UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 28, 202227, 2023
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________
Commission File Number: 001-06403
Logo jpeg.jpg
WINNEBAGO INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Minnesota42-0802678
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
13200 Pioneer TrailEden PrairieMinnesota55347
(Address of principal executive offices)(Zip Code)
952-829-8600
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.50 par value per shareWGONew 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 16, 2022,15, 2023, there were 31,753,99830,210,602 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 28, 202227, 2023

Table of Contents

2

Table of Contents
PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Winnebago Industries, Inc.
Consolidated Statements of Income and Comprehensive Income
(Unaudited)
Three Months EndedNine Months EndedThree Months EndedNine Months Ended
(in thousands, except per share data)May 28,
2022
May 29,
2021
May 28,
2022
May 29,
2021
(in millions, except per share data)(in millions, except per share data)May 27,
2023
May 28,
2022
May 27,
2023
May 28,
2022
Net revenuesNet revenues$1,458,138 $960,737 $3,778,609 $2,593,754 Net revenues$900.8 $1,458.1 $2,719.7 $3,778.6 
Cost of goods soldCost of goods sold1,185,174 791,125 3,059,656 2,130,556 Cost of goods sold749.4 1,185.1 2,261.1 3,059.6 
Gross profitGross profit272,964 169,612 718,953 463,198 Gross profit151.4 273.0 458.6 719.0 
Selling, general, and administrative expensesSelling, general, and administrative expenses88,231 63,586 234,896 165,001 Selling, general, and administrative expenses66.5 88.3 203.4 235.0 
AmortizationAmortization8,016 3,590 24,203 10,771 Amortization4.4 8.0 12.0 24.2 
Total operating expensesTotal operating expenses96,247 67,176 259,099 175,772 Total operating expenses70.9 96.3 215.4 259.2 
Operating incomeOperating income176,717 102,436 459,854 287,426 Operating income80.5 176.7 243.2 459.8 
Interest expense, netInterest expense, net10,511 10,229 31,078 30,222 Interest expense, net5.2 10.5 16.4 31.1 
Non-operating loss (income)11,658 (93)24,522 (310)
Non-operating lossNon-operating loss0.2 11.7 2.3 24.5 
Income before income taxesIncome before income taxes154,548 92,300 404,254 257,514 Income before income taxes75.1 154.5 224.5 404.2 
Provision for income taxesProvision for income taxes37,326 21,005 96,227 59,728 Provision for income taxes16.0 37.3 52.4 96.2 
Net incomeNet income$117,222 $71,295 $308,027 $197,786 Net income$59.1 $117.2 $172.1 $308.0 
Earnings per common share:Earnings per common share:Earnings per common share:
BasicBasic$3.62 $2.12 $9.35 $5.89 Basic$1.95 $3.62 $5.66 $9.35 
DilutedDiluted$3.57 $2.05 $9.18 $5.83 Diluted$1.71 $3.57 $4.95 $9.18 
Weighted average common shares outstanding:Weighted average common shares outstanding:Weighted average common shares outstanding:
BasicBasic32,389 33,552 32,936 33,565 Basic30.4 32.4 30.4 32.9 
DilutedDiluted32,855 34,772 33,559 33,943 Diluted35.4 32.9 35.5 33.6 
Net income$117,222 $71,295 $308,027 $197,786 
Other comprehensive income:
Amortization of net actuarial loss (net of tax of $3, $3, $9, and $9)10 28 26 
Comprehensive income$117,232 $71,304 $308,055 $197,812 

The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.
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Table of Contents

Winnebago Industries, Inc.
Consolidated Balance Sheets
(in thousands, except per share data)May 28,
2022
August 28,
2021
(in millions, except per share data)(in millions, except per share data)May 27,
2023
August 27,
2022
(Unaudited)(Unaudited)
AssetsAssetsAssets
Current assetsCurrent assetsCurrent assets
Cash and cash equivalentsCash and cash equivalents$238,073 $434,563 Cash and cash equivalents$225.9 $282.2 
Receivables, less allowance for doubtful accounts ($370 and $307, respectively)373,639 253,808 
Receivables, less allowance for doubtful accounts ($0.7 and $0.6, respectively)Receivables, less allowance for doubtful accounts ($0.7 and $0.6, respectively)205.3 254.1 
Inventories, netInventories, net486,100 341,473 Inventories, net518.0 525.8 
Prepaid expenses and other current assetsPrepaid expenses and other current assets20,806 29,069 Prepaid expenses and other current assets22.6 31.7 
Total current assetsTotal current assets1,118,618 1,058,913 Total current assets971.8 1,093.8 
Property, plant, and equipment, netProperty, plant, and equipment, net256,335 191,427 Property, plant, and equipment, net320.0 276.2 
GoodwillGoodwill484,176 348,058 Goodwill514.5 484.2 
Other intangible assets, netOther intangible assets, net477,603 390,407 Other intangible assets, net507.7 472.4 
Investment in life insuranceInvestment in life insurance29,505 28,821 Investment in life insurance29.1 28.6 
Operating lease assetsOperating lease assets42,327 28,379 Operating lease assets42.1 41.1 
Deferred income tax assets, netDeferred income tax assets, net8.3 — 
Other long-term assetsOther long-term assets18,570 16,562 Other long-term assets19.3 20.4 
Total assetsTotal assets$2,427,134 $2,062,567 Total assets$2,412.8 $2,416.7 
Liabilities and Stockholders' EquityLiabilities and Stockholders' EquityLiabilities and Stockholders' Equity
Current liabilitiesCurrent liabilitiesCurrent liabilities
Accounts payableAccounts payable$229,727 $180,030 Accounts payable$133.0 $217.5 
Income taxes payableIncome taxes payable10,754 8,043 Income taxes payable1.3 0.7 
Accrued expenses:Accrued expenses:Accrued expenses:
Accrued compensationAccrued compensation63,966 67,541 Accrued compensation38.3 71.6 
Product warrantiesProduct warranties127,263 91,222 Product warranties106.5 127.9 
Self-insuranceSelf-insurance20,615 19,296 Self-insurance22.9 21.4 
PromotionalPromotional16,191 10,040 Promotional28.0 21.5 
Accrued interest and dividendsAccrued interest and dividends14,017 10,720 Accrued interest and dividends16.6 13.0 
Other current liabilitiesOther current liabilities53,419 20,384 Other current liabilities50.5 48.5 
Total current liabilitiesTotal current liabilities535,952 407,276 Total current liabilities397.1 522.1 
Long-term debt, netLong-term debt, net541,453 528,559 Long-term debt, net591.7 545.9 
Deferred income taxes8,445 13,429 
Deferred income tax liabilities, netDeferred income tax liabilities, net— 6.1 
Unrecognized tax benefitsUnrecognized tax benefits6,346 6,483 Unrecognized tax benefits6.5 5.7 
Long-term operating lease liabilitiesLong-term operating lease liabilities41,195 26,745 Long-term operating lease liabilities41.7 40.4 
Deferred compensation benefits, net of current portionDeferred compensation benefits, net of current portion8,550 9,550 Deferred compensation benefits, net of current portion7.9 8.1 
Other long-term liabilitiesOther long-term liabilities21,302 13,582 Other long-term liabilities6.6 25.4 
Total liabilitiesTotal liabilities1,163,243 1,005,624 Total liabilities1,051.5 1,153.7 
Contingent liabilities and commitments (Note 11)Contingent liabilities and commitments (Note 11)00Contingent liabilities and commitments (Note 11)
Shareholders' equity:Shareholders' equity:Shareholders' equity:
Preferred stock, par value $0.01: 10,000 shares authorized; Zero shares issued and outstanding— — 
Common stock, par value $0.50: 120,000 shares authorized; 51,776 shares issued and outstanding25,888 25,888 
Preferred stock, par value $0.01: 10.0 shares authorized; Zero shares issued and outstandingPreferred stock, par value $0.01: 10.0 shares authorized; Zero shares issued and outstanding— — 
Common stock, par value $0.50: 120.0 shares authorized; 51.8 shares issuedCommon stock, par value $0.50: 120.0 shares authorized; 51.8 shares issued25.9 25.9 
Additional paid-in capitalAdditional paid-in capital252,257 218,490 Additional paid-in capital195.5 256.3 
Retained earningsRetained earnings1,463,254 1,172,996 Retained earnings1,713.4 1,537.5 
Accumulated other comprehensive lossAccumulated other comprehensive loss(463)(491)Accumulated other comprehensive loss(0.4)(0.5)
Treasury stock, at cost: 20,067 and 18,713 shares, respectively(477,045)(359,940)
Treasury stock, at cost: 21.6 and 21.5 shares, respectivelyTreasury stock, at cost: 21.6 and 21.5 shares, respectively(573.1)(556.2)
Total shareholders' equityTotal shareholders' equity1,263,891 1,056,943 Total shareholders' equity1,361.3 1,263.0 
Total liabilities and shareholders' equityTotal liabilities and shareholders' equity$2,427,134 $2,062,567 Total liabilities and shareholders' equity$2,412.8 $2,416.7 
The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.
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Table of Contents
Winnebago Industries, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months EndedNine Months Ended
(in thousands)May 28,
2022
May 29,
2021
(in millions)(in millions)May 27,
2023
May 28,
2022
Operating activitiesOperating activitiesOperating activities
Net incomeNet income$308,027 $197,786 Net income$172.1 $308.0 
Adjustments to reconcile net income to net cash provided by operating activitiesAdjustments to reconcile net income to net cash provided by operating activitiesAdjustments to reconcile net income to net cash provided by operating activities
DepreciationDepreciation17,031 13,476 Depreciation20.9 17.0 
AmortizationAmortization24,203 10,771 Amortization12.0 24.2 
Non-cash interest expense, netNon-cash interest expense, net11,225 10,372 Non-cash interest expense, net— 11.2 
Amortization of debt issuance costsAmortization of debt issuance costs1,849 1,852 Amortization of debt issuance costs2.3 1.8 
Last in, first-out expense5,878 2,321 
Last in, first-out ("LIFO") expenseLast in, first-out ("LIFO") expense2.0 5.9 
Stock-based compensationStock-based compensation12,518 11,719 Stock-based compensation8.2 12.5 
Deferred income taxesDeferred income taxes(4,311)(765)Deferred income taxes(3.6)(4.3)
Contingent consideration fair value adjustmentContingent consideration fair value adjustment24,717 — Contingent consideration fair value adjustment2.0 24.7 
Payments of earnout liability above acquisition-date fair valuePayments of earnout liability above acquisition-date fair value(13.3)— 
Other, netOther, net2,261 (4,412)Other, net0.3 2.3 
Change in operating assets and liabilities, net of assets and liabilities acquiredChange in operating assets and liabilities, net of assets and liabilities acquiredChange in operating assets and liabilities, net of assets and liabilities acquired
Receivables, netReceivables, net(117,391)(7,384)Receivables, net49.8 (117.4)
Inventories, netInventories, net(129,056)(152,398)Inventories, net15.8 (129.1)
Prepaid expenses and other assetsPrepaid expenses and other assets10,212 1,010 Prepaid expenses and other assets12.6 10.3 
Accounts payableAccounts payable41,610 40,817 Accounts payable(81.3)41.6 
Income taxes and unrecognized tax benefitsIncome taxes and unrecognized tax benefits4,023 (12,771)Income taxes and unrecognized tax benefits3.2 4.0 
Accrued expenses and other liabilitiesAccrued expenses and other liabilities32,449 35,560 Accrued expenses and other liabilities(46.6)32.5 
Net cash provided by operating activitiesNet cash provided by operating activities245,245 147,954 Net cash provided by operating activities156.4 245.2 
Investing activitiesInvesting activitiesInvesting activities
Purchases of property, plant, and equipmentPurchases of property, plant, and equipment(63,228)(23,596)Purchases of property, plant, and equipment(68.0)(63.2)
Acquisition of business, net of cash acquiredAcquisition of business, net of cash acquired(228,159)— Acquisition of business, net of cash acquired(87.5)(228.2)
Proceeds from the sale of property, plant, and equipmentProceeds from the sale of property, plant, and equipment113 12,450 Proceeds from the sale of property, plant, and equipment0.3 0.1 
Other, netOther, net(60)(224)Other, net0.8 — 
Net cash used in investing activitiesNet cash used in investing activities(291,334)(11,370)Net cash used in investing activities(154.4)(291.3)
Financing activitiesFinancing activitiesFinancing activities
Borrowings on long-term debtBorrowings on long-term debt3,422,539 2,629,932 Borrowings on long-term debt2,840.2 3,422.5 
Repayments on long-term debtRepayments on long-term debt(3,422,539)(2,629,932)Repayments on long-term debt(2,840.2)(3,422.5)
Payments of cash dividendsPayments of cash dividends(18,052)(12,136)Payments of cash dividends(25.1)(18.1)
Payments for repurchases of common stockPayments for repurchases of common stock(134,243)(12,109)Payments for repurchases of common stock(24.9)(134.2)
Payments of debt issuance costs— (224)
Payments of earnout liability up to acquisition-date fair valuePayments of earnout liability up to acquisition-date fair value(8.7)— 
Other, netOther, net1,894 1,151 Other, net0.4 1.9 
Net cash used in financing activitiesNet cash used in financing activities(150,401)(23,318)Net cash used in financing activities(58.3)(150.4)
Net (decrease)/increase in cash and cash equivalents(196,490)113,266 
Net decrease in cash and cash equivalentsNet decrease in cash and cash equivalents(56.3)(196.5)
Cash and cash equivalents at beginning of periodCash and cash equivalents at beginning of period434,563 292,575 Cash and cash equivalents at beginning of period282.2 434.6 
Cash and cash equivalents at end of periodCash and cash equivalents at end of period$238,073 $405,841 Cash and cash equivalents at end of period$225.9 $238.1 
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Table of Contents
Supplemental DisclosuresSupplemental DisclosuresSupplemental Disclosures
Income taxes paid, netIncome taxes paid, net$97,717 $71,090 Income taxes paid, net$54.9 $97.7 
Interest paidInterest paid14,271 14,618 Interest paid14.6 14.3 
Non-cash investing and financing activitiesNon-cash investing and financing activitiesNon-cash investing and financing activities
Issuance of common stock for acquisition of businessIssuance of common stock for acquisition of business$22,000 $— Issuance of common stock for acquisition of business$— $22.0 
Issuance of common stock for settlement of earnout liabilityIssuance of common stock for settlement of earnout liability13,168 — Issuance of common stock for settlement of earnout liability— 13.2 
Capital expenditures in accounts payableCapital expenditures in accounts payable4,668 121 Capital expenditures in accounts payable2.8 4.7 
Dividends declared not yet paidDividends declared not yet paid6,214 4,273 Dividends declared not yet paid8.9 6.2 
Increase (decrease) in lease assets in exchange for lease liabilities:
Increase in lease assets in exchange for lease liabilities:Increase in lease assets in exchange for lease liabilities:
Operating leasesOperating leases17,236 1,633 Operating leases3.9 17.2 
Finance leasesFinance leases2,528 (10)Finance leases0.9 2.5 
The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.

