WGO - Earnings call transcript Q2 2019 | Winnebago Industries, Inc.

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Operator

Good day, ladies and gentlemen. And welcome to the Q2 2019 Winnebago Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session and instructions will follow at that time [Operator Instructions].

As a reminder, this call is being recorded. to of host Investor Financial like Steve today’s Relations. now Director Stuber, Planning, would introduce for your conference, I Analysis and Please, sir. go ahead

Steve Stuber

replay joining site is today. and our call and of This our and being today the I Vice morning. our call this a you, good President live was Michael everyone. Chief investor.wgo.net, Officer on broadcast to you Thank call our Happe, The later and by President and site Hughes, morning, results am joined Officer. to Executive quarter second issued with for the discuss Web be site at on our release available today earnings second will quarter Chief earlier results. Web posted and on Financial Thank Web news us Bryan

in these many These actual results we like our and would now Before from could the over of number you and forward-looking factors and turn made of inherently Company the call laws. that during Winnebago cause certain you are of operations The conference Mike? are differ CEO, you which factors, to materially President statements are may number With statements in remind which Industries control, involve to call I filings, that, I beyond uncertain Company's our a Michael identified encourage be read. forward-looking SEC statements. to considered statements regarding securities like Happe. its to I'd today's a risks, to under that start, cautions

Michael Happe

than and Winnebago usually by and as a work customer team Craft like tremendous just were Design the messengers a for experience our on we employees truly mutual journey as and your on and Winnebago to to leader soldiers be live, solutions as Thank provide today's lifetime of We members Steve play travel, you foot Winnebago thank marine make calls always delivery support many who difference day our for is the the in with place outdoors. high-quality, And in working every around aftermarket like products to market. in hundreds to more end create appreciate that lifestyle ensures partners the and you through and begin mentioned, support. X,XXX at dealer outdoor as the in to you time thanking brands. it daily end RV It this thank these, an have our globe. advocacy describe team's we superior this for the Industries. to your Chris commitment And the where In And of of us to our accomplish and they in would innovative, all service our morning. grow. you partners Steve. of work we the that channel progress brands our They our privilege partners. the extraordinary to people all by it, those ways, you, Brian, We this collaboration Thank your being Industries differentiated hard is end interest in call I, from your and is extremely customers. and customers the our our channel joining Grand

tougher more will our our morning, than I year with our will a share perspective of Q&A. begin of Hughes, to then Overall, this fiscal six and turn Chief the the our Wholesale quarter company. I who in call fiscal related conditions, second over the concluding XXXX. the an to on are had second Then Now Officer, gaining in market provide we before planned. would overview of segments comments quarter we start months market retail Bryan we closing with as Financial consolidated are XXXX. originally shipment the especially some offer call will But strong we with balance material even the financial detail are return like pleased to call the first RV on and results. results

will second As we the of we the half all of our segments. move the into year, build to look business we through created on momentum

We industries future to serve are Winnebago position delivering and profitability results its driving new committed we pursuing and that outpace opportunities to of that growth utilization, brands success. for sales levels higher and asset Industries continue the

company. committed engine long-term our investing market business short-term, to And expertise focusing model remain we We years into outdoor creating through whether Industries growth towards truly a company more profitable but innovation lifestyle a a of ability to Winnebago it and for progress organization are is quality, meaningful, as goal more operationally. the high-performance business ahead. service, continue or on efficient in simultaneously make financial progress work, consistent premier creating we and the with focused in grow, a are a talent, solid development transforming will diversified the to We on both and in

strength play the is quarter, and dramatically in prior from outpace the quarter pleased net X.X% dealer share industry. under down driven share. X% space X position While FSI times new I in the RV of the were XXXX with we positions but North position in of the greater January XX% the wholesale And RVs. by with their ago. in growing just for some and fact, three years experiencing small important American against in Chris-Craft. retail market a strategically year. retail Consolidated of RV benefits seeing RV shipments brands, am from revenues in the industry the a month market rationalization allowed showed comparing strong are has Winnebago Marine two our unique our most to in our market This and significant challenging us is second headwinds, What RV our standalone is Grand progress, company of inventory Design

incentives our to the margin conditions. organic and points of efforts and basis quarter, we our offset overall cost within our various teams' businesses. improvements in and segment revenue operational increased to flow quarter, heightened Thanks from over by phase discipline growth, input Consolidated we XXX% gross our more second made in increased challenging operating further to many gross XXX our production decrease the revenue increasing output costs across a year. managing mix, mitigation driven the raising safely dealer in our saw market Year-to-date, success last during than days efforts cash we portfolio versus controlling lost shipment motorized due continued and the progress Although, profit weather to our our which production and by profitability. navigate

in detail. our segment, unit In shipments the more down to turning were Towable the for Now, quarter segments XX.X%.

