94 | |
Income before income taxes | Income before income taxes | 74,980 | | | 17,961 | | Income before income taxes | 129,771 | | | 74,980 | |
Provision for income taxes | Provision for income taxes | 17,557 | | | 3,893 | | Provision for income taxes | 30,141 | | | 17,557 | |
Net income | Net income | $ | 57,423 | | | $ | 14,068 | | Net income | $ | 99,630 | | | $ | 57,423 | |
| Income per common share: | | |
Earnings per common share: | | Earnings per common share: | |
Basic | Basic | $ | 1.71 | | | $ | 0.44 | | Basic | $ | 2.99 | | | $ | 1.71 | |
Diluted | Diluted | $ | 1.70 | | | $ | 0.44 | | Diluted | $ | 2.90 | | | $ | 1.70 | |
| Weighted average common shares outstanding: | Weighted average common shares outstanding: | | Weighted average common shares outstanding: | |
Basic | Basic | 33,609 | | | 32,067 | | Basic | 33,322 | | | 33,609 | |
Diluted | Diluted | 33,839 | | | 32,267 | | Diluted | 34,378 | | | 33,839 | |
| Net income | Net income | $ | 57,423 | | | $ | 14,068 | | Net income | $ | 99,630 | | | $ | 57,423 | |
Other comprehensive income (loss): | | |
Other comprehensive income: | | Other comprehensive income: | |
Amortization of net actuarial loss (net of tax of $3 and $3) | Amortization of net actuarial loss (net of tax of $3 and $3) | 9 | | | 8 | | Amortization of net actuarial loss (net of tax of $3 and $3) | 9 | | | 9 | |
Interest rate swap activity (net of tax of $0 and $22) | 0 | | | (68) | | |
Total other comprehensive income (loss) | 9 | | | (60) | | |
Comprehensive income | Comprehensive income | $ | 57,432 | | | $ | 14,008 | | Comprehensive income | $ | 99,639 | | | $ | 57,432 | |
See
The accompanying Notes to Condensed Consolidated Financial Statements.Statements are an integral part of these consolidated financial statements.
Winnebago Industries, Inc.
Condensed Consolidated Balance Sheets
(Unaudited) | | | | | | | | | | | |
(in thousands, except per share data) | November 27, 2021 | | August 28, 2021 |
| (Unaudited) | | |
Assets | | | |
Current assets | | | |
Cash and cash equivalents | $ | 211,384 | | | $ | 434,563 | |
Receivables, less allowance for doubtful accounts ($275 and $307, respectively) | 263,677 | | | 253,808 | |
Inventories, net | 432,825 | | | 341,473 | |
Prepaid expenses and other current assets | 21,701 | | | 29,069 | |
Total current assets | 929,587 | | | 1,058,913 | |
Property, plant, and equipment, net | 224,129 | | | 191,427 | |
Goodwill | 484,176 | | | 348,058 | |
Other intangible assets, net | 493,635 | | | 390,407 | |
Investment in life insurance | 29,027 | | | 28,821 | |
Operating lease assets | 27,747 | | | 28,379 | |
Other long-term assets | 18,060 | | | 16,562 | |
Total assets | $ | 2,206,361 | | | $ | 2,062,567 | |
| | | |
Liabilities and Stockholders' Equity | | | |
Current liabilities | | | |
Accounts payable | $ | 166,848 | | | $ | 180,030 | |
Income taxes payable | 29,223 | | | 8,043 | |
Accrued expenses: | | | |
Accrued compensation | 48,909 | | | 67,541 | |
Product warranties | 102,424 | | | 91,222 | |
Self-insurance | 20,952 | | | 19,296 | |
Promotional | 9,965 | | | 10,040 | |
Accrued interest and dividends | 8,014 | | | 10,720 | |
Other current liabilities | 40,768 | | | 20,384 | |
Total current liabilities | 427,103 | | | 407,276 | |
Long-term debt, net | 532,739 | | | 528,559 | |
Deferred income taxes | 13,247 | | | 13,429 | |
Unrecognized tax benefits | 6,667 | | | 6,483 | |
Long-term operating lease liabilities | 26,368 | | | 26,745 | |
Deferred compensation benefits, net of current portion | 9,775 | | | 9,550 | |
Other long-term liabilities | 31,204 | | | 13,582 | |
Total liabilities | 1,047,103 | | | 1,005,624 | |
Contingent liabilities and commitments (Note 11) | 0 | | 0 |
Shareholders' equity: | | | |
Preferred stock, par value $0.01: 10,000 shares authorized; Zero shares issued and outstanding | — | | | — | |
Common stock, par value $0.50: 120,000 shares authorized; 51,776 shares issued and outstanding | 25,888 | | | 25,888 | |
Additional paid-in capital | 233,727 | | | 218,490 | |
Retained earnings | 1,272,697 | | | 1,172,996 | |
Accumulated other comprehensive loss | (482) | | | (491) | |
Treasury stock, at cost: 18,476 and 18,713 shares, respectively | (372,572) | | | (359,940) | |
Total shareholders' equity | 1,159,258 | | | 1,056,943 | |
Total liabilities and shareholders' equity | $ | 2,206,361 | | | $ | 2,062,567 | |
| | | | | | | | | | | |
(in thousands, except per share data) | November 28, 2020 | | August 29, 2020 |
Assets | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 272,939 | | | $ | 292,575 | |
Receivables, less allowance for doubtful accounts ($349 and $353, respectively) | 231,182 | | | 220,798 | |
Inventories, net | 263,137 | | | 182,941 | |
Prepaid expenses and other assets | 21,162 | | | 17,296 | |
Total current assets | 788,420 | | | 713,610 | |
Property, plant, and equipment, net | 171,210 | | | 174,945 | |
Other assets: | | | |
Goodwill | 348,058 | | | 348,058 | |
Other intangible assets, net | 401,178 | | | 404,768 | |
Investment in life insurance | 27,904 | | | 27,838 | |
Operating lease assets | 28,838 | | | 29,463 | |
Other assets | 15,382 | | | 15,018 | |
Total assets | $ | 1,780,990 | | | $ | 1,713,700 | |
| | | |
Liabilities and Stockholders' Equity | | | |
Current liabilities: | | | |
Accounts payable | $ | 123,328 | | | $ | 132,490 | |
Income taxes payable | 25,565 | | | 8,840 | |
Accrued expenses: | | | |
Accrued compensation | 33,620 | | | 36,533 | |
Product warranties | 70,502 | | | 64,031 | |
Self-insurance | 18,410 | | | 17,437 | |
Promotional | 10,817 | | | 12,543 | |
Accrued interest | 8,184 | | | 4,652 | |
Other | 22,975 | | | 23,864 | |
Total current liabilities | 313,401 | | | 300,390 | |
Non-current liabilities: | | | |
Long-term debt, less current maturities | 516,527 | | | 512,630 | |
Deferred income taxes | 16,483 | | | 15,608 | |
Unrecognized tax benefits | 6,692 | | | 6,511 | |
Operating lease liabilities | 26,492 | | | 27,048 | |
Deferred compensation benefits, net of current portion | 10,884 | | | 11,130 | |
Other | 18,953 | | | 12,917 | |
Total non-current liabilities | 596,031 | | | 585,844 | |
Contingent liabilities and commitments (Note 11) | | | |
Stockholders' equity: | | | |
Preferred stock, par value $0.01: Authorized-10,000 shares; Issued-0 | 0 | | | 0 | |
Common stock, par value $0.50: Authorized-60,000 shares; Issued-51,776 shares | 25,888 | | | 25,888 | |
Additional paid-in capital | 204,551 | | | 203,791 | |
Retained earnings | 966,945 | | | 913,610 | |
Accumulated other comprehensive loss | (517) | | | (526) | |
Treasury stock, at cost: 18,275 and 18,133 shares, respectively | (325,309) | | | (315,297) | |
Total stockholders' equity | 871,558 | | | 827,466 | |
Total liabilities and stockholders' equity | $ | 1,780,990 | | | $ | 1,713,700 | |
SeeThe accompanying Notes to Condensed Consolidated Financial Statements.Statements are an integral part of these consolidated financial statements.
Winnebago Industries, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| | | Three Months Ended | | Three Months Ended |
(in thousands) | (in thousands) | November 28, 2020 | | November 30, 2019 | (in thousands) | November 27, 2021 | | November 28, 2020 |
Operating activities: | | | | |
Operating activities | | Operating activities | | | |
Net income | Net income | $ | 57,423 | | | $ | 14,068 | | Net income | $ | 99,630 | | | $ | 57,423 | |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | | |
Adjustments to reconcile net income to net cash provided by (used in) operating activities | | Adjustments to reconcile net income to net cash provided by (used in) operating activities | |
Depreciation | Depreciation | 4,160 | | | 3,586 | | Depreciation | 5,306 | | | 4,160 | |
Amortization of intangible assets | 3,590 | | | 3,614 | | |
Amortization | | Amortization | 8,172 | | | 3,590 | |
Non-cash interest expense, net | Non-cash interest expense, net | 3,351 | | | 1,023 | | Non-cash interest expense, net | 3,627 | | | 3,351 | |
Amortization of debt issuance costs | Amortization of debt issuance costs | 606 | | | 760 | | Amortization of debt issuance costs | 613 | | | 606 | |
Last-in, first-out expense | 276 | | | 332 | | |
Last in, first-out expense | | Last in, first-out expense | 437 | | | 276 | |
Stock-based compensation | Stock-based compensation | 2,354 | | | 1,583 | | Stock-based compensation | 2,711 | | | 2,354 | |
Deferred income taxes | Deferred income taxes | 872 | | | 731 | | Deferred income taxes | (185) | | | 872 | |
Contingent consideration fair value adjustment | | Contingent consideration fair value adjustment | 6,370 | | | — | |
Other, net | Other, net | (3,329) | | | 65 | | Other, net | 2,312 | | | (3,329) | |
Change in assets and liabilities: | | |
Receivables | (10,380) | | | 27,906 | | |
Inventories | (80,472) | | | 20,082 | | |
Change in operating assets and liabilities, net of assets and liabilities acquired | | Change in operating assets and liabilities, net of assets and liabilities acquired | |
Receivables, net | | Receivables, net | (7,210) | | | (10,380) | |
Inventories, net | | Inventories, net | (70,340) | | | (80,472) | |
Prepaid expenses and other assets | Prepaid expenses and other assets | 583 | | | (84) | | Prepaid expenses and other assets | 4,852 | | | 583 | |
Accounts payable | Accounts payable | (8,371) | | | (4,214) | | Accounts payable | (17,704) | | | (8,371) | |
Income taxes and unrecognized tax benefits | Income taxes and unrecognized tax benefits | 16,556 | | | 3,217 | | Income taxes and unrecognized tax benefits | 24,664 | | | 16,556 | |
Accrued expenses and other liabilities | Accrued expenses and other liabilities | 10,111 | | | 6,364 | | Accrued expenses and other liabilities | (6,706) | | | 10,111 | |
Net cash (used in) provided by operating activities | (2,670) | | | 79,033 | | |
Net cash provided by (used in) operating activities | | Net cash provided by (used in) operating activities | 56,549 | | | (2,670) | |
| Investing activities: | | |
Purchases of property and equipment | (8,689) | | | (6,624) | | |
Investing activities | | Investing activities | |
Purchases of property, plant, and equipment | | Purchases of property, plant, and equipment | (23,215) | | | (8,689) | |
Acquisition of business, net of cash acquired | Acquisition of business, net of cash acquired | 0 | | | (264,280) | | Acquisition of business, net of cash acquired | (228,159) | | | — | |
Proceeds from sale of property and equipment | 7,775 | | | 0 | | |
Proceeds from the sale of property, plant, and equipment | | Proceeds from the sale of property, plant, and equipment | — | | | 7,775 | |
Other, net | Other, net | (234) | | | 243 | | Other, net | (36) | | | (234) | |
Net cash used in investing activities | Net cash used in investing activities | (1,148) | | | (270,661) | | Net cash used in investing activities | (251,410) | | | (1,148) | |
| Financing activities: | | |
Financing activities | | Financing activities | |
Borrowings on long-term debt | Borrowings on long-term debt | 798,359 | | | 903,292 | | Borrowings on long-term debt | 932,566 | | | 798,359 | |
Repayments on long-term debt | Repayments on long-term debt | (798,359) | | | (603,292) | | Repayments on long-term debt | (932,566) | | | (798,359) | |
Purchase of convertible bond hedge | 0 | | | (70,800) | | |
Proceeds from issuance of warrants | 0 | | | 42,210 | | |
Payments of cash dividends | Payments of cash dividends | (4,046) | | | (3,469) | | Payments of cash dividends | (6,010) | | | (4,046) | |
Payments for repurchases of common stock | Payments for repurchases of common stock | (11,606) | | | (1,663) | | Payments for repurchases of common stock | (23,723) | | | (11,606) | |
Payments of debt issuance costs | 0 | | | (10,707) | | |
Other, net | Other, net | (166) | | | (46) | | Other, net | 1,415 | | | (166) | |
Net cash (used in) provided by financing activities | (15,818) | | | 255,525 | | |
Net cash used in financing activities | | Net cash used in financing activities | (28,318) | | | (15,818) | |
| Net (decrease) increase in cash and cash equivalents | (19,636) | | | 63,897 | | |
Net decrease in cash and cash equivalents | | Net decrease in cash and cash equivalents | (223,179) | | | (19,636) | |
Cash and cash equivalents at beginning of period | Cash and cash equivalents at beginning of period | 292,575 | | | 37,431 | | Cash and cash equivalents at beginning of period | 434,563 | | | 292,575 | |
Cash and cash equivalents at end of period | Cash and cash equivalents at end of period | $ | 272,939 | | | $ | 101,328 | | Cash and cash equivalents at end of period | $ | 211,384 | | | $ | 272,939 | |
| Supplemental Disclosures | | Supplemental Disclosures | |
Income taxes paid (received), net | | Income taxes paid (received), net | $ | 8,716 | | | $ | (195) | |
Interest paid | | Interest paid | 4,765 | | | 2,377 | |
| | | | | | | | | | | |
Supplement cash flow disclosure: | | | |
Income taxes received, net | $ | (195) | | | $ | (311) | |
Interest paid | $ | 2,377 | | | $ | 5,193 | |
| | | |
Non-cash transactions: | | | |
Issuance of Winnebago common stock for acquisition of business | $ | 0 | | | $ | 92,572 | |
Capital expenditures in accounts payable | $ | 613 | | | $ | 2,063 | |
| | | | | | | | | | | |
| | | |
Non-cash investing and financing activities | | | |
Issuance of common stock for acquisition of business | $ | 22,000 | | | $ | — | |
Capital expenditures in accounts payable | 1,101 | | | 613 | |
SeeThe accompanying Notes to Condensed Consolidated Financial Statements.Statements are an integral part of these consolidated financial statements.
Winnebago Industries, Inc.