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Table of Contents

Winnebago Industries, Inc.
Consolidated Statements of Changes in Shareholders' Equity
(Unaudited)
Three Months Ended May 28, 2022Three Months Ended May 27, 2023
(in thousands,
except per share data)
Common SharesAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Shareholders' Equity
NumberAmountNumberAmount
Balance at February 26, 202251,776 $25,888 $238,159 $1,357,812 $(473)(19,045)$(412,399)$1,208,987 
(in millions, except per share data)(in millions, except per share data)Common SharesAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Shareholders' Equity
NumberAmountNumberAmount
Balances at February 25, 2023Balances at February 25, 202351.8 $25.9 $193.9 $1,671.0 $(0.4)(21.2)$(553.1)$1,337.3 
Stock-based compensationStock-based compensation— — 1.7 — — — — 1.7 
Issuance of stock for employee benefit and stock-based awards, netIssuance of stock for employee benefit and stock-based awards, net— — (0.1)— — — — (0.1)
Repurchase of common stockRepurchase of common stock— — — — — (0.4)(20.0)(20.0)
Common stock dividends; $0.54 per shareCommon stock dividends; $0.54 per share— — — (16.7)— — — (16.7)
Net incomeNet income— — — 59.1 — — — 59.1 
Balances at May 27, 2023Balances at May 27, 202351.8 $25.9 $195.5 $1,713.4 $(0.4)(21.6)$(573.1)$1,361.3 
Three Months Ended May 28, 2022
(in millions, except per share data)(in millions, except per share data)Common SharesAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Shareholders' Equity
NumberAmountNumberAmount
Balances at February 26, 2022Balances at February 26, 202251.8 $25.9 $238.2 $1,357.8 $(0.5)(19.0)$(412.4)$1,209.0 
Stock-based compensationStock-based compensation— — 5,586 — — 41 5,627 Stock-based compensation— — 5.6 — — — — 5.6 
Issuance of stock for settlement of earnout liabilityIssuance of stock for settlement of earnout liability— — 7,830 — — 244 5,338 13,168 Issuance of stock for settlement of earnout liability— — 7.8 — — 0.2 5.4 13.2 
Repurchase of common stockRepurchase of common stock— — — — — (1,268)(70,025)(70,025)Repurchase of common stock— — — — — (1.3)(70.0)(70.0)
Common stock dividends; $0.36 per shareCommon stock dividends; $0.36 per share— — — (11,797)— — — (11,797)Common stock dividends; $0.36 per share— — — (11.8)— — — (11.8)
OtherOther— — 682 17 — — — 699 Other— — 0.7 — — — — 0.7 
Total comprehensive income— — — — 10 — — 10 
Net incomeNet income— — — 117,222 — — — 117,222 Net income— — — 117.2 — — — 117.2 
Balances at May 28, 2022Balances at May 28, 202251,776 $25,888 $252,257 $1,463,254 $(463)(20,067)$(477,045)$1,263,891 Balances at May 28, 202251.8 $25.9 $252.3 $1,463.2 $(0.5)(20.1)$(477.0)$1,263.9 
Three Months Ended May 29, 2021Nine Months Ended May 27, 2023
(in thousands,
except per share data)
Common SharesAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Shareholders' Equity
NumberAmountNumberAmount
Balance at February 27, 202151,776 $25,888 $209,727 $1,032,020 $(509)(18,225)$(324,762)$942,364 
(in millions, except per share data)(in millions, except per share data)Common SharesAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Shareholders' Equity
NumberAmountNumberAmount
Balances at August 27, 2022Balances at August 27, 202251.8 $25.9 $256.3 $1,537.5 $(0.5)(21.5)$(556.2)$1,263.0 
Adoption of Accounting Standards Update (ASU) 2020-06Adoption of Accounting Standards Update (ASU) 2020-06— — (62.0)29.0 — — — (33.0)
Stock-based compensationStock-based compensation— — 4,733 — — — 4,738 Stock-based compensation— — 8.2 — — — — 8.2 
Common stock dividends; $0.24 per share— — — (8,148)— — — (8,148)
Issuance of stock for employee benefit and stock-based awards, netIssuance of stock for employee benefit and stock-based awards, net— — (7.0)— — 0.4 8.0 1.0 
Repurchase of common stockRepurchase of common stock— — — — — (0.5)(24.9)(24.9)
Common stock dividends: $0.81 per shareCommon stock dividends: $0.81 per share— — — (25.2)— — — (25.2)
Total comprehensive incomeTotal comprehensive income— — — — — — Total comprehensive income— — — — 0.1 — — 0.1 
Net incomeNet income— — — 71,295 — — — 71,295 Net income— — — 172.1 — — — 172.1 
Balances at May 29, 202151,776 $25,888 $214,460 $1,095,167 $(500)(18,225)$(324,757)$1,010,258 
Balances at May 27, 2023Balances at May 27, 202351.8 $25.9 $195.5 $1,713.4 $(0.4)(21.6)$(573.1)$1,361.3 
Nine Months Ended May 28, 2022
(in thousands,
except per share data)
Common SharesAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Shareholders' Equity
NumberAmountNumberAmount
Balances at August 28, 202151,776 $25,888 $218,490 $1,172,996 $(491)(18,713)$(359,940)$1,056,943 
Stock-based compensation— — 12,445 — — 73 12,518 
Issuance of stock for employee benefit and stock-based awards, net— — (1,899)— — 225 4,436 2,537 
Issuance of stock for acquisition— — 14,709 — — 379 7,291 22,000 
Issuance of stock for settlement of earnout liability— — 7,830 — — 244 5,338 13,168 
Repurchase of common stock— — — — — (2,205)(134,243)(134,243)
Common stock dividends; $0.54 per share— — — (17,857)— — — (17,857)
Other— — 682 88 — — — 770 
Total comprehensive income— — — — 28 — — 28 
Net income— — — 308,027 — — — 308,027 
Balances at May 28, 202251,776 $25,888 $252,257 $1,463,254 $(463)(20,067)$(477,045)$1,263,891 
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Table of Contents
Nine Months Ended May 29, 2021
(in thousands,
except per share data)
Common SharesAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Shareholders' Equity
NumberAmountNumberAmount
Balances at August 29, 202051,776 $25,888 $203,791 $913,610 $(526)(18,133)$(315,297)$827,466 
Nine Months Ended May 28, 2022
(in millions, except per share data)(in millions, except per share data)Common SharesAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Treasury StockTotal Shareholders' Equity
NumberAmountNumberAmount
Balances at August 28, 2021Balances at August 28, 202151.8 $25.9 $218.5 $1,173.0 $(0.5)(18.7)$(360.0)$1,056.9 
Stock-based compensationStock-based compensation— — 11,701 — — 18 11,719 Stock-based compensation— — 12.5 — — — — 12.5 
Issuance of stock for employee benefit and stock-based awards, netIssuance of stock for employee benefit and stock-based awards, net— — (1,032)— — 149 2,631 1,599 Issuance of stock for employee benefit and stock-based awards, net— — (1.9)— — 0.2 4.5 2.6 
Issuance of stock for acquisitionIssuance of stock for acquisition— — 14.7 — — 0.4 7.3 22.0 
Issuance of stock for settlement of earnout liabilityIssuance of stock for settlement of earnout liability— — 7.8 — — 0.2 5.4 13.2 
Repurchase of common stockRepurchase of common stock— — — — — (242)(12,109)(12,109)Repurchase of common stock— — — — — (2.2)(134.2)(134.2)
Common stock dividends; $0.48 per share— — — (16,229)— — — (16,229)
Total comprehensive income— — — — 26 — — 26 
Common stock dividends; $0.54 per shareCommon stock dividends; $0.54 per share— — — (17.9)— — — (17.9)
OtherOther— — 0.7 0.1 — — — 0.8 
Net incomeNet income— — — 197,786 — — — 197,786 Net income— — — 308.0 — — — 308.0 
Balances at May 29, 202151,776 $25,888 $214,460 $1,095,167 $(500)(18,225)$(324,757)$1,010,258 
Balances at May 28, 2022Balances at May 28, 202251.8 $25.9 $252.3 $1,463.2 $(0.5)(20.1)$(477.0)$1,263.9 
The accompanying Notes to Consolidated Financial Statements are an integral part of these consolidated financial statements.
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Winnebago Industries, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
(All amounts in tables are in thousands,millions, except share and per share data, unless otherwise 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," "we," "our," and "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 our Annual Report on Form 10-K for the fiscal year ended August 28, 202127, 2022 filed with the SEC. Interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year ending August 26, 2023.

Change in Presentation
In the first quarter of Fiscal 2023, we changed our presentation in tables from thousands to millions, unless otherwise designated. As a result, certain rounding adjustments have been made to prior period disclosed amounts in order to conform to the current year presentation. In addition, certain prior period amounts may not recalculate due to rounding. These changes were not significant, and no other updates were made to previously reported financial information.

Comprehensive Income
Comprehensive income refers to the change in stockholders’ equity from transactions and other events and circumstances from non-owner sources. As of May 27, 2022.2023 and May 28, 2022, the difference between comprehensive income and net income was not material.

Subsequent Events
In preparing the accompanying unaudited consolidated financial statements, we have evaluated subsequent events for potential recognition and disclosure through the date of this filing noting no material subsequent events.

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. We took advantage of the employer payroll tax deferral offered by the CARES Act, which allowed us 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 paid in the first nine months of Fiscal 2022 was $8.0 million and the liability left to pay as of May 28, 2022 was $8.2 million, which will be paid in December 2022. We also took advantage of a tax credit granted to companies under the CARES Act who continued to pay their employees when operations were fully or partially suspended. The refundable tax credit available through the end of the third quarter of Fiscal 2020 reflected in cost of goods sold on the Consolidated Statements of Income and Comprehensive Income was approximately $4.0 million. The entire amount is expected to be received during calendar year 2022. As of May 28, 2022, $0.8 million remains outstanding within other current assets on the Consolidated Balance Sheets.

Recently Adopted Accounting Pronouncements
Accounting Standards Update ("ASU") Topic 740, Income Taxes:Simplifying the Accounting for Income Taxes, was adopted in the first quarter of Fiscal 2022. The new standard eliminates certain exceptions to Topic 740's general principles, improves consistent application and simplifies its application. We adopted the new guidance in the first quarter of Fiscal 2022, and there was not a material impact to our financial condition, results of operations or disclosures.

Recently Issued Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board ("FASB") issued 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 must be used 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 our Fiscal 2023. We will adoptadopted the new guidance in the first quarter of Fiscal 2023 and expectusing the new guidance willmodified retrospective approach, resulting in a decrease to additional paid-in capital of $62.0 million, an increase our netto long-term debt of $43.8 million, a decrease in the deferred income tax liability of $10.8 million, and decreasean increase to beginning retained earnings of $29.0 million. In addition, the adoption of the amended guidance reduced our total equity, as well as changenon-cash interest expense by $3.9 million (pre-tax) for the three months ended May 27, 2023 and $11.2 million (pre-tax) for the nine months ended May 27, 2023. The if-converted method will be used prospectively to calculate the impact of our reportedconvertible instruments on diluted EPS. Under the if-converted method, the 4.7 million shares underlying our convertible instruments are assumed to have been outstanding at the beginning of the reporting period, and any interest expense related to these instruments is excluded from the calculation of diluted EPS. Refer to Note 15 in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for more information on the change from the treasury stock method to the if-converted method.

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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. We will adopt this standard when LIBOR is discontinued and do not expect a material impact to our financial condition, results of operations or disclosures based on the current debt portfolio and capital structure.

Note 2. Business Combinations

Lithionics Battery, LLC

On April 28, 2023, we purchased 100% of the equity interests of Lithionics Battery, LLC and Lithionics LLC (collectively, "Lithionics"), a premier lithium-ion battery solutions provider to the recreational equipment and specialty vehicle markets. Refer to Note 7 in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for more information relating to the goodwill and other intangible assets acquired. Pro forma results of operations for this acquisition have not been presented as the impact on our consolidated financial statements was not material.

Total transaction costs related to the Lithionics acquisition of $3.1 million were expensed during the third quarter of Fiscal 2023. Transaction costs are included in selling, general and administrative expenses in the accompanying Consolidated Statements of Income.

Barletta Boat Company, LLC

On August 31, 2021, we purchased 100% of the equity 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 the Barletta and Chris-Craft operating segments.

We acquired Barletta for a purchase price of $286.3 million, including cash payments of $240.1 million, $25.0 million in common stock issued to the sellers (subject to a discount noted below), and contingent consideration from earnout provisions. The common stock fair value included in the purchase price reflects a 12% discount, due to the lack of marketability as these are unregistered shares that have a one-year lockup restriction, which reduced the value of the common stock to $22.0 million. The contingent consideration includes both a potential stock payout as well as a potential cash payment based on achievement of certain financial performance metrics overwithin the next few years.year. 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 as of August 31, 2021 was $24.2 million. TheAs of May 27, 2023 and August 27, 2022, the total fair value of the earnout aswas $19.8 million and $39.8 million, respectively. The portion of May 28, 2022the earnout liability that will be settled within a year was $35.1 million, of which $20.9 million is included in other current liabilities on the Consolidated Balance Sheets, and $14.2 million isthe remaining earnout liability was included in other long-term liabilities on the Consolidated Balance Sheets. As of May 27, 2023, the entire $19.8 million was included in other current liabilities on the Consolidated Balance Sheets. Comparatively, as of August 27, 2022, $21.3 million was included in other current liabilities and $18.5 million was included in other long-term liabilities on the Consolidated Balance Sheets. In the third quarter of Fiscal 2023, we paid $22.0 million to settle earnout obligations associated with the 2022 cash consideration earnout period. In the third quarter of Fiscal 2022, we issued 0.2 million shares of common stock in connection with the settlement of the 2021 earnout period obligation.

