Winnebago Industries (WGO) Q4 2021 Earnings Call Transcript | The Motley Fool

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Winnebago Industries (NYSE:WGO)
Q4 2021 Earnings Call
Oct 20, 2021, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and thank you for standing by. Welcome to the Winnebago Industries fourth-quarter and fiscal year 2021 earnings conference call. [Operator instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to Steve Stuber, vice president of investor relations.

You may begin.

Steve StuberVice President of Investor Relations

Thank you, Catherine, and good morning, everyone. Thank you for joining us today to discuss fiscal 2021 fourth-quarter and full-year earnings results. I am joined on the call today by Michael Happe, president and chief executive officer, and Bryan Hughes, senior vice president and chief financial officer. This call is being broadcast live on our website at investor.wgo.net, and a replay of the call will be available on our website later today.

The news release with our fourth quarter and annual results and the earnings supplement were issued and posted to our website earlier this morning. Before we start, I’d like to remind you that certain statements made during today’s conference call regarding Winnebago Industries and its operations may be considered forward-looking statements under securities laws. The company cautions you that forward-looking statements involve a number of risks and are inherently uncertain in a number of factors, many of which are beyond the company’s control, could cause actual results to differ materially from these statements. These factors are identified in our SEC filings, which I encourage you to read.

With that, I would now like to turn the call over to our president and CEO, Michael Happe. Mike?

Michael HappePresident and Chief Executive Officer

Thanks, Steve. Good morning, everyone, and thank you for joining us again today. We, as always, deeply appreciate your interest in Winnebago Industries and taking the time to discuss our fiscal fourth quarter and annual 2021 results. I’ll begin this morning with a discussion of the trends that drove our performance for the quarter and the year before turning it over to Bryan Hughes, who will discuss our financial results in more detail.

Then I’ll offer some closing comments and thoughts before we turn to your questions. Our fourth-quarter fiscal 2021 was a strong finish to a remarkable year, characterized by record revenue and record profitability, propelled by three key factors. First, a sustained elevated excitement for the outdoor lifestyle remained a powerful tailwind driving demand for Winnebago Industries premium products. Winnebago Industries grew fourth-quarter revenues 40.4% year over year, and 56.8% on an organic basis ex-Newmar, compared to our fiscal 2019 fourth quarter.

Second, Winnebago Industries trend of expanding market share accelerated in the fourth quarter, gaining a full 2.1 percentage points of share during the three-month period ending August. Importantly, this is driven by both new and experienced consumers who recognize the differentiated quality and innovation in Winnebago Industries brand portfolio. And the exceptional service we are known to provide in partnership with our dealers. And third, our team’s relentless demonstration of operational excellence, which enabled us to deliver for consumers and our dealer partners efficiently and profitably during a very challenging period as supply constraints and inflation have endured.

As a result, we expanded margins in both our motor home and towable segments during the fourth quarter. Before I continue, I want to recognize the superb Winnebago Industries employee team. Our employees now 6,800 plus drawn with the addition of Barletta, have worked tirelessly to provide the high-quality products and exceptional service our customers and dealer partners have come to expect. While managing through record high backlogs to meet the tremendous demand for our products, their dedication throughout this year has been the key factor in our success.

The pandemic has undoubtedly catalyzed and accelerated powerful demand for outdoor experiences. And we believe this secular shift already underway pre-COVID-19 will have a lasting impact as more and more new families experience the great outdoors. Over 10 million households camp for the first time in 2020, and we are tracking toward another estimated 4.3 million households to have their first camping experience in 2021. In addition to first timers, a new wave of engaged enthusiasts, especially millennials, younger generations are investing more of their time and income in the outdoor lifestyle.

To put a finer point on this, even as we saw the easing of pandemic restrictions over the summer, creating a possible return to a broader set of vacation and travel leisure options. Our performance in the summer selling season was strong, setting revenue records in both our fiscal third quarter, and now, our fiscal fourth quarter. Our record backlog of orders continues to grow, and we are seeing rapid sell-through of inventory we provide to dealers. We are also confident that the diverse cohorts making memories in the outdoors will be the foundation of our growth in the decades ahead.

So, we’re bullish on the broader recreation economy and investing to expand our reach beyond RVs, in line with our strategy to become a premier outdoor lifestyle company. Early in the first quarter of our fiscal 2022 year, we completed our acquisition of Barletta Boat Company. Building on our past marine investment in the Chris-Craft brand, Barletta’s premium pontoon boats meaningfully expand and extend our marine platform into one of the fastest-growing boating segments in pontoons. Looking ahead, we’re excited to discuss the exciting opportunity in our new marine reporting segment in quarters to come.

Due to the strength of our overall offering, we have been very successful in harnessing the industrywide demand for the outdoor lifestyle and delivering net total growth. Winnebago Industries is increasingly winning with customers, and we’re proud that an outsized share of new outdoor adventures has chosen to become part of the Winnebago Industries’ community. As of August 2021, our RV fiscal year-to-date market share is now 12.5%, up 140 basis points from the same period last year. Even better, we’ve been able to achieve these gains while maintaining record low levels of discounting.

Our performance and ability to capture share in the full value of our products in a competitive market underscores the unique appeal of our differentiated brand portfolio, which includes a broad range of options for new customers as they enter the market, as well as more premium products as customers upgrade and move up the value chain. Continuing to invest in our products and brands unified by our golden threads of quality, innovation and service ensures we are positioned to meet consumer demands on technology and capabilities to drive share gains now and into the future. Finally, our world-class team did a masterful job translating demand growth and market share gains into financial performance in the fourth quarter with an enterprisewide commitment to operational efficiency, despite the challenges posed by the ongoing pandemic, including supply chain disruptions and inflationary pressures. These operational efforts can be clearly seen as we kept off the fiscal year with record consolidated annual gross margins of 17.9%.

One key element of our operational excellence is the success of our enterprisewide operations and sourcing teams, who quickly adapted to component shortages and supply disruptions that have become commonplace across the supply chain. Our team has remained flexible using creative and strategic material sourcing strategies and solutions to keep our assembly lines moving. We will continue to monitor supply chain issues and provide updates along with our results as long as they persist. And importantly, we acknowledge the essential role that our dealer and supplier partners play in meeting the needs of our customers.

Our work to improve communication across our supply chain has allowed us to better anticipate and plan for disruptions in partner component availability. And we are continuing to strengthen and deepen our relationships with our dedicated dealer…

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