Condensed Consolidated Statements of Changes in Stockholders'Shareholders' Equity
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended November 28, 2020 |
(in thousands, except per share data) | Common Shares | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total Stockholders' Equity |
Number | Amount | Number | Amount |
Balances at August 29, 2020 | 51,776 | | $ | 25,888 | | $ | 203,791 | | $ | 913,610 | | $ | (526) | | (18,133) | | $ | (315,297) | | $ | 827,466 | |
Stock-based compensation, net of forfeitures | — | | — | | 2,346 | | — | | — | | 0 | | 8 | | 2,354 | |
Issuance of stock, net | — | | — | | (1,586) | | — | | — | | 91 | | 1,586 | | 0 | |
Repurchase of common stock | — | | — | | — | | — | | — | | (233) | | (11,606) | | (11,606) | |
Common stock dividends; $0.12 per share | — | | — | | — | | (4,088) | | — | | — | | — | | (4,088) | |
Actuarial loss, net of tax | — | | — | | — | | — | | 9 | | — | | — | | 9 | |
Net income | — | | — | | — | | 57,423 | | — | | — | | — | | 57,423 | |
Balances at November 28, 2020 | 51,776 | | $ | 25,888 | | $ | 204,551 | | $ | 966,945 | | $ | (517) | | (18,275) | | $ | (325,309) | | $ | 871,558 | |
| | | | | | | | |
| Three Months Ended November 30, 2019 |
(in thousands, except per share data) | Common Shares | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total Stockholders' Equity |
Number | Amount | Number | Amount |
Balances at August 31, 2019 | 51,776 | | $ | 25,888 | | $ | 91,185 | | $ | 866,886 | | $ | (491) | | (20,262) | | $ | (351,256) | | $ | 632,212 | |
Stock-based compensation, net of forfeitures | — | | — | | 1,574 | | — | | — | | 0 | | 9 | | 1,583 | |
Issuance of restricted stock | — | | — | | (2,219) | | — | | — | | 128 | | 2,219 | | 0 | |
Issuance of stock for acquisition | — | | — | | 57,811 | | — | | — | | 2,000 | | 34,761 | | 92,572 | |
Repurchase of common stock | — | | — | | — | | — | | — | | (43) | | (1,663) | | (1,663) | |
Common stock dividends; $0.11 per share | — | | — | | — | | (3,485) | | — | | — | | — | | (3,485) | |
Actuarial loss, net of tax | — | | — | | — | | — | | 8 | | — | | — | | 8 | |
Interest rate swap activity, net of tax | — | | — | | — | | — | | (68) | | — | | — | | (68) | |
Equity component of convertible senior notes and offering costs, net of tax of $20,915 | — | | — | | 61,555 | | — | | — | | — | | — | | 61,555 | |
Convertible note hedge purchase, net of tax of $17,417 | — | | — | | (53,383) | | — | | — | | — | | — | | (53,383) | |
Warrant transactions | — | | — | | 42,210 | | — | | — | | — | | — | | 42,210 | |
Net income | — | | — | | — | | 14,068 | | — | | — | | — | | 14,068 | |
Balances at November 30, 2019 | 51,776 | | $ | 25,888 | | $ | 198,733 | | $ | 877,469 | | $ | (551) | | (18,177) | | $ | (315,930) | | $ | 785,609 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended November 27, 2021 |
(in thousands, except per share data) | Common Shares | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total Shareholders' Equity |
Number | Amount | Number | Amount |
Balance at August 28, 2021 | 51,776 | | $ | 25,888 | | $ | 218,490 | | $ | 1,172,996 | | $ | (491) | | (18,713) | | $ | (359,940) | | $ | 1,056,943 | |
Stock-based compensation | — | | — | | 2,702 | | — | | — | | — | | 9 | | 2,711 | |
Issuance of stock for acquisition | — | | — | | 14,709 | | — | | — | | 379 | | 7,291 | | 22,000 | |
Issuance of stock, net | — | | — | | (2,174) | | — | | — | | 194 | | 3,791 | | 1,617 | |
Repurchase of common stock | — | | — | | — | | — | | — | | (336) | | (23,723) | | (23,723) | |
Other | — | | — | | — | | 71 | | — | | — | | — | | 71 | |
Total comprehensive income | — | | — | | — | | — | | 9 | | — | | — | | 9 | |
Net income | — | | — | | — | | 99,630 | | — | | — | | — | | 99,630 | |
Balance at November 27, 2021 | 51,776 | | $ | 25,888 | | $ | 233,727 | | $ | 1,272,697 | | $ | (482) | | (18,476) | | $ | (372,572) | | $ | 1,159,258 | |
| | | | | | | | |
| Three Months Ended November 28, 2020 |
(in thousands, except per share data) | Common Shares | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total Shareholders' Equity |
Number | Amount | Number | Amount |
Balance at August 29, 2020 | 51,776 | | $ | 25,888 | | $ | 203,791 | | $ | 913,610 | | $ | (526) | | (18,133) | | $ | (315,297) | | $ | 827,466 | |
Stock-based compensation | — | | — | | 2,346 | | — | | — | | — | | 8 | | 2,354 | |
Issuance of stock, net | — | | — | | (1,586) | | — | | — | | 91 | | 1,586 | | — | |
Repurchase of common stock | — | | — | | — | | — | | — | | (233) | | (11,606) | | (11,606) | |
Common stock dividends; $0.12 per share | — | | — | | — | | (4,088) | | — | | — | | — | | (4,088) | |
Total comprehensive income | — | | — | | — | | — | | 9 | | — | | — | | 9 | |
Net income | — | | — | | — | | 57,423 | | — | | — | | — | | 57,423 | |
Balance at November 28, 2020 | 51,776 | | $ | 25,888 | | $ | 204,551 | | $ | 966,945 | | $ | (517) | | (18,275) | | $ | (325,309) | | $ | 871,558 | |
SeeThe accompanying Notes to Condensed Consolidated Financial Statements.Statements are an integral part of these consolidated financial statements.
Winnebago Industries, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(All amounts are in thousands, except share and per share data, unless otherwise designated)
Note 1:1. Basis of Presentation
UnlessThe consolidated financial statements include the context otherwise requires, theaccounts of Winnebago Industries, Inc. and its wholly owned subsidiaries. Significant intercompany account balances and transactions have been eliminated.
The use of the terms "Winnebago Industries," "Company," "WGO,"Winnebago," "we," "us,"our," and "our""us" in these Notes to Condensed Consolidated Financial Statementsthis Quarterly Report on Form 10-Q, unless the context otherwise requires, refers to Winnebago Industries, Inc. and its wholly-ownedwholly owned subsidiaries.
InThe interim unaudited consolidated financial statements included herein are prepared pursuant to the opinionrules and regulations of management, the accompanying CondensedUnited States (“U.S.”) Securities and Exchange Commission (“SEC”). The information furnished in these consolidated financial statements includes normal recurring adjustments, unless noted otherwise in the Notes to Consolidated Financial Statements, containand reflects all adjustments that are, in management’s opinion, necessary for a fair presentation as prescribed by accounting principles generally acceptedof such financial statements. The consolidated financial statements are prepared in the United Statesaccordance with U.S. Generally Accepted Accounting Principles (“GAAP”). All adjustments were comprised of normal recurring adjustments, except as notedGAAP requires us to make estimates and assumptions that affect amounts reported. Certain information and footnote disclosures normally included in these Notesfinancial statements prepared in accordance with GAAP have been condensed or omitted pursuant to Condensed Consolidated Financial Statements.SEC rules and regulations.
Interim results are not necessarily indicative of the results to be expected for the full year. The interim Condensed Consolidated Financial Statementsconsolidated financial statements included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited Consolidated Financial Statementsconsolidated financial statements and notes thereto included in the Company'sour Annual Report on Form 10-K for the fiscal year ended August 29, 2020.
Fiscal Period
The Company follows a 52-/53-week28, 2021 filed with the SEC. Interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year ending the last Saturday in August. Fiscal 2021 and Fiscal 2020 are both a 52-week year.
Cash and cash equivalents
Cash equivalents include all investments with original maturities of three months or less or which are readily convertible into known amounts of cash and are not legally restricted. Accounts at each banking institution are insured by the Federal Deposit Insurance Corporation up to $250,000, while the remaining balances are uninsured.August 27, 2022.
Subsequent Events
In preparing the accompanying unaudited Condensed Consolidated Financial Statements, the Companyconsolidated financial statements, we have evaluated subsequent events for potential recognition and disclosure through the date of this filing. There werefiling noting no material subsequent events except for the item noted below.below:
Dividend
On December 16, 2020, the Company's15, 2021, our Board of Directors declared a quarterly cash dividend of $0.12$0.18 per share payable on January 27, 202126, 2022 to common stockholdersshareholders of record at the close of business on January 13, 2021.12, 2022.
Amendment to Articles of IncorporationCARES Act
On October 14, 2020, the Board adopted, subject to shareholder approval, an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of common stock, par value $0.50 per share, by 60 million shares to a total of 120 million shares. This amendment was approved by the Company’s shareholders at the 2020 Annual Meeting of Shareholders on December 15, 2020. The amendment, along with an amended and restated Articles of Incorporation, were made effective upon filing with the Secretary of State of the State of Iowa on December 16, 2020.
Coronavirus (COVID-19) pandemic
The Company is closely monitoring the impact of the novel coronavirus, or COVID-19, on all aspects of its business. COVID-19 was declared a global pandemic by the World Health Organization on March 11, 2020 and the President of the United States declared the COVID-19 outbreak a national emergency on March 13, 2020. The Coronavirus Aid, Relief, and Economic Security (CARES)("CARES") Act was signed into law on March 27, 2020. The Company is2020 to help alleviate the impact of the COVID-19 pandemic in the U.S. We are taking advantage of the employer payroll tax (FICA) deferral offered by the CARES Act, which allows the Companyus to defer the payment of employer payroll taxes for the period from March 27, 2020 to December 31, 2020. The deferred FICAemployer payroll tax liability as of November 28, 202027, 2021 was $1.2$12.4 million and will be payable in equal installments atin December 2021 and December 2022. Additionally, the CompanyWe also took advantage of a tax credit granted to companies under the CARES Act who continued to pay their employees when operations were fully or partially suspended. The refundable tax credit available through the end of the third quarter of Fiscal 2020 reflected in cost of goods sold on the Consolidated Statements of Income and Comprehensive Income was approximately $4.0 million. The entire amount is expected to be received during calendar year 2022. As of November 27, 2021, $3.2 million remains outstanding within other current assets is approximately $4.0 million and will be received in Fiscal 2021.on the Consolidated Balance Sheets.
Recently Adopted Accounting Pronouncements
The Company adopted Accounting Standards CodificationUpdate ("ASC"ASU") Topic 326,740, Financial Instruments—Credit LossesIncome Taxes: (“Topic 326”)Simplifying the Accounting for Income Taxes, effective August 30, 2020.was adopted in the first quarter of Fiscal 2022. The new impairment model (known asstandard eliminates certain exceptions to Topic 740's general principles, improves consistent application and simplifies its application. We adopted the current expected credit loss ("CECL") model) is based on expected losses rather than incurred losses. Topic 326 is applicablenew guidance in the first quarter of Fiscal 2022, and there was not a material impact to our financial assets measured at amortized cost, such as accounts receivable and deposits. It requires historical loss data to be adjusted to reflect changes in asset-specific considerations, current conditions and reasonable and supportable forecastscondition, results of future economic conditions. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. The Company adopted Topic 326 using the modifiedoperations or disclosures.
retrospective transition approach, which involves recognizing the cumulative effect of initial adoption of Topic 326 as an adjustment to its opening retained earnings as of August 30, 2020. Therefore, comparative information prior to the adoption date has not been adjusted. As a result of adoption of Topic 326, the Company did not recognize an incremental allowance for credit losses on its accounts receivable for the period ended November 28, 2020. The adoption of this standard did not materially impact the Company's Condensed Consolidated Financial Statements.
Recently Issued Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40). ASU 2020-06 which reduces the number of models used to account for convertible instruments, amends diluted EPSearnings per share ("EPS") calculations for convertible instruments, and amends the requirements for a contract (or embedded derivative) that is potentially settled in an entity's own shares to be classified in equity. The amendments add certainCertain disclosure requirements were also added to increase transparency and decision-usefulness aboutregarding a convertible instrument's terms and features. Under the amendment, the Company must useAdditionally, the if-converted method for including convertible instruments must be used in diluted EPS as opposed to the treasury stock method. ASU 2020-06The new guidance is effective for annual reporting periods beginning after December 15, 2021, (the Company'swhich is our Fiscal 2023).2023. Early adoption is allowed under the standard withpermitted using either a modified retrospective or full retrospective method. The Company expectsapproach. We expect to adopt the new guidance in the first
quarter of Fiscal 2023. While it2023 and have not yet evaluated the impact the adoption of this guidance will have on our financial condition, results of operations or disclosures; however, the new guidance is expected to change the Company'sour diluted EPS reporting, the extent to which the standard will have a material impact on the Company's consolidated financial statements is uncertain at this time.reporting.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04, which provides practical expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The expedients and exceptions provided by the amendments in this updateguidance apply only to contracts, hedging relationships, and other transactions that reference the London interbank offered rate (“LIBOR”) or another reference rate expected to be discontinued as a result of reference rate reform. These amendments areThis guidance is not applicable to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. ASU No. 2020-04 is effective as of March 12, 2020The guidance can be applied immediately through December 31, 2022 and may be applied to contract modifications and hedging relationships from the beginning of an interim period that includes or is subsequent to March 12, 2020. The Company2022. We will adopt this standard when LIBOR is discontinued and doesdo not expect a material impact to its consolidatedour financial statements.
In December 2019,condition, results of operations or disclosures based on the FASB issued ASU 2019-12, Income Taxes (Topic 740):Simplifying the Accounting for Income Taxes. ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles of Topic 740. The standard is effective for annual reporting periods beginning after December 15, 2020 (the Company's Fiscal 2022), including interim periods within those annual reporting periods. The Company expects to adopt the new guidance in the first quarter of Fiscal 2022,current debt portfolio and does not expect a material impact to its consolidated financial statements.capital structure.
Note 2:2. Business Combinations
Newmar Corporation
On November 8, 2019, pursuant to the termsAugust 31, 2021, we purchased 100% of the Stock Purchase Agreement dated September 15, 2019 (the "Purchase Agreement"equity interests of Barletta Boat Company, LLC and Three Limes, LLC (collectively, "Barletta"), Winnebago completed the acquisition of 100% of Newmar Corporation, Dutch Real Estate Corp., New-Way Transport, and New-Serv (collectively “Newmar”). Newmar is a leading manufacturer of Class A and Super C motorized recreation vehicleshigh-quality, premium pontoon boats that are sold through an establisheda network of independent authorized dealers throughout North America.dealers.
The acquisition of Barletta resulted in a newly created Marine reportable segment that includes Barletta and Chris-Craft operating segments.
We acquired Barletta for a purchase price of $286.3 million, including cash payments of $240.1 million, $25.0 million in common stock issued to the sellers (subject to a discount noted below), and contingent consideration from earnout provisions. The common stock fair value included in the purchase price reflects a 12% discount, due to the lack of marketability as these are unregistered shares that have a one-year lockup restriction, which reduced the value of the common stock to $22.0 million. The contingent consideration includes both a potential stock payout as well as a potential cash payment based on achievement of certain financial performance metrics over the next few years. The maximum payout under the earnout is $50.0 million in cash and $15.0 million in stock if all metrics are achieved. The fair value of the earnout at August 31, 2021 was $24.2 million. The fair value of the earnout as of November 27, 2021 was $30.6 million, of which $13.8 million is included in other current liabilities and $16.8 million is included in other long-term liabilities on the Consolidated Balance Sheets.
The total purchase price was allocated to the acquired net tangible and intangible assets of Barletta, based on their preliminary fair values at the date of the acquisition. We expect to finalize the allocation of the purchase price when our valuation of the acquired intangible assets, goodwill, and tax accounts is complete.
The following table summarizes the total consideration paid for Newmarpreliminary fair values assigned to the Barletta net assets acquired as stipulated inof the Purchase Agreement:date of acquisition:
| | | | | |
(in thousands) | November 8, 2019August 31, 2021 |
Cash | $ | 264,43311,903 | |
Winnebago Industries shares: 2,000,000 at $46.29Other current assets | 92,57224,564 | |
Property, plant, and equipment | 17,250 | |
Goodwill | 136,118 | |
Other intangible assets | 111,400 | |
Total assets acquired | 301,235 | |
Accounts payable | 7,181 | |
Product warranties | 4,656 | |
Other current liabilities | 3,146 | |
Total liabilities assumed | 14,983 | |
Total purchase price | $ | 357,005286,252 | |
The cash portionGoodwill from the Barletta acquisition is recognized in our newly created Marine segment. We expect that the full amount of the purchase price of the acquisition and certain transaction expenses were funded through the private placement of convertible senior notes (as further described in Note 9, Long-Term Debt) and cash on hand. The stock consideration was discounted by 7.0% due to lack of marketability because of the one year lock-up restrictions.goodwill will be deductible for tax purposes.
The total purchase price was allocated to the net tangible and intangible assets of Newmar acquired basedinclude a trade name, dealer network, and backlog. The trade name has an indefinite life, while the backlog and dealer network will be amortized on their fair values at the date of the acquisition. The Company believes that the information provides a reasonablestraight line basis for estimating the fair values. During the third quarter of Fiscal 2020, the Company finalized the valuationover 10 months and completed the purchase price allocation, which included purchase price adjustments of $3.3 million.12 years, respectively.
The following table summarizes the fair values assigned to the Newmar net assets acquired and the determination of net assets:
| | | | | |
(in thousands) | November 8, 2019 |
Cash | $ | 3,469 | |
Accounts receivable | 37,147 | |
Inventories | 82,621 | |
Prepaid expenses and other assets | 9,830 | |
Property, plant, and equipment | 31,143 | |
Goodwill | 73,127 | |
Other intangible assets | 172,100 | |
Total assets acquired | 409,437 | |
Accounts payable | 14,023 | |
Accrued compensation | 4,306 | |
Product warranties | 15,147 | |
Promotional | 6,351 | |
Other | 11,637 | |
Deferred tax liabilities | 968 | |
Total liabilities assumed | 52,432 | |
Total purchase price | $ | 357,005 | |
The goodwill, recognized in the Company's Motorhome segment, is primarily attributable to the value of the workforce, reputation of founders, customer and dealer growth opportunities, and expected synergies. Key areas of cost synergies include increased purchasing power for raw materials and supply chain consolidation. The full amount of goodwill is deductible for tax purposes.
The following table summarizes the other intangible assets acquired:
| | | | | | | | | | | |
($ in thousands) | November 8, 2019 | | Useful Life-Years |
Trade name | $ | 98,000 | | | Indefinite |
Dealer network | 64,000 | | | 12.0 |
Backlog | 8,800 | | | 0.5 |
Non-compete agreements | 1,300 | | | 5.0 |
The fair value of the trade name and dealer network were estimated using an income approach. Under the income approach, an intangible asset's fair value is equal to the present value of the future economic benefits to be derived from ownership of the asset. The fair value of the trade name was estimated using an income approach, specifically the relief from royalty method. The relief from royalty method is based on the hypothetical royalty stream that would be received if we were to license the trade name and was based on expected revenues. The fair value of the dealer network was estimated using an income approach, specifically the cost to recreate/cost saving method. This method uses the replacement of the asset as an indicator of the fair value of the asset. The useful life of the intangibles was determined considering the expected cash flows used to measure the fair value of the intangible assets adjusted for the entity-specific factors including legal, regulatory, contractual, competitive, economic or other factors that may limit the useful life of intangible assets. On the acquisition date, amortizable intangible assets had a weighted-average useful life of approximately 10.5 years.