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 finalized the allocation of the purchase priceThis resulted in the third quarterrecognition of fiscal 2022.

The following table summarizes the fair values assigned to the Barletta netgoodwill of $136.1 million and other intangible assets acquired as of the date of acquisition:

(in thousands)August 31, 2021
Cash$11,903 
Other current assets24,564 
Property, plant, and equipment17,250 
Goodwill136,118 
Other intangible assets111,400 
Total assets acquired301,235 
Accounts payable7,181 
Product warranties4,656 
Other current liabilities3,146 
Total liabilities assumed14,983 
Total purchase price$286,252 

$111.4 million. 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 other 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 beis being amortized on a straight line basis over 12 years. The backlog, which was being amortized over 10 months, and 12 years, respectively.was fully amortized as of August 27, 2022. We finalized the allocation of the purchase price in the third quarter of Fiscal 2022.

Total transaction costs related to the Barletta acquisition were $3.1 million, of which $2.4 million were expensed during the first quarter of Fiscal 2022 and $0.7 million were expensed during the fourth quarter of Fiscal 2021.2022. Transaction costs arewere included in selling, general and administrative expenses in the accompanying Consolidated Statements of Income and Comprehensive Income.
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Pro forma results of operations for this acquisition have not been presented as they were immaterial to the reported results.

Note 3.    Business Segments

We have 7eight operating segments: 1) Grand Design towables, 2) Winnebago towables, 3) Winnebago motorhomes, 4) Newmar motorhomes, 5) Chris-Craft marine, 6) Barletta marine, and 7) Winnebago specialty vehicles.vehicles and 8) Lithionics. 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 acquisition
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Table of Barletta resulted in a newly created Marine reportable segment effective forContents
In the firstthird quarter of Fiscal 2022. The2023, we changed the name of our “Towable” reportable segment consists of Barlettato “Towable RV” and our existing Chris-Craft operating segment. Prior year amounts for Chris-Craft have been reclassified from Corporate / All Other category“Motorhome” reportable segment to “Motorhome RV”. These name changes had no impact on the Marine segment.composition of our segments, or previously reported results of operations, financial position, cash flows or segment results.

Our 3three reportable segments are: Towable RV (an aggregation of the Grand Design towables and the Winnebago towables operating segments); Motorhome RV (an aggregation of the Winnebago motorhomes and Newmar motorhomes operating segments); and Marine (an aggregation of the Chris CraftChris-Craft marine and Barletta marine operating segments). Towable RV is comprised of non-motorized RV products that are generally towed by another vehicle, along with other related manufactured products and services. Motorhome RV is comprised of products that include a motorizedmotorhome chassis, along with other related manufactured products and services. Marine is comprised of products that include boats, along with other related manufactured products and services.

The Corporate / All Other category includes the Winnebago specialty vehicles and Lithionics operating segmentsegments 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.

Our 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. Our CODM is responsible for allocating resources and assessing performance of the consolidated enterprise, reportable segments and between operating segments. Management of each operating segment has responsibility for operating decisions, allocating resources and assessing performance within their respective operating segment. The accounting policies of all reportable segments are the same as those described in Note 1 in 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, 2021.27, 2022.

We monitor and evaluate operating performance of our reportable segments based on Adjusted EBITDA. We believe disclosing Adjusted EBITDA is useful to securities analysts, investors and other interested parties when evaluating companies in our industries. EBITDA is defined as net income before interest expense, provision for income taxes, and depreciation and amortization expense. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation and amortization expense, and other pretax adjustments made in order to present comparable results period over period. 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 or loss.

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Financial information by reportable segment is as follows:
Three Months EndedNine Months EndedThree Months EndedNine Months Ended
(in thousands)May 28,
2022
May 29,
2021
May 28,
2022
May 29,
2021
(in millions)(in millions)May 27,
2023
May 28,
2022
May 27,
2023
May 28,
2022
Net RevenuesNet RevenuesNet Revenues
Towable$805,567 $555,749 $2,103,192 $1,449,934 
Motorhome516,345 385,257 1,355,389 1,090,221 
Towable RVTowable RV$384.1 $805.6 $1,073.9 $2,103.2 
Motorhome RVMotorhome RV374.4 516.3 1,242.4 1,355.4 
MarineMarine126,548 17,170 303,175 43,527 Marine129.0 126.5 373.3 303.2 
Corporate / All OtherCorporate / All Other9,678 2,561 16,853 10,072 Corporate / All Other13.3 9.7 30.1 16.8 
ConsolidatedConsolidated$1,458,138 $960,737 $3,778,609 $2,593,754 Consolidated$900.8 $1,458.1 $2,719.7 $3,778.6 
Adjusted EBITDAAdjusted EBITDAAdjusted EBITDA
Towable$117,767 $80,130 $330,417 $205,639 
Motorhome64,388 37,467 160,636 118,779 
Towable RVTowable RV$53.8 $117.8 $129.4 $330.4 
Motorhome RVMotorhome RV26.8 64.4 119.6 160.6 
MarineMarine19,813 1,624 43,336 3,502 Marine17.3 19.8 50.2 43.3 
Corporate / All OtherCorporate / All Other(10,247)(9,447)(24,707)(20,888)Corporate / All Other(1.5)(10.3)(17.4)(24.6)
ConsolidatedConsolidated$191,721 $109,774 $509,682 $307,032 Consolidated$96.4 $191.7 $281.8 $509.7 
Capital ExpendituresCapital ExpendituresCapital Expenditures
Towable$12,621 $4,639 $33,960 $11,490 
Motorhome570 2,976 16,196 10,247 
Towable RVTowable RV$3.4 $12.6 $23.9 $34.0 
Motorhome RVMotorhome RV8.9 0.6 23.7 16.2 
MarineMarine6,041 1,061 8,581 1,859 Marine4.4 6.0 17.0 8.6 
Corporate / All OtherCorporate / All Other570 — 4,491 — Corporate / All Other1.9 0.6 3.4 4.4 
ConsolidatedConsolidated$19,802 $8,676 $63,228 $23,596 Consolidated$18.6 $19.8 $68.0 $63.2 

(in thousands)May 28,
2022
August 28,
2021
(in millions)(in millions)May 27,
2023
August 27,
2022
AssetsAssetsAssets
Towable$913,892 $790,257 
Motorhome857,636 728,060 
Towable RVTowable RV$818.4 $874.9 
Motorhome RVMotorhome RV802.2 823.4 
MarineMarine404,137 102,901 Marine434.4 416.1 
Corporate / All OtherCorporate / All Other251,469 441,349 Corporate / All Other357.8 302.3 
ConsolidatedConsolidated$2,427,134 $2,062,567 Consolidated$2,412.8 $2,416.7 


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Reconciliation of net income to consolidated Adjusted EBITDA is as follows:
Three Months EndedNine Months EndedThree Months EndedNine Months Ended
(in thousands)May 28, 2022May 29, 2021May 28, 2022May 29, 2021
(in millions)(in millions)May 27, 2023May 28, 2022May 27, 2023May 28, 2022
Net incomeNet income$117,222 $71,295 $308,027 $197,786 Net income$59.1 $117.2 $172.1 $308.0 
Interest expense, netInterest expense, net10,511 10,229 31,078 30,222 Interest expense, net5.2 10.5 16.4 31.1 
Provision for income taxesProvision for income taxes37,326 21,005 96,227 59,728 Provision for income taxes16.0 37.3 52.4 96.2 
DepreciationDepreciation6,264 4,917 17,031 13,476 Depreciation7.6 6.3 20.9 17.0 
AmortizationAmortization8,016 3,590 24,203 10,771 Amortization4.4 8.0 12.0 24.2 
EBITDAEBITDA179,339 111,036 476,566 311,983 EBITDA92.3 179.3 273.8 476.5 
Acquisition-related costsAcquisition-related costs724 — 4,594 — Acquisition-related costs3.9 0.7 5.6 4.6 
Litigation reservesLitigation reserves— — 4,000 — Litigation reserves— — — 4.0 
Restructuring expenses— 19 — 112 
Gain on sale of property, plant and equipment— (1,188)— (4,753)
Contingent consideration fair value adjustmentContingent consideration fair value adjustment11,830 — 24,717 — Contingent consideration fair value adjustment— 11.8 2.0 24.7 
Non-operating income(172)(93)(195)(310)
Non-operating loss (income)Non-operating loss (income)0.2 (0.1)0.4 (0.1)
Adjusted EBITDAAdjusted EBITDA$191,721 $109,774 $509,682 $307,032 Adjusted EBITDA$96.4 $191.7 $281.8 $509.7 

Note 4.    Investments and Fair Value Measurements
In determining the fair value of financial assets and liabilities, we utilize market data or other assumptions that we believe market participants would use in pricing the asset or liability in the principal or most advantageous market and adjust for non-performance and/or other risks associated with us as well as counterparties, as appropriate. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date:

Level 1 — Unadjusted quoted prices which are available in active markets for identical assets or liabilities accessible at the measurement date.

Level 2Inputs 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 3Unobservable 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.

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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 atFair Value HierarchyFair Value atFair Value Hierarchy
(in thousands)May 28,
2022
Level 1Level 2Level 3
(in millions)(in millions)May 27,
2023
Level 1Level 2Level 3
Assets that fund deferred compensationAssets that fund deferred compensationAssets that fund deferred compensation
Domestic equity fundsDomestic equity funds$1,206 $1,206 $— $— Domestic equity funds$1.7 $1.7 $— $— 
International equity fundsInternational equity funds61 61 — — International equity funds0.1 0.1 — — 
Fixed income fundsFixed income funds183 183 — — Fixed income funds— — — — 
Total assets at fair valueTotal assets at fair value$1,450 $1,450 $— $— Total assets at fair value$1.8 $1.8 $— $— 
Contingent considerationContingent considerationContingent consideration
Earnout liability Earnout liability$35,147 $— $— $35,147  Earnout liability$19.8 $— $— $19.8 
Total liabilities at fair valueTotal liabilities at fair value$35,147 $— $— $35,147 Total liabilities at fair value$19.8 $— $— $19.8 
    
Fair Value atFair Value HierarchyFair Value atFair Value Hierarchy
(in thousands)August 28,
2021
Level 1Level 2Level 3
(in millions)(in millions)August 27,
2022
Level 1Level 2Level 3
Assets that fund deferred compensationAssets that fund deferred compensationAssets that fund deferred compensation
Domestic equity fundsDomestic equity funds$940 $940 $— $— Domestic equity funds$1.2 $1.2 $— $— 
International equity fundsInternational equity funds41 41 — — International equity funds0.1 0.1 — — 
Fixed income fundsFixed income funds46 46 — — Fixed income funds0.1 0.1 — — 
Total assets at fair valueTotal assets at fair value$1,027 $1,027 $— $— Total assets at fair value$1.4 $1.4 $— $— 
Contingent considerationContingent consideration
Earnout liability Earnout liability$39.8 $— $— $39.8 
Total liabilities at fair valueTotal liabilities at fair value$39.8 $— $— $39.8 

Assets that Fund Deferred Compensation
Our 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 11 ofin 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, 202127, 2022 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 current 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 gross profit results and discounted at a risk-free rate. The contingent consideration is classified as Level 3. Actual 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.

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The following table provides a reconciliation of the beginning and ending balances of the contingent consideration:

Three Months EndedNine Months EndedThree Months EndedNine Months Ended
(in thousands)May 28,
2022
May 29,
2021
May 28,
2022
May 29,
2021
(in millions)(in millions)May 27,
2023
May 28,
2022
May 27,
2023
May 28,
2022
Beginning fair value - contingent considerationBeginning fair value - contingent consideration$37,077 $— $— $— Beginning fair value - contingent consideration$41.8 $37.1 $39.8 $— 
AdditionsAdditions— — 24,190 — Additions— — — 24.2 
Fair value adjustmentsFair value adjustments11,830 — 24,717 — Fair value adjustments— 11.8 2.0 24.7 
SettlementsSettlements(13,168)— (13,168)— Settlements(22.0)(13.2)(22.0)(13.2)
OtherOther$(592)$— $(592)$— Other— (0.6)— (0.6)
Ending fair value - contingent considerationEnding fair value - contingent consideration$35,147 $— $35,147 $— Ending fair value - contingent consideration$19.8 $35.1 $19.8 $35.1 

The fair value of the earnout liability that will be settled within a year is included in other current liabilities on the Consolidated Balance Sheets. The remaining earnout liability is included in other long-term liabilities on the Consolidated Balance Sheets. Refer to Note 2 in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for more information on the classification of earnout liabilities on the Consolidated Balance Sheets.

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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, we will evaluate the non-financial asset for impairment. If an impairment has occurred, the asset will be written down to its current estimated fair value. No impairments were recorded for non-financial assets in the three or nine months ended May 28, 202227, 2023 or May 29, 2021.28, 2022.

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 9 in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for the fair value of our long-term debt.

Note 5.    Inventories

Inventories consist of the following:
(in thousands)May 28,
2022
August 28,
2021
(in millions)(in millions)May 27,
2023
August 27,
2022
Finished goodsFinished goods$18,449 $12,243 Finished goods$77.8 $59.3 
Work-in-processWork-in-process202,733 184,611 Work-in-process152.9 198.9 
Raw materialsRaw materials309,760 183,583 Raw materials336.7 315.0 
TotalTotal530,942 380,437 Total567.4 573.2 
Less: Excess of FIFO over LIFO costLess: Excess of FIFO over LIFO cost44,842 38,964 Less: Excess of FIFO over LIFO cost49.4 47.4 
Inventories, netInventories, net$486,100 $341,473 Inventories, net$518.0 $525.8 

Inventory valuation methods consist of the following:
(in thousands)May 28,
2022
August 28,
2021
(in millions)(in millions)May 27,
2023
August 27,
2022
LIFO basisLIFO basis$216,820 $139,544 LIFO basis$239.1 $212.3 
First-in, first-out basis314,122 240,893 
First-in, first-out ("FIFO") basisFirst-in, first-out ("FIFO") basis328.3 360.9 
TotalTotal$530,942 $380,437 Total$567.4 $573.2 

The above inventory value, before reduction for the LIFO reserve, approximates replacement cost at the respective dates.

