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 May 29,November 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 152,13200 Pioneer Trail | Forest City,Eden 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 ☒
As of June 18,December 13, 2021, there were 33,599,48733,344,672 shares of common stock, par value $0.50 per share, outstanding.
Winnebago Industries, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended May 29,November 27, 2021
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Winnebago Industries, Inc.
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
(Unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
(in thousands, except per share data) | May 29, 2021 | | May 30, 2020 | | May 29, 2021 | | May 30, 2020 |
Net revenues | $ | 960,737 | | | $ | 402,458 | | | $ | 2,593,754 | | | $ | 1,617,726 | |
Cost of goods sold | 791,125 | | | 370,434 | | | 2,130,556 | | | 1,427,307 | |
Gross profit | 169,612 | | | 32,024 | | | 463,198 | | | 190,419 | |
Selling, general, and administrative expenses | 63,586 | | | 33,271 | | | 165,001 | | | 126,540 | |
Amortization | 3,590 | | | 6,926 | | | 10,771 | | | 18,514 | |
Total operating expenses | 67,176 | | | 40,197 | | | 175,772 | | | 145,054 | |
Operating income (loss) | 102,436 | | | (8,173) | | | 287,426 | | | 45,365 | |
Interest expense | 10,229 | | | 8,440 | | | 30,222 | | | 23,140 | |
Non-operating income | (93) | | | (74) | | | (310) | | | (460) | |
Income (loss) before income taxes | 92,300 | | | (16,539) | | | 257,514 | | | 22,685 | |
Provision (benefit) for income taxes | 21,005 | | | (4,186) | | | 59,728 | | | 3,702 | |
Net income (loss) | $ | 71,295 | | | $ | (12,353) | | | $ | 197,786 | | | $ | 18,983 | |
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Earnings (loss) per common share | | | | | | | |
Basic | $ | 2.12 | | | $ | (0.37) | | | $ | 5.89 | | | $ | 0.57 | |
Diluted | $ | 2.05 | | | $ | (0.37) | | | $ | 5.83 | | | $ | 0.57 | |
| | | | | | | |
Weighted average common shares outstanding | | | | | | | |
Basic | 33,552 | | | 33,625 | | | 33,565 | | | 33,102 | |
Diluted | 34,772 | | | 33,625 | | | 33,943 | | | 33,289 | |
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Net income (loss) | $ | 71,295 | | | $ | (12,353) | | | $ | 197,786 | | | $ | 18,983 | |
Other comprehensive income (loss), net of tax: | | | | | | | |
Amortization of net actuarial loss (net of tax of $3, $3, $9 and $9) | 9 | | | 8 | | | 26 | | | 24 | |
Interest rate swap activity (net of tax of $0, $141, $0 and $163) | 0 | | | (432) | | | 0 | | | (500) | |
Other comprehensive income (loss) | 9 | | | (424) | | | 26 | | | (476) | |
Comprehensive income (loss) | $ | 71,304 | | | $ | (12,777) | | | $ | 197,812 | | | $ | 18,507 | |
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| Three Months Ended |
(in thousands, except per share data) | November 27, 2021 | | November 28, 2020 |
Net revenues | $ | 1,155,740 | | | $ | 793,131 | |
Cost of goods sold | 926,328 | | | 656,127 | |
Gross profit | 229,412 | | | 137,004 | |
Selling, general, and administrative expenses | 74,870 | | | 48,399 | |
Amortization | 8,172 | | | 3,590 | |
Total operating expenses | 83,042 | | | 51,989 | |
Operating income | 146,370 | | | 85,015 | |
Interest expense, net | 10,242 | | | 9,941 | |
Non-operating loss | 6,357 | | | 94 | |
Income before income taxes | 129,771 | | | 74,980 | |
Provision for income taxes | 30,141 | | | 17,557 | |
Net income | $ | 99,630 | | | $ | 57,423 | |
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Earnings per common share: | | | |
Basic | $ | 2.99 | | | $ | 1.71 | |
Diluted | $ | 2.90 | | | $ | 1.70 | |
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Weighted average common shares outstanding: | | | |
Basic | 33,322 | | | 33,609 | |
Diluted | 34,378 | | | 33,839 | |
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Net income | $ | 99,630 | | | $ | 57,423 | |
Other comprehensive income: | | | |
Amortization of net actuarial loss (net of tax of $3 and $3) | 9 | | | 9 | |
Comprehensive income | $ | 99,639 | | | $ | 57,432 | |
The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.
Winnebago Industries, Inc.
Consolidated Balance Sheets
| (in thousands, except per share data) | (in thousands, except per share data) | May 29, 2021 | | August 29, 2020 | (in thousands, except per share data) | November 27, 2021 | | August 28, 2021 |
| | (Unaudited) | | | (Unaudited) | |
Assets | Assets | | Assets | |
Current assets | Current assets | | Current assets | |
Cash and cash equivalents | Cash and cash equivalents | $ | 405,841 | | | $ | 292,575 | | Cash and cash equivalents | $ | 211,384 | | | $ | 434,563 | |
Receivables, less allowance for doubtful accounts ($287 and $353, respectively) | 228,199 | | | 220,798 | | |
Receivables, less allowance for doubtful accounts ($275 and $307, respectively) | | Receivables, less allowance for doubtful accounts ($275 and $307, respectively) | 263,677 | | | 253,808 | |
Inventories, net | Inventories, net | 333,018 | | | 182,941 | | Inventories, net | 432,825 | | | 341,473 | |
Prepaid expenses and other assets | 21,559 | | | 17,296 | | |
Prepaid expenses and other current assets | | Prepaid expenses and other current assets | 21,701 | | | 29,069 | |
Total current assets | Total current assets | 988,617 | | | 713,610 | | Total current assets | 929,587 | | | 1,058,913 | |
Property, plant, and equipment, net | Property, plant, and equipment, net | 177,578 | | | 174,945 | | Property, plant, and equipment, net | 224,129 | | | 191,427 | |
Goodwill | Goodwill | 348,058 | | | 348,058 | | Goodwill | 484,176 | | | 348,058 | |
Other intangible assets, net | Other intangible assets, net | 393,997 | | | 404,768 | | Other intangible assets, net | 493,635 | | | 390,407 | |
Investment in life insurance | Investment in life insurance | 28,381 | | | 27,838 | | Investment in life insurance | 29,027 | | | 28,821 | |
Operating lease assets | Operating lease assets | 27,318 | | | 29,463 | | Operating lease assets | 27,747 | | | 28,379 | |
Other long-term assets | Other long-term assets | 15,821 | | | 15,018 | | Other long-term assets | 18,060 | | | 16,562 | |
Total assets | Total assets | $ | 1,979,770 | | | $ | 1,713,700 | | Total assets | $ | 2,206,361 | | | $ | 2,062,567 | |
| Liabilities and Shareholders' Equity | | |
Liabilities and Stockholders' Equity | | Liabilities and Stockholders' Equity | |
Current liabilities | Current liabilities | | Current liabilities | |
Accounts payable | Accounts payable | $ | 173,008 | | | $ | 132,490 | | Accounts payable | $ | 166,848 | | | $ | 180,030 | |
Income taxes payable | Income taxes payable | 0 | | | 8,840 | | Income taxes payable | 29,223 | | | 8,043 | |
Accrued expenses | | |
Accrued expenses: | | Accrued expenses: | |
Accrued compensation | Accrued compensation | 59,412 | | | 36,533 | | Accrued compensation | 48,909 | | | 67,541 | |
Product warranties | Product warranties | 82,062 | | | 64,031 | | Product warranties | 102,424 | | | 91,222 | |
Self-insurance | Self-insurance | 18,237 | | | 17,437 | | Self-insurance | 20,952 | | | 19,296 | |
Promotional | Promotional | 9,851 | | | 12,543 | | Promotional | 9,965 | | | 10,040 | |
Accrued interest | 7,821 | | | 4,652 | | |
Accrued dividends | 4,273 | | | 180 | | |
Other | 20,946 | | | 23,684 | | |
Accrued interest and dividends | | Accrued interest and dividends | 8,014 | | | 10,720 | |
Other current liabilities | | Other current liabilities | 40,768 | | | 20,384 | |
Total current liabilities | Total current liabilities | 375,610 | | | 300,390 | | Total current liabilities | 427,103 | | | 407,276 | |
Long-term debt, net | Long-term debt, net | 524,450 | | | 512,630 | | Long-term debt, net | 532,739 | | | 528,559 | |
Deferred income taxes | Deferred income taxes | 14,852 | | | 15,608 | | Deferred income taxes | 13,247 | | | 13,429 | |
Unrecognized tax benefits | Unrecognized tax benefits | 6,538 | | | 6,511 | | Unrecognized tax benefits | 6,667 | | | 6,483 | |
Operating lease liabilities | 25,391 | | | 27,048 | | |
Long-term operating lease liabilities | | Long-term operating lease liabilities | 26,368 | | | 26,745 | |
Deferred compensation benefits, net of current portion | Deferred compensation benefits, net of current portion | 9,920 | | | 11,130 | | Deferred compensation benefits, net of current portion | 9,775 | | | 9,550 | |
Other long-term liabilities | Other long-term liabilities | 12,751 | | | 12,917 | | Other long-term liabilities | 31,204 | | | 13,582 | |
Total liabilities | Total liabilities | 969,512 | | | 886,234 | | Total liabilities | 1,047,103 | | | 1,005,624 | |
Contingent liabilities and commitments (Note 10) | 0 | | 0 | |
Shareholders' equity | | |
Preferred stock, par value $0.01: 10,000 shares authorized; NaN shares issued and outstanding | 0 | | | 0 | | |
Contingent liabilities and commitments (Note 11) | | Contingent liabilities and commitments (Note 11) | 0 | | 0 |
Shareholders' equity: | | Shareholders' equity: | |
Preferred stock, par value $0.01: 10,000 shares authorized; Zero shares issued and outstanding | | 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 | Common stock, par value $0.50: 120,000 shares authorized; 51,776 shares issued and outstanding | 25,888 | | | 25,888 | | Common stock, par value $0.50: 120,000 shares authorized; 51,776 shares issued and outstanding | 25,888 | | | 25,888 | |
Additional paid-in capital | Additional paid-in capital | 214,460 | | | 203,791 | | Additional paid-in capital | 233,727 | | | 218,490 | |
Retained earnings | Retained earnings | 1,095,167 | | | 913,610 | | Retained earnings | 1,272,697 | | | 1,172,996 | |
Accumulated other comprehensive loss | Accumulated other comprehensive loss | (500) | | | (526) | | Accumulated other comprehensive loss | (482) | | | (491) | |
Treasury stock, at cost: 18,225 and 18,133 shares, respectively | (324,757) | | | (315,297) | | |
Treasury stock, at cost: 18,476 and 18,713 shares, respectively | | Treasury stock, at cost: 18,476 and 18,713 shares, respectively | (372,572) | | | (359,940) | |
Total shareholders' equity | Total shareholders' equity | 1,010,258 | | | 827,466 | | Total shareholders' equity | 1,159,258 | | | 1,056,943 | |
Total liabilities and shareholders' equity | Total liabilities and shareholders' equity | $ | 1,979,770 | | | $ | 1,713,700 | | Total liabilities and shareholders' equity | $ | 2,206,361 | | | $ | 2,062,567 | |
The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.
