Winnebago Industries Announces Strong Third Quarter Fiscal 2021 Results

-- Record Quarterly Revenues of $960.7 million Driven by Strong End Consumer Demand and Consistent Execution --

-- RV Market Share Gains Continue, Rising to 12.5% (+40 Basis Points) on a Fiscal Year to Date Basis thru April --

-- Record Reported Diluted EPS of $2.05; Record Adjusted Diluted EPS of $2.16 --

-- Record Backlogs Reflect Sustained Levels of Strong End Consumer Demand --

EDEN PRAIRIE, Minn., June 23, 2021 (GLOBE NEWSWIRE) -- Winnebago Industries, Inc. (NYSE:WGO), a leading outdoor lifestyle product manufacturer, today reported financial results for the Company's third quarter of Fiscal 2021.

Third Quarter Fiscal 2021 Results
Revenues for the Fiscal 2021 third quarter ended May 29, 2021, were $960.7 million, an increase of 138.7% compared to $402.5 million for the Fiscal 2020 period, and a sequential increase of 14.4% over the Fiscal 2021 second quarter. Gross profit was $169.6 million, an increase of 429.6% compared to $32.0 million for the Fiscal 2020 period, and an increase of 8.3% on a sequential basis, driven primarily by increased revenues as a result of the pandemic-driven shutdown of operations for a six week period in the third quarter of Fiscal 2020. Gross profit margin increased 970 basis points year-over-year, driven primarily by operating leverage, pricing, including lower discounts and allowances, and favorable segment mix. Operating income was $102.4 million for the quarter compared to a loss of $(8.2) million in the third fiscal quarter of last year and increased 2.5% sequentially. Fiscal 2021 third quarter net income was $71.3 million compared to a net loss of $(12.4) million in the prior year fiscal quarter, and net income of $69.1 million in the Fiscal 2021 second quarter. Reported earnings per diluted share was $2.05, compared to a net loss per diluted share of $(0.37) in the same period last year, and earnings per diluted share of $2.04 in the Fiscal 2021 second quarter. Consolidated adjusted earnings per diluted share was $2.16 for the Fiscal 2021 third quarter compared to adjusted loss per diluted share of $(0.26) in the same period last year, and adjusted earnings per diluted share of $2.12 for the Fiscal 2021 second quarter. Consolidated Adjusted EBITDA was $109.8 million for the quarter, compared to $4.1 million in the third quarter of Fiscal 2020 and $108.0 million in the Fiscal 2021 second quarter.

President and Chief Executive Officer Michael Happe commented, “Winnebago Industries’ record fiscal third quarter results continued our sequential growth trajectory, which is a testament to the sustained strength of consumer engagement in the outdoor lifestyle as well as the tremendous appeal of our premium brands. Throughout the quarter, we capitalized on the prime spring selling season to gain share and drive higher consumer engagement, further cultivating our pipeline of lifelong customers. I’m also proud of the Winnebago Industries team who has been able to maintain our commitment to manufacturing excellence amid incredible demand and drive operational leverage that is producing continued, strong profitability. We are very pleased with our results and will maintain our focus on executing our proven strategy to build a differentiated, premier outdoor company and drive long-term value for end customers, dealers, employees and shareholders.”

Towable
Revenues for the Towable segment were $555.7 million for the third quarter of Fiscal 2021, up 194.2% over the prior year period and 26.5% sequentially, driven by heightened consumer demand for our Grand Design and Winnebago branded products. Segment Adjusted EBITDA was $80.1 million, up 387.1% over the prior year period and 28.5% over the Fiscal 2021 second quarter. Adjusted EBITDA margin of 14.4% increased 570 basis points year-over-year and 20 basis points sequentially, primarily due to robust operating leverage and lower levels of discounting. Backlog increased to $1,522.1 million, reflecting an increase of 264.9% over the prior year period, and 26.1% over the Fiscal 2021 second quarter, due to continued strong consumer demand combined with extremely low levels of dealer inventory.