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Note 6.    Property, Plant, and Equipment
Property, plant, and equipment is stated at cost, net of accumulated depreciation, and consists of the following:
(in thousands)May 28,
2022
August 28,
2021
(in millions)(in millions)May 27,
2023
August 27,
2022
LandLand$10,697 $9,111 Land$14.6 $14.6 
Buildings and building improvementsBuildings and building improvements169,781 147,629 Buildings and building improvements232.1 171.0 
Machinery and equipmentMachinery and equipment130,601 121,911 Machinery and equipment156.3 142.6 
SoftwareSoftware40,747 36,815 Software49.8 43.8 
TransportationTransportation6,563 5,335 Transportation7.1 6.5 
Construction in progressConstruction in progress72,023 31,137 Construction in progress58.6 76.8 
Property, plant, and equipment, grossProperty, plant, and equipment, gross430,412 351,938 Property, plant, and equipment, gross518.5 455.3 
Less: Accumulated depreciationLess: Accumulated depreciation174,077 160,511 Less: Accumulated depreciation198.5 179.1 
Property, plant, and equipment, netProperty, plant, and equipment, net$256,335 $191,427 Property, plant, and equipment, net$320.0 $276.2 

Depreciation expense was $6.3$7.6 million and $4.9$6.3 million for the three months ended May 27, 2023 and May 28, 2022, and May 29, 2021, respectively; and $17.0$20.9 million and $13.5$17.0 million for the nine months ended May 28, 202227, 2023 and May 29, 2021,28, 2022, respectively.

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Note 7.    Goodwill and Intangible Assets

The changes in the carrying amount of goodwill by reportable segment, with no accumulated impairment losses, for the nine months ended May 28, 202227, 2023 and May 29, 202128, 2022 are as follows:
(in thousands)TowableMotorhomeMarineTotal
Balances at August 29, 2020 and May 29, 2021(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 May 28, 2022$244,684 $73,127 $166,365 $484,176 
(in millions)Towable
RV
Motorhome
RV
MarineCorporate / All OtherTotal
Balances at August 28, 2021$244.7 $73.1 $30.3 $— $348.1 
Acquisition of Barletta(1)
— — 136.1 — 136.1 
Balances at May 28, 2022$244.7 $73.1 $166.4 $— $484.2 
Balances at August 27, 2022$244.7 $73.1 $166.4 $— $484.2 
Acquisition of Lithionics(2)
— — — 30.3 30.3 
Balances at May 27, 2023$244.7 $73.1 $166.4 $30.3 $514.5 
(1)There was no activity in the nine months ended May 29, 2021.
(2) The change in marine activity is related to the acquisition of Barletta that occurred on August 31, 2021. See Note 2 in the Notes to the Consolidated Financial Statements included in Item 1 of Part I of this quarterly reportQuarterly Report on Form 10-Q.
(2) The change in corporate / all other activity is related to the acquisition of Lithionics that occurred on April 28, 2023. See Note 2 in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

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Other intangible assets, net of accumulated amortization, consist of the following:
May 28, 2022May 27, 2023
(in thousands)Gross Carrying AmountAccumulated AmortizationNet Carrying Value
(in millions)(in millions)Gross Carrying AmountAccumulated AmortizationNet Carrying Value
Trade namesTrade names$352,250 $— $352,250 Trade names$356.4 $— $356.4 
Dealer networks179,981 $56,801 123,180 
Dealer networks/customer relationshipsDealer networks/customer relationships183.6 71.6 112.0 
BacklogBacklog42,327 40,927 1,400 Backlog43.6 42.4 1.2 
Developed technologyDeveloped technology38.3 0.5 37.8 
Non-compete agreementsNon-compete agreements6,647 5,874 773 Non-compete agreements6.6 6.3 0.3 
Other intangible assetsOther intangible assets$581,205 $103,602 $477,603 Other intangible assets$628.5 $120.8 $507.7 
August 28, 2021August 27, 2022
(in thousands)Gross Carrying AmountAccumulated AmortizationNet Carrying Value
(in millions)(in millions)Gross Carrying AmountAccumulated AmortizationNet Carrying Value
Trade namesTrade names$275,250 $— $275,250 Trade names$352.3 $— $352.3 
Dealer networks159,581 45,652 113,929 
Dealer networks/customer relationshipsDealer networks/customer relationships180.0 60.5 119.5 
BacklogBacklog28,327 28,327 — Backlog42.3 42.3 — 
Non-compete agreementsNon-compete agreements6,647 5,419 1,228 Non-compete agreements6.6 6.0 0.6 
Other intangible assetsOther intangible assets$469,805 $79,398 $390,407 Other intangible assets$581.2 $108.8 $472.4 

The weighted average remaining amortization period for intangible assets as of May 28, 202227, 2023 was approximatelapproximately seven yearsy 9 years..

Estimated future amortization expense related to finite-lived intangible assets is as follows:
(in thousands)millions)AmountAmortization
Remainder of Fiscal 20222023$5,216 
Fiscal 202315,2265.6 
Fiscal 202415,12422.5 
Fiscal 202514,91922.1 
Fiscal 202614,86521.7 
Fiscal 202714,86521.7 
Fiscal 202821.4 
Thereafter45,13840.3 
Total amortization expense remaining$125,353155.3 

Note 8.    Product Warranties

We provide certain service and warranty on our products. From time to time, we also voluntarily incur costs for certain warranty-type expenses occurring after the normal warranty period expires to help protect the reputation of our products and maintain the goodwill of our customers. Estimated costs related to product warranty are accrued at the time of sale and are based upon
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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, we also occasionally incur costs as a result of additional service actions not covered by warranties, including product recalls and customer satisfaction actions. Although we estimate and reserve 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.

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Changes in the product warranty liability are as follows:
Three Months EndedNine Months EndedThree Months EndedNine Months Ended
(in thousands)May 28,
2022
May 29,
2021
May 28,
2022
May 29,
2021
(in millions)(in millions)May 27,
2023
May 28,
2022
May 27,
2023
May 28,
2022
Balance at beginning of periodBalance at beginning of period$113,818 $76,040 $91,222 $64,031 Balance at beginning of period$113.7 $113.8 $127.9 $91.2 
Business acquisition(1)
Business acquisition(1)
— — 4,656 — 
Business acquisition(1)
1.4 — 1.4 4.7 
ProvisionProvision37,052 23,056 94,274 64,986 Provision17.6 37.1 51.7 94.3 
Claims paidClaims paid(23,607)(17,034)(62,889)(46,955)Claims paid(26.2)(23.6)(74.5)(62.9)
Balance at end of periodBalance at end of period$127,263 $82,062 $127,263 $82,062 Balance at end of period$106.5 $127.3 $106.5 $127.3 
(1)    RelatesRefer to Note 2 in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for more information on the acquisition of Lithionics on April 28, 2023 and the acquisition of Barletta on August 31, 2021. See Note 2 to the Consolidated Financial Statements in Item 1 of Part I of this quarterly report on Form 10-Q for additional acquisition information.

Note 9.    Long-Term Debt

Long-term debt consists of the following:
(in thousands)May 28,
2022
August 28,
2021
(in millions)(in millions)May 27,
2023
August 27,
2022
ABL Credit FacilityABL Credit Facility$— $— ABL Credit Facility$— $— 
Senior Secured NotesSenior Secured Notes300,000 300,000 Senior Secured Notes300.0 300.0 
Convertible NotesConvertible Notes300,000 300,000 Convertible Notes300.0 300.0 
Long-term debt, grossLong-term debt, gross600,000 600,000 Long-term debt, gross600.0 600.0 
Convertible Notes unamortized interest discount(1)Convertible Notes unamortized interest discount(1)(49,141)(60,366)Convertible Notes unamortized interest discount(1)— (45.3)
Debt issuance costs, netDebt issuance costs, net(9,406)(11,075)Debt issuance costs, net(8.3)(8.8)
Long-term debt, netLong-term debt, net$541,453 $528,559 Long-term debt, net$591.7 $545.9 
(1)    In connection with the adoption of ASU 2020-06, the unamortized interest discount was derecognized in the first quarter of Fiscal 2023. Refer to Note 1 in the Notes to Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q for additional information.

Credit Agreements
On July 15, 2022, we amended and restated our existing asset-backed revolving credit agreement ("ABL Credit Facility") to, among other things, increase the commitments available from $192.5 million to $350.0 million, and extend the maturity date from October 22, 2024 to July 15, 2027 (subject to certain factors which may accelerate the maturity date). The $350.0 million credit facility is on a revolving basis, subject to availability under a borrowing base consisting of eligible accounts receivable and eligible inventory. The ABL Credit Facility is available for issuance of letters of credit to a specified limit of $35.0 million. We pay a commitment fee of 0.25% based on the average daily amount of the facility available, but unused during the most recent quarter. We can elect to base the interest rate on various rates plus specific spreads depending on the borrowing amount outstanding. If drawn, interest on ABL Credit Facility borrowings is at a floating rate based upon our election, either term SOFR or REVSOFR30 (as defined in the ABL Credit Facility agreement), plus, in each case, a credit spread adjustment of 0.10%, as well as an applicable spread between 1.25% and 1.75%, depending on the usage of the facility during the most recent quarter. Based on current usage, we would pay an applicable spread of 1.25%. In connection with the amendment, we capitalized $1.2 million of issuance costs that will be amortized over the five-year term of the ABL Credit Facility.

On July 8, 2020, we closed our private offering (the “Senior Secured Notes Offering”) of $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.

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, we capitalized $7.5 million in debt issuance costs that will be amortized over the eight-year term of the agreement.

On November 8, 2016, we 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. Under the ABL, we have a $192.5 million credit facility that matures on October 22, 2024 (subject to certain factors which may accelerate the maturity date) on a revolving basis, subject to availability under a borrowing base consisting of eligible accounts receivable and eligible inventory. The ABL is available for issuance of letters of credit to a specified limit of $19.3 million. We pay a commitment fee of 0.25% on the average daily amount of the facility available, but unused. We can elect to base the interest rate on various rates plus specific spreads depending on the amount of borrowings outstanding. If drawn, we would pay interest on ABL borrowings at a floating rate based upon a spread between 1.25% and 1.75% plus LIBOR, depending on the usage of the facility during the most recent quarter. Based on current usage, we would pay LIBOR plus 1.25%.

Refer to Note 9 ofin 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, 202127, 2022 for additional information regarding these credit agreements.

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Convertible Notes
On November 1, 2019, we issued $300.0 million in aggregate principal amount of 1.5% unsecured convertible senior notes due 2025 (“Convertible Notes”). The net proceeds from the issuance of the Convertible Notes, after deducting the initial purchasers' transaction fees and offering expense payable by us, were approximately $290.2 million. The Convertible Notes bear interest at the annual rate of 1.5%, payable on April 1 and October 1 of each year, beginning on April 1, 2020, and will mature on April 1, 2025, unless earlier converted or repurchased by us.

The Convertible Notes will be convertible into cash, shares of our common stock or a combination thereof, at theour election, of us, at an initial conversion rate of 15.6906 shares of common stock per $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.

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 calendar 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 5five consecutive business day period after any 5five consecutive trading day period (the "measurement period") in which the trading price per $1 thousand 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 for the Convertible Notes Indenture.Notes.

We may not redeem the Convertible Notes at our option prior to the maturity date, and no sinking fund is provided for the Convertible Notes.

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 our current intent to settle all conversions of the Convertible Notes in cash. Our ability to cash settle may be limited depending on the stock price at the time of conversion.

On October 29, 2019 and October 30, 2019, in connection with the offering of the Convertible Notes, we 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 our common stock that initially underlie the Convertible Notes.

On October 29, 2019 and October 30, 2019, we also entered into privately negotiated warrant transactions (collectively, the “Warrant Transactions” and, together with the Hedge Transactions, the “Call Spread Transactions”), whereby we sold warrants at a higher strike price relating to the same number of shares of our common stock that initially underlie the Convertible Notes, subject to customary anti-dilution adjustments.
  
The Hedge Transactions and the Warrant Transactions are separate transactions, in each case, and are not part of the terms of the Convertible Notes and will not affect any holder’s rights under the Convertible Notes. Holders of the Convertible Notes will not have any rights with respect to the Call Spread Transactions.

Refer to Note 9 ofin 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, 202127, 2022 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
In the first quarter of Fiscal 2023, we adopted ASU 2020-06 using the modified retrospective approach. The net cost incurred in connection withnew guidance simplifies the Call Spread Transactions was $11.2 million. These transactions are classifiedaccounting for convertible instruments by removing certain separation models. As a result, more convertible debt instruments will be accounted for as equity and are not remeasured each reporting period. Wea single liability measured at amortized cost.

Prior to our adoption of ASU 2020-06, we bifurcated the proceeds from the offering of the Convertible Notes between liability and equity components. On the date of issuance, the liability and equity components were calculated to be approximately $215.0 million and $85.0 million, respectively. The initial $215.0 million liability component was determined based on the fair value of similar debt instruments excluding the conversion feature assuming a hypothetical interest rate of 8%. The initial $85.0 million ($64.1 million net of tax) equity component representsrepresented the difference between the fair value of the initial $215.0 million in debt and
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in debt and the $300.0 million of gross proceeds. The related initial debt discount of $85.0 million iswas being amortized over the life of the Convertible Notes as non-cash interest expense using the effective interest method.

We recognized $3.9 million and $11.2 million of non-cash interest expense during the three and nine months ended May 28, 2022, respectively. In connection with the above-noted transactions, we incurred approximatelyaddition, offering-related costs of $9.8 million of offering-related costs. These offering fees were allocated to the liability and equity components in proportion to the allocation of proceedsproceeds.

In connection with our adoption of ASU 2020-06, we derecognized the remaining unamortized interest discount on the Convertible Notes and therefore recorded no non-cash interest expense related to the amortization of the debt discount during the nine months ended May 27, 2023. As a result, the Convertible Notes are now accounted for as debt and equity issuance costs, respectively. We allocated $7.0 milliona single liability measured at amortized cost. Interest expense, representing the amortization of the debt issuance costs toas well as the liability component, which were capitalized as deferred financing costs within long-term debt on the Consolidated Balance Sheets. These costs are beingcontractual interest expense is amortized asusing an effective interest expenserate of 2.1% over the term of the debt using the effective interest method. The remaining $2.8Convertible Notes. We recorded $1.6 million and $4.7 million of transaction costs allocatedinterest expense during the three and nine months ended May 27, 2023, respectively.