a and decline industry that of the year-ago, market, period, While a is X the strong success certainly lot which during to this been declining gain has broader a result times amount broader comparable destocking and nearly exceeded continuing to far in the demonstrates Towable comparable reflection X period share. our dealer dealer

certainly not inventory have though to immune behavior. brands corrective the been Our

impact Towable the XXXX. the the over XXXX revenues the shipment early declines period, the fiscal calendar increased decreased the part environment calendar competitive from during year dealers X.X% of Adjusted offset of and a in by the but half pricing their Towables quarter XXXX reflecting year, pricing during pressures. rightsize largely continuing taken points, by prior fiscal again, XXXX reflecting capacity mentioned basis by input cost partially utilizing second positive dollars added and to inventory in For margins driven for previously, backlog decreased quarter XX additional levels. of EBITDA and X.X% the declined unit

and towable branded line dual our customers. products to the RV the Our to market with outperform up increasing their due appeal strength of continues

full Design new towable were Winnebago plans New Hauler Micro Transcend Salt Explorer Mini and the recent at Fifth floor for once products in the Grand display in RVX Spyder again Wheel. March the including new City, branded Lake Toy on and show

positive dealer showing prospects strong our segment our to and we sales the remain feedback, outpace expect event to industry. at retail RVX towable continue the for Given strong to and

Turning sign segment a certainly industry down The taking ability margins the up stand-alone versus am Motorhome stronger continue in innovative positive the This recent ability improve is with on grow were our on motorized most focus input and are to performance higher we results of on December Winnebago steps Revenues mix, implementing high-quality line January product retail progress. dealers line. regarding the our and supply pleased remain and operational all costs to on of for end basis. focused business EBITDA revitalizing led increase to and points. segment. were improve to motorized improvements managing have and adjusted efficiency and costs, profitability What with gross has our basis an overall a But is customers current even year Motorhomes our offsetting to which down stabilizing to branded on good XX.X% line. the the our to margins were weighed a of year-over-year both I products. top environment prior We that manufacturing for XX

future. A improving our Junction assembly me back effort. centralizes single our company's energizing This this Iowa. home motor priority As our Motorhome difficult efficiency Class we our transition resources business This in operations Oregon you've diesel development, say recent and heard and us dedicated a in motorized of strategic branded the plant shift considerable business manufacturing City, amount top decision overall supply for our have manufacturing for remains a and the before, our as City, chain Forest to to a from Winnebago location, energy to consolidates product diesel campus to includes

full market and access in to space, ample have We labor ascent a profitability begin share to recovery this business. intent and

included foundation positive from year did in series B City edition backlog backlog continuing refreshed RVX selected motor reflects have Class the models the in In The see for national home B Class inventory we View/Navion timing. Winnebago, unveiled XX.X% quarter opportunity C The just product new to our rightsize to several the several the ago. backlog, which prior and not product and decline many park upgrades of B levels terms Lake weeks the currently of Salt also Travato prior numbers. were motorized event new year, Bolt, new Class dealers several dealers second review that Class

Turning our our segment. saw Chris-Craft another other boat We sales in of quarter to results. full earnings

the tremendous as to interest at We Consumers Show are brand new continue our specifically we Miami sales And demonstrated by in translating that expectations. its brand. Marine products, the positive strong it GT our showing exceeded XX Catalina the and Chris-Craft launch for saw and for shipments products in and XX which mid-February, and the trends turnout into and pilothouse. see is XX recent the traffic Boat demand

is well segment in being vehicle the overhauled grow strategically future. specialty to our profitably Lastly, as

several medical. shared specialty and to prior intentions We mobile calls segments. have focus our Accessibility on in electric vehicles enhanced,

talent, new capacity in and technology. new investing are We new

sustainability the Our With top category. call I award in recently the a the Bryan XXXX detail. second all received review electric trade commercial RVX vehicle to in turn more quarter fiscal now over Hughes, platform that at Bryan? to overview, our show financials will

Bryan Hughes

morning, good and everyone. Mike, Thanks,

Second to of the addition more Chris-Craft revenues RV units. compared million the taken fiscal million were profit heightened increased driven X.X% which the pressures Gross quarter, basis points a profit compared XXXX operational the pricing across was million, RV period. margin offset Gross XXXX pricing the favorable incentives. decrease unit partially and sale improvements, by $XX.X X.X% to for quarter dealer by last by and offset $XXX.X XXX of cost million, driven all the consolidated revenue decrease in for fiscal XX and mix, actions business inflationary during a a in period, of of decrease and $XXX.X than motorized $XX.X months

was Growth the operating million, the in business, by sales. primarily investments million $XX.X decline in of in also at to a of the ongoing second to compared we RV XX% making year, are and during $XX.X the quarter, last income decrease operating unit decline contributed quarter partially by quarter driven in SG&A driven Second income. the one-time

SG&A one-time the referred the increase were a quarter. points discrete of amortization, items, by decreased impacted last year XX that driver the we $X.XX, year. $X.XX continuation last associated the in decrease This X.X% increase of with per acquisition a XX% percentage favorably investments same $XX.X a X.X% Earnings per is of was of income share. as Chris-Craft the earnings to the was of a Net $X.X our million compared strategic in of share million, Some quarter. to of in versus contributed and period SG&A diluted or combined project discussed totaling the tax first

for measures the the adjusted performance year, EBITDA. measure provided a non-GAAP release, million and Consolidated $XX.X adjusted have illustrate press to million We EBITDA adjusted EBITDA clearly as of quarter XX.X%. an and $XX.X EBITDA was reconciliation our press The shows between in last performance. schedule our increase compared release income net or comparable accompanying to

starting and for reduce individual network decrease turning continued the quarter by to Now, primarily $XXX.X were efforts was the with down dealer second levels. segment. X.X% This million, Towables Revenues driven year-over-year. the to inventory segments