Winnebago Industries, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
| | | Nine Months Ended | | Three Months Ended |
(in thousands) | (in thousands) | May 29, 2021 | | May 30, 2020 | (in thousands) | November 27, 2021 | | November 28, 2020 |
Operating Activities | | | | |
Operating activities | | Operating activities | | | |
Net income | Net income | $ | 197,786 | | | $ | 18,983 | | Net income | $ | 99,630 | | | $ | 57,423 | |
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 | | Adjustments to reconcile net income to net cash provided by (used in) operating activities | |
Depreciation | Depreciation | 13,476 | | | 11,854 | | Depreciation | 5,306 | | | 4,160 | |
Amortization | Amortization | 10,771 | | | 18,514 | | Amortization | 8,172 | | | 3,590 | |
Non-cash interest expense, net | Non-cash interest expense, net | 10,372 | | | 7,440 | | Non-cash interest expense, net | 3,627 | | | 3,351 | |
Amortization of debt issuance costs | Amortization of debt issuance costs | 1,852 | | | 2,181 | | Amortization of debt issuance costs | 613 | | | 606 | |
Last-in, first-out expense | 2,321 | | | 1,450 | | |
Last in, first-out expense | | Last in, first-out expense | 437 | | | 276 | |
Stock-based compensation | Stock-based compensation | 11,719 | | | 3,332 | | Stock-based compensation | 2,711 | | | 2,354 | |
Deferred income taxes | Deferred income taxes | (765) | | | 365 | | Deferred income taxes | (185) | | | 872 | |
Contingent consideration fair value adjustment | | Contingent consideration fair value adjustment | 6,370 | | | — | |
Other, net | Other, net | (4,412) | | | 516 | | Other, net | 2,312 | | | (3,329) | |
Change in operating assets and liabilities: | | |
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 | (7,384) | | | 31,440 | | Receivables, net | (7,210) | | | (10,380) | |
Inventories, net | Inventories, net | (152,398) | | | 91,938 | | Inventories, net | (70,340) | | | (80,472) | |
Prepaid expenses and other assets | Prepaid expenses and other assets | 1,010 | | | 159 | | Prepaid expenses and other assets | 4,852 | | | 583 | |
Accounts payable | Accounts payable | 40,817 | | | (13,528) | | Accounts payable | (17,704) | | | (8,371) | |
Income taxes and unrecognized tax benefits | Income taxes and unrecognized tax benefits | (12,771) | | | (2,622) | | Income taxes and unrecognized tax benefits | 24,664 | | | 16,556 | |
Accrued expenses and other liabilities | Accrued expenses and other liabilities | 35,560 | | | (9,585) | | Accrued expenses and other liabilities | (6,706) | | | 10,111 | |
Net cash provided by (used in) operating activities | Net cash provided by (used in) operating activities | 147,954 | | | 162,437 | | Net cash provided by (used in) operating activities | 56,549 | | | (2,670) | |
| Investing Activities | | |
Purchases of property, plant and equipment | (23,596) | | | (28,582) | | |
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 | | | (260,965) | | Acquisition of business, net of cash acquired | (228,159) | | | — | |
Proceeds from sale of property, plant and equipment | 12,450 | | | 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 | (224) | | | 141 | | Other, net | (36) | | | (234) | |
Net cash provided by (used in) investing activities | (11,370) | | | (289,406) | | |
Net cash used in investing activities | | 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 | 2,629,932 | | | 1,795,209 | | Borrowings on long-term debt | 932,566 | | | 798,359 | |
Repayments on long-term debt | Repayments on long-term debt | (2,629,932) | | | (1,501,709) | | 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 | (12,136) | | | (10,881) | | Payments of cash dividends | (6,010) | | | (4,046) | |
Payments for repurchases of common stock | Payments for repurchases of common stock | (12,109) | | | (1,789) | | Payments for repurchases of common stock | (23,723) | | | (11,606) | |
Payments of debt issuance costs | (224) | | | (10,761) | | |
Other, net | Other, net | 1,151 | | | 539 | | Other, net | 1,415 | | | (166) | |
Net cash provided by (used in) financing activities | (23,318) | | | 242,018 | | |
Net cash used in financing activities | | Net cash used in financing activities | (28,318) | | | (15,818) | |
| Net increase in cash and cash equivalents | 113,266 | | | 115,049 | | |
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 | $ | 405,841 | | | $ | 152,480 | | 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 | |
| | | | | | | | | | | |
| | | |
Supplemental Disclosures | | | |
Income taxes paid, net | $ | 71,090 | | | $ | 6,240 | |
Interest paid | 14,618 | | | 14,961 | |
| | | |
Non-cash investing and financing activities | | | |
Issuance of common stock for acquisition of business | $ | 0 | | | $ | 92,572 | |
Capital expenditures in accounts payable | 121 | | | 255 | |
Dividends declared not yet paid | 4,273 | | | 126 | |
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| | | |
Non-cash investing and financing activities | | | |
Issuance of common stock for acquisition of business | $ | 22,000 | | | $ | — | |
Capital expenditures in accounts payable | 1,101 | | | 613 | |
The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.
Winnebago Industries, Inc.
Consolidated Statements of Changes in Shareholders' Equity
(Unaudited)
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| Three Months Ended May 29, 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 February 27, 2021 | 51,776 | | $ | 25,888 | | $ | 209,727 | | $ | 1,032,020 | | $ | (509) | | (18,225) | | $ | (324,762) | | $ | 942,364 | |
Stock-based compensation | — | | — | | 4,733 | | — | | — | | 0 | | 5 | | 4,738 | |
Common stock dividends paid; $0.12 per share | — | | — | | — | | (4,062) | | — | | — | | — | | (4,062) | |
Common stock dividends accrued; $0.12 per share | — | | — | | — | | (4,086) | | — | | — | | — | | (4,086) | |
Actuarial loss, net of tax | — | | — | | — | | — | | 9 | | — | | — | | 9 | |
Net income | — | | — | | — | | 71,295 | | — | | — | | — | | 71,295 | |
Balance at May 29, 2021 | 51,776 | | $ | 25,888 | | $ | 214,460 | | $ | 1,095,167 | | $ | (500) | | (18,225) | | $ | (324,757) | | $ | 1,010,258 | |
| | | | | | | | |
| Three Months Ended May 30, 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 February 29, 2020 | 51,776 | | $ | 25,888 | | $ | 200,751 | | $ | 890,994 | | $ | (543) | | (18,153) | | $ | (315,566) | | $ | 801,524 | |
Stock-based compensation | — | | — | | (315) | | — | | — | | 0 | | 7 | | (308) | |
Issuance of stock, net | — | | — | | 20 | | — | | — | | 8 | | 133 | | 153 | |
Repurchase of common stock | — | | — | | — | | — | | — | | (1) | | (52) | | (52) | |
Common stock dividends paid; $0.11 per share | — | | — | | — | | (3,730) | | — | | — | | — | | (3,730) | |
Actuarial loss, net of tax | — | | — | | — | | — | | 8 | | — | | — | | 8 | |
Interest rate swap activity, net of tax | — | | — | | — | | — | | (432) | | — | | — | | (432) | |
Net loss | — | | — | | — | | (12,353) | | — | | — | | — | | (12,353) | |
Balance at May 30, 2020 | 51,776 | | $ | 25,888 | | $ | 200,456 | | $ | 874,911 | | $ | (967) | | (18,146) | | $ | (315,478) | | $ | 784,810 | |
| | | | | | | | |
| Nine Months Ended May 29, 2021 |
| 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 | — | | — | | 11,701 | | — | | — | | 1 | | 18 | | 11,719 | |
Issuance of stock | — | | — | | (1,032) | | — | | — | | 149 | | 2,631 | | 1,599 | |
Repurchase of common stock | — | | — | | — | | — | | — | | (242) | | (12,109) | | (12,109) | |
Common stock dividends paid; $0.36 per share | — | | — | | — | | (12,136) | | — | | — | | — | | (12,136) | |
Common stock dividends accrued; $0.12 per share | — | | — | | — | | (4,093) | | — | | — | | — | | (4,093) | |
Actuarial loss, net of tax | — | | — | | — | | — | | 26 | | — | | — | | 26 | |
Net income | — | | — | | — | | 197,786 | | — | | — | | — | | 197,786 | |
Balance at May 29, 2021 | 51,776 | | $ | 25,888 | | $ | 214,460 | | $ | 1,095,167 | | $ | (500) | | (18,225) | | $ | (324,757) | | $ | 1,010,258 | |
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended May 30, 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 31, 2019 | 51,776 | | $ | 25,888 | | $ | 91,185 | | $ | 866,886 | | $ | (491) | | (20,262) | | $ | (351,256) | | $ | 632,212 | |
Stock-based compensation | — | | — | | 3,309 | | — | | — | | 1 | | 23 | | 3,332 | |
Issuance of stock, net | — | | — | | (2,011) | | — | | — | | 160 | | 2,782 | | 771 | |
Issuance of stock for acquisition | — | | — | | 57,811 | | — | | — | | 2,000 | | 34,761 | | 92,572 | |
Repurchase of common stock | — | | — | | — | | — | | — | | (45) | | (1,788) | | (1,788) | |
Common stock dividends paid; $0.33 per share | — | | — | | — | | (10,958) | | — | | — | | — | | (10,958) | |
Actuarial loss, net of tax | — | | — | | — | | — | | 24 | | — | | — | | 24 | |
Interest rate swap activity, net of tax | — | | — | | — | | — | | (500) | | — | | — | | (500) | |
Equity component of convertible senior notes and offering costs, net of tax of $20,840 | — | | — | | 61,335 | | — | | — | | — | | — | | 61,335 | |
Convertible note hedge purchase, net of tax of $17,417 | — | | — | | (53,383) | | — | | — | | — | | — | | (53,383) | |
Warrant transactions | — | | — | | 42,210 | | — | | — | | — | | — | | 42,210 | |
Net income | — | | — | | — | | 18,983 | | — | | — | | — | | 18,983 | |
Balance at May 30, 2020 | 51,776 | | $ | 25,888 | | $ | 200,456 | | $ | 874,911 | | $ | (967) | | (18,146) | | $ | (315,478) | | $ | 784,810 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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 | |
The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.
Winnebago Industries, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
(Dollars and sharesAll amounts are in thousands, except share and per share data, unless otherwise noted)designated)
Note 1. Basis of Presentation
The consolidated financial statements include the accounts 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," "Winnebago","Winnebago," "we," "our," and "the Company""us" in this Quarterly Report on Form 10-Q, unless the context otherwise requires, refers to Winnebago Industries, Inc. and its wholly owned subsidiaries.
The interim unaudited consolidated financial statements included herein are prepared pursuant to the rules and regulations of the United 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, and reflects all adjustments that are, in management’s opinion, necessary for a fair presentation of such financial statements. The consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). GAAP requires us to make estimates and assumptions that affect amounts reported. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations.