The results of Newmar's operations have been included in the Company's Condensed Consolidated Financial Statements from the close of the acquisition within the Motorhome segment. The following table provides net revenues and operating income from the Newmar operating segment included in the Company's consolidated results following the November 8, 2019 closing date:
| | | | | | | | | | | |
| Three Months Ended |
(in thousands) | November 28, 2020 | | November 30, 2019 |
Net revenues | $ | 118,779 | | | $ | 35,663 | |
Operating income (loss) | 4,084 | | | (1,283) | |
The following information represents the Company's actual results of operations for the three months ended November 28, 2020, and proforma information for the three months ended November 30, 2019 as if the Fiscal 2020 acquisition of Newmar had occurred at the beginning of Fiscal 2020:
| | | | | | | | | | | |
| Three Months Ended |
(in thousands, except per share data) | November 28, 2020 | | November 30, 2019 |
Net revenues | $ | 793,131 | | | $ | 741,717 | |
Net income | 57,423 | | | 17,197 | |
Income per share - basic | $ | 1.71 | | | $ | 0.51 | |
Income per share - diluted | $ | 1.70 | | | $ | 0.50 | |
The Company's actual results of operations for the three months ended November 28, 2020 did not include any significant non-recurring adjustments related to the close of the transaction. The unaudited pro forma data for the three months ended November 30, 2019 above includes the following significant non-recurring adjustments made to account for certain costs which would have changed if the acquisition of Newmar had occurred at the beginning of Fiscal 2020:
| | | | | |
| Three Months Ended |
(in thousands) | November 30, 2019 |
Amortization of intangibles (1 year or less useful life)(1)
| $ | 2,251 | |
Amortization of intangibles(2)
| (1,057) | |
Expenses related to business combination (transaction costs) | 9,950 | |
Interest to reflect new debt structure(3)
| (3,367) | |
Taxes related to the adjustments to the pro forma data and to the income of Newmar(4)
| (832) | |
(1) Includes amortization adjustments for our backlog intangible asset and our fair-value inventory adjustment.
(2) Includes amortization adjustments for our dealer network and non-compete intangible assets.
(3) Includes adjustments for cash and non-cash interest expense as well as deferred financing costs. Refer to Note 9, Long-Term Debt, for additional information on the Company's new debt structure as a result of the acquisition.
(4) Calculated using our U.S. federal statutory rate of 21.0%.
The unaudited pro forma information for the three months ended November 30, 2019 is not necessarily indicative of the results that the Company would have achieved had the transaction actually taken place at the beginning of Fiscal 2020, and the unaudited pro forma information for the three months ended November 30, 2019 does not purport to be indicative of future financial operating results. The unaudited pro forma condensed consolidated financial information does not reflect any operating efficiencies and cost savings that may be realized from the integration of the acquisition.
Total transaction costs related to the NewmarBarletta acquisition were $10.4$3.1 million, of which $9.8$2.4 million were expensed during the first quarter of Fiscal 20202022 and $0.6$0.7 million were expensed during the fourth quarter of Fiscal 2019. There were no transaction costs incurred during the first three months of Fiscal 2021. Transaction costs are included in Selling,selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income.
Pro forma results of operations for this acquisition have not been presented as they were immaterial to the reported results.
Note 3:3. Business Segments
The Company has 6We have 7 operating segments: 1) Grand Design towables, 2) Winnebago towables, 3) Winnebago motorhomes, 4) Newmar motorhomes, 5) Chris-Craft marine, 6) Barletta marine and 6)7) Winnebago specialty vehicles. The Company evaluatesFinancial performance is evaluated based on each operating segment's Adjusted EBITDA,Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), as defined below, which excludes certain corporate administration expenses and non-operating income and expense.
The Company's 2acquisition of Barletta resulted in a newly created Marine reportable segment effective for the first quarter of Fiscal 2022. The segment consists of Barletta and our existing Chris-Craft operating segment. Prior year amounts for Chris-Craft have been reclassified from Corporate / All Other category to the Marine segment.
Our 3 reportable segments include: 1)are: Towable (comprised of products which are not motorized and are generally towed by another vehicle as well as other related manufactured products and services), which is an(an aggregation of the Grand Design towables and the Winnebago towables operating segments and 2)segments); Motorhome (comprised of products that include a motorized chassis as well as other related manufactured products and services), which is an(an aggregation of the Winnebago motorhomes and Newmar motorhomes operating segments.segments); and Marine (an aggregation of the Chris Craft marine and Barletta marine operating segments). Towable is comprised of non-motorized products that are generally towed by another vehicle, along with other related manufactured products and services. Motorhome is comprised of products that include a motorized chassis, along with other related manufactured products and services. Marine is comprised of products that include boats, along with other manufactured products and services.
The Corporate / All Other category includes the Chris-Craft marine and Winnebago specialty vehicles operating segmentssegment as well as expenses related to certain corporate administration expenses forrelated to the oversight of the enterprise. These expenses include itemsenterprise, such as corporate leadership and administration costs.
Identifiable assets of the reportable segments exclude general corporate assets, which principally consist of cash and cash equivalents and certain deferred tax balances. The general corporate assets are included in the Corporate / All Other category.
The Company's chief operating decision maker ("CODM") is itsOur Chief Executive Officer. The Company's CODM relies on internal management reporting that analyzesOfficer (the Chief Operating Decision Maker ("CODM")) regularly reviews consolidated financial results to the net earnings levelin their entirety and operating segment'ssegment financial information through Adjusted EBITDA. The Company's CODMEBITDA and has ultimate responsibility for enterprise decisions. The Company'sOur CODM determines, in particular, resource allocationis responsible for allocating resources and monitors theassessing performance of the consolidated enterprise, the Towablereportable segments and operating segments. Management of each operating segment and the Motorhome segment. The operating segments' management havehas responsibility for operating decisions, allocating resources and assessing performance within their respective segments.operating segment. The accounting policies of bothall reportable segments are the same and areas those described in Note 1 Summary of Significant Accounting Policies, ofto the Notes to Consolidated Financial Statements included in the Company'sItem 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended August 29, 2020.28, 2021.
The Company evaluates theWe monitor and evaluate operating performance of itsour reportable segments based on Adjusted EBITDA. We believe disclosing Adjusted EBITDA is useful to securities analysts, investors and other interested parties when evaluating companies in our industries. EBITDA is defined as net income before interest expense, provision for income taxes, and depreciation and amortization expense. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation and amortization expense, and other pretax adjustments made in order to present comparable results from period toover period. Examples of items excluded from Adjusted EBITDA include acquisition-related fair-value inventory step-up, acquisition-related costs, litigation reserves, restructuring expenses, gain or loss on sale of property, plant and equipment, contingent consideration fair value adjustment, and non-operating income. The following table showsincome or loss.
Financial information by reportable segment:segment is as follows:
| | | | | | | | | | | |
| Three Months Ended |
(in thousands) | November 27, 2021 | | November 28, 2020 |
Net Revenues | | | |
Towable | $ | 651,024 | | | $ | 454,901 | |
Motorhome | 421,479 | | | 322,389 | |
Marine | 79,318 | | | 11,894 | |
Corporate / All Other | 3,919 | | | 3,947 | |
Consolidated | $ | 1,155,740 | | | $ | 793,131 | |
| | | |
Adjusted EBITDA | | | |
Towable | $ | 112,077 | | | $ | 63,143 | |
Motorhome | 50,153 | | | 30,343 | |
Marine | 10,570 | | | 854 | |
Corporate / All Other | (5,568) | | | (5,047) | |
Consolidated | $ | 167,232 | | | $ | 89,293 | |
| | | |
Capital Expenditures | | | |
Towable | $ | 11,158 | | | $ | 4,137 | |
Motorhome | 7,751 | | | 4,003 | |
Marine | 628 | | | 549 | |
Corporate / All Other | 3,678 | | | — | |
Consolidated | $ | 23,215 | | | $ | 8,689 | |
| | | Three Months Ended | | | | | | | | | | |
(in thousands) | (in thousands) | November 28, 2020 | | November 30, 2019 | (in thousands) | November 27, 2021 | | August 28, 2021 |
Net Revenues | | | | |
Assets | | Assets | | | |
Towable | Towable | $ | 454,901 | | | $ | 341,250 | | Towable | $ | 823,838 | | | $ | 790,257 | |
Motorhome | Motorhome | 322,389 | | | 225,891 | | Motorhome | 762,742 | | | 728,060 | |
Marine | | Marine | 395,533 | | | 102,901 | |
Corporate / All Other | Corporate / All Other | 15,841 | | | 21,317 | | Corporate / All Other | 224,248 | | | 441,349 | |
Consolidated | Consolidated | $ | 793,131 | | | $ | 588,458 | | Consolidated | $ | 2,206,361 | | | $ | 2,062,567 | |
| Adjusted EBITDA | | |
Towable | $ | 63,143 | | | $ | 35,785 | | |
Motorhome | 30,343 | | | 9,331 | | |
Corporate / All Other | (4,193) | | | (3,068) | | |
Consolidated | $ | 89,293 | | | $ | 42,048 | | |
| Capital Expenditures | | |
Towable | $ | 4,137 | | | $ | 4,026 | | |
Motorhome | 4,003 | | | 2,240 | | |
Corporate / All Other | 549 | | | 358 | | |
Consolidated | $ | 8,689 | | | $ | 6,624 | | |
| | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | | | | | November 28, 2020 | | August 29, 2020 |
Total Assets | | | | | | | |
Towable | | | | | $ | 732,419 | | | $ | 718,253 | |
Motorhome | | | | | 671,761 | | | 600,304 | |
Corporate / All Other | | | | | 376,810 | | | 395,143 | |
Consolidated | | | | | $ | 1,780,990 | | | $ | 1,713,700 | |
Reconciliation of net income to consolidated Adjusted EBITDA:EBITDA is as follows:
| | | Three Months Ended | | Three Months Ended |
(in thousands) | (in thousands) | November 28, 2020 | | November 30, 2019 | (in thousands) | November 27, 2021 | | November 28, 2020 |
Net income | Net income | $ | 57,423 | | | $ | 14,068 | | Net income | $ | 99,630 | | | $ | 57,423 | |
Interest expense | 9,941 | | | 6,049 | | |
Interest expense, net | | Interest expense, net | 10,242 | | | 9,941 | |
Provision for income taxes | Provision for income taxes | 17,557 | | | 3,893 | | Provision for income taxes | 30,141 | | | 17,557 | |
Depreciation | Depreciation | 4,160 | | | 3,586 | | Depreciation | 5,306 | | | 4,160 | |
Amortization of intangible assets | 3,590 | | | 3,614 | | |
Amortization | | Amortization | 8,172 | | | 3,590 | |
EBITDA | EBITDA | 92,671 | | | 31,210 | | EBITDA | 153,491 | | | 92,671 | |
Acquisition-related fair-value inventory step-up | 0 | | | 1,176 | | |
Acquisition-related costs | Acquisition-related costs | 0 | | | 9,950 | | Acquisition-related costs | 3,384 | | | — | |
Litigation reserves | | Litigation reserves | 4,000 | | | — | |
Gain on sale of property, plant and equipment | | Gain on sale of property, plant and equipment | — | | | (3,565) | |
Restructuring expenses | Restructuring expenses | 93 | | | (172) | | Restructuring expenses | — | | | 93 | |
Gain on sale of property and equipment | (3,565) | | | 0 | | |
Non-operating loss (income) | 94 | | | (116) | | |
Contingent consideration fair value adjustment | | Contingent consideration fair value adjustment | 6,370 | | | — | |
Non-operating (income) loss | | Non-operating (income) loss | (13) | | | 94 | |
Adjusted EBITDA | Adjusted EBITDA | $ | 89,293 | | | $ | 42,048 | | Adjusted EBITDA | $ | 167,232 | | | $ | 89,293 | |
Note 4:4. Investments and Fair Value Measurements
In determining the fair value of financial assets and liabilities, we utilize market data or other assumptions that we believe market participants would use in pricing the asset or liability in the principal or most advantageous market and adjust for non-performance and/or other risks associated with us as well as counterparties, as appropriate. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date:
Level 1 — Unadjusted quoted prices which are available in active markets for identical assets or liabilities accessible at the measurement date.
Level 2 — Inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 — Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.
Assets and Liabilities that are Measured at Fair Value on a Recurring Basis
The Company accounts for fair value measurements in accordance with ASC 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measurement, and expands disclosure about fair value measurement. The fair value hierarchy requires the use of observable market data when available. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels as follows:
Level 1 - Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.
Level 2 - Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:
•Quoted prices for similar assets or liabilities in active markets;
•Quoted prices for identical or similar assets in nonactive markets;
•Inputs other than quoted prices that are observable for the asset or liability; and
•Inputs that are derived principally from or corroborated by other observable market data.
Level 3 - Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.
The following tables set forth by level within the fair value hierarchy the Company's financialFinancial assets and liabilities that were accounted formeasured at fair value on a recurring basis at November 28, 2020 and August 29, 2020 according to the valuation techniques the Company used to determine their fair values:are as follows:
| | | Fair Value at | | Fair Value Hierarchy | | Fair Value at | | Fair Value Hierarchy |
(in thousands) | (in thousands) | November 28, 2020 | | Level 1 | | Level 2 | | Level 3 | (in thousands) | November 27, 2021 | | Level 1 | | Level 2 | | Level 3 |
Assets that fund deferred compensation: | | | | | | | | |
Assets that fund deferred compensation | | Assets that fund deferred compensation | | | | | | | |
Domestic equity funds | Domestic equity funds | $ | 783 | | | $ | 783 | | | $ | 0 | | | $ | 0 | | Domestic equity funds | $ | 1,347 | | | $ | 1,347 | | | $ | — | | | $ | — | |
International equity funds | International equity funds | 35 | | | 35 | | | 0 | | | 0 | | International equity funds | 76 | | | 76 | | | — | | | — | |
Fixed income funds | Fixed income funds | 49 | | | 49 | | | 0 | | | 0 | | Fixed income funds | 195 | | | 195 | | | — | | | — | |
Total assets at fair value | Total assets at fair value | $ | 867 | | | $ | 867 | | | $ | 0 | | | $ | 0 | | Total assets at fair value | $ | 1,618 | | | $ | 1,618 | | | $ | — | | | $ | — | |
| Contingent consideration | | Contingent consideration | |
Earnout liability | | Earnout liability | $ | 30,560 | | | $ | — | | | $ | — | | | $ | 30,560 | |
Total liabilities at fair value | | Total liabilities at fair value | $ | 30,560 | | | $ | — | | | $ | — | | | $ | 30,560 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Fair Value at | | Fair Value Hierarchy |
(in thousands) | August 28, 2021 | | Level 1 | | Level 2 | | Level 3 |
Assets that fund deferred compensation | | | | | | | |
Domestic equity funds | $ | 940 | | | $ | 940 | | | $ | — | | | $ | — | |
International equity funds | 41 | | | 41 | | | — | | | — | |
Fixed income funds | 46 | | | 46 | | | — | | | — | |
Total assets at fair value | $ | 1,027 | | | $ | 1,027 | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Fair Value at | | Fair Value Hierarchy |
(in thousands) | August 29, 2020 | | Level 1 | | Level 2 | | Level 3 |
Assets that fund deferred compensation: | | | | | | | |
Domestic equity funds | $ | 626 | | | $ | 626 | | | $ | 0 | | | $ | 0 | |
International equity funds | 34 | | | 34 | | | 0 | | | 0 | |
Fixed income funds | 50 | | | 50 | | | 0 | | | 0 | |
Total assets at fair value | $ | 710 | | | $ | 710 | | | $ | 0 | | | $ | 0 | |
The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
Assets that fund deferred compensationFund Deferred Compensation
The Company'sOur assets that fund deferred compensation are marketable equity securities measured at fair value using quoted market prices and primarily consist of equity-based mutual funds. These securities, used to fund the Executive Share Option Plan and the Executive Deferred Compensation Plan, are classified as Level 1 as they are traded in an active market for which closing stock prices are readily available. These securities fund the Executive Share Option Plan and the Executive Deferred Compensation Plan. Refer to Note 11, Employee and Retiree Benefits,10 of the Notes to the Consolidated Financial Statements included in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended August 29, 202028, 2021 for additional information regarding these plans.
The proportion of the assets that will fund options which expire within a year are included in Prepaidprepaid expenses and other assets inon the accompanying Condensed Consolidated Balance Sheets. The remaining assets are classified as non-current and are included in Other assets.other assets on the Consolidated Balance Sheets.
Contingent Consideration
Contingent consideration represents the earnout liability related to the Barletta acquisition and is valued using a probability-weighted scenario analysis of projected EBITDA and gross profit results and discounted at a risk-free rate. The contingent consideration is classified as Level 3. Actual EBITDA and gross profit results may differ significantly from those used in the estimate above, which may affect future payments. Changes in future payments will be reflected in future operating results as they occur.
Assets and Liabilities that are measuredMeasured at Fair Value on a Nonrecurring Basis
The Company's non-financial assets, which include goodwill, intangible assets, and property, plant and equipment,Certain financial instruments are not required to be measured at fair value on a recurringnonrecurring basis. However, ifThese assets primarily include goodwill, intangible assets, property, plant and equipment, and right-of-use lease assets. These assets were originally recognized at amounts equal to the fair value determined at date of acquisition or purchase. If certain triggering events occur, or if an annual impairment test is required, the Company mustwe will evaluate the non-financial asset for impairment. If an impairment has occurred, the asset is requiredwill be written down to be recorded at theits current estimated fair value. NaNNo impairments were recorded for non-financial assets in the first quarter of Fiscalthree months ended November 27, 2021 or the first quarter of FiscalNovember 28, 2020.