We quarter points, past was in the are also from extremely reflecting strong of $XX.X over second down the inflationary for against last costs, second year, the offset notably fully decreased X.X% not Segment enhanced the EBITDA prior adjusted and basis materials. comparing adjusted year year. shipments advances XX most quarter that EBITDA did input price margins million,

pricing of some sales, Turning were B in we Segment C down past B C. $XXX.X Class mix margin year-over-year. XX.X% the in shipments product primarily year, $X.X motorized relative for adjusted by Class A by Pricing driven our benefit actions quarter, XX basis over revenues quarter. favorable products. to down million of offset sales were in XX decline further of the was related last Class impacted the partially strength but unit EBITDA for now offset higher EBITDA and impacted Adjusted the quarter, Class months the to taken decrease driven also SG&A, offset to of investments segment, motorized versus Class incentives by sales the by points, A strong a have second in Class dealer million by by decreased the and the partially XX.X% and

balance Turning to sheet. our

capital of was $XXX.X As issuance $X.X company of of the Working the second million end million. quarter, million. of net outstanding $XXX.X had debt cost the of debt

or net from current the range year-to-date, million times. adjusted year. was just flow million EBITDA period ratio targeted to ratio X.X was leverage of same Cash operations X.X above times to approximately debt Our X.X our last from up XXX% $XX.X $XX.X

strategically And code, of to R&D was in XX.X% was balance also same our tax provides related beyond we extensive The we drove discrete driven tax the our the tax income XX%. we our flow Tax under that year the which by year transformation Jobs compared the versus associated possible rate, our us allocation business quarter credits. XX% in Total our investing to per for and quarter. in remains fiscal Including we Cuts favorable identifying fiscal was This Corporate talent be contributed last opportunity used in Federal made earnings the tax of tax year our as we top the new and partially full cash rate our and Recall had tax and approximate items our invest by function. As combined credit tax to the decision XX.X% for our our share effective for capture by in current discrete will for year with further we code our currently that XXXX quarter reduction rate for the are last second identified approximately favorable $X.XX The XXXX. endorsed the our priority. continue so, to to by to growth XX.X% invest activities. business, tax confident strengths fiscal additional the doing in quarter, Act, fiscal period that R&D rate rate initiative, and execute capital a to sheet XX%. to rate anticipate flexibility rate the tax second in We in anticipate now XX%. blended will ongoing an the

April of I our Finally, per will cash the the And now concludes closing close XXXX common of of review payable of April quarterly with Mike to record business Mike? share, provide call my at Directors turn financials. back to of XXXX. approved That our to that, some Board quarterly dividend on comments. X, on a XX, stockholders $X.XX

Michael Happe

Thanks Bryan.

during to trusted successful our not is our process, a pursuit As morning, grade but quarterly becoming remain advanced heard consequences. our are the two always made a our these to is It than the around our we active also final step competitive not and At in the degree. allocation report remain marine Each in ever way in consistent platform due potential lifestyle, of position you've one which fiscal line specialty we our attainment also us more around affecting progress with in enterprise outdoor the steadfast but dire RV, have portfolio industry that company with an forward new on more they hopefully transformation This luxury future. recognize steps is better Winnebago industry navigate capital efforts we and year mention and Industries, or future. part RV internal for full the early resilient, stages, much of aspire before without in business pleased more this there talent, approach, the operations. we've vision have more large hopefully resiliency surprising the able and but our quiz XXXX, made we to a headwinds back the diversified to is and significant within advanced vehicle only the

Just three representing sales. one a with short were years of Motorhomes, largely our division overall ago, organization XX% we

We on with to talent, continue companies next business. inorganic expand our of brands, share are those and confident channel years, that quarter, said global in strengths that last to value there leverage promises and premium for our significant over organic to search be further markets. and we the opportunities each we expansion as the service And will strong deliver they great for product investment five partnerships XX make

the market to facing retail the some share the remainder for prospects both of industry its with on Next, I'd challenges and like thoughts XXXX. of you RV my

to more In relates bearish industry its a across grow a possessions experiences recreational industry. the demand fed part double-digit Recent RV prospects has a the good retail deal for is versatility of outdoors costs, decline breadth slowed is inventory costs about previous we rationalization, RV end maintained XXXX, prices long-term the first of to uncertainty what increases and likely and to dealer the the RV by broader as interest of about brings product orders to from volatility been and being retail year by a space. the show trajectory, short due generally continuing has vehicle try unusually to in they and seasonal back to continues calendar headed to in fund camping, customers the year. of clearly term, increased impacted XXXX the a the tariff in RV for for determine The where multiple truly the noise more Secular called versus a lifestyle has and high XXXX demographic segments. macroeconomic higher shipments is collecting sentiment economy of due remains and the sense material reports Although, the it market, as expand years industry. optimistic rates half the market there growth. in variety of remain pressures, in and that increased of returns from tax as equities Retail following anxiety of and result year next middle-class general higher interest in in compound