The consolidated financial statements included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company'sour Annual Report on Form 10-K for the fiscal year ended August 29, 202028, 2021 filed with the SEC. Interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year.
Fiscal Period
The Company has a 5-4-4 quarterly accounting cycle with the fiscal year ending on the last Saturday in August. Fiscal 2021 ending on August 28, 2021 will consist of 52 weeks. Fiscal 2020 ended on August 29, 2020 consisted of 52 weeks.
Cash and Cash Equivalents
Cash and cash equivalents represent cash, demand deposits and highly liquid investments with original maturities of three months or less that are not legally restricted. Cash equivalents are recorded at cost, which approximates fair value. Accounts at each banking institution are insured by the Federal Deposit Insurance Corporation up to $250,000, while the remaining balances are uninsured.27, 2022.
Subsequent Events
In preparing the accompanying unaudited consolidated financial statements, the Companywe have evaluated subsequent events for potential recognition and disclosure through the date of this filing noting no material subsequent events.events except for the item noted below:
On December 15, 2021, our Board of Directors declared a quarterly cash dividend of $0.18 per share payable on January 26, 2022 to common shareholders of record at the close of business on January 12, 2022.
CARES Act
The Coronavirus Aid, Relief, and Economic Security ("CARES") Act was signed into law on March 27, 2020 to help alleviate the impact of the COVID-19 pandemic in the U.S. The Company isWe are taking advantage of the employer payroll tax 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 employer payroll tax liability as of May 29,November 27, 2021 was $16,223$12.4 million and will be payable in equal installments in December 2021 and December 2022. 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 (Loss) and Comprehensive Income (Loss) was approximately $3,999.$4.0 million. The entire amount is expected to be received by the end ofduring calendar year 2021.2022. As of May 29,November 27, 2021, $3,202$3.2 million remains outstanding within other current assets 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:Simplifying the Accounting for Income Taxes, which changeswas adopted in the accounting for credit losses on instruments measured at amortized costs, such as accounts receivables and deposits by adding an impairment model that is based on expected losses rather than incurred losses. An entity will recognize as an allowance its estimatefirst quarter of expected credit losses, which is believed to result in more timely recognition of such losses as theFiscal 2022. The new standard eliminates the probable initial recognition threshold. The Companycertain exceptions to Topic 740's general principles, improves consistent application and simplifies its application. We adopted the new standard usingguidance in the modified retrospective approach, which involves recognizing the cumulative effectfirst quarter of initial adoption of Topic 326 as an adjustment to its opening retained earnings as of August 30, 2020. As a result, the Company didFiscal 2022, and there was not adjust comparative period financial information for periods before the effective date. No incremental allowance for credit losses has been recognized during the nine months ended May 29, 2021 as a result of the adoption. The adoption of this standard did not have a material impact on the Company’s
to our financial condition, results of operations or disclosures.
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) which reduces the number of models used to account for convertible instruments, amends diluted earnings 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. Certain disclosure requirements were also added to increase transparency and decision-usefulness regarding a convertible instrument's terms and features. Additionally, the if-converted method for including convertible instruments must be used in diluted EPS as opposed to the treasury stock method. The new guidance is effective for annual reporting periods beginning after December 15, 2021, which is the Company'sour Fiscal 2023. Early adoption is permitted using either a modified retrospective or full retrospective approach. The Company expectsWe expect to adopt the new guidance in the first
quarter of Fiscal 2023 and hashave not yet evaluated the impact the adoption of this guidance will have on itsour financial condition, results of operations or disclosures; however, the new guidance is expected to change the Company'sour diluted EPS 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, 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 this guidance 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. This guidance is not applicable to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. The guidance can be applied immediately through December 31, 2022. The CompanyWe will adopt this standard when LIBOR is discontinued and doesdo not expect a material impact to itsour financial condition, results of operations or disclosures based on the current debt portfolio and capital structure.
Note 2. Business Combinations
In December 2019,
On August 31, 2021, we purchased 100% of the FASBequity interests of Barletta Boat Company, LLC and Three Limes, LLC (collectively, "Barletta"), a manufacturer of high-quality, premium pontoon boats that are sold through a network of independent authorized 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 ASU 2019-12,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 preliminary fair values assigned to the Barletta net assets acquired as of the date of acquisition:
| | | | | |
(in thousands) | August 31, 2021 |
Cash | $ | 11,903 | |
Other current assets | 24,564 | |
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 | $ | 286,252 | |
Goodwill from the Barletta acquisition is recognized in our newly created Marine segment. We expect that the full amount of goodwill will be deductible for tax purposes.
The intangible assets acquired include a trade name, dealer network, and backlog. The trade name has an indefinite life, while the backlog and dealer network will be amortized on a straight line basis over Income Taxes (Topic 740):10 months and Simplifying12 years, respectively.
Total transaction costs related to the Accounting for Income Taxes, Barletta acquisition were $3.1 million, of which eliminates certain exceptions to Topic 740's general principles, improves consistent application and simplifies its application. The standard is effective for annual reporting periods beginning after December 15, 2020, which is the Company's Fiscal 2022, including interim periods within those annual reporting periods. The Company expects to adopt the new guidance in$2.4 million were expensed during the first quarter of Fiscal 2022 and does not expect a material impact to its financial condition,$0.7 million were expensed during the fourth quarter of Fiscal 2021. Transaction costs are included in selling, general and administrative expenses in the accompanying Consolidated Statements of Income and Comprehensive Income.
Pro forma results of operations or disclosures.for this acquisition have not been presented as they were immaterial to the reported results.
Note 2.3. 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. Financial performance is evaluated based on each operating segment's Adjusted 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 are: Towable (an aggregation of the Grand Design towables and the Winnebago towables operating segments) and; Motorhome (an aggregation of the Winnebago motorhomes and Newmar motorhomes operating 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 certain corporate administration expenses related to the oversight of the enterprise, 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'sOur Chief Executive Officer (the Chief Operating Decision Maker ("CODM")) regularly reviews consolidated financial results in their entirety and operating segment financial information through Adjusted EBITDA and has ultimate responsibility for enterprise decisions. The Company'sOur CODM is responsible for allocating resources and assessing performance of the consolidated enterprise, reportable segments and operating segments. Management of each operating segment has responsibility for operating decisions, allocating resources and assessing performance within their respective operating segment. BothThe accounting policies of all reportable segments and all operating segments followare the same accounting policiesas those described in Note 1 to the Consolidated Financial Statements included in Item 8 of Part II of the Company'sour Annual Report on Form 10-K for the fiscal year ended August 29, 2020.28, 2021.
The Company monitorsWe monitor and evaluatesevaluate operating performance of itsour reportable segments based on Adjusted EBITDA. The Company believesWe believe disclosing Adjusted EBITDA is useful to securities analysts, investors and other interested parties when evaluating companies in the industry.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 (loss).or loss.
Financial information by reportable segment is as follows:
| | | Three Months Ended | | Nine Months Ended | | Three Months Ended |
(in thousands) | (in thousands) | May 29, 2021 | | May 30, 2020 | | May 29, 2021 | | May 30, 2020 | (in thousands) | November 27, 2021 | | November 28, 2020 |
Net Revenues | Net Revenues | | | | | | | | Net Revenues | | | |
Towable | Towable | $ | 555,749 | | | $ | 188,898 | | | $ | 1,449,934 | | | $ | 813,611 | | Towable | $ | 651,024 | | | $ | 454,901 | |
Motorhome | Motorhome | 385,257 | | | 203,590 | | | 1,090,221 | | | 755,023 | | Motorhome | 421,479 | | | 322,389 | |
Marine | | Marine | 79,318 | | | 11,894 | |
Corporate / All Other | Corporate / All Other | 19,731 | | | 9,970 | | | 53,599 | | | 49,092 | | Corporate / All Other | 3,919 | | | 3,947 | |
Consolidated | Consolidated | $ | 960,737 | | | $ | 402,458 | | | $ | 2,593,754 | | | $ | 1,617,726 | | Consolidated | $ | 1,155,740 | | | $ | 793,131 | |
| Adjusted EBITDA | Adjusted EBITDA | | Adjusted EBITDA | |
Towable | Towable | $ | 80,130 | | | $ | 16,451 | | | $ | 205,639 | | | $ | 86,982 | | Towable | $ | 112,077 | | | $ | 63,143 | |
Motorhome | Motorhome | 37,467 | | | (10,789) | | | 118,779 | | | 13,488 | | Motorhome | 50,153 | | | 30,343 | |
Marine | | Marine | 10,570 | | | 854 | |
Corporate / All Other | Corporate / All Other | (7,823) | | | (1,588) | | | (17,386) | | | (8,919) | | Corporate / All Other | (5,568) | | | (5,047) | |
Consolidated | Consolidated | $ | 109,774 | | | $ | 4,074 | | | $ | 307,032 | | | $ | 91,551 | | Consolidated | $ | 167,232 | | | $ | 89,293 | |
| Capital Expenditures | Capital Expenditures | | Capital Expenditures | |
Towable | Towable | $ | 4,639 | | | $ | 2,296 | | | $ | 11,490 | | | $ | 11,962 | | Towable | $ | 11,158 | | | $ | 4,137 | |
Motorhome | Motorhome | 2,976 | | | 5,768 | | | 10,247 | | | 13,348 | | Motorhome | 7,751 | | | 4,003 | |
Marine | | Marine | 628 | | | 549 | |