Assets and Liabilities Not Measured at Fair Value of Financial Instruments
The Company'sCertain financial instruments other than those presented in the disclosures above,are not measured at fair value but are recorded at carrying amounts approximating fair value based on their short-term nature. These financial instruments include cash and cash equivalents, receivables, accounts payable, other payables, and long-term debt. The fair values of cash, receivables, accounts payable, and other payables approximated carrying values because of the short-term nature of these instruments. If these instruments were measured at fair value in the financial statements, they would be classified as Level 1 in the fair value hierarchy. The fair value of our long-term debt was determined using current quoted prices in active markets for our publicly traded debt obligations, which is classified as Level 1 in the fair value hierarchy. See Note 9 Long-Term Debt, for information about the fair value of our long-term debt.
Note 5:5. Inventories
Inventories consist of the following:
| | | | | | | | | | | |
(in thousands) | November 28, 2020 | | August 29, 2020 |
Finished goods | $ | 9,295 | | | $ | 17,141 | |
Work-in-process | 137,280 | | | 86,651 | |
Raw materials | 152,671 | | | 114,982 | |
Total | 299,246 | | | 218,774 | |
Less last-in, first-out ("LIFO") reserve | 36,109 | | | 35,833 | |
Inventories, net | $ | 263,137 | | | $ | 182,941 | |
| | | | | | | | | | | |
(in thousands) | November 27, 2021 | | August 28, 2021 |
Finished goods | $ | 12,267 | | | $ | 12,243 | |
Work-in-process | 188,380 | | | 184,611 | |
Raw materials | 271,579 | | | 183,583 | |
Total | 472,226 | | | 380,437 | |
Less: Excess of FIFO over LIFO cost | 39,401 | | | 38,964 | |
Inventories, net | $ | 432,825 | | | $ | 341,473 | |
Inventory valuation methods consist of the following:
| | | | | | | | | | | |
(in thousands) | November 28, 2020 | | August 29, 2020 |
LIFO basis | $ | 124,002 | | | $ | 88,675 | |
First-in, first-out basis | 175,244 | | | 130,099 | |
Total | $ | 299,246 | | | $ | 218,774 | |
| | | | | | | | | | | |
(in thousands) | November 27, 2021 | | August 28, 2021 |
LIFO basis | $ | 176,772 | | | $ | 139,544 | |
First-in, first-out basis | 295,454 | | | 240,893 | |
Total | $ | 472,226 | | | $ | 380,437 | |
The above inventory value, of inventories, before reduction for the LIFO reserve, approximates replacement cost at the respective dates.
Note 6:6. Property, Plant, and Equipment
Property, plant, and equipment is stated at cost, net of accumulated depreciation, and consists of the following:
| (in thousands) | (in thousands) | November 28, 2020 | | August 29, 2020 | (in thousands) | November 27, 2021 | | August 28, 2021 |
Land | Land | $ | 9,111 | | | $ | 11,101 | | Land | $ | 10,697 | | | $ | 9,111 | |
Buildings and building improvements | Buildings and building improvements | 144,701 | | | 144,565 | | Buildings and building improvements | 163,731 | | | 147,629 | |
Machinery and equipment | Machinery and equipment | 118,317 | | | 117,370 | | Machinery and equipment | 126,093 | | | 121,911 | |
Software | Software | 28,359 | | | 28,456 | | Software | 36,099 | | | 36,815 | |
Transportation | Transportation | 4,840 | | | 4,913 | | Transportation | 5,972 | | | 5,335 | |
Construction in progress | Construction in progress | 17,907 | | | 20,778 | | Construction in progress | 46,144 | | | 31,137 | |
Property, plant, and equipment, gross | Property, plant, and equipment, gross | 323,235 | | | 327,183 | | Property, plant, and equipment, gross | 388,736 | | | 351,938 | |
Less accumulated depreciation | 152,025 | | | 152,238 | | |
Less: Accumulated depreciation | | Less: Accumulated depreciation | 164,607 | | | 160,511 | |
Property, plant, and equipment, net | Property, plant, and equipment, net | $ | 171,210 | | | $ | 174,945 | | Property, plant, and equipment, net | $ | 224,129 | | | $ | 191,427 | |
Depreciation expense was $5.3 million and $4.2 million and $3.6 million duringfor the first quarters of Fiscalthree months ended November 27, 2021 and November 28, 2020, respectively.
Note 7:7. Goodwill and Intangible Assets
The changes in the carrying amount of goodwill by reportable segment, were as follows for the first three months of Fiscal 2021 and 2020, of which there werewith no accumulated impairment losses:
| | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | Towable | | Motorhome | | Corporate / All Other | | Total |
Balances at August 31, 2019 | $ | 244,684 | | | $ | 0 | | | $ | 30,247 | | | $ | 274,931 | |
Acquisition of Newmar(1) | 0 | | | 72,909 | | | 0 | | | 72,909 | |
Balances at November 30, 2019 | $ | 244,684 | | | $ | 72,909 | | | $ | 30,247 | | | $ | 347,840 | |
| | | | | | | |
Balances at August 29, 2020 and November 28, 2020(2) | $ | 244,684 | | | $ | 73,127 | | | $ | 30,247 | | | $ | 348,058 | |
losses, for the three months ended November 27, 2021 and November 28, 2020 are as follows: | | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | Towable | | Motorhome | | Marine | | Total |
Balances at August 29, 2020 and November 28, 2020(1) | $ | 244,684 | | | $ | 73,127 | | | $ | 30,247 | | | $ | 348,058 | |
| | | | | | | |
Balances at August 28, 2021 | $ | 244,684 | | | $ | 73,127 | | | $ | 30,247 | | | $ | 348,058 | |
Acquisition of Barletta(2) | — | | | — | | | 136,118 | | | 136,118 | |
Balances at November 27, 2021 | $ | 244,684 | | | $ | 73,127 | | | $ | 166,365 | | | $ | 484,176 | |
(1) The change in Motorhome activity is related to the acquisition of Newmar. Refer to Note 2, Business Combinations, for additional information.
(2) There was no activity in the three months beginning August 29, 2020 and endingended November 28, 2020.
(2) The change in marine activity is related to the acquisition of Barletta that occurred on August 31, 2021. See Note 2 to the Consolidated Financial Statements included in Item 1 of Part I of this quarterly report on Form 10-Q.
Other intangible assets, net of accumulated amortization, consist of the following:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | November 28, 2020 | | | | August 29, 2020 |
($ in thousands) | Weighted Average Life-Years | | Cost | | Accumulated Amortization | | Weighted Average Life-Years | | Cost | | Accumulated Amortization |
Trade names | Indefinite | | $ | 275,250 | | | | | Indefinite | | $ | 275,250 | | | |
Dealer networks | 12.1 | | 159,581 | | | $ | 35,778 | | | 12.2 | | 159,581 | | | $ | 32,487 | |
Backlog | 0.5 | | 28,327 | | | 28,327 | | | 0.5 | | 28,327 | | | 28,327 | |
Non-compete agreements | 4.3 | | 6,647 | | | 4,522 | | | 4.1 | | 6,647 | | | 4,223 | |
Other intangible assets, gross | | | 469,805 | | | 68,627 | | | | | 469,805 | | | 65,037 | |
Less accumulated amortization | | | 68,627 | | | | | | | 65,037 | | | |
Other intangible assets, net | | | $ | 401,178 | | | | | | | $ | 404,768 | | | |
| | | | | | | | | | | | | | | | | |
| November 27, 2021 |
(in thousands) | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Value |
Trade names | $ | 352,250 | | | $ | — | | | $ | 352,250 | |
Dealer networks | 179,981 | | | $ | 49,367 | | | 130,614 | |
Backlog | 42,327 | | | 32,527 | | | 9,800 | |
Non-compete agreements | 6,647 | | | 5,676 | | | 971 | |
Other intangible assets | $ | 581,205 | | | $ | 87,570 | | | $ | 493,635 | |
| | | | | |
| August 28, 2021 |
(in thousands) | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Value |
Trade names | $ | 275,250 | | | $ | — | | | $ | 275,250 | |
Dealer networks | 159,581 | | | 45,652 | | | 113,929 | |
Backlog | 28,327 | | | 28,327 | | | — | |
Non-compete agreements | 6,647 | | | 5,419 | | | 1,228 | |
Other intangible assets | $ | 469,805 | | | $ | 79,398 | | | $ | 390,407 | |
The weighted average remaining amortization period for intangible assets as of November 28, 202027, 2021 was approximately 1013 years.
Remaining estimated aggregate annualEstimated future amortization expense by fiscal yearrelated to finite-lived intangible assets is as follows:
| | | | | |
(in thousands) | Amount |
Remainder of Fiscal 20212022 | $ | 10,771 | |
Fiscal 2022 | 13,71921,247 | |
Fiscal 2023 | 13,52615,226 | |
Fiscal 2024 | 13,42415,124 | |
Fiscal 2025 | 13,21914,919 | |
Fiscal 2026 | 14,865 | |
Fiscal 2027 | 14,865 | |
Thereafter | 61,26945,139 | |
Total amortization expense remaining | $ | 125,928141,385 | |
Note 8:8. Product Warranties
The Company providesWe provide certain service and warranty on itsour products. From time to time, the Companywe also voluntarily incursincur costs for certain warranty-type expenses occurring after the normal warranty period expires to help protect the reputation of the Company'sour products and maintain the goodwill of the Company'sour customers. Estimated costs related to product warranty are accrued at the time of sale and are based upon historical warranty and service claims experience. Adjustments are made to accruals as claim data and cost experience becomes available.
In addition to the costs associated with the contractual warranty coverage provided on products, the Companywe also occasionally incursincur costs as a result of additional service actions not covered by warranties, including product recalls and customer satisfaction actions. Although the Company estimateswe estimate and reservesreserve for the cost of these service actions when probable and estimable, there can be no assurance that expense levels will remain at current levels or such reserves will continue to be adequate.
Changes in the Company's product warranty liability are as follows:
| | | | | | | | | | | |
| Three Months Ended |
(in thousands) | November 28, 2020 | | November 30, 2019 |
Balance at beginning of period | $ | 64,031 | | | $ | 44,436 | |
Business acquisition(1) | 0 | | | 15,147 | |
Provision | 21,703 | | | 15,318 | |
Claims paid | (15,232) | | | (13,794) | |
Balance at end of period | $ | 70,502 | | | $ | 61,107 | |
(1) Refer to Note 2, Business Combinations, for additional information.
Changes in the product warranty liability are as follows: | | | | | | | | | | | |
| Three Months Ended |
(in thousands) | November 27, 2021 | | November 28, 2020 |
Balance at beginning of period | $ | 91,222 | | | $ | 64,031 | |
Business acquisition(1) | 4,656 | | | — | |
Provision | 26,059 | | | 21,703 | |
Claims paid | (19,513) | | | (15,232) | |
Balance at end of period | $ | 102,424 | | | $ | 70,502 | |
(1) Relates to the acquisition of Barletta on August 31, 2021. See Note 9:2 to the Consolidated Financial Statements in Item 1 of Part I of this quarterly report on Form 10-Q for additional acquisition information.
Note 9. Long-Term Debt
The componentsLong-term debt consists of long-term debt are as follows:
| | | | | | | | | | | |
(in thousands) | November 28, 2020 | | August 29, 2020 |
ABL Credit Facility | $ | 0 | | | $ | 0 | |
Senior Secured Notes | 300,000 | | | 300,000 | |
Convertible Notes | 300,000 | | | 300,000 | |
Long-term debt, gross | 600,000 | | | 600,000 | |
Convertible Notes unamortized interest discount | (70,943) | | | (74,294) | |
Debt issuance costs, net | (12,530) | | | (13,076) | |
Long-term debt, net | $ | 516,527 | | | $ | 512,630 | |
the following: | | | | | | | | | | | |
(in thousands) | November 27, 2021 | | August 28, 2021 |
ABL Credit Facility | $ | — | | | $ | — | |
Senior Secured Notes | 300,000 | | | 300,000 | |
Convertible Notes | 300,000 | | | 300,000 | |
Long-term debt, gross | 600,000 | | | 600,000 | |
Convertible Notes unamortized interest discount | (56,739) | | | (60,366) | |
Debt issuance costs, net | (10,522) | | | (11,075) | |
Long-term debt, net | $ | 532,739 | | | $ | 528,559 | |
Credit Agreements
On July 8, 2020, the Companywe closed itsour private offering (the “Senior Secured Notes Offering”) of $300$300.0 million aggregate principal amount of 6.25% Senior Secured Notes due 2028 (the “Senior Secured Notes”). The Senior Secured Notes were issued in accordance with an Indenture dated as of July 8, 2020 (the “Indenture”). The Senior Secured Notes will mature on July 15, 2028 unless earlier redeemed or repurchased. Interest on the Senior Secured Notes accrues starting July 8, 2020 and is payable semi-annually in arrears on January 15 and July 15 of each year, beginningwhich began on January 15, 2021. The Senior Secured Notes and the related guarantees are secured by (i) a first-priority lien on substantially all of the Company’s and the subsidiary guarantor parties' existing and future assets (other than certain collateral under the Company’s ABL facility) and (ii) a second-priority lien on the Company’s present and future accounts and receivables, inventory and other related assets and proceeds that secure the ABL facility on a first-priority basis.
The Indenture limits certain abilities of the CompanyDebt issuance costs incurred and its subsidiaries (subject to certain exceptions and qualifications) to incur additional debt and provide additional guarantees; make restricted payments; create or permit certain liens; make certain asset sales; use the proceeds from the sale of assets and subsidiary stock; create or permit restrictions on the ability of the Company’s restricted subsidiaries to pay dividends or make other inter-company distributions; engage in certain transactions with affiliates; designate subsidiaries as unrestricted subsidiaries; and consolidate, merge or transfer all or substantially all of the Company’s assets and the assets of its restricted subsidiaries.
The Company amortizes debt issuance costscapitalized are amortized on a straight-line basis over the term of the associated debt agreement. If early principal payments are made on the Senior Secured Notes, a proportional amount of the unamortized debt issuance costs is expensed. As part of the Senior Secured Notes Offering, the Companywe capitalized $7.3$7.5 million in debt issuance costs that will be amortized over the eight-year term of the agreement.
On November 8, 2016, the Companywe entered into an asset-based revolving credit agreement ("ABL") and a loan agreement ("Term Loan") with JPMorgan Chase Bank, N.A. ("JPMorgan Chase"), as administrative agent and certain lenders from time to time party thereto. The remaining principal balance of the Term Loan as of July 8, 2020 was $249.8 million, which was repaid with the proceeds from the Senior Secured Notes, and debt issuance costs of $4.7 million were written off upon repayment. In addition, the interest rate swaps with a liability position of $0.6 million hedging the Term Loan interest rates were settled early in July 2020.
Under the ABL, the Company haswe have a $192.5 million credit facility that matures on October 22, 2024 (subject to certain factors which may accelerate the maturity date) on a revolving basis, subject to availability under a borrowing base consisting of eligible accounts receivable and eligible inventory. The ABL is available for issuance of letters of credit to a specified limit of $19.3 million. The Company paysWe pay a commitment fee of 0.25% on the average daily amount of the facility available, but unused. The CompanyWe can elect to base the interest rate on various rates plus specific spreads depending on the amount of borrowings outstanding. If drawn, the Companywe would pay interest on ABL borrowings at a floating rate based upon LIBOR plus a spread of between 1.25% and 1.75%, plus LIBOR, depending on the usage of the facility during the most recent quarter. Based on current usage, the Companywe would pay LIBOR plus 1.25%.
Refer to Note 9 of the Notes to the Consolidated Financial Statements included in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended August 28, 2021 for additional information regarding these credit agreements.
Convertible Notes
On November 1, 2019, the Companywe issued $300.0 million in aggregate principal amount of 1.5% unsecured convertible senior notes due 2025 (“Convertible Notes”). The net proceeds from the issuance of the Convertible Notes, after deducting the initial purchasers' transaction fees and offering expense payable by the Company,us, were approximately $290.2 million. The Convertible Notes bear interest at the annual rate of 1.5%, payable on April 1 and October 1 of each year, beginning on April 1, 2020, and will mature on April 1, 2025, unless earlier converted or repurchased by the Company.us.
The Convertible Notes will be convertible into cash, shares of the Company'sour common stock or a combination thereof, at the election of the Company,us, at an initial conversion rate of 15.6906 shares of common stock per $1,000$1 thousand principal amount of
Convertible Notes, which is equivalent to an initial conversion price of approximately $63.73 per share, as adjusted pursuant to the terms of the indenture governing the Convertible Notes. The Convertible Notes may be converted at any time on or after October 1, 2024, until the close of business on the second scheduled trading day immediately preceding the maturity date.
The conversion rate of the Convertible Notes may be adjusted in certain circumstances, including in connection with a conversion of the Convertible Notes made following certain fundamental changes and under other circumstances set forth in the indenture. It is the Company's current intent to settle all conversions of the Convertible Notes through settlement of cash.
Prior to the close of business on the business day immediately preceding October 1, 2024, the Convertible Notes will be convertible only under the following circumstances:
(1) during any fiscal quarter commencing after December 31, 2019 if the closing sale price of the common stock is more than 130% of the applicable conversion price on each applicable trading day for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;
(2) during the 5 consecutive business day period after any 5 consecutive trading day period (the "measurement period") in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate for the Convertible Notes on each such trading day; or
(3) upon the occurrence of certain specified corporate events set forth in the indenture.
The Company may not redeem the Convertible Notes at its option prior to the maturity date, and no sinking fund is provided for the Convertible Notes.
On October 29, 2019 and October 30, 2019, in connection with the offering of the Convertible Notes, the Companywe entered into privately negotiated convertible note hedge transactions (collectively, the “Hedge Transactions”) that cover, subject to customary anti-dilution adjustments, the number of shares of the Company'sour common stock that initially underlie the Convertible Notes, and are expected generally to reduce the potential dilution and/or offset any cash payments the Company is required to make in excess of the principal amount due, as the case may be, upon conversion of the Convertible Notes in the event that the market price of the Company's common stock is greater than the strike price of the Hedge Transactions, which was initially $63.73 per share (subject to adjustment under the terms of the Hedge Transactions), corresponding to the initial conversion price of the Convertible Notes.