family in the position brands future. quarter, our headwinds some during recognize our stable, friends. seeking overall the for invest headwinds the in confidence are to more sales experiences positive creating and as it choose they balance that oil opportunity OEMs we strong macro the resources uniquely validate RV are indicators new are orders and industry, definite These have to are now and be incremental new to strong sales relatively existing market, Despite can for for also are retail and carefully growth there outdoor prices inventory enter but regarding positive has several the from managing as impacted a selling fuel the on we to which that continuing believe discretionary provides to and related challenging growth Reasonable the through demand, and quantity insulation capture businesses. developments our our dealers As season. Consumer serving remained lasting inventories They respond a valuable orders currently continue served also product. XXXX timely second new tailwinds to We most with future with poised see of customers purchases we opportunities. to manner. their us

availability. strong of several be to ahead our customers' ability most as show constraining data over gain from retail the were both traffic part, moderated and The and to Lastly, weeks share show the remain of certain peers data our the year. sales capital during further in outperform down recent seeing financing avoided last been and expected part This positive. resiliency the and retail companies for access financing and first We're expectations demonstrates our have has abnormally also sales coming as in a market. to credit

industries' the shipment of We forecast XXXX, of are year the RV for support forecast. and the cognizant wholesale Association's calendar

We a call. retail whole target for also the to believe that of calendar aspirational good we our said is year flat during continue for XXXX as industry last the

However, be calendar more retail will mid year. likely believe down we for single digits to low the

industry been shifts. team versus nine much for others. tremendous industry growing eight Industries' to and Winnebago year. Chris last to reasons; points. by certain Chris retain the Marine momentum compete the right learn steadier outperformed recovery market the categories at is be as digit retail this now we industry in RV XX to the we our comment brand And has consistently growth, One this ability on has expansion crisis, our continue to forward since commitment we spread to double Craft. competitive Marine confident basis on line and a channel and years quickly are months, as current the a trajectory XX calendar for expansion; last Over fortunate XX through Craft The consolidated financial product multiple about the

opportunity as are portfolio the best We to well Chris the and exceed projections to grow continues practices first confident profitably. for and continue foreseeable chemistry the addition go space model due for in will an and/or The building company. and their Chris-Craft full-year future. We to are our Craft marine meet remain selectively to M&A that our across interested and to integration the

the ahead industry PRV look outpacing record we As to of and expansion. profitability marine half it line top track of our relates maintain are fiscal sales, to and XXXX, second as share we the poised to both the

high place will their to priorities in. be strategic We and against that quality to managed our trust well continue work companies can execute investors a

regarding with of close Board comment recent a Director announcement. the I’ll Finally,

the Over past years, changes leadership our we several to made strategies. have and model, business

period, to several new a During Bob At within instincts has a as morning. Chair will and we behalf your of role we like our having a heights. of fall And be operator this to The years forward the he up the also that to time Q&A also half played much past Winnebago the David courage, for Bob in valued the supportive him to key that, [Dave] his which role have the with He for of this strategic organization. of leadership look and to same collectively personally now Winnebago governance the Industries' today. transformational serve I Directors, board for for of passion, personally leading both as very now Thanks and XXXX. in our Chiusano but I to years, wrap sharing will service been director as I'd board, by turn new chair. Winnebago On with member. insight we're of the employees, overall With forward Board Chair pleased board and last the come. greater up was Dave’s thank our formal to all Miles to line look years comments in significant his working change Bob drive in over financial expertise, valued journey time, Industries' over to the back step his which his session. will operating as And CEO and exciting a are for continue company strategic service expertise. ongoing diligent, new management in many this the three has the has occurred to process, recommended. have Industries instrumental especially the and

Operator

Thank you [Operator instructions].

question W. first the of line Our Kennison from Craig Robert with comes Baird.

open. now Your line is

Craig Kennison

First the had one do Class B with market. to

there an get you it? you in doing market How opportunity, that frame opportunity create for that has after some B disruption Class are and Winnebago. frankly know As may been to would that, what you

Michael Happe

and Mike, is question. I'll This that answer

We are Canada. the certainly the to aware developments of specific Roadtrek of some business in

that share position a share monthly fortunate basis neighborhood consistently reports. Winnebago our at business are believe, reports significant currently on I those two share has Class Depending Motorhome you Bs. same the of the on Roadtrek, somewhere Industries and in We XX%. been have in number a it in look

So in least shifts and industry. organically happen and unknown and are Winnebago compete term business, current line any at the products pipeline, customers certainly, and their many term share disruption in B our in brand well to positioned our could dealers certainly future well. that the believe products has And the to their short end long our of of Class future for as business, in new questions we and asking some the that we have our

our on what with line. opportunities there. being to business. Class And focused best we share very market about the be will the dealers is to intentionally the our team B potential increases continue They're trying the focused Winnebago very of Motorhome on engaged our business with So believe market that for that we is the serve line part in

Craig Kennison

I your also you XXXX achieve revenue of you XX% one those about outlined, to plans And share do How in on November second think RV from operating of segments? has that with feel and appears your do achieved plan goals. you've XX% recently, it of market margin based trend question key to XXXX outside