Motorhome
In the third quarter of Fiscal 2021, revenues for the Motorhome segment were $385.3 million, up 89.2% from the prior year period, driven by continued strong consumer demand for both Winnebago and Newmar branded motorhomes. Segment Adjusted EBITDA was $37.5 million compared to a loss of $(10.8) million in the same period last year and $51.0 million in the prior quarter. Adjusted EBITDA margin increased 1,500 basis points over the prior year to 9.7%, driven by operating leverage and low levels of discounting. Backlog increased to $2,180.1 million, an increase of 323.3% over the prior year period, and 20.0% over the prior quarter, as dealers continue to experience significant reductions in inventories due to extremely high levels of consumer demand.

Balance Sheet and Cash Flow
As of May 29, 2021, the Company had total net outstanding debt of $524.5 million ($600.0 million of debt, net of convertible note discount of $63.9 million and net of debt issuance costs of $11.6 million) and working capital of $613.0 million. Cash flow from operations was $148.0 million in the first nine months of Fiscal 2021, a decrease of $14.5 million from the same period in Fiscal 2020 due to strong improvement in income during the current year-to-date period that was more than offset by year-over-year changes in working capital required to support increased production and rapid sales growth.

Quarterly Cash Dividend
On May 19, 2021, the Company’s Board of Directors approved a quarterly cash dividend of $0.12 per share payable on June 30, 2021, to common stockholders of record at the close of business on June 16, 2021.

Mr. Happe continued, “As we enter the final quarter of Fiscal 2021, we are pleased with the strength of our business and the unique appeal of our leading brands. We remain focused on working with our suppliers to sustain strong levels of production and with our dealer network to replenish their inventories in the face of record backlog. We are also continuing to invest in our business to ensure we are best positioned to meet the persistent, elevated demand we anticipate in quarters to come, driven by the secular and ongoing growth in outdoor lifestyle products and a positive change in consumer preferences for leisure and family activities. I am also incredibly proud of Winnebago Industries’ unwavering commitment to stewardship of the environment and the communities in which we live and operate. During the quarter, we announced our participation in the United Nations Global Compact – a corporate sustainability initiative designed to advance universal principles on human rights, labor, environment and anti-corruption – and initiated a partnership with Habitat for Humanity, a global housing nonprofit, to support its community-based neighborhood revitalization efforts. These organizations’ missions are clearly aligned with Winnebago Industries’ values and enable more communities to safely and equitably enjoy the outdoors where they live, work and play.”

Conference Call
Winnebago Industries, Inc. will discuss Fiscal 2021 third quarter earnings results during a conference call scheduled for 9:00 a.m. Central Time today. Members of the news media, investors and the general public are invited to access a live broadcast of the conference call via the Investor Relations page of the Company's website at http://investor.wgo.net. The event will be archived and available for replay for the next 90 days.

About Winnebago Industries
Winnebago Industries, Inc. is a leading North American manufacturer of outdoor lifestyle products under the Winnebago, Grand
Design, Newmar and Chris-Craft brands, which are used primarily in leisure travel and outdoor recreation activities. The
Company builds quality motorhomes, travel trailers, fifth-wheel products and boats. Winnebago Industries has multiple facilities in Iowa, Indiana, Minnesota and Florida. The Company's common stock is listed on the New York Stock Exchange and traded
under the symbol WGO. For access to Winnebago Industries' investor relations material or to add your name to an automatic
email list for Company news releases, visit http://investor.wgo.net.

Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements are inherently uncertain. A number of factors could cause actual results to differ materially from these statements, including, but not limited to increases in interest rates, availability of credit, low consumer confidence, availability of labor, significant increase in repurchase obligations, inadequate liquidity or capital resources, availability and price of fuel, a slowdown in the economy, increased material and component costs, availability of chassis and other key component parts, sales order cancellations, slower than anticipated sales of new or existing products, new product introductions by competitors, the effect of global tensions, integration of operations relating to mergers and acquisitions activities, business interruptions, any unexpected expenses related to enterprise resource planning ("ERP"), risks related to compliance with debt covenants, and other factors. Additional information concerning certain risks and uncertainties that could cause actual results to differ materially from that projected or suggested is contained in the Company's filings with the Securities and Exchange Commission ("SEC") over the last 12 months, copies of which are available from the SEC or from the Company upon request. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this release or to reflect any changes in the Company's expectations after the date of this release or any change in events, conditions or circumstances on which any statement is based, except as required by law.

Contacts
Steve Stuber, Investor Relations
srstuber@wgo.net
(952) 828-8461
Media: Sam Jefson, Public Relations Specialist
sjefson@wgo.net
(641) 585-6803

Winnebago Industries, Inc.
Consolidated Statements of Income (Unaudited)
(in thousands, except per share data)

	Three Months Ended
	May 29, 2021								May 30, 2020
Net revenues	$	960,737				100.0	%		$	402,458				100.0		%
Cost of goods sold	791,125					82.3	%		370,434					92.0		%
Gross profit	169,612					17.7	%		32,024					8.0		%
Selling, general, and administrative expenses	63,586					6.6	%		33,271					8.3		%
Amortization	3,590					0.4	%		6,926					1.7		%
Total operating expenses	67,176					7.0	%		40,197					10.0		%
Operating income (loss)	102,436					10.7	%		(8,173		)			(2.0	)	%
Interest expense	10,229					1.1	%		8,440					2.1		%
Non-operating income	(93		)			—	%		(74		)			—		%
Income (loss) before income taxes	92,300					9.6	%		(16,539		)			(4.1	)	%
Provision (benefit) for income taxes	21,005					2.2	%		(4,186		)			(1.0	)	%
Net income (loss)	$	71,295				7.4	%		$	(12,353	)			(3.1	)	%
Earnings (loss) per common share
Basic	$	2.12							$	(0.37	)
Diluted	$	2.05							$	(0.37	)
Weighted average common shares outstanding
Basic	33,552								33,625
Diluted	34,772								33,625
	Nine Months Ended
	May 29, 2021								May 30, 2020
Net revenues	$	2,593,754				100.0	%		$	1,617,726				100.0		%
Cost of goods sold	2,130,556					82.1	%		1,427,307					88.2		%
Gross profit	463,198					17.9	%		190,419					11.8		%
Selling, general, and administrative expenses	165,001					6.4	%		126,540					7.8		%
Amortization	10,771					0.4	%		18,514					1.1		%
Total operating expenses	175,772					6.8	%		145,054					9.0		%
Operating income	287,426					11.1	%		45,365					2.8		%
Interest expense	30,222					1.2	%		23,140					1.4		%
Non-operating income	(310		)			—	%		(460		)			—		%
Income before income taxes	257,514					9.9	%		22,685					1.4		%
Provision for income taxes	59,728					2.3	%		3,702					0.2		%
Net income	$	197,786				7.6	%		$	18,983				1.2		%
Earnings per common share
Basic	$	5.89							$	0.57
Diluted	$	5.83							$	0.57
Weighted average common shares outstanding
Basic	33,565								33,102
Diluted	33,943								33,289

Percentages may not add due to rounding differences.