Corporate / All Other | Corporate / All Other | 1,061 | | | 1,492 | | | 1,859 | | | 3,272 | | Corporate / All Other | 3,678 | | | — | |
Consolidated | Consolidated | $ | 8,676 | | | $ | 9,556 | | | $ | 23,596 | | | $ | 28,582 | | Consolidated | $ | 23,215 | | | $ | 8,689 | |
| | | | | | | | | | | |
(in thousands) | November 27, 2021 | | August 28, 2021 |
Assets | | | |
Towable | $ | 823,838 | | | $ | 790,257 | |
Motorhome | 762,742 | | | 728,060 | |
Marine | 395,533 | | | 102,901 | |
Corporate / All Other | 224,248 | | | 441,349 | |
Consolidated | $ | 2,206,361 | | | $ | 2,062,567 | |
| | | | | | | | | | | | | | | | | | | | | | | |
(in thousands) | | | | | May 29, 2021 | | August 29, 2020 |
Assets | | | | | | | |
Towable | | | | | $ | 745,249 | | | $ | 718,253 | |
Motorhome | | | | | 721,603 | | | 600,304 | |
Corporate / All Other | | | | | 512,918 | | | 395,143 | |
Consolidated | | | | | $ | 1,979,770 | | | $ | 1,713,700 | |
Reconciliation of net income to consolidated Adjusted EBITDA is as follows:
| | | Three Months Ended | | Nine Months Ended | | Three Months Ended |
(in thousands) | (in thousands) | May 29, 2021 | | May 30, 2020 | | May 29, 2021 | | May 30, 2020 | (in thousands) | November 27, 2021 | | November 28, 2020 |
Net income (loss) | $ | 71,295 | | | $ | (12,353) | | | $ | 197,786 | | | $ | 18,983 | | |
Interest expense | 10,229 | | | 8,440 | | | 30,222 | | | 23,140 | | |
Provision (benefit) for income taxes | 21,005 | | | (4,186) | | | 59,728 | | | 3,702 | | |
Net income | | Net income | $ | 99,630 | | | $ | 57,423 | |
Interest expense, net | | Interest expense, net | 10,242 | | | 9,941 | |
Provision for income taxes | | Provision for income taxes | 30,141 | | | 17,557 | |
Depreciation | Depreciation | 4,917 | | | 4,134 | | | 13,476 | | | 11,854 | | Depreciation | 5,306 | | | 4,160 | |
Amortization | Amortization | 3,590 | | | 6,926 | | | 10,771 | | | 18,514 | | Amortization | 8,172 | | | 3,590 | |
EBITDA | EBITDA | 111,036 | | | 2,961 | | | 311,983 | | | 76,193 | | EBITDA | 153,491 | | | 92,671 | |
Acquisition-related fair-value inventory step-up | 0 | | | 0 | | | 0 | | | 4,810 | | |
Acquisition-related costs | Acquisition-related costs | 0 | | | (189) | | | 0 | | | 9,761 | | 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 | 19 | | | 1,376 | | | 112 | | | 1,247 | | Restructuring expenses | — | | | 93 | |
Gain on sale of property, plant and equipment | (1,188) | | | 0 | | | (4,753) | | | 0 | | |
Non-operating income | (93) | | | (74) | | | (310) | | | (460) | | |
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 | $ | 109,774 | | | $ | 4,074 | | | $ | 307,032 | | | $ | 91,551 | | Adjusted EBITDA | $ | 167,232 | | | $ | 89,293 | |
Note 3.4. Investments and Fair Value Measurements
In determining the fair value of financial assets and liabilities, the Company utilizeswe utilize market data or other assumptions that it believeswe believe market participants would use in pricing the asset or liability in the principal or most advantageous market and adjustsadjust for non-performance and/or other risks associated with the Companyus 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
Financial assets and liabilities measured at fair value on a recurring basis are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Fair Value at | | Fair Value Hierarchy |
(in thousands) | November 27, 2021 | | Level 1 | | Level 2 | | Level 3 |
Assets that fund deferred compensation | | | | | | | |
Domestic equity funds | $ | 1,347 | | | $ | 1,347 | | | $ | — | | | $ | — | |
International equity funds | 76 | | | 76 | | | — | | | — | |
Fixed income funds | 195 | | | 195 | | | — | | | — | |
Total assets at fair value | $ | 1,618 | | | $ | 1,618 | | | $ | — | | | $ | — | |
| | | | | | | |
Contingent consideration | | | | | | | |
Earnout liability | $ | 30,560 | | | $ | — | | | $ | — | | | $ | 30,560 | |
Total liabilities at fair value | $ | 30,560 | | | $ | — | | | $ | — | | | $ | 30,560 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Fair Value at | | Fair Value Hierarchy |
(in thousands) | May 29, 2021 | | Level 1 | | Level 2 | | Level 3 |
Assets that fund deferred compensation | | | | | | | |
Domestic equity funds | $ | 917 | | | $ | 917 | | | $ | 0 | | | $ | 0 | |
International equity funds | 39 | | | 39 | | | 0 | | | 0 | |
Fixed income funds | 46 | | | 46 | | | 0 | | | 0 | |
Total assets at fair value | $ | 1,002 | | | $ | 1,002 | | | $ | 0 | | | $ | 0 | |
| | | Fair Value at | | Fair Value Hierarchy | | Fair Value at | | Fair Value Hierarchy |
(in thousands) | (in thousands) | August 29, 2020 | | Level 1 | | Level 2 | | Level 3 | (in thousands) | August 28, 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 | $ | 626 | | | $ | 626 | | | $ | 0 | | | $ | 0 | | Domestic equity funds | $ | 940 | | | $ | 940 | | | $ | — | | | $ | — | |
International equity funds | International equity funds | 34 | | | 34 | | | 0 | | | 0 | | International equity funds | 41 | | | 41 | | | — | | | — | |
Fixed income funds | Fixed income funds | 50 | | | 50 | | | 0 | | | 0 | | Fixed income funds | 46 | | | 46 | | | — | | | — | |
Total assets at fair value | Total assets at fair value | $ | 710 | | | $ | 710 | | | $ | 0 | | | $ | 0 | | Total assets at fair value | $ | 1,027 | | | $ | 1,027 | | | $ | — | | | $ | — | |
Assets that Fund 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. Refer to Note 1110 of the Notes to the Consolidated Financial Statements included in Item 8 of Part II of the Company'sour 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 prepaid expenses and other assets on the Consolidated Balance Sheets. The remaining assets are classified as non-current and are included in 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 Measured at Fair Value on a Nonrecurring Basis
Certain financial instruments are measured at fair value on a nonrecurring basis. These 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 Companywe will evaluate the non-financial asset for impairment. If an impairment has occurred, the asset is will be written down to its current estimated fair value. NaNNo impairments were recorded for non-financial assets in the three or ninemonths ended May 29,November 27, 2021 or May 30,November 28, 2020.
Assets and Liabilities Not Measured at Fair Value
Certain financial instruments 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. 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 89 for information about the fair value of the Company'sour long-term debt.
Note 4.5. Inventories
Inventories consist of the following:
| | | | | | | | | | | |
(in thousands) | May 29, 2021 | | August 29, 2020 |
Finished goods | $ | 19,638 | | | $ | 17,141 | |
Work-in-process | 182,316 | | | 86,651 | |
Raw materials | 169,218 | | | 114,982 | |
Total | 371,172 | | | 218,774 | |
Less: Last-in, first-out ("LIFO") reserve | 38,154 | | | 35,833 | |
Inventories, net | $ | 333,018 | | | $ | 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) | May 29, 2021 | | August 29, 2020 |
LIFO basis | $ | 147,836 | | | $ | 88,675 | |
First-in, first-out basis | 223,336 | | | 130,099 | |
Total | $ | 371,172 | | | $ | 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, before reduction for the LIFO reserve, approximates replacement cost at the respective dates.
Note 5.6. 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) | May 29, 2021 | | 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 | 147,679 | | | 144,565 | | Buildings and building improvements | 163,731 | | | 147,629 | |
Machinery and equipment | Machinery and equipment | 120,557 | | | 117,370 | | Machinery and equipment | 126,093 | | | 121,911 | |
Software | Software | 33,644 | | | 28,456 | | Software | 36,099 | | | 36,815 | |
Transportation | Transportation | 4,974 | | | 4,913 | | Transportation | 5,972 | | | 5,335 | |
Construction in progress | Construction in progress | 22,158 | | | 20,778 | | Construction in progress | 46,144 | | | 31,137 | |
Property, plant, and equipment, gross | Property, plant, and equipment, gross | 338,123 | | | 327,183 | | Property, plant, and equipment, gross | 388,736 | | | 351,938 | |
Less: Accumulated depreciation | Less: Accumulated depreciation | 160,545 | | | 152,238 | | Less: Accumulated depreciation | 164,607 | | | 160,511 | |
Property, plant, and equipment, net | Property, plant, and equipment, net | $ | 177,578 | | | $ | 174,945 | | Property, plant, and equipment, net | $ | 224,129 | | | $ | 191,427 | |
Depreciation expense was $4,917$5.3 million and $4,134$4.2 million for the three months ended May 29,November 27, 2021 and May 30, 2020, respectively, and $13,476 and $11,854 for the nine months ended May 29, 2021 and May 30,November 28, 2020, respectively.
Note 6.7. Goodwill and Intangible Assets
The changes in the carrying amount of goodwill by reportable segment, with no accumulated impairment losses, for the ninethree months ended May 29,November 27, 2021 and May 30,November 28, 2020 are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
(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 | | | 73,127 | | | 0 | | | 73,127 | |
Balances at May 30, 2020 | $ | 244,684 | | | $ | 73,127 | | | $ | 30,247 | | | $ | 348,058 | |
| | | | | | | |
Balances at August 29, 2020 and May 29, 2021(2) | $ | 244,684 | | | $ | 73,127 | | | $ | 30,247 | | | $ | 348,058 | |
| | | | | | | | | | | | | | | | | | | | | | | |
(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) There was no activity in the three months ended November 28, 2020.
(2) The change in Motorhomemarine activity is related to the acquisition of Newmar Corporation, Dutch Real Estate Corp., New-Way Transport and New-Serv (collectively "Newmar")Barletta that occurred on November 8, 2019.August 31, 2021. See Note 2 to the Consolidated Financial Statements included in Item 81 of Part III of the Company's Annual Reportthis quarterly report on Form 10-K for the fiscal year ended August 29, 2020 for additional acquisition information.
(2) There was 0 activity in the nine months ended May 29, 2021.10-Q.
Other intangible assets, net of accumulated amortization, consist of the following:
| | | | | | | | | | | | | | | | | | | | | | | |
| May 29, 2021 |
($ in thousands) | Weighted Average Life-Years | | Gross Carrying Amount | | Accumulated Amortization | | Net Carrying Value |
Trade names | Indefinite | | $ | 275,250 | | | $ | — | | | $ | 275,250 | |
Dealer networks | 12.1 | | 159,581 | | | $ | 42,360 | | | 117,221 | |
Backlog | 0.5 | | 28,327 | | | 28,327 | | | 0 | |
Non-compete agreements | 4.3 | | 6,647 | | | 5,121 | | | 1,526 | |
Other intangible assets | | | $ | 469,805 | | | $ | 75,808 | | | $ | 393,997 | |
| | | | | | | |
| August 29, 2020 |
($ in thousands) | Weighted Average Life-Years | | Cost | | Accumulated Amortization | | Net Carrying Value |
Trade names | Indefinite | | $ | 275,250 | | | $ | — | | | $ | 275,250 | |
Dealer networks | 12.2 | | 159,581 | | | 32,487 | | | 127,094 | |
Backlog | 0.5 | | 28,327 | | | 28,327 | | | 0 | |
Non-compete agreements | 4.1 | | 6,647 | | | 4,223 | | | 2,424 | |
Other intangible assets | | | $ | 469,805 | | | $ | 65,037 | | | $ | 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 May 29,November 27, 2021 was approximately 913 years.