Michael Happe

you doing four XXXX. XXXX mark our RV was And to by recall here of share we've even November to York the goals achieve just probably end that. to as in share alluded, seem Day seen track comments of goals. American standalone on Winnebago that Industries City, market we of did basis in good my the recently. at Investor a XX% North We be on monthly one many As attain mentioned, you of Craig, hoping New as

exceed in of a that candidly goal in anticipated operating So we bit position we The and hope the to than tougher definitely XXXX. had maintain income November that little is future.

most other formally remember cost and you tariffs of of some before material the was were If that the business. inflation put many in to of begun our impact place, or had

our one would income will is good to a XX% that goal. is in We goal half back fiscal so, make calendar hope the the definitely year, but progress that And achieve. tougher to say strive I year on XXXX, our of still we operating

the Grand the acquisition for not that such it's I made call in we've in. year categories, assure RV more had of of the business you XX% in on good product sales So entry Chris-Craft, Design's new business against or the stick new daily with businesses by new products goal one with of to net end new were categories And do still of organic the either I and a as our fiscal progress within our into a can 'XX on stretch of I of at end also XX% tin new some XXXX. the we that goal and The not introduction businesses of but FXXXX, we that. But basis. goal about that were that our that talking fiscal achieving would would we're end our the

specifics around months we're point that on as going we goal here at thoughts try XX any to have, achieve share inorganic business not but to development guess, So well. to this I opportunities further

those will we if of not us tuned. can those. appreciate make So progress, do forward. And very We both attain everything we reminding going to good stay of you

Operator

Thank you.

Scott of next comes question Our the with from CL Stember line King.

is line now Your open.

Scott Stember

of a would there bit be if give of your guess and release basis us a you talked in in a you to you retail little expect you Maybe on actually could expectations granular guys the your monthly about the more equilibrium first would wholesale. I in expect question. third to would more Mike, press that state just bottom? when industry when guess that And my be weighing Thanks. a hit I quarter,

Michael Happe

of in the retail levels equilibrium been the release equilibrium over the were words late used that achieve six our early We've we that shipments I three. and normal the been, consistent think an guess press quarter summer spring would new we I had in some hopeful approaching XXXX. in last months, relatively the in

to see is weather QX, talked about QX, business public that in in hopeful equilibrium into break that, specifically, am companies happen way offered for think, with have we're again in the country. for this. anybody's our sector the so personally really into you'll it that but in I early our could start guess. it's their of industry June it well. I wise increasingly late we different -- especially the parts as But thoughts April, May. own know our Candidly, spring starting probably still have spill I could certain pleased to of over on

country. have We here. part to waiting and retail be the hopefully some of more northern comment the some will states, retail drive bit north that dealers that seen Mason-Dixon good a season the seasonally for to of we're kick-off start retail say experience of weather that there in of will And think some warmer I tightening the probably good truly the when lines factor in the last let's some this

sticking hopefully So case. that's early share the take positioned outperform not late our case, a and the industry. and well again, If the minimum to we spring business at is we're hope market that's summer, still retail too

Scott Stember

or talked about about still to that's that And we against talking as Grand a of the were had wanted holding I selling has factor I into your guys just of that in you discounting. to steadfast season? ground one and know you I for the are that still go quarter we up not headwinds discounting make margin as Design you've perspective. goes, talked about the that release as far sure about been that you the But gross know discounting reasons from one guys go in and the

Michael Happe

an pleased very made Design as years to acquisition the committed are we Grand them to that early continue And things. Yes, we've ago. model successful with performance target do owned very to and more the two us positive we that since business remain their our attractive as is them in than in years fact, And do the had of quarterly we've stated still They companies operate. still discounting to on basis some the branded that And entirety Winnebago and some our as business in products we other place that report as are to in pleased industry a of so. in its that do model of discipline today own they not includes business.

we line the overtime as And time. get our to Design Winnebago a those product them are as improve positions good, there But business the Grand future lots and well. to strength run lines there. clean product do with that allow the well. that dealers we as businesses be stronger our of and move relationships Motorhome on able their should pure the to intently as in there and branded and So take very working And Winnebago our will dealer some Towables branded

Scott Stember

motorized of there's facility. should closing savings some fruit know profitability the costs quarters a And you. what will guess, quarter. the next be you last I to modeling once some hanging what and be come Oregon Could of just going in of cost of, Thank the just on side those we question transitory remind I of one be couple with some the also the low out in? us

Bryan Hughes

the QX, in incurred So immaterial. were costs

really we they for being so driver we QX, really -- quarter. were speak those didn't in a those to speak So, immaterial, the as to didn't

$X forward, of for then of in $X.XX QX, For going we of and And the expect the million year about quarters. EPS two to in be of offset the 'XX forward. and fiscal roughly every expect them QX those to other. XXXX, each we expect we savings costs In savings and magnitude each

metrics the disclosed are those that we've So previously.

Operator

Thank you.

the from of O'Hara question comes Steve Sidoti Our and line next with Company.

Your now line is open.