On October 29, 2019 and October 30, 2019, the Companywe also entered into privately negotiated warrant transactions (collectively, the “Warrant Transactions” and, together with the Hedge Transactions, the “Call Spread Transactions”), whereby the Companywe sold warrants at a higher strike price relating to the same number of shares of the Company'sour common stock that initially underlie the Convertible Notes, subject to customary anti-dilution adjustments. The initial strike price of the warrants is $96.20 per share (subject to adjustment under the terms of the Warrant Transactions), which is 100% above the last reported sale price of the Company's common stock on October 29, 2019. The Warrant Transactions could have a dilutive effect to the Company's stockholders to the extent that the market price per share of the Company's common stock, as measured under the terms of the Warrant Transactions, exceeds the applicable strike price of the warrants.
The Company used $28.6 million of the net proceeds from the issuance of the Convertible Notes to pay the cost of the Call Spread Transactions.
The Hedge Transactions and the Warrant Transactions are separate transactions, in each case, and are not part of the terms of the Convertible Notes and will not affect any holder’s rights under the Convertible Notes. Holders of the Convertible Notes will not have any rights with respect to the Call Spread Transactions.
Refer to Note 9 of the Notes to the Consolidated Financial Statements included in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended August 28, 2021 for additional information regarding the Convertible Notes and the Call Spread Transactions.
Accounting Treatment of the Convertible Notes and Related Hedge Transactions and Warrant Transactions
The Call Spread Transactions were classified as equity. The CompanyWe bifurcated the proceeds from the offering of the Convertible Notes between liability and equity components. On the date of issuance, the liability and equity components were calculated to be approximately $215.0 million and $85.0 million, respectively. The initial $215.0 million liability component was determined based on the fair value of similar debt instruments excluding the conversion feature assuming a hypothetical interest rate of 8%. The initial $85.0 million ($64.1 million net of tax) equity component represents the difference between the fair value of the initial $215.0 million in debt and the $300.0 million of gross proceeds. The related initial debt discount of $85.0 million is being amortized over the life of the Convertible Notes as non-cash interest expense using the effective interest method.
In connection with the above-noted transactions, the Companywe incurred approximately $9.8 million of offering-related costs. These offering fees were allocated to the liability and equity components in proportion to the allocation of proceeds and accounted for as debt and equity issuance costs, respectively. The CompanyWe allocated $7.0 million of debt issuance costs to the liability component, which were capitalized as deferred financing costs within Long-term debt.long-term debt on the Consolidated Balance Sheets. These costs are being amortized as interest expense over the term of the debt using the effective interest method. The remaining $2.8 million of transaction costs allocated to the equity component were recorded as a reduction of the equity component.
Fair Value and Future Maturities
As of November 27, 2021 and August 28, 2020,2021, the fair value of long-term debt, gross, was $655.0 million. As of August 29, 2020, the fair value of long-term debt, gross, was $674.7 million.$727.4 million and $726.6 million, respectively.
Aggregate contractual maturities of debt in future fiscal years are as follows:
| | | | | |
(in thousands) | Amount |
Remainder of Fiscal 20212022 | $ | 0 | |
Fiscal 2022 | 0— | |
Fiscal 2023 | 0— | |
Fiscal 2024 | 0— | |
Fiscal 2025 | 300,000 | |
Fiscal 2026 | — | |
Fiscal 2027 | — | |
Thereafter | 300,000 | |
Total Term LoanSenior Secured Notes and Convertible Notes | $ | 600,000 | |
Note 10:10. Employee and Retiree Benefits
Deferred compensation liabilities are as follows: | | | | | | | | | | | |
(in thousands) | November 27, 2021 | | August 28, 2021 |
Non-qualified deferred compensation | $ | 9,278 | | | $ | 9,731 | |
Supplemental executive retirement plan | 1,614 | | | 1,615 | |
Executive deferred compensation plan | 1,620 | | | 1,029 | |
Total deferred compensation benefits | 12,512 | | | 12,375 | |
Less current portion(1) | 2,737 | | | 2,825 | |
Deferred compensation benefits, net of current portion | $ | 9,775 | | | $ | 9,550 | |
| | | | | | | | | | | |
(in thousands) | November 28, 2020 | | August 29, 2020 |
Non-qualified deferred compensation | $ | 11,010 | | | $ | 11,460 | |
Supplemental executive retirement plan | 1,851 | | | 1,838 | |
Executive deferred compensation plan | 867 | | | 710 | |
Deferred compensation benefits | 13,728 | | | 14,008 | |
Less current portion(1) | 2,844 | | | 2,878 | |
Deferred compensation benefits, net of current portion | $ | 10,884 | | | $ | 11,130 | |
(1) Included in Accruedaccrued compensation on the Condensed Consolidated Balance Sheets.
Note 11:11. Contingent Liabilities and Commitments
Repurchase Commitments
Generally, manufacturers in the same industries as the Companyus enter into repurchase agreements with lending institutions which have provided wholesale floorplan financing to dealers. Most dealers are financed on a "floorplan" basis under which a bank or finance company lends the dealer all, or substantially all, of the purchase price, collateralized by a security interest in the units purchased.
The Company'sOur repurchase agreements generally provide that, in the event of default by the dealer on the agreement to pay the lending institution, Winnebago Industrieswe will repurchase the financed merchandise. The terms of these agreements, which generally can last up to 24 months, provide that the Company'sour liability will be the lesser of remaining principal owed by the dealer to the lending institution, or dealer invoice less periodic reductions based on the time since the date of the original invoice. The Company'sOur liability cannot exceed 100% of the dealer invoice. In certain instances, the Companywe also repurchasesrepurchase inventory from dealers due to state law or regulatory requirements that govern voluntary or involuntary relationship terminations. Although laws vary from state to state, some states have laws in place that require manufacturers of recreational vehicles or boats to repurchase current inventory if a dealership exits the business. The total contingent liability on all of our repurchase agreements of the Company was approximately $760.7$1,051.3 million and $798.9$727.7 million at November 28, 202027, 2021 and August 29, 2020,28, 2021, respectively.
Repurchased sales are not recorded as a revenue transaction, butrather the net difference between the original repurchase price and the resale price areis recorded against the loss reserve, which is a deduction from gross revenue. The Company'sOur loss reserve for repurchase commitments contains uncertainties because the calculation requires management to make assumptions and apply judgment regarding a number of factors. The Company'sOur risk of loss related to these repurchase commitments is significantly reduced by the potential resale value of any products that are subject to repurchase and is spread over numerous dealers and lenders. The aggregate contingent liability related to the Company'sour repurchase agreements represents all financed dealer inventory at the periodperiod-end reporting date subject to a repurchase agreement, net of the greater of periodic reductions per the agreement or dealer principal payments. Based on these repurchase agreements and the Company'sour historical loss experience, an associated loss reserve is established which is included in Accruedaccrued expenses: Otherother on the Condensed Consolidated Balance Sheets. The Company'sOur repurchase accrual was $0.9$1.0 million and $1.0$0.9 million at November 28, 202027, 2021 and August 29, 2020,28, 2021, respectively. Repurchase risk is affected by the credit worthiness of the Company'sour dealer network, and management doesnetwork. We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions used to establish the loss reserve for repurchase commitments.
There was no material activity related to repurchase agreements during the three months ended November 27, 2021 and August 28, 2020 and November 30, 2019.2021.
Litigation
The Company isWe are involved in various legal proceedings which are considered ordinary and routine litigation incidental to the business, some of which are covered in whole or in part by insurance. While the Company believeswe believe the ultimate disposition of litigation will not have a material adverse effect on the Company'sour financial position, results of operations or liquidity, there exists the possibility exists that such litigation may have an impact on the Company'sour results for a particular reporting period in which litigation effects become probable and reasonably estimable. Though the Company doeswe do not believe there is a reasonable likelihood that there will be a material change related to these matters, litigation is subject to inherent uncertainties and management’sour view of these matters may change in the future.
Note 12:12. Revenue
The Company generates allAll operating revenue is generated from contracts with customers. The Company'sOur primary revenue source of revenue is generated through the sale of manufactured motorizednon-motorized towable units, non-motorized towablemotorized units and marine units to the Company'sour independent dealer network (the Company's(our customers). The following table disaggregates revenue by reportable segment and product category: | | | | | | | | | | | |
| Three Months Ended |
(in thousands) | November 27, 2021 | | November 28, 2020 |
Net Revenues | | | |
Towable | | | |
Fifth Wheel | $ | 325,762 | | | $ | 240,448 | |
Travel Trailer | 315,414 | | | 208,596 | |
Other(1) | 9,848 | | | 5,857 | |
Total Towable | 651,024 | | | 454,901 | |
Motorhome | | | |
Class A | 195,297 | | | 134,166 | |
Class B | 145,011 | | | 109,287 | |
Class C and Other(1) | 81,171 | | | 78,936 | |
Total Motorhome | 421,479 | | | 322,389 | |
Marine | 79,318 | | | 11,894 | |
Corporate / All Other(2) | 3,919 | | | 3,947 | |
Consolidated Net Revenues | $ | 1,155,740 | | | $ | 793,131 | |
| | | | | | | | | | | |
| Three Months Ended |
(in thousands) | November 28, 2020 | | November 30, 2019 |
Net Revenues | | | |
Towable: | | | |
Fifth Wheel | $ | 240,448 | | | $ | 195,189 | |
Travel Trailer | 208,596 | | | 140,463 | |
Other(1) | 5,857 | | | 5,598 | |
Total Towable | 454,901 | | | 341,250 | |
Motorhome: | | | |
Class A | 134,166 | | | 65,644 | |
Class B | 109,287 | | | 85,456 | |
Class C | 69,286 | | | 66,876 | |
Other(1) | 9,650 | | | 7,915 | |
Total Motorhome | 322,389 | | | 225,891 | |
Corporate / All Other: | | | |
Other(2) | 15,841 | | | 21,317 | |
Total Corporate / All Other | 15,841 | | | 21,317 | |
Consolidated | $ | 793,131 | | | $ | 588,458 | |
(1) Relates to parts, accessories, and services.
(2) Relates to marine, specialty vehicle units, parts, accessories, and services.
The Company doesWe do not have material contract assets or liabilities. The Company establishes allowancesAllowances for uncollectible receivables are established based on historical collection trends, write-off history, consideration of current conditions and expectations for future economic conditions.
Concentration of Risk
None of the Company'sNo single dealer organizationsorganization accounted for more than 10% of net revenue for each of the first quarter periods of Fiscalthree months ended November 27, 2021 and Fiscalor November 28, 2020.
Note 13:13. Stock-Based Compensation
On December 11, 2018, the Company'sour shareholders approved the Winnebago Industries, Inc. 2019 Omnibus Incentive Plan ("2019 Plan") as detailed in the Company'sour Proxy Statement for the 2018 Annual Meeting of Shareholders. The 2019 Plan allows the Companyus to grant or issue non-qualified stock options, incentive stock options, restricted share awards,units, and other equity compensation to key employees and to non-employee directors. The 2019 Plan replaces ourthe 2014 Omnibus Equity, Performance Award, and Incentive Compensation Plan (as amended, the "2014 Plan"). The number of shares of the Company's Common Stockour common stock that may be
the subject of awards awarded and issued under the 2019 Plan is 4.1 million shares, plus the shares subject to any awards outstanding under the 2014 Plan and the Company'sour predecessor plan, the 2004 Incentive Compensation Plan (the “2004 Plan”), on December 11, 2018 that subsequently expire, are forfeited or canceled, or are settled for cash. Until such time, however, awards under the 2014 Plan and the 2004 Plan, respectively, that arewere outstanding on December 11, 2018 will continue to be subject to the terms of the 2014 Plan or 2004 Plan, as applicable. Shares remaining available for future awards under the 2014 Plan were not carried over into the 2019 Plan.
Stock-based compensation expense was $2.4$2.7 million and $1.6$2.4 million during the first quarters of Fiscalthree months ended November 27, 2021 and November 28, 2020, respectively. Compensation expense is recognized over the requisite service or performance period of the award.
Note 14: Restructuring
In Fiscal 2020, the Company's Class A diesel production was moved from Junction City, OR to Forest City, IA. In November 2020, a portion of the property in Junction City, OR was sold for net proceeds of $7.7 million with a resulting gain of $3.6 million. The gain on this sale is included within selling, general, and administrative expenses for Fiscal 2021. Total restructuring expenses during the first quarter of Fiscal 2021 were $93,000.
The Company does not expect additional reorganization charges during the remainder of Fiscal 2021.
Note 15:14. Income Taxes
The Company'sOur effective tax rate increased towas 23.2% and 23.4% for the three months ended November 27, 2021 and November 28, 2020, from 21.7%respectively. The decrease in tax rate for the three months ended November 30, 2019 due primarily27, 2021 compared to the three months ended November 28, 2020 was primarily driven by the impact of a morenet favorable benefit in the priorcurrent year related to stock compensation.compensation, partially offset by an increase to the rate due to consistent tax credits year-over-year and increased income in the current year.
We file a U.S. Federal tax return, as well as returns in various international and state jurisdictions. As of November 28, 2020, the Company's federal27, 2021, our Federal returns from Fiscal 20172018 to present are subject to review by the Internal Revenue Service. With limited exception,exceptions, state returns from Fiscal 20162017 to present continue to be subject to review by state taxing jurisdictions. The Company isWe are currently under review by certain U.S. state tax authorities for Fiscal 2016 through Fiscal 2019. The Company believes it hasWe believe we have adequately reserved for itsour exposure to potential additional payments for uncertain tax positions in itsour liability for unrecognized tax benefits.
Note 16: Income15. Earnings Per Share
The following table reflects the calculation of basicBasic and diluted incomeearnings per share:
| | | | | | | | | | | |
| Three Months Ended |
(in thousands, except per share data) | November 28, 2020 | | November 30, 2019 |
Numerator | | | |
Net income | $ | 57,423 | | | $ | 14,068 | |
| | | |
Denominator | | | |
Weighted average common shares outstanding | 33,609 | | | 32,067 | |
Dilutive impact of stock compensation awards | 230 | | | 200 | |
Weighted average common shares outstanding, assuming dilution | 33,839 | | | 32,267 | |
| | | |
Anti-dilutive securities excluded from Weighted average common shares outstanding, assuming dilution | 140 | | | 73 | |
| | | |
Basic income per common share | $ | 1.71 | | | $ | 0.44 | |
Diluted income per common share | $ | 1.70 | | | $ | 0.44 | |
share are calculated as follows: | | | | | | | | | | | |
| Three Months Ended |
(in thousands, except per share data) | November 27, 2021 | | November 28, 2020 |
Net income | $ | 99,630 | | | $ | 57,423 | |
| | | |
Weighted average common shares outstanding | 33,322 | | | 33,609 | |
Dilutive impact of stock compensation awards | 543 | | | 230 | |
Dilutive impact of convertible notes | 513 | | | — | |
Weighted average common shares outstanding, assuming dilution | 34,378 | | | 33,839 | |
| | | |
Anti-dilutive securities excluded from weighted average common shares outstanding, assuming dilution | 78 | | | 140 | |
| | | |
Basic earnings per common share | $ | 2.99 | | | $ | 1.71 | |
Diluted earnings per common share | $ | 2.90 | | | $ | 1.70 | |
Anti-dilutive securities were not included in the computation of diluted income per common share because they are considered anti-dilutive underUnder the treasury stock method.method, shares associated with certain anti-dilutive securities have been excluded from the diluted weighted average shares outstanding calculation because the exercise of those options would lead to a net reduction in common shares outstanding or anti-dilution.
Note 16. Accumulated Other Comprehensive Income (Loss)
Changes in Accumulated Other Comprehensive Income ("AOCI") by component, net of tax, were: | | | | | | | | | | | |
| Three Months Ended |
| November 27, 2021 | | November 28, 2020 |
(in thousands) | Defined Benefit Pension Items | | Defined Benefit Pension Items |
Balance at beginning of period | $ | (491) | | | $ | (526) | |
Amounts reclassified from AOCI | 9 | | | 9 | |
Net current-period OCI | 9 | | | 9 | |
Balance at end of period | $ | (482) | | | $ | (517) | |
Reclassifications out of AOCI, net of tax, were: | | | | | | | | | | | | | | |
| | Three Months Ended |
(in thousands) | Location on Consolidated Statements of Income and Comprehensive Income | November 27, 2021 | | November 28, 2020 |
Amortization of net actuarial loss | SG&A | $ | 9 | | | $ | 9 | |
Note 17: Accumulated Other Comprehensive Income (Loss)
Changes in Accumulated Other Comprehensive Income ("AOCI") by component, net of tax, were:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| November 28, 2020 | | November 30, 2019 |
(in thousands) | Defined Benefit Pension Items | | Total | | Defined Benefit Pension Items | | Interest Rate Swap | | Total |
Balance at beginning of period | $ | (526) | | | $ | (526) | | | $ | (559) | | | $ | 68 | | | $ | (491) | |
Other comprehensive income ("OCI") before reclassifications | 0 | | | 0 | | | 0 | | | (80) | | | (80) | |
Amounts reclassified from AOCI | 9 | | | 9 | | | 8 | | | 12 | | | 20 | |
Net current-period OCI | 9 | | | 9 | | | 8 | | | (68) | | | (60) | |
Balance at end of period | $ | (517) | | | $ | (517) | | | $ | (551) | | | $ | 0 | | | $ | (551) | |
Reclassifications out of AOCI, net of tax, were:
| | | | | | | | | | | | | | |
| | Three Months Ended |
(in thousands) | Location on Consolidated Statements of Income and Comprehensive Income | November 28, 2020 | | November 30, 2019 |
Amortization of net actuarial loss | SG&A | $ | 9 | | | $ | 8 | |
Interest rate contract | Interest expense | 0 | | | 12 | |
Total reclassifications | | $ | 9 | | | $ | 20 | |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.Operations
Unless the context otherwise requires, the use of theThe terms "Winnebago," "we," "us," and "our" refers"our," unless the context otherwise requires, refer to Winnebago Industries, Inc. and its wholly-owned subsidiaries.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. Unless otherwise noted, transactions and other factors significantly impacting our financial condition, results of operations and liquidity are discussed in order of magnitude.