Estimated future amortization expense related to finite-lived intangible assets is as follows:
| | | | | |
(in thousands) | Amount |
Remainder of Fiscal 20212022 | $ | 3,590 | |
Fiscal 2022 | 13,71921,247 | |
Fiscal 2023 | 13,52615,226 | |
Fiscal 2024 | 13,42415,124 | |
Fiscal 2025 | 13,21914,919 | |
Fiscal 2026 | 13,16514,865 | |
Fiscal 2027 | 14,865 | |
Thereafter | 48,10445,139 | |
Total amortization expense remaining | $ | 118,747141,385 | |
Note 7.8. 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 product warranty liability are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
(in thousands) | May 29, 2021 | | May 30, 2020 | | May 29, 2021 | | May 30, 2020 |
Balance at beginning of period | $ | 76,040 | | | $ | 60,211 | | | $ | 64,031 | | | $ | 44,436 | |
Business acquisition(1) | 0 | | | 0 | | | 0 | | | 15,147 | |
Provision | 23,056 | | | 13,227 | | | 64,986 | | | 44,274 | |
Claims paid | (17,034) | | | (12,773) | | | (46,955) | | | (43,192) | |
Balance at end of period | $ | 82,062 | | | $ | 60,665 | | | $ | 82,062 | | | $ | 60,665 | |
| | | | | | | | | | | |
| 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 NewmarBarletta on November 8, 2019.August 31, 2021. See Note 2 to the Consolidated Financial Statements in Item 81 of Part III of the Company's Annual Reportthis quarterly report on Form 10-K for the fiscal year ended August 29, 202010-Q for additional acquisition information.
Note 8.9. Long-Term Debt
Long-term debt consists of the following:
| | | | | | | | | | | |
(in thousands) | May 29, 2021 | | 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 | (63,922) | | | (74,294) | |
Debt issuance costs, net | (11,628) | | | (13,076) | |
Long-term debt, net | $ | 524,450 | | | $ | 512,630 | |
| | | | | | | | | | | |
(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 $300,000$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, which 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 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 Company 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.
Debt issuance costs incurred and capitalized 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 $7,493$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 $249,750, which was repaid with the proceeds from the Senior Secured Notes, and debt issuance costs of $4,650 were written off upon repayment. In addition, the interest rate swaps with a liability position of $600 used to hedge the Term Loan interest rates were settled early in July 2020 in conjunction with the Term Loan repayment.
Under the ABL, the Company haswe have a $192,500$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 $19,250. The Company
pays$19.3 million. We 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 $300,000$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 $290,223.$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. The Company’s ability to cash settle may be limited depending on the stock price at the time of conversion.
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 shareholders 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 $28,590 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.
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 $214,979$215.0 million and $85,021,$85.0 million, respectively. The initial $214,979$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 $85,021$85.0 million ($64,10664.1 million net of tax) equity component represents the difference between the fair value of the initial $214,979$215.0 million in debt and the $300,000$300.0 million of gross proceeds. The related initial debt discount of $85,021$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 $9,777$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 $7,006$7.0 million of debt issuance costs to the liability component, which were capitalized as deferred financing costs within 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 $2,771$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 May 29,November 27, 2021 and August 29, 2020,28, 2021, the fair value of long-term debt, gross, was $729,954$727.4 million and $674,709,$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 | 0— | |
Fiscal 2027 | — | |
Thereafter | 300,000 | |
Total Senior Secured Notes and Convertible Notes | $ | 600,000 | |
Note 9.10. Employee and Retiree Benefits
Deferred compensation liabilities are as follows:
| | | | | | | | | | | |
(in thousands) | May 29, 2021 | | August 29, 2020 |
Non-qualified deferred compensation | $ | 10,157 | | | $ | 11,460 | |
Supplemental executive retirement plan | 1,601 | | | 1,838 | |
Executive deferred compensation plan | 1,004 | | | 710 | |
Deferred compensation benefits | 12,762 | | | 14,008 | |
Less current portion(1) | 2,842 | | | 2,878 | |
Deferred compensation benefits, net of current portion | $ | 9,920 | | | $ | 11,130 | |
| | | | | | | | | | | |
(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 | |
(1) Included in accrued compensation on the Consolidated Balance Sheets.
Note 10.11. 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, the Companywe 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 $739,966$1,051.3 million and $798,906$727.7 million at May 29,November 27, 2021 and August 29, 2020,28, 2021, respectively.
Repurchased sales are not recorded as a revenue transaction, rather the net difference between the original repurchase price and the resale price is 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 period-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 accrued expenses: other on the Consolidated Balance Sheets. The Company'sOur repurchase accrual was $989$1.0 million and $980$0.9 million at May 29,November 27, 2021 and August 29, 2020,28, 2021, respectively. Repurchase risk is affected by the credit worthiness of the Company'sour dealer network. The Company doesWe 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 ninethree months ended May 29,November 27, 2021 and May 30, 2020.August 28, 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, 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 the Company'sour view of these matters may change in the future.
Note 11.12. Revenue
All operating revenue is generated from contracts with customers. The Company'sOur primary revenue source is generated through the sale of manufactured non-motorized towable units, motorized 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 | | Nine Months Ended |
(in thousands) | May 29, 2021 | | May 30, 2020 | | May 29, 2021 | | May 30, 2020 |
Net Revenues | | | | | | | |
Towable | | | | | | | |
Fifth Wheel | $ | 284,432 | | | $ | 107,364 | | | $ | 751,822 | | | $ | 459,301 | |
Travel Trailer | 264,450 | | | 77,974 | | | 680,088 | | | 342,331 | |
Other(1) | 6,867 | | | 3,560 | | | 18,024 | | | 11,979 | |
Total Towable | 555,749 | | | 188,898 | | | 1,449,934 | | | 813,611 | |
Motorhome | | | | | | | |
Class A | 172,437 | | | 92,280 | | | 464,347 | | | 337,629 | |
Class B | 135,705 | | | 65,000 | | | 382,162 | | | 232,349 | |
Class C | 67,386 | | | 39,268 | | | 215,935 | | | 161,801 | |
Other(1) | 9,729 | | | 7,042 | | | 27,777 | | | 23,244 | |
Total Motorhome | 385,257 | | | 203,590 | | | 1,090,221 | | | 755,023 | |
Corporate / All Other | | | | | | | |
Other(2) | 19,731 | | | 9,970 | | | 53,599 | | | 49,092 | |
Total Corporate / All Other | 19,731 | | | 9,970 | | | 53,599 | | | 49,092 | |
Consolidated Net Revenues | $ | 960,737 | | | $ | 402,458 | | | $ | 2,593,754 | | | $ | 1,617,726 | |
| | | | | | | | | | | |
| 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 | |
(1) Relates to parts, accessories, and services.
(2) Relates to marine units, specialty vehicle units, parts, accessories, and services.
The Company doesWe do not have material contract assets or liabilities. Allowances 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
No single dealer organization accounted for more than 10% of net revenue for the three or nine months ended May 29,November 27, 2021 or May 30,November 28, 2020.
Note 12.13. 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 units, and other equity compensation to key employees and to non-employee directors. The 2019 Plan replaces the 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 awarded and issued under the 2019 Plan is 4,1004.1 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, 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 $4,738$2.7 million and $(308)$2.4 million during the three months ended May 29,November 27, 2021 and May 30, 2020, respectively, and $11,719 and $3,332 during the nine months ended May 29, 2021 and May 30,November 28, 2020, respectively. Compensation expense is recognized over the requisite service or performance period of the award.
Note 13. Restructuring
In Fiscal 2020, the Company's Class A diesel production included in the Motorhome reportable segment 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 $7,731 with a resulting gain of $3,565. In May 2021, the rest of the property in Junction City, OR was sold for net proceeds of $4,692 with a resulting gain of $1,188. The gain on both sales is included within selling, general, and administrative expenses on the Consolidated Statements of Income (Loss) for Fiscal 2021. Total restructuring expenses related to the relocation for the nine months ended May 29, 2021 were immaterial to the Consolidated Financial Statements. The Company does not expect additional restructuring charges during the remainder of Fiscal 2021.
Note 14. Income Taxes
The Company'sOur effective tax rate was 22.8%23.2% and 25.3%23.4% for the three months ended May 29,November 27, 2021 and May 30, 2020, respectively, and 23.2% and 16.3% for the nine months ended May 29, 2021 and May 30,November 28, 2020, respectively. The decrease in tax rate for the three months ended May 29,November 27, 2021 compared to the three months ended May 30,November 28, 2020 was primarily due to a favorable tax adjustment in the third quarter of Fiscal 2020 primarily driven by a change in projected annual performance over a pretax loss resulting in a higher calculated effective tax rate. The increase in tax rate for the nine months ended May 29, 2021 compared to the nine months ended May 30, 2020 was driven primarily by the impact of a net favorable benefit in the current year related to stock compensation, partially offset by an increase to the rate due to consistent tax credits year-over-year over anand increased year to date pretax 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 May 29,November 27, 2021, the Company'sour Federal returns from Fiscal 20172018 to present are subject to review by the Internal Revenue Service. With limited 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 15. Earnings Per Share
Basic and diluted earnings per share are calculated as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
(in thousands, except per share data) | May 29, 2021 | | May 30, 2020 | | May 29, 2021 | | May 30, 2020 |
Net income (loss) | $ | 71,295 | | | $ | (12,353) | | | $ | 197,786 | | | $ | 18,983 | |
| | | | | | | |
Weighted average common shares outstanding | 33,552 | | | 33,625 | | | 33,565 | | | 33,102 | |
Dilutive impact of stock compensation awards | 384 | | | 0 | | | 302 | | | 187 | |
Dilutive impact of convertible notes | 836 | | | 0 | | | 76 | | | 0 | |
Weighted average diluted common shares outstanding | 34,772 | | | 33,625 | | | 33,943 | | | 33,289 | |
| | | | | | | |
Anti-dilutive securities excluded from weighted average diluted common shares outstanding | 1 | | | 123 | | | 46 | | | 104 | |
| | | | | | | |
Basic earnings (loss) per common share | $ | 2.12 | | | $ | (0.37) | | | $ | 5.89 | | | $ | 0.57 | |
Diluted earnings (loss) per common share | $ | 2.05 | | | $ | (0.37) | | | $ | 5.83 | | | $ | 0.57 | |
| | | | | | | | | | | |
| 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 | |
Under the treasury stock 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 | | |
| May 29, 2021 | | May 30, 2020 |
(in thousands) | Defined Benefit Pension Items | | Total | | Defined Benefit Pension Items | | Interest Rate Swap | | Total |
Balance at beginning of period | $ | (509) | | | $ | (509) | | | $ | (543) | | | $ | 0 | | | $ | (543) | |
Other comprehensive income (loss) ("OCI") before reclassifications | 0 | | | 0 | | | 0 | | | (432) | | | (432) | |
Amounts reclassified from AOCI | 9 | | | 9 | | | 8 | | | 0 | | | 8 | |
Net current-period OCI | 9 | | | 9 | | | 8 | | | (432) | | | (424) | |
Balance at end of period | $ | (500) | | | $ | (500) | | | $ | (535) | | | $ | (432) | | | $ | (967) | |
| | | | | | | | | |
| Nine Months Ended |
| May 29, 2021 | | May 30, 2020 |
(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) | |
OCI before reclassifications | 0 | | | 0 | | | 0 | | | (500) | | | (500) | |
Amounts reclassified from AOCI | 26 | | | 26 | | | 24 | | | 0 | | | 24 | |
Net current-period OCI | 26 | | | 26 | | | 24 | | | (500) | | | (476) | |
Balance at end of period | $ | (500) | | | $ | (500) | | | $ | (535) | | | $ | (432) | | | $ | (967) | |
| | | | | | | | | | | |
| 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 | | Nine Months Ended |
(in thousands) | Location on Consolidated Statements of Income and Comprehensive Income | May 29, 2021 | | May 30, 2020 | | May 29, 2021 | | May 30, 2020 |
Amortization of net actuarial loss | SG&A | $ | 9 | | | $ | 8 | | | $ | 26 | | | $ | 24 | |
| | | | | | | | | | | | | | |
| | 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 | |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The terms "Winnebago," "we," "us," and "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 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 dollar 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 of recreation vehicles ("RV"s) and marine products with a diversified portfolio used primarily in leisure travel and outdoor recreational 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.