Steve O'Hara

Towables out maybe there? I as could the just you well improve to talk as I you. gave think you side, Can retail just you your talk but continue you into could thought that your that you that And materially a think expectations. about said little if You that’s more. outperform, you go I on expectations? Obviously, Thank standpoint. Motorhome results just maybe expect to narrow, the that from grow if you continue about you how size a as think gap to begins to But you play just

Michael Happe

most over Our but the ignited fast Towables also Design, has in the of of last business of acceleration growth business, market our by both share the a definitely the in Grand several years growing the growth wise acquisition our been for several has business dollar profitability Winnebago on years. to Towables of we're business line that more the last business the pleased bottom The than tripled. the has size which and report well, of doubled as segment

dealer in new But upgrade particular and comes we start So standalone terms shift had that And that design, alluded our the XX The those earlier at in mentioned Winnebago consecutive to in pleased pleased contributing numerous markets. lines, But View the product that led businesses And us are see our streak positions fashion, improving to see XX resource. even and B the longer version a months markets smaller better growth. business and months of of supported both to, find our Salt the to about have to being morning their time Winnebago Mercedes by unveiled Navion on of into a been lot meaningful certainly this need last two but those from especially where feel their comments C there. that strength to Towables dealer as the are move a some continue to new here both line-up around probably to the did improvements B our industry RVX, as by extremely market you'll Lake my of to we've with gain shown here relationships that through product business. also share but products, as grand expand position has the SSI new much spent of Winnebago I Class Class market recently that our momentum happen, demand outlook the way the we Motorhomes in retail lot small a recently ago being well. chassis but on Towables and/or see a in retail the continue in to or Class the question Motorhome here we that's companies better year I positive introduce relationships think at outperformance our of share their some strengthen of of products. introduction business, of Sprinter even in

that see can will in So to but I an work it. driven sometime market we hard which contribute We'll lasts intend to date end as future. gain we're be we is great. that Motorhome long it make won't that and by mostly on put very sure to do as for possible. are now as optimistic share starting Towables, the But well,

Steve O'Hara

the where not maybe on a you'd maybe years you brand for you're if improve maybe market is reception the right And to team a the a side dealers? think the to right at stands you. that terms having where think them and there've and And the relative that that have just helped seeing I dealer point, the well? in prior just at price to think stands? process that, wondering from maybe come that as am your to dealers product some Thank the Winnebago management follow new in about number the talked then dropped back And up where been wondering base, the of And of then motorized coming I has point. on. of I I'm past you number And product right having in that

Michael Happe

turnaround work and line advocate they those Winnebago progress, The product brands as and in have lots having them carry. end on continues against view strong Motorhome favorably for that that starts well the and customers to it products appeal be for with their a other will dealers that

not we examples laurels continue think even the are work showed that at Our Class up, RVX new a stronger, and make we Travato very is will there. B Bolt and to our of hard to resting on us line I product market-leading

A re-launched with Class on that the Vista now mentioned, on refreshed Adventurer repositioned we've positioned I C been as well line the side and Winnebago now the As Navion, but with View Class line intent and also now gas outlook in the our working the has line. and been well the the and Motorhome

better we're ago. still both So, several tired are where still have than years models do We need we refresh. were that and

assembly now. opening right retail here speak we process the would pipeline diesel about from in in strengthen A products years say to transition point new need we'll in that year. coming some unveil performed can't We and product, Class has I overall Oregon price have and during as good lineup Forza is we the to this our We production at shape, the Iowa. well that the fiscal our diesel

it's improve up in quarter every say come market starting turn both But see to that and and I think line the roughly XX% candidly, we some the from share business future to get to Steve, share like margins that at exactly positive starting stabilize that aware and that's year-over-year on have working that to my market share and in to and direction. we're a better is why team perspective but to guess, for more. goal a time. we're I metaphor, end, that that clearly hopefully So, the that's take journey. better would also in market I'd a but tough to the see in with But feeling where basis XX% hard will of or still you're And

Operator

Thank you.

next now the your is Our with of line comes Capital Garrett open. Markets, BMO line Johnson from question

Garrett Johnson

Good you. morning, Thank here. two questions

of wholesale equation each comment and will equilibrium. equal? you. So shipments retail approach does that that precisely growth mean? mean? retail be that what percent say mean be will guys that and exactly Does the units mean does new What sales that wholesale you or same, when First, will Thank does a

Michael Happe

a more and to the much dealer will of What is with inventory and as that destocking on targets and their the Motorhomes dealer on inventory sub-categories turns dealers But not destocking comment slow, that to by probably it their inventory of will comfortable macro stable a I if lots we of pace pertains reach place. category within slow pace mean forward, that there. to vary reasonable the basis, where going stable a see by Towable's by more will a point even a are in

to math outpace of you at the in to would mean the on give probably get that's that's to what intention be position we'll months over but that I'm in specific basis to certainly But to by that, the have several here So comment. order continue not percentage that shipments have next there. I retail the a numbers,

Garrett Johnson

the said quarters any. XX% onetime points I investments it like Oregon cost I that The much that does third And in SG&A. quarter other is, fourth how second XX guys have $X.XX not of cost future long? for if quarter how in that guess quantified include How investments, question have you each for And sounds increase quarter. and Oregon quarter those and much more that onetime-ish in about for you we where and