Refer to Note 15 in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for more information related to the earnings per share impact associated with the Convertible Notes and our adoption of ASU-2020-06.

The net cost incurred in connection with the Call Spread Transactions was $11.2 million. These transactions are classified as equity component were recorded as a reduction of the equity component.and are not remeasured each reporting period.

Fair Value and Future Maturities
As of May 28, 202227, 2023 and August 28, 2021,27, 2022, the fair value of long-term debt, gross, was $599.1$624.5 million and $726.6$634.2 million, respectively. The fair value of the Convertible Notes was $332.8 million as of May 27, 2023.

Aggregate contractual maturities of debt in future fiscal years are as follows:
(in thousands)millions)Amount
Remainder of Fiscal 20222023$— 
Fiscal 2023— 
Fiscal 2024— 
Fiscal 2025300,000300.0 
Fiscal 2026— 
Fiscal 2027— 
ThereafterFiscal 2028300,000300.0 
Total Senior Secured Notes and Convertible Notes$600,000600.0 

Note 10.    Employee and Retiree Benefits

Deferred compensation liabilities are as follows:
(in thousands)May 28,
2022
August 28,
2021
(in millions)(in millions)May 27,
2023
August 27,
2022
Non-qualified deferred compensationNon-qualified deferred compensation$8,470 $9,731 Non-qualified deferred compensation$6.9 $7.9 
Supplemental executive retirement planSupplemental executive retirement plan1,381 1,615 Supplemental executive retirement plan1.1 1.4 
Executive deferred compensation planExecutive deferred compensation plan1,432 1,029 Executive deferred compensation plan1.8 1.4 
Total deferred compensation benefitsTotal deferred compensation benefits11,283 12,375 Total deferred compensation benefits9.8 10.7 
Less current portion(1)
2,733 2,825 
Less: current portion(1)
Less: current portion(1)
1.9 2.6 
Deferred compensation benefits, net of current portionDeferred compensation benefits, net of current portion$8,550 $9,550 Deferred compensation benefits, net of current portion$7.9 $8.1 
(1) Included in accrued compensation on the Consolidated Balance Sheets.

Note 11.     Contingent Liabilities and Commitments
Repurchase Commitments
Generally, manufacturers in the same industries as us 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.

Our repurchase agreements generally provide that, in the event of default by the dealer on the agreement to pay the lending institution, we will repurchase the financed merchandise. The terms of these agreements, which generally can last up to 24 months, provide that our 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. Our liability cannot exceed 100% of the
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dealer invoice. In certain instances, we also repurchase 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 was approximately $1,720.7$2,069.8 million and $727.7$1,783.7 million at May 28, 202227, 2023 and August 28, 2021,27, 2022, respectively.

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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. Our loss reserve for repurchase commitments contains uncertainties because the calculation requires management to make assumptions and apply judgment regarding a number of factors. Our 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 our 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 our historical loss experience, an associated loss reserve is established which is included in accrued expenses: other current liabilities on the Consolidated Balance Sheets. Our repurchase accrual was $1.4$1.3 million and $0.9$1.4 million at May 28, 202227, 2023 and August 28, 2021,27, 2022, respectively. Repurchase risk is affected by the credit worthiness of our dealer network. We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions used to establish the loss reserve for repurchase commitments.

There was no material activity related to repurchase agreements during the nine months ended May 28, 202227, 2023 and May 29, 2021.28, 2022.

Litigation
We 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 we believe the ultimate disposition of litigation will not have a material adverse effect on our financial position, results of operations or liquidity, the possibility exists that such litigation may have an impact on our results for a particular reporting period in which litigation effects become probable and reasonably estimable. Though we 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 our view of these matters may change in the future. 

Note 12. Revenue

All operating revenue is generated from contracts with customers. Our primary revenue source is generated through the sale of manufactured non-motorized towable RV units, motorizedmotorhome RV units and marine units to our independent dealer network (our customers). The following table disaggregates revenue by reportable segment and product category:
Three Months EndedNine Months EndedThree Months EndedNine Months Ended
(in thousands)May 28,
2022
May 29,
2021
May 28,
2022
May 29,
2021
(in millions)(in millions)May 27,
2023
May 28,
2022
May 27,
2023
May 28,
2022
Net RevenuesNet RevenuesNet Revenues
Towable
Towable RVTowable RV
Fifth WheelFifth Wheel$392,116 $284,432 $999,025 $751,822 Fifth Wheel$185.0 $392.1 $548.0 $999.0 
Travel TrailerTravel Trailer404,462 264,450 1,076,626 680,088 Travel Trailer189.2 404.5 494.7 1,076.7 
Other(1)
Other(1)
8,989 6,867 27,541 18,024 
Other(1)
9.9 9.0 31.2 27.5 
Total Towable805,567 555,749 2,103,192 1,449,934 
Motorhome
Total Towable RVTotal Towable RV384.1 805.6 1,073.9 2,103.2 
Motorhome RVMotorhome RV
Class AClass A208,387 172,437 568,683 464,347 Class A166.5 208.4 580.7 568.7 
Class BClass B194,469 135,705 507,171 382,162 Class B112.9 194.5 366.4 507.2 
Class C and Other(1)
Class C and Other(1)
113,489 77,115 279,535 243,712 
Class C and Other (1)
95.0 113.4 295.3 279.5 
Total Motorhome516,345 385,257 1,355,389 1,090,221 
Total Motorhome RVTotal Motorhome RV374.4 516.3 1,242.4 1,355.4 
MarineMarine126,548 17,170 303,175 43,527 Marine129.0 126.5 373.3 303.2 
Corporate / All Other(2)
Corporate / All Other(2)
9,678 2,561 16,853 10,072 
Corporate / All Other(2)
13.3 9.7 30.1 16.8 
Consolidated Net RevenuesConsolidated Net Revenues$1,458,138 $960,737 $3,778,609 $2,593,754 Consolidated Net Revenues$900.8 $1,458.1 $2,719.7 $3,778.6 
(1)    Relates to parts, accessories, services, and services.other miscellaneous revenue.
(2)    Relates to specialty vehicle units, parts, accessories, and services.services associated with Winnebago specialty vehicles. In addition, this activity also includes Lithionics battery sales, including the related systems and accessories, that are sold directly to external customers.

We 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.

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Concentration of Risk
No single dealer organization accounted for more than 10% of net revenue for the nine months ended May 28, 202227, 2023 or May 29, 2021.28, 2022.

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Note 13. Stock-Based Compensation

On December 11, 2018, our shareholders approved the Winnebago Industries, Inc. 2019 Omnibus Incentive Plan ("2019 Plan") as detailed in our Proxy Statement for the 2018 Annual Meeting of Shareholders. The 2019 Plan allows us 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 our common stock that may be awarded and issued under the 2019 Plan is 4.1 million shares, plus the shares subject to any awards outstanding under the 2014 Plan and our 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 were 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 $1.7 million and $5.6 million and $4.7 million duringfor the three months ended May 27, 2023 and May 28, 2022, respectively; and May 29, 2021, respectively;$8.2 million and $12.5 million and $11.7 million duringfor the nine months ended May 28, 202227, 2023 and May 29, 2021,28, 2022, respectively. Compensation expense is recognized over the requisite service or performance period of the award.award, unless accelerated by certain retirement eligibility provisions.

Note 14. Income Taxes

Our effective tax rate was 21.4% and 24.2% for the three months ended May 27, 2023 and 22.8%May 28, 2022, respectively, and 23.4% and 23.8% for the nine months ended May 27, 2023 and May 28, 2022, respectively. The decrease in tax rate for the three months ended May 27, 2023 compared to the three months ended May 28, 2022 andwas driven primarily by the impact of favorable tax return to provision adjustments. The decrease in tax rate for the nine months ended May 29, 2021, respectively, and 23.8% and 23.2% for27, 2023 compared to the nine months ended May 28, 2022 and May 29, 2021, respectively. The increase in tax rate for the three and nine months ended May 28, 2022 compared to the three and nine months ended May 29, 2021 was driven primarily by the impact of bothfavorable tax return to provision adjustments in the current year and the impact of mostly consistent tax credits year-over-year over increaseddecreased income in the current year, andoffset by a net unfavorable expensefavorable benefit in the currentprior year related to stock compensation.

On August 16, 2022, the Inflation Reduction Act (“IRA”) was signed into law in the United States. Among other provisions, the IRA includes a 15% corporate minimum tax rate applied to certain large corporations and a 1% excise tax on corporate stock repurchases made after December 31, 2022. We do not expect the IRA to have a material impact on our consolidated financial statements.

We file a U.S. Federal tax return, as well as returns in various international and state jurisdictions. As of May 28, 2022,27, 2023, our Federal returns from Fiscal 20182019 to present are subject to review by the Internal Revenue Service. With limited exceptions, state returns from Fiscal 20172018 to present continue to be subject to review by state taxing jurisdictions. We are currently under review by certain U.S. state tax authorities for Fiscal 20162019 through Fiscal 2019.2021. We believe we have adequately reserved for our exposure to potential additional payments for uncertain tax positions in our liability for unrecognized tax benefits.

Note 15. Earnings Per Share
In the first quarter of Fiscal 2023, we adopted ASU 2020-06. Prior to adoption, we utilized the treasury stock method for calculating the dilutive impact of our Convertible Notes. Upon adoption, we prospectively utilized the if-converted method to calculate the dilutive impact of our Convertible Notes. Under the if-converted method, the Convertible Notes are assumed to be converted into common stock at the beginning of the reporting period, and the resulting shares are included in the denominator of the calculation. In addition, interest charges, net of any income tax effects are added back to the numerator of the calculation.

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Basic and diluted earnings per share are calculated as follows:
Three Months EndedNine Months EndedThree Months EndedNine Months Ended
(in thousands, except per share data)May 28,
2022
May 29,
2021
May 28,
2022
May 29,
2021
(in millions, except per share data)(in millions, except per share data)May 27,
2023
May 28,
2022
May 27,
2023
May 28,
2022
Earnings per share - basicEarnings per share - basic
Net incomeNet income$117,222 $71,295 $308,027 $197,786 Net income$59.1 $117.2 $172.1 $308.0 
Weighted average common shares outstandingWeighted average common shares outstanding30.4 32.4 30.4 32.9 
Basic earnings per common share(1)
Basic earnings per common share(1)
$1.95 $3.62 $5.66 $9.35 
Earnings per share - dilutedEarnings per share - diluted
Net incomeNet income$59.1 $117.2 $172.1 $308.0 
Interest expense on convertible notes, net of taxInterest expense on convertible notes, net of tax1.2 — 3.6 — 
Diluted net incomeDiluted net income$60.3 $117.2 $175.7 $308.0 
Weighted average common shares outstandingWeighted average common shares outstanding32,389 33,552 32,936 33,565 Weighted average common shares outstanding30.4 32.4 30.4 32.9 
Dilutive impact of stock compensation awardsDilutive impact of stock compensation awards466 384 504 302 Dilutive impact of stock compensation awards0.3 0.5 0.4 0.5 
Dilutive impact of convertible notesDilutive impact of convertible notes— 836 119 76 Dilutive impact of convertible notes4.7 — 4.7 0.2 
Weighted average common shares outstanding, assuming dilutionWeighted average common shares outstanding, assuming dilution32,855 34,772 33,559 33,943 Weighted average common shares outstanding, assuming dilution35.4 32.9 35.5 33.6 
Anti-dilutive securities excluded from weighted average common shares outstanding, assuming dilutionAnti-dilutive securities excluded from weighted average common shares outstanding, assuming dilution199 174 46 Anti-dilutive securities excluded from weighted average common shares outstanding, assuming dilution0.1 0.2 0.1 0.2 
Basic earnings per common share$3.62 $2.12 $9.35 $5.89 
Diluted earnings per common share$3.57 $2.05 $9.18 $5.83 
Diluted earnings per common share(1)
Diluted earnings per common share(1)
$1.71 $3.57 $4.95 $9.18 
(1)    Earnings per share amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.

For both periods presented, the dilutive effect of stock compensation awards was determined using the treasury stock method. 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.

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Note 16. Accumulated Other Comprehensive Income (Loss)

Changes in Accumulated Other Comprehensive Income ("AOCI") by component, net of tax, were:
Three Months EndedNine Months Ended
May 28, 2022May 29, 2021May 28, 2022May 29, 2021
(in thousands)Defined Benefit Pension ItemsDefined Benefit Pension ItemsDefined Benefit Pension ItemsDefined Benefit Pension Items
Balance at beginning of period$(473)$(509)$(491)$(526)
Amounts reclassified from AOCI10 28 26 
Net current-period OCI10 28 26 
Balance at end of period$(463)$(500)$(463)$(500)

Reclassifications out of AOCI, net of tax, were:
Three Months EndedNine Months Ended
(in thousands)Location on Consolidated Statements
of Income and Comprehensive Income
May 28,
2022
May 29,
2021
May 28,
2022
May 29,
2021
Amortization of net actuarial lossSG&A$10 $$28 $26 

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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 28, 202127, 2022 (including the information presented therein under Risk Factors), as well as our reports on Forms 10-Q and 8-K and other publicly available information. All amounts herein are unaudited. All amounts in tables are in thousands,millions, 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 RV units in Iowa and Indiana; our towable RV 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.

Macroeconomic Events
In February 2022, the United States announced targeted economic sanctions on Russia in response to the military conflict in Ukraine. As described in Part I, Item 1A — Risk Factors, in the Annual Report on Form 10-K for the fiscal year ended August 28, 2021, our business may be sensitive to economic conditions such as the adverse impact of global tensions, which could impact input costs, consumer spending, and fuel prices. As our operations are primarily in North America, we have no direct exposure to Russia and Ukraine. However, we are actively monitoring the broader economic impact of the crisis, especially the potential impact of rising commodity and fuel prices, and the potential decreased demand for our products.