Acquisition of Barletta
On August 31, 2021, we completed our acquisition of all the equity interests of Barletta for $286.3 million funded with cash payments of $240.1 million, $25.0 million in common stock issued to the sellers (subject to a 12% 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 Item 1 of Part I in this Quarterly Report on Form 10-Q.
The acquisition 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.
COVID-19 Pandemic
We continue to monitor 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. Overall, 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 outdoors, during the COVID-19 pandemic. While ourOur 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. 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 Item 1A 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 GAAP,generally accepted 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 and the Results of Operations - Nine Months Ended May 29, 2021 Compared to the Nine Months Ended May 30, 2020 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 Board of Directors to enable our Board of Directors 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 Facility and outstanding notes, as further described in Note 89 to the Consolidated Financial Statements included in Item 1 of Part I 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 the industry.
Industry Trends
Reportable Segments
Weraw material components. While we continue to manage through these supply disruptions, they have six operating segments: 1) Grand Design towables, 2) Winnebago towables, 3) Winnebago motorhomes, 4) Newmar motorhomes, 5) Chris-Craft marineimpacted our ability to increase production to meet existing demand in the current fiscal year. If these shortages and 6) Winnebago specialty vehicles. Financial performance is evaluated baseddelays worsen, we could experience a negative impact on each operating segment's Adjusted EBITDA, as defined above, which excludes certain corporate administration expensesour sales and non-operating income and expense.earnings in the future.
Our two reportable segments are Towable (an aggregation of the Winnebago towables and Grand Design towables operating segments) and Motorhome (an aggregation of the Winnebago motorhomes and Newmar motorhomes 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.
The Corporate / All Other category includes the Chris-Craft marine and Winnebago specialty vehicles operating segments as well as certain corporate administration expenses related to the oversight of the enterprise such as corporate leadership and administration costs.
Industry Trends
Key reported statistics for the North American RV industry are as follows:
•Wholesale unit shipments - RV product delivered to the dealers, which is reported monthly by the Recreation Vehicle Industry Association ("RVIA").
•Retail unit registrations - Consumer purchases of RVs from dealers, which is reported monthly by Stat Surveys.
We track RV industry conditions using these key statistics to monitor trends and evaluate and understand our performance relative to the overall industry. The following is an analysis of changes in these key statistics for the rolling 12 months through April as of 2021 and 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| US and Canada Industry |
| Wholesale Unit Shipments per RVIA | | Retail Unit Registrations per Stat Surveys |
| Rolling 12 Months through April | | Rolling 12 Months through April |
| 2021 | | 2020 | | Unit Change | | % Change | | 2021 | | 2020 | | Unit Change | | % Change |
Towable(1) | 462,704 | | | 324,262 | | | 138,442 | | | 42.7 | % | | 520,369 | | | 373,427 | | | 146,942 | | | 39.3 | % |
Motorhome(2) | 49,293 | | | 40,152 | | | 9,141 | | | 22.8 | % | | 58,743 | | | 47,183 | | | 11,560 | | | 24.5 | % |
Combined | 511,997 | | | 364,414 | | | 147,583 | | | 40.5 | % | | 579,112 | | | 420,610 | | | 158,502 | | | 37.7 | % |
(1) Towable: Fifth wheel and travel trailer products.
(2) Motorhome: Class A, B, and C products.
Wholesale unit shipments have experienced growth (after the initial industry-wide shutdown of RV manufacturing for a six-week period beginning the last week of March 2020) due to high levels of end consumer demand and extremely low levels of dealer inventories, most notably in the towables segment, as consumers considered RVs a safe travel option during the COVID-19 pandemic. The rolling twelve months retail information for 2021 and 2020 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 noted 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 throughout 2021 and likely into 2022 before normalizing.
| | | | | | | | | | | | | | | | | | | | | | | |
| Calendar Year |
Wholesale Unit Shipment Forecast per RVIA(1) | 2021 Forecast | | 2020 Actual | | Unit Change | | % Change |
Aggressive | 586,300 | | | 430,400 | | | 155,900 | | | 36.2 | % |
Most likely | 576,100 | | | 430,400 | | | 145,700 | | | 33.9 | % |
Conservative | 565,800 | | | 430,400 | | | 135,400 | | | 31.5 | % |
(1) Prepared by ITR Economics for RVIA and reported in the Roadsigns RV Summer 2021 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. This data is subject to adjustment and is continuously updated.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Rolling 12 Months through April | | Calendar Year |
US and Canada | 2021 | | 2020(1) | | 2020 | | 2019(1) | | 2018 |
Travel trailer and fifth wheels | 10.7 | % | | 9.8 | % | | 10.4 | % | | 9.2 | % | | 7.8 | % |
Motorhome A, B, C | 20.0 | % | | 20.3 | % | | 20.8 | % | | 16.1 | % | | 15.5 | % |
Total market share | 11.6 | % | | 11.0 | % | | 11.5 | % | | 10.0 | % | | 8.7 | % |
(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 due to the identification of 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 the new ERP's useful life.
The following table illustrates the cumulative project costs:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended | | Fiscal Year | | Cumulative Investment |
(in thousands) | May 29, 2021 | | 2020 | | 2019 | | Fiscal 2015-2021 |
Capitalized | $ | 3,838 | | | $ | 3,891 | | | $ | 3,875 | | | $ | 30,515 | | | 59.2 | % |
Expensed | 2,376 | | | 1,788 | | | 3,709 | | | 21,039 | | | 40.8 | % |
Total | $ | 6,214 | | | $ | 5,679 | | | $ | 7,584 | | | $ | 51,554 | | | 100.0 | % |
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 Statements of Income (Loss) for the three months ended May 29,November 27, 2021 compared to the three months ended May 30,November 28, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
($ in thousands, except per share data) | May 29, 2021 | | % of Revenues(1) | | May 30, 2020 | | % of Revenues(1) | | $ Change | | % Change |
Net revenues | $ | 960,737 | | | 100.0 | % | | $ | 402,458 | | | 100.0 | % | | $ | 558,279 | | | 138.7 | % |
Cost of goods sold | 791,125 | | | 82.3 | % | | 370,434 | | | 92.0 | % | | 420,691 | | | 113.6 | % |
Gross profit | 169,612 | | | 17.7 | % | | 32,024 | | | 8.0 | % | | 137,588 | | | 429.6 | % |
Selling, general, and administrative expenses | 63,586 | | | 6.6 | % | | 33,271 | | | 8.3 | % | | 30,315 | | | 91.1 | % |
Amortization | 3,590 | | | 0.4 | % | | 6,926 | | | 1.7 | % | | (3,336) | | | (48.2) | % |
Total operating expenses | 67,176 | | | 7.0 | % | | 40,197 | | | 10.0 | % | | 26,979 | | | 67.1 | % |
Operating income (loss) | 102,436 | | | 10.7 | % | | (8,173) | | | (2.0) | % | | 110,609 | | | (1,353.3) | % |
Interest expense | 10,229 | | | 1.1 | % | | 8,440 | | | 2.1 | % | | 1,789 | | | 21.2 | % |
Non-operating income | (93) | | | — | % | | (74) | | | — | % | | 19 | | | 25.7 | % |
Income (loss) before income taxes | 92,300 | | | 9.6 | % | | (16,539) | | | (4.1) | % | | 108,839 | | | (658.1) | % |
Provision (benefit) for income taxes | 21,005 | | | 2.2 | % | | (4,186) | | | (1.0) | % | | 25,191 | | | (601.8) | % |
Net income (loss) | $ | 71,295 | | | 7.4 | % | | $ | (12,353) | | | (3.1) | % | | $ | 83,648 | | | (677.1) | % |
| | | | | | | | | | | |
Diluted earnings (loss) per share | $ | 2.05 | | | | | $ | (0.37) | | | | | $ | 2.42 | | | (654.1) | % |
Diluted weighted average shares outstanding | 34,772 | | | | | 33,625 | | | | | 1,147 | | | 3.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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 | % |
(1) Percentages may not add due to rounding differences.
Third quarter Fiscal 2020 results were negatively impacted by the unprecedented series of events related to the COVID-19 pandemic which included the suspension of the Company's manufacturing operations as well as disruptions across its dealer network, supply chain and end consumers during most of the quarter.
Net revenues increased primarily due to unit growth and pricing actions, including lower allowances.price increases.
Gross profit as a percentage of revenue increased primarily due to improved operating leverage on higher revenues, pricing actionsprice increases, productivity initiatives, and favorable segment mix, partially offset by higher enterprise-wide variable compensation expense.material and component costs.
Operating expenses increased primarily due to an increase in enterprise-wide variable compensation expense and higher selling costs from improved operating performance, partially offset by lower Newmar amortization.acquisition-related costs, incremental amortization, and normal operating expenses of Barletta.
Interest expenseNon-operating loss increased primarily due to a higher interest rate on indebtedness as a resultthe contingent consideration fair value adjustment related to the acquisition of refinancing our Term Loan in the fourth quarter of Fiscal 2020.Barletta.