Bryan Hughes

of project quarters when specific strategic invest that alluded have I to effectively. see we We right not strategically or of and to continue say commit to not is reserved we will do we the that going QX, QX in projects opportunity to wrapped-up the the having to future in here to We're so. QX having QX terms So that alluded types in in investments. an to as investment. those

material item, opportunity. But that we we to we be the expect to relates in it continue the as reserve specific to again do don't costs QX. said, like see other I right items way So a in as here in invest incurred to

Operator

Thank you.

question comes Our SunTrust. the next of Swartz Michael from with line

Your line now open. is

Michael Swartz

were we share retail how am got around is to to X the first comments And me I thinking your but on just But about XXXX. you I points. side, I by were your when saying little And maybe single-digit outperform more digits low previously a you're if gain I now. thinking to wanted low talked down mid-single out the retail like sounds single quarter maybe backdrop XX like Mike think on I It expected guess that for remember you to you flush correct worse. wrong, sounds that digits. call down it it think

Now, double-digit. you're saying by

So better. shares it are sounds actually like your getting

to more weeks those about recent way correct what is comfort you it? XX seen the think have gap you maybe in point share are So and that that gives that right

Michael Happe

over months has, hung performance in at performance Industry well I well little earlier. very our think the do that our you over couple softer had there. stated a been there digit in question in double projected last And of than we retail I has your assumptions believe I think rate.

are still very as to our of Towables serve earn evidence of share we and are dealers And potential end both whether continue that business, as business, but guess, I for right, you still the retail think as there fierce see no in Both their the competitors we also, XXXX year to points for well, to we those hope myself know they to probably really Class more modifying I'd calendar not closer a but focused months to couple up customers. terms for happen. latest But they and genesis But able that. it's flat our have, I for can we we project those, retail calendar I'm industry that to gain and so B X% our think a satisfy But But slightly, market you see of here to digits. year, way probably performance. our either guess lower a worse of single can. again, like Design over than And the our I'd that teams specifically are of margin is that's slightly customers year also would would are some can well and the X simplistically XXXX momentum, sit being will quite we today. Grand agree, serve within as love down assumptions. I retail or thoughts continue their our their hopefully, as the that momentum the industry

Michael Swartz

think, And then how over number Did due to days, year you February. maybe think second in it weather you days I the quarter, fewer days three basis? you lost about Was quantify the clarification, was that? one of year specifically that of to actually a how think said or point I many

Michael Happe

various some I'll you exactly and days the calculated sure to stable XX because facilities. what environment quarter. with numbers could that Mike, or we've everybody lost should production operating in a have had happened back We had but of them go approximately roughly across want our second make So to you salt, sometimes grain calculate do I it hard is takes here. give But a

of market. other whole shipments down a the day down themselves, several calendar same not believe but facilities $XX And production possible units. XX of million the XX to that were wise, days, that's facilities for terms just in potential hundreds value and we days Now, but by several had of were

an notice tentative as in no Indiana. excuse, the as a that North that in or well of say especially by of it of to you'll Iowa here going I so, of here. industry means Minnesota because our bit And that will stressing we're and the because some we we harsh rest use State an just State operating of I'm facilities, crutch where that, are have was saw a the winter some the

our are weather. and we And revenue and attribute we approximately so by results for with million so the days total $XX production loss QX. of XX in numbers, them are to pleased those But potential stand

Michael Swartz

we're how progressing rebalancing Is in board of we And seems others, think or about way same Are then inventory inventory one just are to heavier a more this it position? there and there the the you the act? think than geographically as areas little we about a terms in situation. where across in be

Michael Happe

and some that's and a analysts as your just of dealer a just be qualitative own the part I And reports No, north. that to on country our seem retail to those a north sure continue would further looking But basis. inventory the this own go. is in well make bit still three finance surveys from the sense the read coming in the And the is spring and lagging of next here two country. earlier number But some But partners. do as to a would for that a correction, of you to bit further the months from into to does the we north part I of And probably part south, south we starts at candidly I say north, meaning terms in say northern weather great destock job don't southern over regional that get of or in regional and in appears specificity. behind ways that want expect dealer also due common to inventory inventory it of ahead the geographically would have than to they feedback. feedback of the get of the country little our

Operator

Thank you.

the Our line David comes Morningstar. from of next question with Wisden

open. now line Your is

David Whiston

through towards terms incentives of Following up dealers they're have last rightsizing in been -- maybe significant pretty least just on sounds like the at that south, that in process, question, end that. slow? going situation? a optimistic the pretty now your going dealers you of selling macro nationwide think into season they're spring Do pretty relatively will do still are think uneasy about you Or the and