Our MD&A should be read in conjunction with the Consolidated Financial Statements and related Notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended August 29, 202028, 2021 (including the information presented therein under Risk Factors), as well as our reports on Forms 10-Q and 8-K and other publicly available information. All amounts herein are unaudited. All amounts are in thousands, except share and per share data, unless otherwise noted.
Overview
Winnebago Industries, Inc. is one of the leading North American manufacturers with a diversified portfolio of recreation vehicles ("RV"s) and marine products with a diversified portfolio used primarily in leisure travel and outdoor recreationrecreational activities. We produce our motorhome units in Iowa and Indiana; our towable units in Indiana; and our marine units in Indiana and Florida. We distribute our RV and marine products primarily through independent dealers throughout the U.S. and Canada, who then retail the products to the end consumer. We also distribute our marine products internationally through independent dealers, who then retail the products to the end consumer.
COVID-19 PandemicAcquisition of Barletta
In March 2020,On August 31, 2021, we completed our acquisition of all the World Health Organization declaredequity interests of Barletta for $286.3 million funded with cash payments of $240.1 million, $25.0 million in common stock issued to the COVID-19 outbreaksellers (subject to a pandemic. The COVID-19 pandemic has resulted12% discount), and contingent consideration from earnout provisions. For further discussion regarding the acquisition, refer to Note 2 to the Notes to Consolidated Financial Statements, included in governments around the world implementing increasingly stringent measures to help control the spreadItem 1 of the virus, including quarantines and “shelter-in-place” orders, travel restrictions, business curtailments, limitsPart I in this Quarterly Report on gatherings, and other measures. In addition, governments and central banks in several parts of the world have enacted fiscal and monetary stimulus measures designed to counteract the economic impacts of the COVID-19 pandemic.Form 10-Q.
Health and safety
From the earliest signsThe acquisition of the outbreak, we have taken proactive measures to protect the health and safety of our employees, customers, and suppliers. We have enacted rigorous safety measuresBarletta resulted in our sites, including employee training and self-monitoringa newly created Marine reportable segment effective for symptoms of the COVID-19 virus, the taking of all employee temperatures upon reporting to work, implementing social distancing protocols, implementing working from home arrangements for those employees that do not need to be physically present, suspending travel, extensively and frequently disinfecting our workspaces, and providing or accommodating the wearing of masks to those employees who must be physically present in their workplace. In the event an employee contracts the virus and is tested positive, we have mandated quarantining and have instructed employees not to return to work until such time that they have been cleared to do so, in accordance with recommendations by the Center for Disease Control and Prevention (CDC). We expect to continue to practice these measures until we determine that the COVID-19 pandemic is adequately contained for purposes of our business, and we may take further actions as government authorities require or recommend or as we determine to be in the best interests of our employees, customers, and suppliers.
Operations
Our manufacturing operations were not affected by the COVID-19 pandemic during the first quarter of Fiscal 2021. Generally, any government mandated measures providing for business shutdowns exclude certain essential businesses2022. The segment consists of Barletta and services, including businesses that manufacture and sell products that were considered essential to daily lives or otherwise operate in essential or critical sectors. While governmental measures may be modified or extended, we expect that our manufacturing facilities will remain operational.existing Chris-Craft operating segment.
Supply
Our production has experienced certain supply shortages as a result of the COVID-19 pandemic, particularly on our Newmar business. We are actively monitoring the costs and timing of raw materials and other inputs to our supply chain.Pandemic
Demand
The COVID-19 pandemic has significantly increased economic and demand volatility and uncertainty. Our dealer networks were significantly impacted during the initial onset of the COVID-19 pandemic and a majority of our dealers temporarily closed during the third quarter of Fiscal 2020. However, beginning in May of Fiscal 2020 our dealers began to reopen, with dealer reopenings accelerating in June. The majority of our dealers have reopened as of the end of the first quarter of Fiscal 2021. During the third quarter of Fiscal 2020, we experienced reductions in customer demand due to a decrease in consumer spending attributable to the COVID-19 pandemic. However, in the fourth quarter of Fiscal 2020 and continuing into the first quarter of Fiscal 2021, we experienced higher consumer demand due to the perceived safety of RV travel. At November 28, 2020, backlog levels were higher than the first quarter of Fiscal 2020 due to the increase in demand. Despite the increase in demand, consumer buying activity may still decline if there are additional shut downs within our dealer networks. The current COVID-19 pandemic has caused a global economic slowdown, and the possibility of a global recession. In the event of a recession, demand for our products would decline
and our business and results of operations would be adversely affected. When a vaccine is introduced, we could also see a decline in sales as consumers start to feel safer with other modes of transportation.
We continue to monitor the rapidly evolving situation and guidance from international and domestic authorities, including federal, state and local public health authorities, regarding the COVID-19 pandemic and may take additional actions based on their requirements and recommendations. In these circumstances, there may be developments outside our control requiring us to adjust our operating plan. As such, givenOverall, there has been strong retail demand by consumers of RVs as a safe travel option, and of marine products as a safe way to experience the dynamic nature of this situation, we cannot reasonably estimate the impacts ofoutdoors, during the COVID-19 pandemic onpandemic. Our production has experienced certain supply shortages, and if supply shortages continue or there are additional disruptions in our supply chain, it could materially or adversely impact our operating results and financial condition, results of operations or cash flowscondition. Despite certain supply shortages, we continue to actively manage through these temporary supply chain disruptions. Refer to the COVID-19 related risk factors disclosed in the future. In addition, see Item 1A "Risk Factors"of Part I in our Annual Report on Form 10-K for the fiscal year ended August 29, 2020.28, 2021.
Non-GAAP ReconciliationFinancial Measures
This MD&A includes financial information prepared in accordance with accounting principles generally accepted in the U.S.accounting principles ("GAAP"), as well as certain adjusted or non-GAAP financial measures such as EBITDA and Adjusted EBITDA. EBITDA is defined as net income before interest expense, provision for income taxes, and depreciation and amortization expense. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation and amortization expense, and other pretax adjustments made in order to present comparable results from period to period.
These non-GAAP financial measures, which are not calculated or presented in accordance with GAAP, have been provided as information supplemental and in addition to the financial measures presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented herein. The non-GAAP financial measures presented may differ from similar measures used by other companies.
Refer to the ResultsIncluded in "Results of Operations - Current Quarter Compared to the Comparable Prior Year Quarter forQuarter" is a detailed reconciliation of items that impacted EBITDA and Adjusted EBITDA.EBITDA from net income, the nearest GAAP measure. We have included these non-GAAP performance measures as a comparable measure to illustrate the effect of non-recurring transactions occurringthat occurred during the reported periods and to improve comparability of our results from period to period. We believe Adjusted EBITDA provides meaningful supplemental information about our operating performance because these measures excludeas this measure excludes amounts from net income that we do not consider part of our core
operating results when assessing our performance. Examples of items excluded from Adjusted EBITDA include acquisition-related costs, litigation reserves, restructuring expenses, gain or loss on sale of property, plant and equipment, contingent consideration fair value adjustment, and non-operating income.income or loss.
Management uses these non-GAAP financial measures (a) to evaluate our historical and prospective financial performance and trends as well as our performance relative to competitors and peers; (b) to measure operational profitability on a consistent basis; (c) in presentations to the members of our boardBoard of directorsDirectors to enable our boardBoard of directorsDirectors to have the same measurement basis of operating performance as is used by management in its assessmentstheir assessment of performance and in forecasting and budgeting for our company;forecasting; (d) to evaluate potential acquisitions; and (e) to ensure compliance with covenants and restricted activities under the terms of our ABL credit facilityCredit Facility and outstanding notes, as further described in Note 9 Long-Term Debt, ofto the Notes to Condensed Consolidated Financial Statements included in Item 1 of Part ICondensed Consolidated Financial Statements, of this Quarterly Report on Form 10-Q. We believe these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties to evaluate companies in ourthe industry.
Reportable Segments
We have six operating segments: 1) Grand Design towables, 2) Winnebago towables, 3) Winnebago motorhomes, 4) Newmar motorhomes, 5) Chris-Craft marine, and 6) Winnebago specialty vehicles. We evaluate performance based on each operating segment's Adjusted EBITDA, as defined below, which excludes certain corporate administration expenses and non-operating income and expense.
Our two reportable segments include: 1) Towable (comprised of products which are not motorized and are generally towed by another vehicle as well as other related manufactured products and services), which is an aggregation of the Winnebago towables and Grand Design towables operating segments and 2) Motorhome (comprised of products that include a motorized chassis as well as other related manufactured products and services), which is an aggregation of the Winnebago motorhomes and Newmar motorhomes operating segments.
The Corporate / All Other category includes the Chris-Craft marine and Winnebago specialty vehicles operating segments as well as expenses related to certain corporate administration expenses for the oversight of the enterprise. These expenses include items such as corporate leadership and administration costs.
Industry Trends
Key reported statistics for the North AmericanThe RV industry are as follows:
•Wholesale unit shipments: RV product deliveredand marine industries continue to the dealers, which is reported monthly by the Recreation Vehicle Industry Association ("RVIA")
•Retail unit registrations: consumer purchasesexperience supply shortages and shipping delays of RVs from dealers, which is reported monthly by Stat Surveys
We track RV Industry conditions usingraw material components. While we continue to manage through these key statisticssupply disruptions, they have impacted our ability to monitor trends and evaluate and understand our performance relativeincrease production to the overall industry. The following is an analysis of changes in these key statistics for the rolling 12 months through October as of 2020 and 2019:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| US and Canada Industry |
| Wholesale Unit Shipments per RVIA | | Retail Unit Registrations per Stat Surveys |
| Rolling 12 Months through October | | Rolling 12 Months through October |
| 2020 | | 2019 | | Unit Change | | % Change | | 2020 | | 2019 | | Unit Change | | % Change |
Towable(1) | 356,270 | | | 352,496 | | | 3,774 | | | 1.1 | % | | 428,617 | | | 396,136 | | | 32,481 | | | 8.2 | % |
Motorhome(2) | 39,011 | | | 47,726 | | | (8,715) | | | (18.3) | % | | 50,987 | | | 52,625 | | | (1,638) | | | (3.1) | % |
Combined | 395,281 | | | 400,222 | | | (4,941) | | | (1.2) | % | | 479,604 | | | 448,761 | | | 30,843 | | | 6.9 | % |
(1) Towable: Fifth wheel and travel trailer products.
(2) Motorhome: Class A, B, and C products.
The rolling twelve months shipments for 2020 compared to 2019 reflect a contraction in shipments, particularly in motorhome, as dealers rationalized inventory during the period September 2019 through December 2019. Shipments returned to growth starting in January 2020. Due to the onset of the COVID-19 pandemic in March 2020, evidenced by an industry wide shutdown of RV manufacturing in April 2020, shipments declined year over year for the period of March 2020 through May 2020. Shipments have returned to growth from June 2020 through October 2020 due to high levels of end consumermeet existing demand and extremely low levels of dealer inventories. The rolling twelve months retail information for 2020 and 2019 illustrates that retail sales remain at healthy levels relative to the industry's historical retail levels. We believe retail demand is the key driver to continued growth in the industry.
The most recent RVIA wholesale shipment forecasts for calendar year 2021, as notedcurrent fiscal year. If these shortages and delays worsen, we could experience a negative impact on our sales and earnings in the table below, indicate that industry shipments are expected to experience growth in 2021. The retail activity is anticipated to remain at healthy levels, and wholesale shipments are expected to reflect a rebound associated with dealers rebuilding their inventories.
| | | | | | | | | | | | | | | | | | | | | | | |
| Calendar Year |
Wholesale Unit Shipment Forecast per RVIA(1) | 2021 Forecast | | 2020 Actual | | Unit Change | | % Change |
Aggressive | 515,400 | | | 423,600 | | | 91,800 | | | 21.7 | % |
Most likely | 502,900 | | | 423,600 | | | 79,300 | | | 18.7 | % |
Conservative | 490,300 | | | 423,600 | | | 66,700 | | | 15.7 | % |
(1) Prepared by ITR Economics for RVIA and reported in the Roadsigns RV Winter 2020 Industry Forecast Issue.
Market Share
Our retail unit market share, as reported by Stat Surveys based on state records, is illustrated below. Market share is calculated by taking our brands total unit sales divided by the total units sold in the motorized and travel trailer and fifth wheel markets. The data is used to analyze growth and profitability of our products and brands year over year. Note that this data is subject to adjustment and is continuously updated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Rolling 12 Months through October | | Calendar Year |
US and Canada | 2020(1) | | 2019 | | 2019 | | 2018 | | 2017 |
Travel trailer and fifth wheels | 10.3 | % | | 9.1 | % | | 9.3 | % | | 7.8 | % | | 6.1 | % |
Motorhome A, B, C | 21.1 | % | | 15.3 | % | | 16.1 | % | | 15.5 | % | | 16.3 | % |
Total market share | 11.4 | % | | 9.8 | % | | 10.1 | % | | 8.7 | % | | 7.4 | % |
(1) Includes retail unit market share for Newmar since its acquisition on November 8, 2019.
Enterprise Resource Planning System
In the second quarter of Fiscal 2015, our Board of Directors approved the strategic initiative of implementing an enterprise resource planning ("ERP") system to replace our legacy business applications. The new ERP platform will provide better support for our changing business needs and plans for future growth. Our initial cost estimates have grown for additional needs of the business, such as the opportunity to integrate the ERP system with additional manufacturing systems. The project includes software, external implementation assistance, and increased internal staffing directly related to this initiative. We anticipate that approximately 40% of the cost will be expensed in the period incurred and 60% will be capitalized and depreciated over its useful life.
The following table illustrates the cumulative project costs:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Fiscal Year | | Cumulative Investment |
(in thousands) | November 28, 2020 | | 2020 | | 2019 | | Fiscal 2015-2020 |
Capitalized | $ | 1,272 | | | $ | 3,891 | | | $ | 3,875 | | | $ | 27,949 | | | 59.1 | % |
Expensed | 687 | | | 1,788 | | | 3,709 | | | 19,350 | | | 40.9 | % |
Total | $ | 1,959 | | | $ | 5,679 | | | $ | 7,584 | | | $ | 47,299 | | | 100.0 | % |
future.
Results of Operations - Current Quarter Compared to the Comparable Prior Year Quarter
Consolidated Performance Summary
The following is an analysis of changes in key items included in the consolidated statementsConsolidated Statements of income and comprehensive incomeIncome for the three months ended November 28, 202027, 2021 compared to the three months ended November 30, 2019:28, 2020: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
($ in thousands, except per share data) | November 27, 2021 | | % of Revenues(1) | | November 28, 2020 | | % of Revenues(1) | | $ Change | | % Change |
Net revenues | $ | 1,155,740 | | | 100.0 | % | | $ | 793,131 | | | 100.0 | % | | $ | 362,609 | | | 45.7 | % |
Cost of goods sold | 926,328 | | | 80.2 | % | | 656,127 | | | 82.7 | % | | 270,201 | | | 41.2 | % |
Gross profit | 229,412 | | | 19.8 | % | | 137,004 | | | 17.3 | % | | 92,408 | | | 67.4 | % |
Selling, general, and administrative expenses | 74,870 | | | 6.5 | % | | 48,399 | | | 6.1 | % | | 26,471 | | | 54.7 | % |
Amortization | 8,172 | | | 0.7 | % | | 3,590 | | | 0.5 | % | | 4,582 | | | 127.6 | % |
Total operating expenses | 83,042 | | | 7.2 | % | | 51,989 | | | 6.6 | % | | 31,053 | | | 59.7 | % |
Operating income | 146,370 | | | 12.7 | % | | 85,015 | | | 10.7 | % | | 61,355 | | | 72.2 | % |
Interest expense, net | 10,242 | | | 0.9 | % | | 9,941 | | | 1.3 | % | | 301 | | | 3.0 | % |
Non-operating loss | 6,357 | | | 0.6 | % | | 94 | | | — | % | | (6,263) | | | 6,662.8 | % |
Income before income taxes | 129,771 | | | 11.2 | % | | 74,980 | | | 9.5 | % | | 54,791 | | | 73.1 | % |
Provision for income taxes | 30,141 | | | 2.6 | % | | 17,557 | | | 2.2 | % | | 12,584 | | | 71.7 | % |
Net income | $ | 99,630 | | | 8.6 | % | | $ | 57,423 | | | 7.2 | % | | $ | 42,207 | | | 73.5 | % |
| | | | | | | | | | | |
Diluted earnings per share | $ | 2.90 | | | | | $ | 1.70 | | | | | $ | 1.20 | | | 70.6 | % |
Diluted weighted average shares outstanding | 34,378 | | | | | 33,839 | | | | | 539 | | | 1.6 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
(in thousands, except percent and per share data) | November 28, 2020 | | % of Revenues(1) | | November 30, 2019 | | % of Revenues(1) | | $ Change | | % Change |
Net revenues | $ | 793,131 | | | 100.0 | % | | $ | 588,458 | | | 100.0 | % | | $ | 204,673 | | | 34.8 | % |
Cost of goods sold | 656,127 | | | 82.7 | % | | 509,845 | | | 86.6 | % | | 146,282 | | | 28.7 | % |
Gross profit | 137,004 | | | 17.3 | % | | 78,613 | | | 13.4 | % | | 58,391 | | | 74.3 | % |
Selling, general, and administrative expenses | 48,399 | | | 6.1 | % | | 51,105 | | | 8.7 | % | | (2,706) | | | (5.3) | % |
Amortization of intangible assets | 3,590 | | | 0.5 | % | | 3,614 | | | 0.6 | % | | (24) | | | (0.7) | % |
Total operating expenses | 51,989 | | | 6.6 | % | | 54,719 | | | 9.3 | % | | (2,730) | | | (5.0) | % |
Operating income | 85,015 | | | 10.7 | % | | 23,894 | | | 4.1 | % | | 61,121 | | | 255.8 | % |
Interest expense | 9,941 | | | 1.3 | % | | 6,049 | | | 1.0 | % | | 3,892 | | | 64.3 | % |
Non-operating loss (income) | 94 | | | — | % | | (116) | | | — | % | | (210) | | | (181.0) | % |
Income before income taxes | 74,980 | | | 9.5 | % | | 17,961 | | | 3.1 | % | | 57,019 | | | 317.5 | % |
Provision for income taxes | 17,557 | | | 2.2 | % | | 3,893 | | | 0.7 | % | | 13,664 | | | 351.0 | % |
Net income | $ | 57,423 | | | 7.2 | % | | $ | 14,068 | | | 2.4 | % | | $ | 43,355 | | | 308.2 | % |
| | | | | | | | | | | |
Diluted income per share | $ | 1.70 | | | | | $ | 0.44 | | | | | $ | 1.26 | | | 286.4 | % |
Diluted average shares outstanding | 33,839 | | | | | 32,267 | | | | | 1,572 | | | 4.9 | % |
(1) Percentages may not add due to rounding differences.