Our effective tax rate decreasedwas relatively flat in the first quarter of Fiscal 2022 compared to 22.8% for the thirdfirst quarter of Fiscal 2021 compared primarily due
to 25.3% for the third quarterimpact of Fiscal 2020 primarilya net favorable benefit in the current year related to stock compensation, offset by an increase to the rate due to a favorableconsistent tax adjustmentcredits year-over-year and increased income in the third quarter of Fiscal 2020 driven by a change in projected annual performance over a pretax loss resulting in a higher calculated effective tax rate.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 May 29,November 27, 2021 and May 30,November 28, 2020:
| | | | | | | | | | | |
| Three Months Ended |
(in thousands) | May 29, 2021 | | May 30, 2020 |
Net income (loss) | $ | 71,295 | | | $ | (12,353) | |
Interest expense | 10,229 | | | 8,440 | |
Provision (benefit) for income taxes | 21,005 | | | (4,186) | |
Depreciation | 4,917 | | | 4,134 | |
Amortization | 3,590 | | | 6,926 | |
EBITDA | 111,036 | | | 2,961 | |
Acquisition-related costs | — | | | (189) | |
Restructuring expenses | 19 | | | 1,376 | |
Gain on sale of property, plant and equipment | (1,188) | | | — | |
Non-operating income | (93) | | | (74) | |
Adjusted EBITDA | $ | 109,774 | | | $ | 4,074 | |
| | | | | | | | | | | |
| 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 May 29,November 27, 2021 compared to the three months ended May 30,November 28, 2020:
| | | Three Months Ended | | Three Months Ended |
(in thousands, except ASP) | May 29, 2021 | | % of Revenues | | May 30, 2020 | | % of Revenues | | $ Change | | % Change | |
(in thousands, except ASP and units) | | (in thousands, except ASP and units) | November 27, 2021 | | % of Revenues | | November 28, 2020 | | % of Revenues | | $ Change | | % Change |
Net revenues | Net revenues | $ | 555,749 | | | | | $ | 188,898 | | | | | $ | 366,851 | | | 194.2 | % | Net revenues | $ | 651,024 | | | | | $ | 454,901 | | | | | $ | 196,123 | | | 43.1 | % |
Adjusted EBITDA | Adjusted EBITDA | 80,130 | | | 14.4 | % | | 16,451 | | | 8.7 | % | | 63,679 | | | 387.1 | % | Adjusted EBITDA | 112,077 | | | 17.2 | % | | 63,143 | | | 13.9 | % | | 48,934 | | | 77.5 | % |
| Average Selling Price ("ASP")(1) | Average Selling Price ("ASP")(1) | 32,958 | | | 32,107 | | | 851 | | | 2.7 | % | Average Selling Price ("ASP")(1) | 39,237 | | | 32,089 | | | 7,148 | | | 22.3 | % |
| | | Three Months Ended | | Three Months Ended |
Unit deliveries | Unit deliveries | May 29, 2021 | | Product Mix(2) | | May 30, 2020 | | Product Mix(2) | | Unit Change | | % Change | Unit deliveries | November 27, 2021 | | Product Mix(2) | | November 28, 2020 | | Product Mix(2) | | Unit Change | | % Change |
Travel trailer | Travel trailer | 11,089 | | | 66.4 | % | | 3,537 | | | 60.3 | % | | 7,552 | | | 213.5 | % | Travel trailer | 11,143 | | | 67.8 | % | | 9,160 | | | 64.4 | % | | 1,983 | | | 21.6 | % |
Fifth wheel | Fifth wheel | 5,620 | | | 33.6 | % | | 2,324 | | | 39.7 | % | | 3,296 | | | 141.8 | % | Fifth wheel | 5,288 | | | 32.2 | % | | 5,054 | | | 35.6 | % | | 234 | | | 4.6 | % |
Total towables | Total towables | 16,709 | | | 100.0 | % | | 5,861 | | | 100.0 | % | | 10,848 | | | 185.1 | % | Total towables | 16,431 | | | 100.0 | % | | 14,214 | | | 100.0 | % | | 2,217 | | | 15.6 | % |
| | | | November 27, 2021 | | November 28, 2020 | | Change | | % Change |
Backlog(3) | | Backlog(3) | | | | | | | |
Units | | Units | 48,759 | | | 29,659 | | | 19,100 | | | 64.4 | % |
Dollars | | Dollars | $ | 1,874,847 | | | $ | 865,420 | | | $ | 1,009,427 | | | 116.6 | % |
Dealer Inventory | | Dealer Inventory | |
Units | | Units | 15,344 | | | 12,637 | | | 2,707 | | | 21.4 | % |
(1) Average selling price excludes off-invoice dealer incentives.
(2) Percentages may not add due to rounding differences.
Net revenues increased primarily driven by unit growth.
Adjusted EBITDA increased primarily due to operating leverage on an increase in unit sales, partially offset by higher operating expenses.
Motorhome
The following is an analysis of key changes in our Motorhome segment for the three months ended May 29, 2021 compared to the three months ended May 30, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
(in thousands, except ASP) | May 29, 2021 | | % of Revenues | | May 30, 2020 | | % of Revenues | | $ Change | | % Change |
Net revenues | $ | 385,257 | | | | | $ | 203,590 | | | | | $ | 181,667 | | | 89.2 | % |
Adjusted EBITDA | 37,467 | | | 9.7 | % | | (10,789) | | | (5.3) | % | | 48,256 | | | 447.3 | % |
| | | | | | | | | | | |
ASP(1) | 138,810 | | | | | 131,609 | | | | | 7,201 | | | 5.5 | % |
| | | | | | | | | | | |
| Three Months Ended |
Unit deliveries | May 29, 2021 | | Product Mix(2) | | May 30, 2020 | | Product Mix(2) | | Unit Change | | % Change |
Class A | 745 | | | 27.3 | % | | 428 | | | 27.4 | % | | 317 | | | 74.1 | % |
Class B | 1,384 | | | 50.8 | % | | 694 | | | 44.4 | % | | 690 | | | 99.4 | % |
Class C | 598 | | | 21.9 | % | | 440 | | | 28.2 | % | | 158 | | | 35.9 | % |
Total motorhomes | 2,727 | | | 100.0 | % | | 1,562 | | | 100.0 | % | | 1,165 | | | 74.6 | % |
(1) ASP excludes off-invoice dealer incentives.
(2) Percentages may not add due to rounding differences.
Net revenues increased primarily due to unit growth and increased pricing, including lower allowances, partially offset by unfavorable product mix.
Adjusted EBITDA increased primarily due to improved operating leverage on higher revenue and increased pricing, including lower allowances, partially offset by investments in the business and higher variable compensation expense throughout the segment.
Results of Operations - Nine Months Ended May 29, 2021 Compared to the Nine Months Ended May 30, 2020
Consolidated Performance Summary
The following is an analysis of changes in key items included in the Consolidated Statements of Income (Loss) for the nine months ended May 29, 2021 compared to the nine months ended May 30, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended |
($ in thousands, except per share data) | May 29, 2021 | | % of Revenues(1) | | May 30, 2020 | | % of Revenues(1) | | $ Change | | % Change |
Net revenues | $ | 2,593,754 | | | 100.0 | % | | $ | 1,617,726 | | | 100.0 | % | | $ | 976,028 | | | 60.3 | % |
Cost of goods sold | 2,130,556 | | | 82.1 | % | | 1,427,307 | | | 88.2 | % | | 703,249 | | | 49.3 | % |
Gross profit | 463,198 | | | 17.9 | % | | 190,419 | | | 11.8 | % | | 272,779 | | | 143.3 | % |
Selling, general, and administrative expenses | 165,001 | | | 6.4 | % | | 126,540 | | | 7.8 | % | | 38,461 | | | 30.4 | % |
Amortization of intangible assets | 10,771 | | | 0.4 | % | | 18,514 | | | 1.1 | % | | (7,743) | | | (41.8) | % |
Total operating expenses | 175,772 | | | 6.8 | % | | 145,054 | | | 9.0 | % | | 30,718 | | | 21.2 | % |
Operating income | 287,426 | | | 11.1 | % | | 45,365 | | | 2.8 | % | | 242,061 | | | 533.6 | % |
Interest expense | 30,222 | | | 1.2 | % | | 23,140 | | | 1.4 | % | | 7,082 | | | 30.6 | % |
Non-operating income | (310) | | | — | % | | (460) | | | — | % | | (150) | | | (32.6) | % |
Income before income taxes | 257,514 | | | 9.9 | % | | 22,685 | | | 1.4 | % | | 234,829 | | | 1,035.2 | % |
Provision for income taxes | 59,728 | | | 2.3 | % | | 3,702 | | | 0.2 | % | | 56,026 | | | 1,513.4 | % |
Net income | $ | 197,786 | | | 7.6 | % | | $ | 18,983 | | | 1.2 | % | | $ | 178,803 | | | 941.9 | % |
| | | | | | | | | | | |
Diluted earnings per share | $ | 5.83 | | | | | $ | 0.57 | | | | | $ | 5.26 | | | 922.8 | % |
Diluted average shares outstanding | 33,943 | | | | | 33,289 | | | | | 654 | | | 2.0 | % |
(1)Percentages may not add due to rounding differences.
Fiscal 2020 results were negatively impacted by the unprecedented series of events related to the COVID-19 pandemic which included the suspension of the Company's manufacturing operations as well as disruptions across its dealer network, supply chain and end consumers during most of the third quarter.
Net revenues increased primarily due to organic unit growth, the annualized impact from our Newmar acquisition, which took place in the first quarter of Fiscal 2020, and pricing actions, including lower allowances.
Gross profit as a percentage of revenue increased primarily due to improved leverage as a result of higher revenues, pricing actions, including lower allowances, and productivity initiatives.
Operating expenses increased primarily driven by an increase in enterprise-wide variable compensation, higher selling costs and a full year of Newmar operating costs, partially offset by prior year acquisition-related costs, a gain on sale of certain assets and lower Newmar amortization expense.
Interest expense increased primarily due to a higher interest rate on the refinancing of our Term Loan in the fourth quarter of Fiscal 2020.
Our effective tax rate increased to 23.2% for the nine months ended May 29, 2021 compared to 16.3% for the nine months ended May 30, 2020 primarily due to consistent year-over-year tax credits on higher current year pretax income.
Net income and diluted earnings per share increased primarily due to leverage gained on higher revenues, partially offset by higher operating expenses and a higher effective tax rate.
Non-GAAP Reconciliation
The following table reconciles net income to consolidated EBITDA and Adjusted EBITDA for the nine months ended May 29, 2021 and May 30, 2020:
| | | | | | | | | | | |
| Nine Months Ended |
(in thousands) | May 29, 2021 | | May 30, 2020 |
Net income | $ | 197,786 | | | $ | 18,983 | |
Interest expense | 30,222 | | | 23,140 | |
Provision for income taxes | 59,728 | | | 3,702 | |
Depreciation | 13,476 | | | 11,854 | |
Amortization | 10,771 | | | 18,514 | |
EBITDA | 311,983 | | | 76,193 | |
Acquisition-related fair-value inventory step-up | — | | | 4,810 | |
Acquisition-related costs | — | | | 9,761 | |
Restructuring expenses | 112 | | | 1,247 | |
Gain on sale of property, plant and equipment | (4,753) | | | — | |
Non-operating income | (310) | | | (460) | |
Adjusted EBITDA | $ | 307,032 | | | $ | 91,551 | |
Reportable Segment Performance Summary
Towable
The following is an analysis of key changes in our Towable segment for thenine months ended May 29, 2021 compared to the nine months ended months ended May 30, 2020, and as of May 29, 2021 compared to May 30, 2020:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Nine Months Ended |
(in thousands, except ASP) | May 29, 2021 | | % of Revenues | | May 30, 2020 | | % of Revenues | | $ Change | | % Change |
Net revenues | $ | 1,449,934 | | | | | $ | 813,611 | | | | | $ | 636,323 | | | 78.2 | % |
Adjusted EBITDA | 205,639 | | | 14.2 | % | | 86,982 | | | 10.7 | % | | 118,657 | | | 136.4 | % |
| | | | | | | | | | | |
ASP(1) | 32,503 | | | | | 32,836 | | | | | (333) | | | (1.0) | % |
| | | | | | | | | | | |
| Nine Months Ended |
Unit deliveries | May 29, 2021 | | Product Mix(2) | | May 30, 2020 | | Product Mix(2) | | Unit Change | | % Change |
Travel trailer | 29,125 | | | 65.6 | % | | 15,319 | | | 60.8 | % | | 13,806 | | | 90.1 | % |
Fifth wheel | 15,306 | | | 34.4 | % | | 9,874 | | | 39.2 | % | | 5,432 | | | 55.0 | % |
Total towables | 44,431 | | | 100.0 | % | | 25,193 | | | 100.0 | % | | 19,238 | | | 76.4 | % |
| | | | | | | | | | | |
(in thousands, except units) | May 29, 2021 | | | | May 30, 2020 | | | | Change | | % Change |
Backlog(3) | | | | | | | | | | | |
Units | 46,646 | | | | | 13,235 | | | | | 33,411 | | | 252.4 | % |
Dollars | $ | 1,522,069 | | | | | $ | 417,176 | | | | | $ | 1,104,893 | | | 264.9 | % |
Dealer Inventory | | | | | | | | | | | |
Units | 11,647 | | | | | 15,562 | | | | | (3,915) | | | (25.2) | % |
(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 generally 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.growth and price increases.