Michael Happe

some there's calendar think RV massive don't be that it's I correction XXXX. of I the sky is here going to predicting year mix retail ways, in Well, a dealers both. falling and that any think are in a

of strength they markets various they the that I have think competitive in presence it depends lines carry dealer, their position a may on that the in. their the

are about think in noting, retail dealers their coming retail a that at it of that Grand ways, comments, your very know due mentioned to strong a I that, on stronger, of So have Marine is they that, your they that many prospects earlier retail sales, number traffic retail environment cases, again, both RV anxiety are solid the good glad to and Lake of that the for close I to the customers optimistic in And of carry lots. and and their that their a I especially however, They my have seeing season. lines off depends are. But that dealers are Design more a they lots some some Salt specific probably general to that presence on we're competitive Grand difficult formal example, are when factors dealers on general get continue view again, more is the economic also can I City dealer where bullish Design don't but their case. and in and in are that's carry think a industries position of because I good And The shelves. just shows the RVX pessimistic. are but think as conditions foot

David Whiston

inventory reduction an inventory generation think on second on 'XX, the And first be the there from second of half half robust tailwind? capital. even Do you really in cash half if free fiscal can working still is flow benefited

Bryan Hughes

always you capital appreciate half seeing the as challenge is And a is good do can cash We feel about market the capital shifting lot we're working moment. generation. underway got at down, second working the initiatives headwinds or flow as on We've manage to wholesale a of shipments. as

and So year we our that the have in that to have been the as sales manage overall in is as sure it our half of with peers But we've to initiatives the well we managing underway well, it you the expect do because first struggling of get with downturn. second I'm are expectation. current ahead half

Operator

Thank you.

Our from the Badishkanian of with next question line Citigroup. comes Greg

is line Your now open.

Fred Wightman

inventory less Just then? And than continued a quick has dealer about month. since pattern concerns that clarification. Last quarter, each you had talked

Michael Happe

from and They of drop guess end think I as are would top continue shape our turns. our our that for I softness. brands pertains of to terms in then business dealer of the definitely maintain, later in other a retail some for was say future QX. Fred, a being inventory brands always position of year-over-year in would to impacted the had end of headwinds terms QX taking you in in destocking. terms getting brands some showed probably than basis the we our some industry. late it in line saw you of I Yes, I our And that of of more little business, our inventories to bit on were better on QX dealers that cycle tell

of Our an that's strength of shape. I you, as been here Winnebago function would industry product also spots. space think being Motorhome relatively inventory has the recent several I months in more always softer line, a tell a but the good the little Motorhome in in

we to inventory. feel about So our continue good field

the We the have watched aging carefully, turns. very

There down. spots selectively. our inventory aspiration we We working field focused to working some we drive are that always higher on and we an that dealers And turns with some are are we have have improve as position that as do well. to cost year on in the terms to in here of not well so but look our our much a continues brands next two, or change of inventory macro

Fred Wightman

RVIA And February, basis. down overall an then wholesale on data just from the a for perspective, mid-teens

just in the saying and spring it declines an being line terms entry-level year-over-year last consistent point not what you're or much with but all to I down the continued more in as mean mean we've similar So of should year-over-year guys really saw I as as be is perspective? month. you that summer? into what approach that late at the thinking low cadence from then seen a early to we

Michael Happe

numbers that would I I many to of those your of improve. of would need basis, Yes, next hope and back, hope a start have case. the are to more you would the declines months I But I for closely. the hope And at bit Fred, significant a that most numbers shipment couple would see be those on look would year-over-year us. here to go certainly behind

over But months, Now, don't seeing will that industry see. I couple positive months negative an to next the think next conditions for at better will here turn would anytime level. but they'll think here improve our the have in several chances I shipment

other of North still are history industry, of RV RV in is XX% hands We the the American XX% of players. some the only

larger their shipment a industry driving number the the the will still to lot pacing. inventory really is our and but rest the make and number We work of of smaller

Fred Wightman

then you finally, see retail would pick-up are perspective? that And that confident just meet from you May? guys in and wholesale a demand can you April How

Michael Happe

say very would we're things turn I on. can we confident back that

are of certainly Some the chain. not near almost suppliers can our we relationships of have up full production ramp in how that But we most on and anywhere running back with you still it depends supply with well. all the of good and at And I one our there as capacity a the that's exception, at the rate. more have strong Class to at we plant produce production plants this probably time, would line continues B say that quickly

cases some So, about business probably are lot depend anymore. a in can talking series-by-series, I in we respond. and capacity not our constraints think But we supplier-by-supplier. line-by-line It'll

we of discussions done side North We where the to around capacity Towables tell that forward the And line. having around is on discussions integrity we we on a that number exceed expectations efficiency that you those segment particular that I going the Chris-Craft business. continuing And our that in would really some significantly around our place And brand address latest We've are it space. expansion Iowa that still our of because the and business. in We've identified to investing new have luxury bought business, in done lot the could the it diesel in business those. capacity M&A had maintain the for projects is North space brand model. has thinking Motorhome that the we're a grow Iowa and

Operator

you. Thank

no at to back Stuber Steve questions this have call turn the like time. remarks. further I to further now for We would any

Steve Stuber

great many appreciate you speaking Great. again. to quarter. Thank you, throughout day, time forward everyone and of We certainly call with for joining today. our a the look Have your and thanks

Operator

conference. for you in today's Ladies and thank participating gentlemen, program. does today's This conclude

disconnect. Everyone, great a have all may day. You

Winnebago Industries (WGO) 25 Mar 192019 Q2 Earnings call transcript