The COVID-19 pandemic has resulted in strong retail demand by consumers of RVs as a safe travel option, and of marine products as a safe way to experience the outdoors. However, the pandemic has also caused global supply chain disruption. Our production has experienced certain supply shortages, particularly within our Motorhome and Marine segments, as well as material and component cost inflation. If these disruptions continue, or if there are additional disruptions in our supply chain, it could materially or adversely impact our operating results and financial condition. Despite certain supply shortages and inflationary cost input pressures, 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 28, 2021.

Acquisition of BarlettaLithionics
On August 31, 2021,April 28, 2023, 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 issuedLithionics, a premier lithium-ion battery solutions provider to the sellers (subject to a 12% discount),recreational equipment and contingent consideration from earnout provisions.specialty vehicle markets. 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 acquisitionReportable Segment Name Changes
In the third quarter of Barletta resultedFiscal 2023, we changed the name of our “Towable” segment to “Towable RV” and our “Motorhome” segment to “Motorhome RV”. These name changes had no impact on the composition of our segments, or previously reported results of operations, financial position, cash flows or segment results.

Known Trends and Uncertainties
Our business continues to be challenged by macroeconomic conditions impacting retail consumers, such as inflation and rising interest rates. These factors have contributed to lower consumer spending and reduced short-term demand for large discretionary products such as RVs and marine products. In response, we are working closely with dealer partners across all our segments to align field inventory levels to meet end consumer demand. We continue to produce and ship in accordance with dealer demand as evidenced and requested by dealer orders.
Despite the current economic slowdown, we still believe in the long-term health of consumer demand for RV and marine products. According to statistics published by Kampgrounds of America, Inc., the number of households in North America that own an RV increased by approximately 34% between 2019 and 2022. In addition, according to a newly createdrecent study conducted by the National Marine reportable segment effective as ofManufacturers Association, recreational boating saw a 36% increase in annual economic activity from 2018 to 2023.
In the first quarter of Fiscal 2022. The segment consists2023, Mercedes-Benz AG issued a global recall related to an electronic parking brake defect affecting 2019 through 2022 Sprinter chassis. As a result, all retail sales and wholesale shipments of Barletta and our existing Chris-Craft operating segment.products built on this chassis were temporarily suspended until a recall remedy was implemented. During the second quarter of Fiscal 2023, the recall remedy was implemented in cooperation with Mercedes-Benz AG.

Non-GAAP Financial Measures
This MD&A includes financial information prepared in accordance with 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.

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Included in "Results of Operations" below for the three and nine months ended May 28, 202227, 2023 compared to the comparable prior year period is a reconciliation of EBITDA and Adjusted 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 that 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 as 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 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 used by management in their assessment of performance and in 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 9 in the Notes 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
The RV and marine industries continue to experience shipping delays, and material and component cost inflation. In addition, both industries continue to experience supply chain disruptions and shortages, particularly within the Motorhome and Marine segments. While we continue to manage through these supply chain disruptions, they have impacted our ability to increase production to meet existing demand in the current fiscal year.

We believe field inventory for our Towable segment is returning to normalized levels to adequately serve end consumer demand, whereas field inventory for our Motorhome and Marine segments remain lower than desired by our dealer network, which indicates future strength in wholesale shipments. We continue to produce and ship in accordance with dealer demand as evidenced and requested by dealer orders.

RV industry retail sales have been softening compared to record prior year levels, however we still believe in the long-term health of consumer demand for RV and marine products. More people are pursuing outdoor activities, household penetration of RVs is increasing, and campers are more diverse than ever. According to statistics published by Kampgrounds of America, Inc. (KOA), over 14 million households camped for the first time in 2020 and 2021, and combined with record levels of first-time buyers of RVs over the past two years, a tailwind exists for new product and upgrade-related sales. While we believe in these outdoor lifestyle secular trends in the long term, current macroeconomic trends such as inflation, rising interest rates and low consumer sentiment, as well as global political issues, do provide a risk to short-term consumer demand for large discretionary products such as RVs and Marine products, which could in turn impact our future revenue and profits.



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Results of Operations - Three Months Ended May 28, 202227, 2023 Compared to the Three Months Ended May 29, 202128, 2022

Consolidated Performance Summary
The following is an analysis of changes in key items included in the Consolidated Statements of Income for the three months ended May 28, 202227, 2023 compared to the three months ended May 29, 2021:
Three Months Ended
($ in thousands, except per share data)May 28, 2022
% of Revenues(1)
May 29, 2021
% of Revenues(1)
$ Change% Change
Net revenues$1,458,138 100.0 %$960,737 100.0 %$497,401 51.8 %
Cost of goods sold1,185,174 81.3 %791,125 82.3 %394,049 49.8 %
Gross profit272,964 18.7 %169,612 17.7 %103,352 60.9 %
Selling, general, and administrative expenses88,231 6.1 %63,586 6.6 %24,645 38.8 %
Amortization8,016 0.5 %3,590 0.4 %4,426 123.3 %
Total operating expenses96,247 6.6 %67,176 7.0 %29,071 43.3 %
Operating income176,717 12.1 %102,436 10.7 %74,281 72.5 %
Interest expense, net10,511 0.7 %10,229 1.1 %282 2.8 %
Non-operating loss (income)11,658 0.8 %(93)— %(11,751)(12,635.5)%
Income before income taxes154,548 10.6 %92,300 9.6 %62,248 67.4 %
Provision for income taxes37,326 2.6 %21,005 2.2 %16,321 77.7 %
Net income$117,222 8.0 %$71,295 7.4 %$45,927 64.4 %
Diluted earnings per share$3.57 $2.05 $1.52 74.1 %
Diluted weighted average shares outstanding32,855 34,772 (1,917)(5.5)%
28, 2022:
Three Months Ended
($ in millions, except per share data)May 27, 2023
% of Revenues(1)
May 28, 2022
% of Revenues(1)
$ Change(1)
% Change(1)
Net revenues$900.8 100.0 %$1,458.1 100.0 %$(557.3)(38.2)%
Cost of goods sold749.4 83.2 %1,185.1 81.3 %(435.8)(36.8)%
Gross profit151.4 16.8 %273.0 18.7 %(121.5)(44.5)%
Selling, general, and administrative expenses66.5 7.4 %88.3 6.1 %(21.7)(24.6)%
Amortization4.4 0.5 %8.0 0.5 %(3.6)(44.7)%
Total operating expenses70.9 7.9 %96.3 6.6 %(25.3)(26.3)%
Operating income80.5 8.9 %176.7 12.1 %(96.2)(54.5)%
Interest expense, net5.2 0.6 %10.5 0.7 %(5.4)(51.0)%
Non-operating loss0.2 — %11.7 0.8 %(11.4)(98.1)%
Income before income taxes75.1 8.3 %154.5 10.6 %(79.4)(51.4)%
Provision for income taxes16.0 1.8 %37.3 2.6 %(21.3)(57.0)%
Net income$59.1 6.6 %$117.2 8.0 %$(58.2)(49.6)%
Diluted earnings per share$1.71 $3.57 $(1.86)(52.1)%
Diluted weighted average shares outstanding35.4 32.9 2.5 7.6 %
(1)    PercentagesAmounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided. In addition, percentages may not add in total due to rounding differences.rounding.

Net revenues increased in the third quarter of Fiscal 2022 compared to the third quarter of Fiscal 2021decreased primarily due to price increaseslower unit sales related to currentretail market conditions and anticipated higher materialdiscounts and component costs, as well as unit growth, including incremental volume from the acquisition of Barletta.allowances compared to prior year, partially offset by carryover price increases.

Gross profit as a percentage of revenue increased in the third quarter of Fiscal 2022decreased primarily from deleverage and higher discounts and allowances compared to the third quarter of Fiscal 2021 primarily due to operating leverage, in addition to price increases and favorable segment mix, partially offset by higher material and component costs.prior year.

Operating expenses increased in the third quarter of Fiscal 2022 compared to the third quarter of Fiscal 2021decreased primarily due to higher operating expenses to support increasing sales, and incremental operating expenses and amortization associated with the acquisition of Barletta.

Non-operating loss increased in the third quarter of Fiscal 2022 compared to the third quarter of Fiscal 2021 due to the contingent consideration fair value adjustmentlower incentive-based compensation related to the acquisition of Barletta.

Our effective tax rate increased in the third quarter of Fiscal 2022 compared to the third quarter of Fiscal 2021 primarily due to the impact of consistent tax credits compared to prior year over increased income in the current yearoperating performance, and net unfavorable expense in the current yearlower amortization related to stock compensation.

Net income and diluted earnings per share increased in the third quarter of Fiscal 2022 compared to the third quarter of Fiscal 2021 primarily due to leverage gained on higher revenues,Barletta intangible assets, partially offset by increased operating expensesstrategic investments and higher income tax expense.Lithionics transaction costs.

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Non-operating loss decreased due to a lower contingent consideration fair value adjustment related to the earnout from the acquisition of Barletta.

Our effective tax rate decreased primarily from the impact of favorable tax return to provision adjustments.

Non-GAAP Reconciliation
The following table reconciles net income to consolidated EBITDA and Adjusted EBITDA for the three months ended May 28, 202227, 2023 and May 29, 2021:
Three Months Ended
(in thousands)May 28, 2022May 29, 2021
Net income$117,222 $71,295 
Interest expense, net10,511 10,229 
Provision for income taxes37,326 21,005 
Depreciation6,264 4,917 
Amortization8,016 3,590 
EBITDA179,339 111,036 
Acquisition-related costs724 — 
Restructuring expenses— 19 
Gain on sale of property, plant and equipment— (1,188)
Contingent consideration fair value adjustment11,830 — 
Non-operating income(172)(93)
Adjusted EBITDA$191,721 $109,774 
28, 2022:
Three Months Ended
(in millions)May 27, 2023May 28, 2022
Net income$59.1 $117.2 
Interest expense, net5.2 10.5 
Provision for income taxes16.0 37.3 
Depreciation7.6 6.3 
Amortization4.4 8.0 
EBITDA92.3 179.3 
Acquisition-related costs3.9 0.7 
Contingent consideration fair value adjustment— 11.8 
Non-operating loss (income)0.2 (0.1)
Adjusted EBITDA$96.4 $191.7 

Reportable Segment Performance Summary
Towable RV
The following is an analysis of key changes in our Towable RV segment for the three months ended May 28, 202227, 2023 compared to the three months ended May 29, 2021:28, 2022:
Three Months EndedThree Months Ended
(in thousands, except ASP and units)May 28,
2022
% of RevenuesMay 29,
2021
% of Revenues$ Change% Change
(in millions, except ASP and units)(in millions, except ASP and units)May 27, 2023
% of Revenues(2)
May 28, 2022
% of Revenues(2)
$ Change(2)
% Change(2)
Net revenuesNet revenues$805,567 $555,749 $249,818 45.0 %Net revenues$384.1 $805.6 $(421.5)(52.3)%
Adjusted EBITDAAdjusted EBITDA117,767 14.6 %80,130 14.4 %37,637 47.0 %Adjusted EBITDA53.8 14.0 %117.8 14.6 %(64.0)(54.3)%
Average Selling Price ("ASP")(1)
Average Selling Price ("ASP")(1)
45,322 32,958 12,364 37.5 %
Average Selling Price ("ASP")(1)
$44,070 $45,322 $(1,252)(2.8)%
Three Months EndedThree Months Ended
Unit deliveriesUnit deliveriesMay 28,
2022
Product Mix(2)
May 29,
2021
Product Mix(2)
Unit Change% ChangeUnit deliveriesMay 27, 2023
Product Mix(3)
May 28, 2022
Product Mix(3)
Unit Change% Change
Travel trailerTravel trailer12,031 68.1 %11,089 66.4 %942 8.5 %Travel trailer6,376 73.2 %12,031 68.1 %(5,655)(47.0)%
Fifth wheelFifth wheel5,644 31.9 %5,620 33.6 %24 0.4 %Fifth wheel2,339 26.8 %5,644 31.9 %(3,305)(58.6)%
Total towables17,675 100.0 %16,709 100.0 %966 5.8 %
Total Towable RVTotal Towable RV8,715 100.0 %17,675 100.0 %(8,960)(50.7)%
(1)    Average selling priceASP excludes off-invoice dealer incentives.
(2)    Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.
(3)    Percentages may not add due to rounding differences.

Net revenues increased in the third quarter of Fiscal 2022 compared to the third quarter of Fiscal 2021decreased primarily due to price increases relateda decline in unit volume associated with retail market conditions and higher discounts and allowances compared to current and anticipated higher material and component costs, and unit growth.prior year.

Adjusted EBITDA increased in the third quarter of Fiscal 2022 compared to the third quarter of Fiscal 2021decreased primarily due to revenue growth,lower revenues associated with volume declines related to retail market conditions, and higher discounts and allowances compared to prior year, partially offset by higher operating expenses to support increasing sales.favorable warranty experience.

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Motorhome
Motorhome RV
The following is an analysis of key changes in our Motorhome RV segment for the three months ended May 28, 202227, 2023 compared to the three months ended May 29, 2021:
Three Months Ended
(in thousands, except ASP and units)May 28,
2022
% of RevenuesMay 29,
2021
% of Revenues$ Change% Change
Net revenues$516,345 $385,257 $131,088 34.0 %
Adjusted EBITDA64,388 12.5 %37,467 9.7 %26,921 71.9 %
ASP(1)
$159,699 $138,810 20,889 15.0 %
Three Months Ended
Unit deliveriesMay 28,
2022
Product Mix(2)
May 29,
2021
Product Mix(2)
Unit Change% Change
Class A672 21.0 %745 27.3 %(73)(9.8)%
Class B1,801 56.3 %1,384 50.8 %417 30.1 %
Class C728 22.7 %598 21.9 %130 21.7 %
Total motorhomes3,201 100.0 %2,727 100.0 %474 17.4 %
28, 2022:
Three Months Ended
(in millions, except ASP and units)May 27, 2023
% of Revenues(2)
May 28, 2022
% of Revenues(2)
$ Change(2)
% Change(2)
Net revenues$374.4 $516.3 $(142.0)(27.5)%
Adjusted EBITDA26.8 7.2 %64.4 12.5 %(37.5)(58.3)%
ASP(1)
$177,612 $159,699 $17,913 11.2 %
Three Months Ended
Unit deliveriesMay 27, 2023
Product Mix(3)
May 28, 2022
Product Mix(3)
Unit Change% Change
Class A524 24.6 %672 21.0 %(148)(22.0)%
Class B1,018 47.8 %1,801 56.3 %(783)(43.5)%
Class C589 27.6 %728 22.7 %(139)(19.1)%
Total Motorhome RV2,131 100.0 %3,201 100.0 %(1,070)(33.4)%
(1)    ASP excludes off-invoice dealer incentives.
(2)    Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.
(3)    Percentages may not add due to rounding differences.