Winnebago Industries, Inc.
Condensed Consolidated Balance Sheets
(in thousands)

	May 29, 2021				August 29, 2020
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	405,841			$	292,575
Receivables, net	228,199				220,798
Inventories, net	333,018				182,941
Prepaid expenses and other assets	21,559				17,296
Total current assets	988,617				713,610
Property, plant, and equipment, net	177,578				174,945
Goodwill	348,058				348,058
Other intangible assets, net	393,997				404,768
Investment in life insurance	28,381				27,838
Operating lease assets	27,318				29,463
Other long-term assets	15,821				15,018
Total assets	$	1,979,770			$	1,713,700
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable	$	173,008			$	132,490
Income taxes payable	—				8,840
Accrued expenses	202,602				159,060
Total current liabilities	375,610				300,390
Long-term debt, net	524,450				512,630
Deferred income taxes	14,852				15,608
Unrecognized tax benefits	6,538				6,511
Long-term operating lease liabilities	25,391				27,048
Deferred compensation benefits, net of current portion	9,920				11,130
Other long-term liabilities	12,751				12,917
Total liabilities	969,512				886,234
Shareholders' equity	1,010,258				827,466
Total liabilities and shareholders' equity	$	1,979,770			$	1,713,700

Winnebago Industries, Inc.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)

	Nine Months Ended
(in thousands)	May 29, 2021						May 30, 2020
Operating Activities
Net income	$	197,786					$	18,983
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation	13,476						11,854
Amortization	10,771						18,514
Non-cash interest expense, net	10,372						7,440
Amortization of debt issuance costs	1,852						2,181
Last in, first-out expense	2,321						1,450
Stock-based compensation	11,719						3,332
Deferred income taxes	(765		)				365
Other, net	(4,412		)				516
Change in operating assets and liabilities:
Receivables, net	(7,384		)				31,440
Inventories, net	(152,398		)				91,938
Prepaid expenses and other assets	1,010						159
Accounts payable	40,817						(13,528		)
Income taxes and unrecognized tax benefits	(12,771		)				(2,622		)
Accrued expenses and other liabilities	35,560						(9,585		)
Net cash provided by (used in) operating activities	147,954						162,437
Investing Activities
Purchases of property, plant and equipment	(23,596		)				(28,582		)
Acquisition of business, net of cash acquired	—						(260,965		)
Proceeds from sale of property, plant and equipment	12,450						—
Other, net	(224		)				141
Net cash provided by (used in) investing activities	(11,370		)		—		(289,406		)
Financing Activities
Borrowings on long-term debt	2,629,932						1,795,209
Repayments on long-term debt	(2,629,932		)				(1,501,709		)
Purchase of convertible bond hedge	—						(70,800		)
Proceeds from issuance of warrants	—						42,210
Payments of cash dividends	(12,136		)				(10,881		)
Payments for repurchases of common stock	(12,109		)				(1,789		)
Payments of debt issuance costs	(224		)				(10,761		)
Other, net	1,151						539
Net cash provided by (used in) financing activities	(23,318		)				242,018
Net increase in cash and cash equivalents	113,266						115,049
Cash and cash equivalents at beginning of period	292,575						37,431
Cash and cash equivalents at end of period	$	405,841					$	152,480
Supplement Disclosure:
Income taxes paid, net	$	71,090					$	6,240
Interest paid	14,618						14,961
Non-cash investing and financing activities:
Issuance of Winnebago common stock for acquisition of business	$	—					$	92,572
Capital expenditures in accounts payable	121						255
Dividends declared not yet paid	4,273						126

Winnebago Industries, Inc.
Supplemental Information by Reportable Segment (Unaudited) - Towable
(in thousands, except unit data)