Net revenues increased in the first quarter of Fiscal 2021 compared to the first quarter of Fiscal 2020 primarily due to organic unit growth pricing actions including lower allowances, and our acquisition of Newmar.price increases.
Gross profit as a percentage of revenue increased primarily due to improved operating leverage on higher revenues, price increases, productivity initiatives, and favorable segment mix, partially offset by higher material and component costs.
Operating expenses increased primarily due to higher selling costs from improved operating performance, acquisition-related costs, incremental amortization, and normal operating expenses of Barletta.
Non-operating loss increased due to the contingent consideration fair value adjustment related to the acquisition of Barletta.
Our effective tax rate was relatively flat in the first quarter of Fiscal 20212022 compared to the first quarter of Fiscal 20202021 primarily due to improved leverage as a result of higher revenues, pricing actions including lower allowances and productivity initiatives partially offset by the dilutive impact of mix related to the Newmar acquisition.
Operating expenses decreased in the first quarter of Fiscal 2021 compared to the first quarter of Fiscal 2020 due to prior year acquisition-related costs, and in the current year a gain recognized on the sale of certain assets, partially offset by incremental Newmar operating costs and an increase in variable compensation.
Interest expense increased in the first quarter of Fiscal 2021 compared to the first quarter of Fiscal 2020 primarily due to the additional interest expense related to the Convertible Notes issued in connection with the acquisition of Newmar.
The effective tax rate increased to 23.4% for the first quarter of Fiscal 2021 compared to 21.7% for the first quarter of Fiscal 2020 due primarily to a favorable benefit in the prior year related to stock compensation.
Net income and diluted income per share increased in the first quarter of Fiscal 2021 compared to the first quarter of Fiscal 2020 primarily due to the profitability impact of higher organic revenues and improved profit margins, partially offset by a higher effective tax rate.
to the impact of a net favorable benefit in the current year related to stock compensation, offset by an increase to the rate due to consistent tax credits year-over-year and increased income in the current year.
Net income and diluted earnings per share increased primarily due to leverage gained on higher revenues, partially offset by increased operating expenses and higher income tax expense.
Non-GAAP Reconciliation
The following table reconciles net income to consolidated EBITDA and Adjusted EBITDA for the three months ended November 28, 202027, 2021 and November 30, 2019:
| | | | | | | | | | | |
| Three Months Ended |
(in thousands) | November 28, 2020 | | November 30, 2019 |
Net income | $ | 57,423 | | | $ | 14,068 | |
Interest expense | 9,941 | | | 6,049 | |
Provision for income taxes | 17,557 | | | 3,893 | |
Depreciation | 4,160 | | | 3,586 | |
Amortization of intangible assets | 3,590 | | | 3,614 | |
EBITDA | 92,671 | | | 31,210 | |
Acquisition-related fair-value inventory step-up | — | | | 1,176 | |
Acquisition-related costs | — | | | 9,950 | |
Restructuring expenses | 93 | | | (172) | |
Gain on sale of property and equipment | (3,565) | | | — | |
Non-operating loss (income) | 94 | | | (116) | |
Adjusted EBITDA | $ | 89,293 | | | $ | 42,048 | |
28, 2020: | | | | | | | | | | | |
| Three Months Ended |
(in thousands) | November 27, 2021 | | November 28, 2020 |
Net income | $ | 99,630 | | | $ | 57,423 | |
Interest expense, net | 10,242 | | | 9,941 | |
Provision for income taxes | 30,141 | | | 17,557 | |
Depreciation | 5,306 | | | 4,160 | |
Amortization | 8,172 | | | 3,590 | |
EBITDA | 153,491 | | | 92,671 | |
Acquisition-related costs | 3,384 | | | — | |
Litigation reserves | 4,000 | | | — | |
Gain on sale of property, plant and equipment | — | | | (3,565) | |
Restructuring expenses | — | | | 93 | |
Contingent consideration fair value adjustment | 6,370 | | | — | |
Non-operating (income) loss | (13) | | | 94 | |
Adjusted EBITDA | $ | 167,232 | | | $ | 89,293 | |
Reportable Segment Performance Summary
Towable
The following is an analysis of key changes in our Towable segment for the three months ended November 28, 202027, 2021 compared to the three months ended November 30, 2019:28, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
(in thousands, except ASP and units) | November 27, 2021 | | % of Revenues | | November 28, 2020 | | % of Revenues | | $ Change | | % Change |
Net revenues | $ | 651,024 | | | | | $ | 454,901 | | | | | $ | 196,123 | | | 43.1 | % |
Adjusted EBITDA | 112,077 | | | 17.2 | % | | 63,143 | | | 13.9 | % | | 48,934 | | | 77.5 | % |
| | | | | | | | | | | |
Average Selling Price ("ASP")(1) | 39,237 | | | | | 32,089 | | | | | 7,148 | | | 22.3 | % |
| | | | | | | | | | | |
| Three Months Ended |
Unit deliveries | November 27, 2021 | | Product Mix(2) | | November 28, 2020 | | Product Mix(2) | | Unit Change | | % Change |
Travel trailer | 11,143 | | | 67.8 | % | | 9,160 | | | 64.4 | % | | 1,983 | | | 21.6 | % |
Fifth wheel | 5,288 | | | 32.2 | % | | 5,054 | | | 35.6 | % | | 234 | | | 4.6 | % |
Total towables | 16,431 | | | 100.0 | % | | 14,214 | | | 100.0 | % | | 2,217 | | | 15.6 | % |
| | | | | | | | | | | |
| November 27, 2021 | | | | November 28, 2020 | | | | Change | | % Change |
Backlog(3) | | | | | | | | | | | |
Units | 48,759 | | | | | 29,659 | | | | | 19,100 | | | 64.4 | % |
Dollars | $ | 1,874,847 | | | | | $ | 865,420 | | | | | $ | 1,009,427 | | | 116.6 | % |
Dealer Inventory | | | | | | | | | | | |
Units | 15,344 | | | | | 12,637 | | | | | 2,707 | | | 21.4 | % |
(1)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
(in thousands, except ASP) | November 28, 2020 | | % of Revenues | | November 30, 2019 | | % of Revenues | | $ Change | | % Change |
Net revenues | $ | 454,901 | | | | | $ | 341,250 | | | | | $ | 113,651 | | | 33.3 | % |
Adjusted EBITDA | 63,143 | | | 13.9 | % | | 35,785 | | | 10.5 | % | | 27,358 | | | 76.5 | % |
| | | | | | | | | | | |
Average Selling Price ("ASP")(1) | 32,089 | | | | | 32,998 | | | | | (909) | | | (2.8) | % |
| | | | | | | | | | | |
| Three Months Ended |
Unit deliveries | November 28, 2020 | | Product Mix(2) | | November 30, 2019 | | Product Mix(2) | | Unit Change | | % Change |
Travel trailer | 9,160 | | | 64.4 | % | | 6,336 | | | 59.8 | % | | 2,824 | | | 44.6 | % |
Fifth wheel | 5,054 | | | 35.6 | % | | 4,263 | | | 40.2 | % | | 791 | | | 18.6 | % |
Total towables | 14,214 | | | 100.0 | % | | 10,599 | | | 100.0 | % | | 3,615 | | | 34.1 | % |
| | | | | | | | | | | |
($ in thousands) | November 28, 2020 | | | | November 30, 2019 | | | | Change | | % Change |
Backlog | | | | | | | | | | | |
Units | 29,659 | | | | | 7,174 | | | | | 22,485 | | | 313.4 | % |
Dollars | $ | 865,420 | | | | | $ | 242,853 | | | | | $ | 622,567 | | | 256.4 | % |
Dealer Inventory | | | | | | | | | | | |
Units | 12,637 | | | | | 17,843 | | | | | (5,206) | | | (29.2) | % |
(1) Average selling price excludes off-invoice dealer incentives.
(2) Percentages may not add due to rounding differences.
(3) Our backlog includes all accepted orders from dealers which generally have been requested to be shipped within the next six months. Orders in backlog generally can be cancelled or postponed at the option of the dealer at any time without penalty; therefore, backlog may not necessarily be an accurate measure of future sales.
Net revenues increased primarily due to unit growth and price increases.
Adjusted EBITDA increased primarily due to operating leverage on an increase in unit sales, partially offset by higher operating expenses.
Net revenues increased in the first quarter of Fiscal 2021 compared to the first quarter of Fiscal 2020 driven by unit growth. Industry retail unit sales on a trailing three months through October 2020 as reported by SSI in December 2020 grew 27.2% while our Towable segment grew by 36.9% reflecting an increase in our market share.Motorhome
Adjusted EBITDA increased in the first quarter of Fiscal 2021 compared to the first quarter of Fiscal 2020 due to an increase in unit sales, lower allowances and operating leverage driven by our strong sales growth.
We have seen an increase in backlog as of November 28, 2020 compared to November 30, 2019 due to the continued strong retail demand by consumers of RVs as a safe travel option during the COVID-19 pandemic. As a result of this high retail demand, dealer inventory levels are lower, creating higher order backlog.
Motorhome
The following is an analysis of key changes in our Motorhome segment for the three months ended November
28, 202027, 2021 compared to the three months ended November
30, 2019:28, 2020: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
(in thousands, except ASP and units) | November 27, 2021 | | % of Revenues | | November 28, 2020 | | % of Revenues | | $ Change | | % Change |
Net revenues | $ | 421,479 | | | | | $ | 322,389 | | | | | $ | 99,090 | | | 30.7 | % |
Adjusted EBITDA | 50,153 | | | 11.9 | % | | 30,343 | | | 9.4 | % | | 19,810 | | | 65.3 | % |
| | | | | | | | | | | |
ASP(1) | $ | 152,550 | | | | | $ | 136,887 | | | | | 15,663 | | | 11.4 | % |
| | | | | | | | | | | |
| Three Months Ended |
Unit deliveries | November 27, 2021 | | Product Mix(2) | | November 28, 2020 | | Product Mix(2) | | Unit Change | | % Change |
Class A | 744 | | | 27.2 | % | | 598 | | | 25.7 | % | | 146 | | | 24.4 | % |
Class B | 1,447 | | | 52.9 | % | | 1,098 | | | 47.1 | % | | 349 | | | 31.8 | % |
Class C | 544 | | | 19.9 | % | | 634 | | | 27.2 | % | | (90) | | | (14.2) | % |
Total motorhomes | 2,735 | | | 100.0 | % | | 2,330 | | | 100.0 | % | | 405 | | | 17.4 | % |
| | | | | | | | | | | |
| November 27, 2021 | | | | November 28, 2020 | | | | Change | | % Change |
Backlog(3) | | | | | | | | | | | |
Units | 18,826 | | | | | 13,217 | | | | | 5,609 | | | 42.4 | % |
Dollars | $ | 2,412,625 | | | | | $ | 1,709,154 | | | | | $ | 703,471 | | | 41.2 | % |
Dealer Inventory | | | | | | | | | | | |
Units | 2,468 | | | | | 2,123 | | | | | 345 | | | 16.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
(in thousands, except ASP) | November 28, 2020 | | % of Revenues | | November 30, 2019 | | % of Revenues | | $ Change | | % Change |
Net revenues | $ | 322,389 | | | | | $ | 225,891 | | | | | $ | 96,498 | | | 42.7 | % |
Adjusted EBITDA | 30,343 | | | 9.4 | % | | 9,331 | | | 4.1 | % | | 21,012 | | | 225.2 | % |
| | | | | | | | | | | |
ASP(1) | 136,887 | | | | | 119,749 | | | | | 17,138 | | | 14.3 | % |
| | | | | | | | | | | |
| Three Months Ended |
Unit deliveries | November 28, 2020 | | Product Mix(2) | | November 30, 2019 | | Product Mix(2) | | Unit Change | | % Change |
Class A | 598 | | | 25.7 | % | | 399 | | | 21.2 | % | | 199 | | | 49.9 | % |
Class B | 1,098 | | | 47.1 | % | | 809 | | | 43.0 | % | | 289 | | | 35.7 | % |
Class C | 634 | | | 27.2 | % | | 674 | | | 35.8 | % | | (40) | | | (5.9) | % |
Total motorhomes | 2,330 | | | 100.0 | % | | 1,882 | | | 100.0 | % | | 448 | | | 23.8 | % |
| | | | | | | | | | | |
($ in thousands) | November 28, 2020 | | | | November 30, 2019 | | | | Change | | % Change |
Backlog | | | | | | | | | | | |
Units | 13,217 | | | | | 2,631 | | | | | 10,586 | | | 402.4 | % |
Dollars | $ | 1,709,154 | | | | | $ | 384,201 | | | | | $ | 1,324,953 | | | 344.9 | % |
Dealer Inventory | | | | | | | | | | | |
Units | 2,123 | | | | | 5,169 | | | | | (3,046) | | | (58.9) | % |
(1) ASP excludes off-invoice dealer incentives.
(2) Percentages may not add due to rounding differences.
(3) Our backlog includes all accepted orders from dealers which generally have been requested to be shipped within the next six months. Orders in backlog generally can be cancelled or postponed at the option of the dealer at any time without penalty; therefore, backlog may not necessarily be an accurate measure of future sales.
Net revenues increased in the first quarter of Fiscal 2021 compared to the first quarter of Fiscal 2020 primarily due to our acquisition of Newmar, organic unit growth and increased pricing.price increases.
Adjusted EBITDA increased in the first quarter of Fiscal 2021 comparedincreased primarily due to the first quarter of Fiscal 2020 driven by productivity initiatives, pricing actions, higher revenue and associated operating leverage improvements, and our acquisition of Newmar.
We have seenon an increase in the volumeunit sales and dollar value of backlog as of November 28, 2020 compared to November 30, 2019 due to the continued strong retail demandproductivity initiatives, partially offset by consumers of RVs as a safe travel option during the COVID-19 pandemic. As a result of this high retail demand, dealer inventory levels are lower, creating higher order backlog.operating expenses.
Marine
The following is an analysis of key changes in our Marine segment for the three months ended November 27, 2021 compared to the three months ended November 28, 2020: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
(in thousands, except ASP and units) | November 27, 2021 | | % of Revenues | | November 28, 2020 | | % of Revenues | | $ Change | | % Change |
Net revenues | $ | 79,318 | | | | | $ | 11,894 | | | | | $ | 67,424 | | | 566.9 | % |
Adjusted EBITDA | 10,570 | | | 13.3 | % | | 854 | | | 7.2 | % | | 9,716 | | | 1,137.7 | % |
| | | | | | | | | | | |
ASP(1) | $ | 69,935 | | | | | $ | 195,103 | | | | | (125,168) | | | (64.2) | % |
| | | | | | | | | | | |
| Three Months Ended |
Unit deliveries | November 27, 2021 | | | | November 28, 2020 | | | | Unit Change | | % Change |
Boats | 1,135 | | | | | 61 | | | | | 1,074 | | | 1,760.7 | % |
| | | | | | | | | | | |
| November 27, 2021 | | | | November 28, 2020 | | | | Change | | % Change |
Backlog(3) | | | | | | | | | | | |
Units | 3,002 | | | | | 317 | | | | | 2,685 | | | 847.0 | % |
Dollars | $ | 257,248 | | | | | $ | 61,848 | | | | | $ | 195,400 | | | 315.9 | % |
Dealer Inventory | | | | | | | | | | | |
Units | 1,446 | | | | | 155 | | | | | 1,291 | | | 832.9 | % |
(1) ASP excludes off-invoice dealer incentives.