Net revenues increased in the third quarter of Fiscal 2022decreased primarily due to unit volume decline and higher discounts and allowances compared to the third quarter of Fiscal 2021 primarily due toprior year, partially offset by price increases related to current and anticipated higher material and component costs, and unit growth.chassis costs.

Adjusted EBITDA increased in the third quarter of Fiscal 2022decreased primarily due to lower revenues associated with volume declines, higher discounts and allowances compared to the third quarter of Fiscal 2021 dueprior year, and productivity and operational efficiency challenges, primarily related to revenue growth, partially offset by higher input costs.an ERP system implementation.


Marine
The following is an analysis of key changes in our Marine segment for the three months ended May 28, 202227, 2023 compared to the three months ended May 29, 2021:
Three Months Ended
(in thousands, except ASP and units)May 28, 2022% of RevenuesMay 29, 2021% of Revenues$ Change% Change
Net revenues$126,548 $17,170 $109,378 637.0 %
Adjusted EBITDA19,813 15.7 %1,624 9.5 %18,189 1,120.0 %
ASP(1)
$76,371 $204,114 (127,743)(62.6)%
Three Months Ended
Unit deliveriesMay 28, 2022May 29, 2021Unit Change% Change
Boats1,655 83 1,572 1,894.0 %
28, 2022:
Three Months Ended
(in millions, except ASP and units)May 27, 2023
% of Revenues(2)
May 28, 2022
% of Revenues(2)
$ Change(2)
% Change(2)
Net revenues$129.0 $126.5 $2.4 1.9 %
Adjusted EBITDA17.3 13.4 %19.8 15.7 %(2.5)(12.5)%
ASP(1)
$81,492 $76,371 $5,121 6.7 %
Three Months Ended
Unit deliveriesMay 27, 2023May 28, 2022Unit Change% Change
Boats1,586 1,655 (69)(4.2)%
(1)    ASP excludes off-invoice dealer incentives.
(2)    Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.

Net revenues increased in the third quarter of Fiscal 2022 compared to the third quarter of Fiscal 2021 primarily due to the acquisition of Barletta at the beginning of the first quarter of Fiscal 2022.carryover price increases, partially offset by unit volume decline.

Adjusted EBITDA increased in the third quarter of Fiscal 2022 compared to the third quarter of Fiscal 2021decreased primarily due to the acquisition of Barletta at the beginning of the first quarter of Fiscal 2022.higher discounts and allowances compared to prior year.


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Results of Operations - Nine Months Ended May 28, 202227, 2023 Compared to the Nine Months Ended May 29, 202128, 2022

Consolidated Performance Summary
The following is an analysis of changes in key items included in the Consolidated Statements of Income for the nine months ended May 28, 202227, 2023 compared to the nine months ended May 29, 2021:28, 2022:
Nine Months EndedNine Months Ended
($ in thousands, except per share data)May 28, 2022
% of Revenues(1)
May 29, 2021
% of Revenues(1)
$ Change% Change
($ in millions, except per share data)($ in millions, except per share data)May 27, 2023
% of Revenues(1)
May 28, 2022
% of Revenues(1)
$ Change(1)
% Change(1)
Net revenuesNet revenues$3,778,609 100.0 %$2,593,754 100.0 %$1,184,855 45.7 %Net revenues$2,719.7 100.0 %$3,778.6 100.0 %$(1,058.8)(28.0)%
Cost of goods soldCost of goods sold3,059,656 81.0 %2,130,556 82.1 %929,100 43.6 %Cost of goods sold2,261.1 83.1 %3,059.6 81.0 %(798.5)(26.1)%
Gross profitGross profit718,953 19.0 %463,198 17.9 %255,755 55.2 %Gross profit458.6 16.9 %719.0 19.0 %(260.3)(36.2)%
Selling, general, and administrative expensesSelling, general, and administrative expenses234,896 6.2 %165,001 6.4 %69,895 42.4 %Selling, general, and administrative expenses203.4 7.5 %235.0 6.2 %(31.5)(13.4)%
AmortizationAmortization24,203 0.6 %10,771 0.4 %13,432 124.7 %Amortization12.0 0.4 %24.2 0.6 %(12.1)(50.2)%
Total operating expensesTotal operating expenses259,099 6.9 %175,772 6.8 %83,327 47.4 %Total operating expenses215.4 7.9 %259.2 6.9 %(43.6)(16.8)%
Operating incomeOperating income459,854 12.2 %287,426 11.1 %172,428 60.0 %Operating income243.2 8.9 %459.8 12.2 %(216.7)(47.1)%
Interest expense, netInterest expense, net31,078 0.8 %30,222 1.2 %856 2.8 %Interest expense, net16.4 0.6 %31.1 0.8 %(14.7)(47.3)%
Non-operating loss (income)24,522 0.6 %(310)— %(24,832)(8,010.3)%
Non-operating lossNon-operating loss2.3 0.1 %24.5 0.6 %(22.3)(90.9)%
Income before income taxesIncome before income taxes404,254 10.7 %257,514 9.9 %146,740 57.0 %Income before income taxes224.5 8.3 %404.2 10.7 %(179.7)(44.5)%
Provision for income taxesProvision for income taxes96,227 2.5 %59,728 2.3 %36,499 61.1 %Provision for income taxes52.4 1.9 %96.2 2.5 %(43.7)(45.5)%
Net incomeNet income$308,027 8.2 %$197,786 7.6 %$110,241 55.7 %Net income$172.1 6.3 %$308.0 8.2 %$(136.0)(44.1)%
Diluted earnings per shareDiluted earnings per share$9.18 $5.83 $3.35 57.5 %Diluted earnings per share$4.95 $9.18 $(4.23)(46.1)%
Diluted average shares outstanding33,559 33,943 (384)(1.1)%
Diluted weighted average shares outstandingDiluted weighted average shares outstanding35.5 33.6 1.9 5.7 %
(1)    PercentagesAmounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided. In addition, percentages may not add in total due to rounding differences.rounding.

Net revenues increased in the first nine months of Fiscal 2022 compared to the first nine months of Fiscal 2021decreased primarily due to lower unit sales related to retail market conditions, and higher discounts and allowances compared to prior year, partially offset by carryover price increases related to current and anticipated higher material and component costs, and unit growth, including incremental volume from the acquisition of Barletta.in all segments.

Gross profit as a percentage of revenue increased in the first nine months of Fiscal 2022 compared to the first nine months of Fiscal 2021decreased primarily due to improved operating leverage ondeleverage and higher revenuesdiscounts and price increases, partially offset by higher material and component costs.allowances compared to prior year.

Operating expenses increased in the first nine months of Fiscal 2022 compared to the first nine months of Fiscal 2021decreased primarily due to higherlower incentive-based compensation related to operating performance, lower amortization related to Barletta intangible assets and lower legal settlement expenses, to support increasing sales, acquisition-related costs, and incremental operating expenses and amortization associated with the acquisition of Barletta.partially offset by strategic investments.

Non-operating loss increased in the first nine months of Fiscal 2022 compared to the first nine months of Fiscal 2021decreased due to thea lower contingent consideration fair value adjustment related to the earnout from the acquisition of Barletta.

Our effective tax rate increased in the first nine months of Fiscal 2022 compared to the first nine months of Fiscal 2021decreased primarily due tofrom the impact of favorable tax return to provision adjustments in the current year and the impact of mostly consistent tax credits compared to prior yearyear-over-year over increaseddecreased income in the current year, andoffset by a net unfavorable expensefavorable benefit in the currentprior year related to stock compensation.

Net income and diluted earnings per share increased in the first nine months of Fiscal 2022 compared to the first nine months of Fiscal 2021 primarily due to leverage gained on higher revenues, partially offset by increased operating expenses and higher income tax expense.

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Non-GAAP Reconciliation
The following table reconciles net income to consolidated EBITDA and Adjusted EBITDA for the nine months ended May 28, 202227, 2023 and May 29, 2021:28, 2022:
Nine Months EndedNine Months Ended
(in thousands)May 28, 2022May 29, 2021
(in millions)(in millions)May 27, 2023May 28, 2022
Net incomeNet income$308,027 $197,786 Net income$172.1 $308.0 
Interest expense, netInterest expense, net31,078 30,222 Interest expense, net16.4 31.1 
Provision for income taxesProvision for income taxes96,227 59,728 Provision for income taxes52.4 96.2 
DepreciationDepreciation17,031 13,476 Depreciation20.9 17.0 
AmortizationAmortization24,203 10,771 Amortization12.0 24.2 
EBITDAEBITDA476,566 311,983 EBITDA273.8 476.5 
Acquisition-related costsAcquisition-related costs4,594 — Acquisition-related costs5.6 4.6 
Litigation reservesLitigation reserves4,000 — Litigation reserves— 4.0 
Restructuring expenses— 112 
Gain on sale of property, plant and equipment— (4,753)
Contingent consideration fair value adjustmentContingent consideration fair value adjustment24,717 — Contingent consideration fair value adjustment2.0 24.7 
Non-operating income(195)(310)
Non-operating loss (income)Non-operating loss (income)0.4 (0.1)
Adjusted EBITDAAdjusted EBITDA$509,682 $307,032 Adjusted EBITDA$281.8 $509.7 

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Reportable Segment Performance Summary
Towable RV
The following is an analysis of key changes in our Towable RV segment for the nine months ended May 28, 202227, 2023 compared to the nine months ended May 29, 2021:28, 2022:
Nine Months EndedNine Months Ended
(in thousands, except ASP and units)May 28, 2022% of RevenuesMay 29, 2021% of Revenues$ Change% Change
(in millions, except ASP and units)(in millions, except ASP and units)May 27, 2023
% of Revenues(2)
May 28, 2022
% of Revenues(2)
$ Change(2)
% Change(2)
Net revenuesNet revenues$2,103,192 $1,449,934 $653,258 45.1 %Net revenues$1,073.9 $2,103.2 $(1,029.3)(48.9)%
Adjusted EBITDAAdjusted EBITDA330,417 15.7 %205,639 14.2 %124,778 60.7 %Adjusted EBITDA129.4 12.0 %330.4 15.7 %(201.1)(60.9)%
ASP(1)
ASP(1)
42,244 32,503 9,741 30.0 %
ASP(1)
$46,018 $42,244 $3,774 8.9 %
Nine Months EndedNine Months Ended
Unit deliveriesUnit deliveriesMay 28, 2022
Product Mix(2)
May 29, 2021
Product Mix(2)
Unit Change% ChangeUnit deliveriesMay 27, 2023
Product Mix(3)
May 28, 2022
Product Mix(3)
Unit Change% Change
Travel trailerTravel trailer33,938 68.7 %29,125 65.6 %4,813 16.5 %Travel trailer16,049 68.8 %33,938 68.7 %(17,889)(52.7)%
Fifth wheelFifth wheel15,462 31.3 %15,306 34.4 %156 1.0 %Fifth wheel7,293 31.2 %15,462 31.3 %(8,169)(52.8)%
Total towables49,400 100.0 %44,431 100.0 %4,969 11.2 %
Total Towable RVTotal Towable RV23,342 100.0 %49,400 100.0 %(26,058)(52.7)%
May 28, 2022May 29, 2021Change% ChangeMay 27, 2023May 28, 2022
Change(2)
% Change(2)
Backlog(3)(4)
Backlog(3)(4)
Backlog(3)(4)
UnitsUnits31,606 46,646 (15,040)(32.2)%Units5,297 31,606 (26,309)(83.2)%
DollarsDollars$1,312,878 $1,522,069 $(209,191)(13.7)%Dollars$236.0 $1,312.9 $(1,076.9)(82.0)%
Dealer InventoryDealer InventoryDealer Inventory
UnitsUnits25,230 11,647 13,583 116.6 %Units20,218 25,230 (5,012)(19.9)%
(1)    Average selling priceASP excludes off-invoice dealer incentives.
(2)    Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.
(3)    Percentages may not add due to rounding differences.
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(3)(4)    Our backlog includes all accepted orders from dealers which generally have been requested to be shipped within the next six months. Orders in backlog generally can be cancelled or postponed at the option of the dealer at any time without penalty; therefore, backlog may not necessarily be an accurate measure of future sales.

Net revenues increased in the first nine months of Fiscal 2022 compared to the first nine months of Fiscal 2021decreased primarily due to price increasesa decline in unit volume related to currentretail market conditions and anticipated higher materialdiscounts and component costs, and unit growth.allowances compared to prior year, partially offset by carryover price increases.

Adjusted EBITDA increased in the first nine months of Fiscal 2022decreased primarily due to lower revenues associated with volume declines related to retail market conditions and higher discounts and allowances compared to prior year.