	Three Months Ended
	May 29, 2021				% of Revenues			May 30, 2020				% of Revenues			$ Change					% Change
Net revenues	$	555,749						$	188,898						$	366,851				194.2		%
Adjusted EBITDA	80,130				14.4	%		16,451				8.7	%		63,679					387.1		%
	Three Months Ended
Unit deliveries	May 29, 2021				Product Mix(1)			May 30, 2020				Product Mix(1)			Unit Change					% Change
Travel trailer	11,089				66.4	%		3,537				60.3	%		7,552					213.5		%
Fifth wheel	5,620				33.6	%		2,324				39.7	%		3,296					141.8		%
Total towables	16,709				100.0	%		5,861				100.0	%		10,848					185.1		%
	Nine Months Ended
	May 29, 2021				% of Revenues			May 30, 2020				% of Revenues			$ Change					% Change
Net revenues	$	1,449,934						$	813,611						$	636,323				78.2		%
Adjusted EBITDA	205,639				14.2	%		86,982				10.7	%		118,657					136.4		%
	Nine Months Ended
Unit deliveries	May 29, 2021				Product Mix(1)			May 30, 2020				Product Mix(1)			Unit Change					% Change
Travel trailer	29,125				65.6	%		15,319				60.8	%		13,806					90.1		%
Fifth wheel	15,306				34.4	%		9,874				39.2	%		5,432					55.0		%
Total towables	44,431				100.0	%		25,193				100.0	%		19,238					76.4		%
(in thousands, except units)	May 29, 2021							May 30, 2020							Change					% Change
Backlog(2)
Units	46,646							13,235							33,411					252.4		%
Dollars	$	1,522,069						$	417,176						$	1,104,893				264.9		%
Dealer Inventory
Units	11,647							15,562							(3,915		)			(25.2	)	%

⁽¹⁾ Percentages may not add due to rounding differences.
⁽²⁾ Backlog includes all accepted orders from dealers to be shipped generally within the next six months. Orders in backlog 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.

Winnebago Industries, Inc.
Supplemental Information by Reportable Segment (Unaudited) - Motorhome
(in thousands, except unit data)

	Three Months Ended
	May 29, 2021				% of Revenues			May 30, 2020					% of Revenues				$ Change					% Change
Net revenues	$	385,257						$	203,590								$	181,667				89.2		%
Adjusted EBITDA	37,467				9.7	%		(10,789		)			(5.3	)	%		48,256					447.3		%
	Three Months Ended
Unit deliveries	May 29, 2021				Product Mix(1)			February 29, 2020					Product Mix(1)				Unit Change					% Change
Class A	745				27.3	%		428					27.4		%		317					74.1		%
Class B	1,384				50.8	%		694					44.4		%		690					99.4		%
Class C	598				21.9	%		440					28.2		%		158					35.9		%
Total motorhomes	2,727				100.0	%		1,562					100.0		%		1,165					74.6		%
	Nine Months Ended
	May 29, 2021				% of Revenues			May 30, 2020					% of Revenues				$ Change					% Change
Net revenues	$	1,090,221						$	755,023								$	335,198				44.4		%
Adjusted EBITDA	118,779				10.9	%		13,488					1.8		%		105,291					780.6		%
	Nine Months Ended
Unit deliveries	May 29, 2021				Product Mix(1)			May 30, 2020					Product Mix(1)				Unit Change					% Change
Class A	2,047				25.8	%		1,803					31.0		%		244					13.5		%
Class B	3,901				49.1	%		2,287					39.3		%		1,614					70.6		%
Class C	1,994				25.1	%		1,734					29.7		%		260					15.0		%
Total motorhomes	7,942				100.0	%		5,824					100.0		%		2,118					36.4		%
(in thousands, except units)	May 29, 2021							May 30, 2020									Change					% Change
Backlog(2)
Units	18,145							4,131									14,014					339.2		%
Dollars	$	2,180,149						$	515,035								$	1,665,114				323.3		%
Dealer Inventory
Units	2,429							5,013									(2,584		)			(51.5	)	%

⁽¹⁾ Percentages may not add due to rounding differences.
⁽²⁾ Backlog includes all accepted orders from dealers to be shipped generally within the next six months. Orders in backlog 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.

Winnebago Industries, Inc.
Non-GAAP Reconciliation (Unaudited)
(in thousands, except per share data)

Non-GAAP financial measures, which are not calculated or presented in accordance with accounting principles generally accepted in the United States (“GAAP”), have been provided as information supplemental and in addition to the financial measures presented in the accompanying news release that are calculated and 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 in the news release. The non-GAAP financial measures presented may differ from similar measures used by other companies.