(2) Percentages may not add due to rounding differences.
(3) Our backlog includes all accepted orders from dealers which generally have been requested to be shipped within the next six months. Orders in backlog generally can be cancelled or postponed at the option of the dealer at any time without penalty; therefore, backlog may not necessarily be an accurate measure of future sales.
Net revenues increased primarily due to the acquisition of Barletta at the beginning of the first quarter of Fiscal 2022.
Adjusted EBITDA increased primarily due to the acquisition of Barletta at the beginning of the first quarter of Fiscal 2022.
Analysis of Financial Condition, Liquidity, and Resources
Cash Flows
The following table summarizes our cash flows from operations for the three months ended November 28, 2020 and November 30, 2019:
| | | | | | | | | | | |
| Three Months Ended |
(in thousands) | November 28, 2020 | | November 30, 2019 |
Total cash provided by (used in): | | | |
Operating activities | $ | (2,670) | | | $ | 79,033 | |
Investing activities | (1,148) | | | (270,661) | |
Financing activities | (15,818) | | | 255,525 | |
Net (decrease) increase in cash and cash equivalents | $ | (19,636) | | | $ | 63,897 | |
operations: | | | | | | | | | | | |
| Three Months Ended |
(in thousands) | November 27, 2021 | | November 28, 2020 |
Total cash provided by (used in): | | | |
Operating activities | $ | 56,549 | | | $ | (2,670) | |
Investing activities | (251,410) | | | (1,148) | |
Financing activities | (28,318) | | | (15,818) | |
Net increase (decrease) in cash and cash equivalents | $ | (223,179) | | | $ | (19,636) | |
Operating Activities
Cash provided by operating activities decreased forincreased due to higher profitability, partially offset by investments in working capital to support current year revenue growth, including a $70.3 million increase in inventory to support customer demand, a $7.2 million increase in accounts receivable due to timing of invoicing/collections and a $17.7 million decrease in accounts payable due to timing of payments in the three months ended November 28, 2020 compared to the three months ended November 30, 2019 primarily due to an increase in our inventory partially offset by higher profitability in the first quarter of Fiscal27, 2021.
Investing Activities
Cash used in investing activities decreased for the three months ended November 28, 2020 compared to the three months ended November 30, 2019increased primarily due to our acquisition of NewmarBarletta during the first quarter of Fiscal 2020.2022.
Financing Activities
Cash provided byused in financing activities for the three months ended November 28, 2020 compared to cash used for three months ended November 30, 2019 changedincreased primarily due to the issuance of Convertible Notes issued in the first quarter of Fiscal 2020 to finance our acquisition of Newmar and due to an increase in stock repurchases in the first quarter of Fiscal 2021.2022.
Debt and Capital
During the first quarter of Fiscal 2020, we issued the Convertible Notes, which were used to partially fund the Newmar acquisition. Refer to Note 9, Long-Term Debt, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional details.
On July 8, 2020, we closed our private offering (the "Senior Secured Notes Offering") of $300 million in aggregate principal amount of 6.25% senior secured notes due 2028 (the "Senior Secured Notes"). The proceeds from the Senior Secured Notes were used to repay the remaining debt on the term loan and for general corporate purposes. Refer to Note 9, Long-Term Debt, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional details.
We maintain a $192.5 million asset-based revolving credit facility ("ABL Credit Facility") with a maturity date of October 22, 2024 subject to certain factors which may accelerate the maturity date. As of November 28, 2020,27, 2021, we had no borrowings against the ABL.ABL Credit Facility.
As of November 28, 2020,27, 2021, we had $272.9$211.4 million in cash and cash equivalents and $192.5 million in unused ABL Credit Facility. Our cash and cash equivalent balances consist of high quality, short-term money market instruments.
We believe cash flow from operations, existing lines of credit, and access to debt and capital markets will be sufficient to meet our current liquidity needs, and we have committed liquidity and cash reserves in excess of our anticipated funding requirements. We evaluate the financial stability of the counterparties for the Convertible Notes, the Senior Secured Notes, and the ABL Credit Facility, and will continue to monitor counterparty risk on an on-going basis.
Other Financial Measures
Working capital at November 28, 202027, 2021 and August 29, 202028, 2021 was $475.0$502.5 million and $413.2$651.6 million, respectively. We currently expect cash on hand, funds generated from operations, and the borrowing available under our ABL Credit Facility to be sufficient to cover both short-term and long-term operating requirements.
Share Repurchases and Dividends
We repurchase our common stock and pay dividends pursuant to programs approved by our Board of Directors. Our long-term capital allocation strategy is to first fund operations and investments in growth, maintain a debt leverage ratio within our targeted zone, maintain reasonable liquidity, and then return excess cash over time to shareholders through dividends and share repurchases.
On October 18, 2017,13, 2021, our Board of Directors authorized a new share repurchase program in the amount of $70.0 million. There is$200.0 million with no time restriction on the authorization.authorization, which took effect immediately and replaced the prior program. In the first quarter of Fiscalthree months ended November 27, 2021, we repurchased 203,950281,000 shares of our own common stock at a cost of $10.0$19.6 million under this authorization, and 29,44955,000 shares at a cost of $1.6$4.1 million to satisfy tax obligations on employee equity awards vested. We continually evaluate if share repurchases reflect a prudent use of our capital and, subject to compliance with our ABL credit facilityCredit Facility and Senior Secured Notes, we may purchase shares in the future. At November 28, 2020,27, 2021, we have $58.8$190.0 million remaining on our boardBoard approved repurchase authorization.
On December 16, 2020,15, 2021, our Board of Directors approved a quarterly cash dividend of $0.12$0.18 per share payable on January 27, 2021,26, 2022, to common stockholders of record at the close of business on January 13, 2021.12, 2022.
Contractual Obligations and Commercial Commitments
There has been no material change in our contractual obligations since the end of Fiscal 2020. Refer to Note 9, Long-Term Debt, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional details on the Convertible Notes and Senior Secured Notes, and see2021. See our Annual Report on Form 10-K for the fiscal year ended August 29, 202028, 2021 for additional information regarding our contractual obligations and commercial commitments.
SignificantCritical Accounting Policies and Estimates
We describe our significant accounting policies in Note 1 Summary of Significant Accounting Policies, ofto the Notes to Consolidated Financial Statements included in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended August 29, 2020.28, 2021. We discuss our critical accounting estimates in Item 7 Management's Discussion and Analysis of Financial Condition and ResultsPart II of Operations, in our Annual Report on Form 10-K for the fiscal year ended August 29, 2020.28, 2021. There have been no significantmaterial changes into our significant accounting policies or critical accounting estimatespolicies since the end of Fiscal 2020.2021.
NewRecently Issued Accounting Pronouncements
For a descriptionsummary of newrecently issued applicable accounting pronouncements, see Note 1 Basis of Presentation, ofto the Notes to Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.
Safe Harbor Statement Under the Private Securities Litigation Reform Act
Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), provide a “safe harbor” for forward-looking statements to encourage companies to provide prospective information about their companies. With the exception of historical information, the matters discussed in this Quarterly Report on Form 10-Q are forward-looking statements and may be identified by the use of words such as "anticipate," "assume," "believe,
"believe," "estimate," "expect," "guidance," "intend," "outlook," "plan," "project," and other words and terms of similar meaning. Such statements reflect our current views and estimates with respect to future market conditions, company performance and financial results, operational investments, business prospects, new strategies, the competitive environment, and other events. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the potential results discussed in such forward-looking statements. Readers should review Item 1A Risk Factors,of Part I of our Annual Report on Form 10-K for the fiscal year ended August 29, 2020,28, 2021, and Item 1A Risk Factors, inof Part II of this Quarterly Report on Form 10-Q, for a description of important factors that could cause our actual results to differ materially from those contemplated by the forward-looking statements made in this Quarterly Report on Form 10-Q. Among the factors that could cause actual results and outcomes to differ materially from those contained in such forward-looking statements are the following: competition and new product introductions by competitors, our ability to attract and retain qualified personnel, increases in market compensation rates, business or production disruptions, sales order cancellations, risk related to the terms of our credit agreements and compliance with debt covenants and leverage ratios, stock price volatility and share dilution, disruptions or unanticipated costs from facility expansions, availability of labor, a slowdown in the economy, low consumer confidence, the effect of global tensions, increases in interest rates, availability of credit
•, availability of financing for RV and marine dealers, impairment of goodwill, risk related to cyclicality and seasonality of our business, slower than anticipated sales of new or existing products, integration of operations relating to merger and acquisition activities generally, our acquisition of Newmar, the possibility that the Newmar acquisition may not perform as expected or may not result in earnings growth, difficulties and expenses related to integrating Newmar into our business, increased focus of management attention and resources on the acquisition of Newmar, risks related to the Convertible Notes and Senior Secured Notes, including our ability to satisfy our obligations under the Convertible Notes and Senior Secured Notes, risks related to our recent Convertible Note hedge and warrant transactions, inadequate liquidity or capital resources, inventory and distribution channel management, our ability to innovate, our reliance on large dealer organizations, significant increase in repurchase obligations, availability and price of fuel, availability of chassis and other key component parts, increased material and component costs, exposure to warranty claims, ability to protect our intellectual property, exposure to product liability claims, dependence on
information systems and web applications, any unexpected expenses related to the implementation of our ERP system, the duration and scope ofUncertainty surrounding the COVID-19 pandemic, actions governments, businesses, and individuals take in response to the COVID-19 pandemic, including mandatory business closures and restrictions of onsite commercial interactions; the impact of the pandemic and actions taken in response to the pandemic on regional economies and economic activity; the pace of recovery when the COVID-19 pandemic subsides; and generalpandemic.
•General economic uncertainty in key markets and a worsening of domestic economic conditions or low levels of economic growth, riskgrowth.
•Availability of financing for RV and marine dealers.
•Ability to innovate and commercialize new products.
•Ability to manage our inventory to meet demand.
•Competition and new product introductions by competitors.
•Risk related to cyclicality and seasonality of our business.
•Significant increase in repurchase obligations.
•Business or production disruptions.
•Inadequate inventory and distribution channel management.
•Ability to retain relationships with our suppliers.
•Increased material and component costs, including availability and price of fuel and other raw materials.
•Ability to integrate mergers and acquisitions.
•Ability to attract and retain qualified personnel and changes in market compensation rates.
•Exposure to warranty claims.
•Ability to protect our information technology systems from data security, governmentalcyberattacks, and network disruption risks and the ability to successfully upgrade and evolve our information technology systems.
•Ability to retain brand reputation and related exposure to product liability claims.
•Governmental regulation, including for climate change, riskchange.
•Impairment of goodwill.
•Risks related to anti-takeover provisions applicableour Convertible and Senior Secured Notes, including our ability to us, cyber-attacks and other factors. satisfy our obligations under these notes.
We caution that the foregoing list of important factors is not complete. Any forward-looking statements speak only as of the date they are made, and we assume no obligation to update any forward-looking statement that we may make.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.Risk
The assets we maintain to fund deferred compensation have market risk, but we maintain a corresponding liability for these assets. The market risk is therefore borne by the participants in the deferred compensation program.
Interest rate risk
As of November 28, 2020,27, 2021, we have no interest rate swaps outstanding and the Term Loan, that had been subject to variable interest rates, was repaid in the fourth quarter of Fiscal 2020 using the proceeds from the Senior Secured Notes. The ABL Credit Facility is our only floating rate debt instrument which remains undrawn as of November 28, 2020.27, 2021.
Item 4. Controls and Procedures.Procedures
Evaluation of Disclosure Controls and Procedures
We maintain "disclosure controls and procedures", as such term is defined under Securities Exchange Act of 1934, as amended ("Exchange Act") Rule 13a-15(e), that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures and believes that such controls and procedures are effective at the reasonable assurance level.
Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures required by(as defined in Rule 13a-15(e) under the Securities Exchange Act Rule 13a-15(b)of 1934, as amended (the "Exchange Act")), as of the end of the period covered by this report (the "Evaluation Date"). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of the Evaluation Date.
Changes in Internal Control Over Financial Reporting
We are implementing an ERP system, which is expected to improve the efficiency of certain financial and related transaction processes. The implementation of an ERP system will likely affect the processes that constitute our internal control over financial reporting and will require testing for effectiveness. As future phases of the ERP implementation are completed, internal controls over financial reporting will be tested for effectiveness with respect to the scope of the phase completed. We concluded, as part of our evaluation described in the above paragraphs, that the implementation of ERP in these circumstances has not materially affected our internal control over financial reporting. The implementation is continuing in a phased approach and will continue to be evaluated for effect on our internal control over financial reporting.
There were no other changes in our internal control over financial reporting that occurred during the first quarter of Fiscal 20212022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION.INFORMATION
Item 1. Legal Proceedings.Proceedings
For a description of our legal proceedings, see Note 11 Contingent Liabilities and Commitments, ofto the Notes to Condensed Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.
Item 1A. Risk Factors.Factors
There have been no material changes from the risk factors previously disclosed in Part I, Item 1A Risk Factors,of Part I of our Annual Report on Form 10-K for the fiscal year ended August 29, 2020.28, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.Proceeds
(c) Stock Repurchases
Purchases of our common stock during each fiscal month of the first quarter of Fiscal 2021 were:
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Period | Total Number of Shares Purchased(1) | | Average Price Paid per Share | | Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) | | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(2)(3) |
08/30/20 - 10/03/20 | — | | | $ | — | | | — | | | $ | 68,761,000 | |
10/04/20 - 10/31/20 | 170,174 | | | 50.30 | | | 141,662 | | | 61,761,000 | |
11/01/20 - 11/28/20 | 63,225 | | | 48.12 | | | 62,288 | | | 58,761,000 | |
Total | 233,399 | | | $ | 49.71 | | | 203,950 | | | $ | 58,761,000 | |
2022 are as follows: | | | | | | | | | | | | | | | | | | | | | | | |
Period(1) | Total Number of Shares Purchased(2) | | Average Price Paid per Share | | Number of Shares Purchased as Part of Publicly Announced Plans or Programs(2) | | Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(3) |
08/29/21 - 10/02/21 | 134,981 | | | $ | 71.12 | | | 134,981 | | | $ | 13,761,000 | |
10/03/21 - 10/30/21 | 144,977 | | | 69.78 | | | 89,986 | | | 194,000,000 | |
10/31/21 - 11/27/21 | 55,979 | | | 71.46 | | | 55,979 | | | 190,000,000 | |
Total | 335,937 | | | $ | 70.60 | | | 280,946 | | | $ | 190,000,000 | |
(1)Number of shares in the table are shown in whole numbers.
(2) Shares not purchased as part of a publicly announced program were repurchased from employees who vested in Company shares and elected to pay their payroll tax via the value of shares delivered as opposed to cash.
(2) Pursuant(3) Prior to October 13, 2021, pursuant to a $70.0$70 million share repurchase program authorized by our Board of Directors on October 18, 2017. On and after October 13, 2021, pursuant to a new $200.0 million share repurchase program authorized by our Board of Directors on October 13, 2021. There is no time restriction on the authorization.
(3) Adjustment in dollar amount for repurchases remaining from prior quarter reflects a correction in the counting of share repurchases against share authorizations.
Our senior secured notes,Senior Secured Notes, as defined in Note 9 Long-Term Debt, ofto the Notes to Condensed Consolidated Financial Statements included in Item 1 Condensed Consolidated Financial Statements,of Part I of this Quarterly Report on Form 10-Q, contains occurrence based restrictions that may limit our ability to make distributions or payments with respect to purchases of our common stock without consent of the lenders, except for limited purchases of our common stock from employees, in the event of a significant reduction in our EBITDA or in the event of a significant borrowing on our ABL Credit Facility.
Item 6. Exhibits.Exhibits
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101 | The following financial statements from our Quarterly Report on Form 10-Q for |
101.INS | XBRL Instance Document - the first quarter of Fiscal 2021instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline Extensible Business Reporting Language ("iXBRL"): (i) the Condensed Consolidated Balance Sheets at November 28, 2020, and August 29, 2020, (ii) the Condensed Consolidated Statements of Income and Comprehensive Income for the three months ended November 28, 2020, and November 30, 2019, (iii) the Condensed Consolidated Statements of Cash Flows for the three months ended November 28, 2020, and November 30, 2019, (iv) the Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended November 28, 2020, and November 30, 2019, and (v) the Notes to the Condensed Consolidated Financial Statements.XBRL document (furnished herewith). |
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101.SCH | Inline XBRL Taxonomy Extension Schema Document (furnished herewith). |
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101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document (furnished herewith). |
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101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document (furnished herewith). |
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101.LAB | Inline XBRL Taxonomy Label Linkbase Document (furnished herewith). |
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101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document (furnished herewith). |
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104 | The cover page from our Quarterly Report on Form 10-Q for the first quarter of Fiscal 2021 formattedCover Page Interactive Data File (formatted in iXBRL (included asInline XBRL and contained in Exhibit 101) (furnished herewith). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrantregistrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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| | WINNEBAGO INDUSTRIES, INC. | |
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Date: | December 18, 202017, 2021 | ByBy: | /s/ Michael J. Happe | |
| | | Michael J. Happe | |
| | | Chief Executive Officer, President | |
| | | (Principal Executive Officer) | |
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Date: | December 18, 202017, 2021 | ByBy: | /s/ Bryan L. Hughes | |
| | | Bryan L. Hughes | |
| | | Chief Financial Officer and Senior Vice President | |
| | | (Principal Financial and Accounting Officer) | |