Backlog decreased compared to the first nine monthsprior year when dealers were replenishing inventories.
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Table of Fiscal 2021 primarily due to revenue growth, partially offset by higher operating expenses to support increasing sales.Contents

Motorhome RV
The following is an analysis of key changes in our Motorhome RV segment for the nine months ended May 28, 202227, 2023 compared to the nine months ended May 29, 2021:28, 2022:
Nine Months EndedNine Months Ended
(in thousands, except ASP and units)May 28, 2022% of RevenuesMay 29, 2021% of Revenues$ Change% Change
(in millions, except ASP and units)(in millions, except ASP and units)May 27, 2023
% of Revenues(2)
May 28, 2022
% of Revenues(2)
$ Change(2)
% Change(2)
Net revenuesNet revenues$1,355,389 $1,090,221 $265,168 24.3 %Net revenues$1,242.4 $1,355.4 $(113.0)(8.3)%
Adjusted EBITDAAdjusted EBITDA160,636 11.9 %118,779 10.9 %41,857 35.2 %Adjusted EBITDA119.6 9.6 %160.6 11.9 %(41.0)(25.5)%
ASP(1)
ASP(1)
153,139 135,356 17,783 13.1 %
ASP(1)
$182,326 $153,139 $29,187 19.1 %
Nine Months EndedNine Months Ended
Unit deliveriesUnit deliveriesMay 28, 2022
Product Mix(2)
May 29, 2021
Product Mix(2)
Unit Change% ChangeUnit deliveriesMay 27, 2023
Product Mix(3)
May 28, 2022
Product Mix(3)
Unit Change% Change
Class AClass A2,004 22.9 %2,047 25.8 %(43)(2.1)%Class A1,734 25.5 %2,004 22.9 %(270)(13.5)%
Class BClass B4,889 55.8 %3,901 49.1 %988 25.3 %Class B3,233 47.5 %4,889 55.8 %(1,656)(33.9)%
Class CClass C1,874 21.4 %1,994 25.1 %(120)(6.0)%Class C1,837 27.0 %1,874 21.4 %(37)(2.0)%
Total motorhomes8,767 100.0 %7,942 100.0 %825 10.4 %
Total Motorhome RVTotal Motorhome RV6,804 100.0 %8,767 100.0 %(1,963)(22.4)%
May 28, 2022May 29, 2021Change% ChangeMay 27, 2023May 28, 2022
Change(2)
% Change(2)
Backlog(3)(4)
Backlog(3)(4)
Backlog(3)(4)
UnitsUnits15,180 18,145 (2,965)(16.3)%Units4,595 15,180 (10,585)(69.7)%
DollarsDollars$2,285,236 $2,180,149 $105,087 4.8 %Dollars$800.4 $2,285.2 $(1,484.8)(65.0)%
Dealer InventoryDealer InventoryDealer Inventory
UnitsUnits3,008 2,429 579 23.8 %Units4,544 3,008 1,536 51.1 %
(1)    Average selling priceASP excludes off-invoice dealer incentives.
(2)    Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.
(3)    Percentages may not add due to rounding differences.
(3)(4)    Our backlog includes all accepted orders from dealers which generally have been requested to be shipped within the next six months. Orders in backlog generally can be cancelled or postponed at the option of the dealer at any time without penalty; therefore, backlog may not necessarily be an accurate measure of future sales.

Net revenues increased in the first nine months of Fiscal 2022 compared to the first nine months of Fiscal 2021decreased primarily due to unit volume decline, partially offset by price increases and unit growth.increases.

Adjusted EBITDA increased in the first nine months of Fiscal 2022 compared to the first nine months of Fiscal 2021 primarilydecreased due to revenue growth, partially offset by higher input costslower revenues and operating expenses.productivity and operational efficiency challenges.

Backlog decreased due to normalizing levels of dealer inventories.
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Marine
The following is an analysis of key changes in our Marine segment for the nine months ended May 28, 202227, 2023 compared to the nine months ended May 29, 2021:28, 2022:
Nine Months EndedNine Months Ended
(in thousands, except ASP and units)May 28, 2022% of RevenuesMay 29, 2021% of Revenues$ Change% Change
(in millions, except ASP and units)(in millions, except ASP and units)May 27, 2023
% of Revenues(2)
May 28, 2022
% of Revenues(2)
$ Change(2)
% Change(2)
Net revenuesNet revenues$303,175 $43,527 $259,648 596.5 %Net revenues$373.3 $303.2 $70.1 23.1 %
Adjusted EBITDAAdjusted EBITDA43,336 14.3 %3,502 8.0 %39,834 1,137.5 %Adjusted EBITDA50.2 13.5 %43.3 14.3 %6.9 15.9 %
ASP(1)
ASP(1)
73,669 203,418 (129,749)(63.8)%
ASP(1)
$82,582 $73,669 $8,913 12.1 %
Nine Months EndedNine Months Ended
Unit deliveriesUnit deliveriesMay 28, 2022May 29, 2021Unit Change% ChangeUnit deliveriesMay 27, 2023May 28, 2022Unit Change% Change
BoatsBoats4,112 213 3,899 1,830.5 %Boats4,552 4,112 440 10.7 %
May 28, 2022May 29, 2021Change% ChangeMay 27, 2023May 28, 2022
Change(2)
% Change(2)
Backlog(2)(3)
Backlog(2)(3)
Backlog(2)(3)
UnitsUnits2,491 492 1,999 406.3 %Units1,348 2,491 (1,143)(45.9)%
DollarsDollars$245,416 $110,472 $134,944 122.2 %Dollars$146.3 $245.4 $(99.2)(40.4)%
Dealer Inventory(4)Dealer Inventory(4)Dealer Inventory(4)
UnitsUnits2,454 167 2,287 1,369.5 %Units4,109 2,454 1,655 67.4 %
(1)    ASP excludes off-invoice dealer incentives.
(2)    Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.
(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.
(4)    Due to the nature of the Marine industry, this amount includes a higher proportion of retail sold units than our other segments.

Net revenues increased in the first nine months of Fiscal 2022 compared to the first nine months of Fiscal 2021 primarily due to the acquisition of Barletta at the beginning of the first quarter of Fiscal 2022.unit growth and price increases.

Adjusted EBITDA increased in the first nine months of Fiscal 2022 compared to the first nine months of Fiscal 2021 primarily due to the acquisitionincreased revenue, partially offset by higher discounts and allowances compared to prior year.

Backlog decreased due to normalizing levels of Barletta at the beginning of the first quarter of Fiscal 2022.dealer inventories.

Analysis of Financial Condition, Liquidity, and Resources
Cash Flows
The following table summarizes our cash flows from operations:
Nine Months EndedNine Months Ended
(in thousands)May 28,
2022
May 29,
2021
(in millions)(in millions)May 27,
2023
May 28,
2022
Total cash provided by (used in):Total cash provided by (used in):Total cash provided by (used in):
Operating activitiesOperating activities$245,245 $147,954 Operating activities$156.4 $245.2 
Investing activitiesInvesting activities(291,334)(11,370)Investing activities(154.4)(291.3)
Financing activitiesFinancing activities(150,401)(23,318)Financing activities(58.3)(150.4)
Net (decrease) increase in cash and cash equivalents$(196,490)$113,266 
Net decrease in cash and cash equivalentsNet decrease in cash and cash equivalents$(56.3)$(196.5)
Operating Activities
Cash provided by operating activities increased forDuring the nine months ended May 28, 202227, 2023, cash provided by operating activities was $156.4 million compared to $245.2 million in the nine months ended May 29, 2021 due to highersame period last year. The decrease is primarily driven by lower profitability adjusted for non-cash items, partially offset by investments in working capital to support current year revenue growth. The investments in working capital included a $117.4 million increase in accounts receivable due to timing of invoicing/collections, a $129.1 million increase in inventory to support customer demand and to support operational activities during a period impacted
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by supply chain disruption,net favorable changes in operating assets and liabilities. The favorable impact of operating assets and liabilities is primarily due to changes in accounts receivable due to lower sales and timing of invoicing/collections, and changes in inventory due to elevated purchases in Fiscal 2022 to support customer demand, partially offset by a $41.6 million increasedecrease in accounts payable due to inventory growth and timing of payments.lower purchasing requirements.

Investing Activities
Cash used in investing activities increased in the nine months ended May 28, 2022 compared to the nine months ended May 29, 2021decreased primarily due to our acquisition of Barletta during the first quarter of Fiscal 2022.2022 compared to the acquisition of Lithionics during the third quarter of Fiscal 2023.

Financing Activities
Cash used in financing activities increased in the nine months ended May 28, 2022 compared to the nine months ended May 29, 2021decreased primarily due to an increase$24.9 million of stock repurchases in stock repurchasesthe first nine months of Fiscal 2023 compared to $134.2 million in the first nine months of Fiscal 2022.

Debt and Capital
We maintain a $192.5$350.0 million asset-based revolving credit facility ("ABL Credit Facility") with a maturity date of October 22, 2024July 15, 2027 subject to certain factors which may accelerate the maturity date. As of May 28, 2022,27, 2023, we had no borrowings against the ABL Credit Facility.

As of May 28, 2022,27, 2023, we had $238.1$225.9 million in cash and cash equivalents and $192.5$350.0 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 MeasuresWorking Capital
Working capital at May 28, 202227, 2023 and August 28, 202127, 2022 was $582.7$574.7 million and $651.6$571.7 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 13, 2021,August 17, 2022, our Board of Directors authorized a new share repurchase program in the amount of $200.0$350.0 million with no time restriction on the authorization, which took effect immediately and replaced the prior program. In the nine months ended May 28, 2022,27, 2023, we repurchased 2,143,000346,860 shares of our own common stock at a cost of $129.6$20.0 million under this authorization, and the previous authorization, and 62,00086,840 shares at a cost of $4.6$4.9 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. AtAs of May 28, 2022,27, 2023, we have $80.0$330.0 million remaining on our Board approved repurchase authorization.

On May 18, 2022,17, 2023, our Board of Directors approved a quarterly cash dividend of $0.18$0.27 per share payable on June 29, 2022,28, 2023, to common stockholders of record at the close of business on June 8, 2022.14, 2023.

Contractual Obligations and Commercial Commitments
There hashave been no material changechanges in our contractual obligations since the end of Fiscal 2021.2022. See our Annual Report on Form 10-K for the fiscal year ended August 28, 202127, 2022 for additional information regarding our contractual obligations and commercial commitments.

Critical Accounting Policies
We describe our significantcritical accounting policies in Note 1 in 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, 2021.27, 2022. We discuss our critical accounting estimates in Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended August 28, 2021.27, 2022. There have been no material changes to our critical accounting policies or critical accounting estimates since the end of Fiscal 2021.2022.

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Recently Issued Accounting Pronouncements
For a summary of recently issued applicableThere have been no new accounting pronouncements see Note 1 to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Reportissued but not yet adopted or effective that we believe will have a significant impact on Form 10-Q.our consolidated financial statements.

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," "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 28, 2021,27, 2022, 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:
Uncertainty surrounding the COVID-19 pandemic.
General economic uncertainty in key markets and a worsening of domestic and global economic conditions or low levels of economic growth.
Uncertainty surrounding the COVID-19 pandemic.
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.
Risk related to independent dealers.
Significant increase in repurchase obligations.
Business or production disruptions.
Inadequate inventory and distribution channel management.
Ability to retain relationships with our suppliers.suppliers and obtain components.
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, 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.
Impairment of goodwill.goodwill and trade names.
Risks related to our Convertible and Senior Secured Notes, including our ability to 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 28, 2022, 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, which is our only floating rate debt instrument, which remains undrawn as of May 28, 2022.27, 2023.

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.

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Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the third quarter of Fiscal 20222023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION

Item 1. Legal Proceedings
For a description of our legal proceedings, see Note 11 in the Notes 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 Part I, Item 1A, of Part I Risk Factors,of our Annual Report on Form 10-K for the fiscal year ended August 28, 2021.27, 2022, except for the risk factor updated below:

For some of the components used in production, we depend on a small group of suppliers and the loss of any of these suppliers could affect our ability to obtain components timely or at competitive prices, which would decrease our results of operations, financial condition, and cash flows.

Most of our RV and marine components are readily available from numerous sources. However, a few of our components are produced by a small group of suppliers. In the case of motorhome RV chassis, Mercedes-Benz (USA and Canada), Stellantis N.V., Freightliner Trucks, Ford Motor Company, and Spartan RV Chassis are our major suppliers. Our relationship with our chassis suppliers is similar to our other supplier relationships in that no specific contractual commitments are engaged in by either party. This means that we do not have minimum purchase requirements, and our chassis suppliers do not have minimum supply requirements. Our chassis suppliers also supply to our competitors. Historically, chassis suppliers resort to an industry-wide allocation system during periods when supply is restricted. These allocations have been based on the volume of chassis previously purchased, which could mean our larger competitors could receive more chassis in a time of scarcity. Sales of motorhome RVs rely on chassis supply and are affected by shortages, instability, or recalls from time to time. For example, in the first quarter of Fiscal 2023, the Mercedes-Benz Sprinter chassis became subject to a recall notice, which temporarily suspended all retail sales and wholesale shipments of our products built on this chassis until a recall remedy was implemented. The remedy was implemented in the second quarter of Fiscal 2023 in cooperation with Mercedes-Benz AG. Furthermore, decisions by our suppliers to decrease production, production delays or work stoppages by the employees of such suppliers, or price increases could have a material adverse effect on our ability to produce motorhome RVs and ultimately, on our results of operations, financial condition, and cash flows. In Fiscal 2022, one of our suppliers individually accounted for approximately 11% of our consolidated raw material purchases.


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 third quarter of Fiscal 20222023 are as follows:
Period
Total Number of Shares Purchased(1,2)
Average Price Paid per Share
Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1,2)
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(3)
02/27/22 - 04/02/22137,258 $54.64 137,258 $142,500 
04/03/22 - 04/30/22572,940 54.54 572,940 111,250 
05/01/22 - 05/28/22557,931 56.01 557,931 80,000 
Total1,268,129 $55.20 1,268,129 $80,000 
Period
Total Number of Shares Purchased(1,2)
Average Price Paid per Share
Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1,2)
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(3) (in millions)
2/26/23 - 4/1/2352,556 $57.08 52,556 $347.0 
4/2/23 - 4/29/23294,304 57.76 294,304 330.0 
4/30/23 - 5/27/23113 58.73 — 330.0 
Total346,973 $57.66 346,860 $330.0 
(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)    Pursuant to a $200.0$350.0 million share repurchase program authorized by our Board of Directors on October 13, 2021.August 17, 2022. There is no time restriction on the authorization.

Our Senior Secured Notes, as defined in Note 9 in the Notes to the Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q, containscontain 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.
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Item 6.    Exhibits
101.INSXBRL 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).
101.SCHInline XBRL Taxonomy Extension Schema Document (furnished herewith).
101.CALInline XBRL Taxonomy Calculation Linkbase Document (furnished herewith).
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document (furnished herewith).
101.LABInline XBRL Taxonomy Label Linkbase Document (furnished herewith).
101.PREInline XBRL Taxonomy Presentation Linkbase Document (furnished herewith).
104Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) (furnished herewith).

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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.
WINNEBAGO INDUSTRIES, INC.
Date:June 22, 202221, 2023By:/s/ Michael J. Happe
Michael J. Happe
Chief Executive Officer, President
(Principal Executive Officer)
Date:June 22, 202221, 2023By:/s/ Bryan L. Hughes
Bryan L. Hughes
Chief Financial Officer and Senior Vice President
(Principal Financial and Accounting Officer)

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