Adjusted EBITDA increased primarily due to operating leverage on an increase in unit sales, and improved pricing, partially offset by higher selling expenses and variable compensation throughout the segment due to improved operating performance.expenses.
Backlog increased primarily due to the continued strong retail demand by consumers
Motorhome
The following is an analysis of key changes in our Motorhome segment for thenine three months ended May 29,November 27, 2021 compared to the ninethree months ended months ended May 30, 2020, and as of May 29, 2021 compared to May 30,November 28, 2020:
| | | Nine Months Ended | | Three Months Ended |
(in thousands, except ASP) | May 29, 2021 | | % of Revenues | | May 30, 2020 | | % of Revenues | | $ Change | | % Change | |
(in thousands, except ASP and units) | | (in thousands, except ASP and units) | November 27, 2021 | | % of Revenues | | November 28, 2020 | | % of Revenues | | $ Change | | % Change |
Net revenues | Net revenues | $ | 1,090,221 | | | | | $ | 755,023 | | | | | $ | 335,198 | | | 44.4 | % | Net revenues | $ | 421,479 | | | | | $ | 322,389 | | | | | $ | 99,090 | | | 30.7 | % |
Adjusted EBITDA | Adjusted EBITDA | 118,779 | | | 10.9 | % | | 13,488 | | | 1.8 | % | | 105,291 | | | 780.6 | % | Adjusted EBITDA | 50,153 | | | 11.9 | % | | 30,343 | | | 9.4 | % | | 19,810 | | | 65.3 | % |
| ASP(1) | ASP(1) | 135,356 | | | 129,344 | | | 6,012 | | | 4.6 | % | ASP(1) | $ | 152,550 | | | $ | 136,887 | | | 15,663 | | | 11.4 | % |
| | | Nine Months Ended | | Three Months Ended |
Unit deliveries | Unit deliveries | May 29, 2021 | | Product Mix(2) | | May 30, 2020 | | Product Mix(2) | | Unit Change | | % Change | Unit deliveries | November 27, 2021 | | Product Mix(2) | | November 28, 2020 | | Product Mix(2) | | Unit Change | | % Change |
Class A | Class A | 2,047 | | | 25.8 | % | | 1,803 | | | 31.0 | % | | 244 | | | 13.5 | % | Class A | 744 | | | 27.2 | % | | 598 | | | 25.7 | % | | 146 | | | 24.4 | % |
Class B | Class B | 3,901 | | | 49.1 | % | | 2,287 | | | 39.3 | % | | 1,614 | | | 70.6 | % | Class B | 1,447 | | | 52.9 | % | | 1,098 | | | 47.1 | % | | 349 | | | 31.8 | % |
Class C | Class C | 1,994 | | | 25.1 | % | | 1,734 | | | 29.7 | % | | 260 | | | 15.0 | % | Class C | 544 | | | 19.9 | % | | 634 | | | 27.2 | % | | (90) | | | (14.2) | % |
Total motorhomes | Total motorhomes | 7,942 | | | 100.0 | % | | 5,824 | | | 100.0 | % | | 2,118 | | | 36.4 | % | Total motorhomes | 2,735 | | | 100.0 | % | | 2,330 | | | 100.0 | % | | 405 | | | 17.4 | % |
| (in thousands, except units) | May 29, 2021 | | May 30, 2020 | | Change | | % Change | |
| | | November 27, 2021 | | November 28, 2020 | | Change | | % Change |
Backlog(3) | Backlog(3) | | | | | | | | Backlog(3) | | | | | | | |
Units | Units | 18,145 | | | 4,131 | | | 14,014 | | | 339.2 | % | Units | 18,826 | | | 13,217 | | | 5,609 | | | 42.4 | % |
Dollars | Dollars | $ | 2,180,149 | | | $ | 515,035 | | | $ | 1,665,114 | | | 323.3 | % | Dollars | $ | 2,412,625 | | | $ | 1,709,154 | | | $ | 703,471 | | | 41.2 | % |
Dealer Inventory | Dealer Inventory | | Dealer Inventory | |
Units | Units | 2,429 | | | 5,013 | | | (2,584) | | | (51.5) | % | Units | 2,468 | | | 2,123 | | | 345 | | | 16.3 | % |
(1)ASP excludes off-invoice dealer incentives.
(2) Percentages may not add due to rounding differences.
(3) BacklogOur backlog includes all accepted orders from dealers which generally have been requested to be shipped generally 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 organic unit growth our acquisition of Newmar in the first quarter of Fiscal 2020, and increased pricing, including allowances.price increases.
Adjusted EBITDA increasedincreased primarily due to improved operating leverage as a result of higher revenueon an increase in unit sales and pricing actions, including allowances,productivity initiatives, partially offset by higher variable compensation throughout the segment due to improved operating performance.
Backlog increased primarily 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.
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:
| | | | | | | | | | | |
| Nine Months Ended |
(in thousands) | May 29, 2021 | | May 30, 2020 |
Total cash provided by (used in): | | | |
Operating activities | $ | 147,954 | | | $ | 162,437 | |
Investing activities | (11,370) | | | (289,406) | |
Financing activities | (23,318) | | | 242,018 | |
Net increase in cash and cash equivalents | $ | 113,266 | | | $ | 115,049 | |
| | | | | | | | | | | |
| 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 primarilyincreased due to higher profitability, partially offset by investments in working capital to support current year revenue growth, including highera $70.3 million increase in inventory to support customer demand, a $7.2 million increase in accounts receivable due to timing of accounts receivable invoicing/collections and payments ona $17.7 million decrease in accounts payable and higher enterprise-wide variable compensation, partially offset by higher profitabilitydue to timing of payments in the ninethree months ended May 29,November 27, 2021.
Investing Activities
Cash used in investing activities decreasedincreased primarily due to our acquisition of NewmarBarletta during the first quarter of Fiscal 2020 and proceeds received from the sale2022.
Financing Activities
Cash provided byused in financing activities switchedincreased primarily due to cash used in Fiscal 2021 primarily driven by financing of the Newmar acquisition in the prior year through the issuance of Convertible Notes and Warrants, partially offset by the purchase of a convertible bond hedge, and 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 Convertible Notes, which were partially used to fund the Newmar acquisition. Refer to Note 8 to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional details.
On July 8, 2020, we closed on our private offering (the "Senior Secured Notes Offering") of $300,000 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 8 to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional details.
We maintain a $192,500$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 May 29,November 27, 2021, we had no borrowings against the ABL Credit Facility.
As of May 29,November 27, 2021, we had $405,841$211.4 million in cash and cash equivalents and $192,500$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 May 29,November 27, 2021 and August 29, 202028, 2021 was $613,007$502.5 million and $413,220,$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 14, 2020, our Board of Directors 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 60,000 shares to a total of 120,000 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 17, 2020.
On October 18, 2017,13, 2021, our Board of Directors authorized a new share repurchase program in the amount of $70,000. There is$200.0 million with no time restriction on the authorization.authorization, which took effect immediately and replaced the prior program. In the ninethree months ended May 29,November 27, 2021, we repurchased 204,000281,000 shares of our own common stock at a cost of $10,004$19.6 million under this authorization, and 38,00055,000 shares at a cost of $2,105$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 Facility and Senior Secured Notes, we may purchase shares in the future. At May 29,November 27, 2021, we have $58,761$190.0 million remaining on our Board approved repurchase authorization.
On May 19,December 15, 2021, our Board of Directors approved a quarterly cash dividend of $0.12$0.18 per share payable on June 30, 2021,January 26, 2022, to common stockholders of record at the close of business on June 16, 2021.January 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 8 to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional details on the Convertible Notes and Senior Secured Notes. Additionally, 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.
Critical Accounting Policies
We describe our significant accounting policies in Note 1 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, 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 material changes to our significant accounting policies or critical accounting policies since the end of Fiscal 2020.2021.
Recently Issued Accounting Pronouncements
Information regarding newFor a summary of recently issued applicable accounting pronouncements, is include insee Note 1 to the 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 of Part I of our Annual Report on Form 10-K for the fiscal year ended August 29, 2020,28, 2021, and Item 1A of 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 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; governmentalsecurity, cyberattacks, 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
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 May 29,November 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 May 29,November 27, 2021.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act 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 concluded that our disclosure controls and procedures were effective as of the Evaluation Date.
Changes in Internal Control Over Financial Reporting
During the third quarter of Fiscal 2021, we implemented an ERP system within specific areas of certain operating segments which is expected to improve the efficiency of certain financial and related transaction processes. We have evaluated and tested the implementation of the ERP system for effect on our internal control over financial reporting. We have concluded, as part of our evaluation described in the above paragraphs, that the implementation of the ERP system in these circumstances has not materially affected our internal control over financial reporting.
There were no other changes in our internal control over financial reporting that occurred during the thirdfirst 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
Item 1. Legal Proceedings
For a description of our legal proceedings, see Note 1011 to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.
Item 1A. Risk Factors
There have been no material changes from the risk factors previously disclosed in Item 1A 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
(c) Stock Repurchases
Purchases of our common stock during each fiscal month of the thirdfirst quarter of Fiscal 20212022 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)
|
02/28/21 - 04/03/21 | — | | | $ | — | | | — | | | $ | 58,761,000 | |
04/04/21 - 05/01/21 | — | | | — | | | — | | | 58,761,000 | |
05/02/21 - 05/29/21 | — | | | — | | | — | | | 58,761,000 | |
Total | — | | | $ | — | | | — | | | $ | 58,761,000 | |
| | | | | | | | | | | | | | | | | | | | | | | |
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.
(3) PursuantPrior to October 13, 2021, pursuant to a $70,000$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.
Our Senior Secured notes,Notes, as defined in Note 89 to the Consolidated Financial Statements included in Item 1 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
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101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline 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 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) (furnished herewith). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant 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: | June 23,December 17, 2021 | By: | /s/ Michael J. Happe | |
| | | Michael J. Happe | |
| | | Chief Executive Officer, President | |
| | | (Principal Executive Officer) | |
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Date: | June 23,December 17, 2021 | By: | /s/ Bryan L. Hughes | |
| | | Bryan L. Hughes | |
| | | Chief Financial Officer and Senior Vice President | |
| | | (Principal Financial and Accounting Officer) | |