The following table reconciles diluted earnings per share to Adjusted diluted earnings per share:

	Three Months Ended										Nine Months Ended
	May 29, 2021					May 30, 2020					May 29, 2021					May 30, 2020
Diluted earnings (loss) per share	$	2.05				$	(0.37	)			$	5.83				$	0.57
Acquisition-related costs(1,2)	—					(0.01		)			—					0.29
Acquisition-related fair-value inventory step-up(2)	—					—					—					0.14
Non-cash interest expense(2,3)	0.10					0.10					0.31					0.22
Restructuring expenses(2)	—					0.04					—					0.04
Gain on sale of property, plant and equipment(2)	(0.03		)			—					(0.14		)			—
Impact of convertible share dilution(4)	0.05					—					0.01					—
Tax impact of adjustments(5)	(0.01		)			(0.03		)			(0.04		)			(0.15		)
Adjusted diluted earnings (loss) per share(6)	$	2.16				$	(0.26	)			$	5.97				$	1.12

⁽¹⁾ Represents transaction-closing costs.
⁽²⁾ Represents a pretax adjustment.
⁽³⁾ Non-cash interest expense associated with the convertible notes issued as part of our acquisition of Newmar.
⁽⁴⁾ Represents the dilution of convertible notes which is economically offset by a call/spread overlay that was put in place upon issuance.
⁽⁵⁾ Income tax charge calculated using the statutory tax rate for the U.S. of 21.0% for both periods presented.
⁽⁶⁾ Per share numbers may not foot due to rounding.

The following table reconciles net income to consolidated EBITDA and Adjusted EBITDA.

	Three Months Ended										Nine Months Ended
	May 29, 2021					May 30, 2020					May 29, 2021					May 30, 2020
Net income (loss)	$	71,295				$	(12,353	)			$	197,786				$	18,983
Interest expense	10,229					8,440					30,222					23,140
Provision (benefit) for income taxes	21,005					(4,186		)			59,728					3,702
Depreciation	4,917					4,134					13,476					11,854
Amortization	3,590					6,926					10,771					18,514
EBITDA	111,036					2,961					311,983					76,193
Acquisition-related fair-value inventory step-up	—					—					—					4,810
Acquisition-related costs	—					(189		)			—					9,761
Restructuring expenses	19					1,376					112					1,247
Gain on sale of property, plant and equipment	(1,188		)			—					(4,753		)			—
Non-operating income	(93		)			(74		)			(310		)			(460		)
Adjusted EBITDA	$	109,774				$	4,074				$	307,032				$	91,551

Non-GAAP performance measures of Adjusted diluted earnings per share, EBITDA and Adjusted EBITDA have been provided as comparable measures to illustrate the effect of non-recurring transactions occurring during the reported periods and to improve comparability of our results from period to period. Adjusted diluted earnings per share is defined as diluted earnings per share adjusted for after-tax items that impact the comparability of our results from period to period. 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 (benefit) for income taxes, depreciation and amortization expense and other pretax adjustments made in order to present comparable results from period to period. Management believes Adjusted diluted earnings per share and Adjusted EBITDA provide meaningful supplemental information about our operating performance because these measures exclude amounts that we do not consider part of our core operating results when assessing our performance. Examples of items excluded from Adjusted diluted earnings per share include acquisition-related costs, acquisition-related fair-value inventory step-up, non-cash interest expense, restructuring expenses, gain on sale of property, plant and equipment, impact of convertible share dilution and the tax impact of the adjustments. Examples of items excluded from Adjusted EBITDA include acquisition-related fair-value inventory step-up, acquisition-related costs, restructuring expenses, gain or loss on the sale of property, plant and equipment and non-operating income.

Management uses these non-GAAP financial measures (a) to evaluate historical and prospective financial performance and trends as well as assess performance relative to competitors and peers; (b) to measure operational profitability on a consistent basis; (c) in presentations to the members of our Board of Directors to enable our Board of Directors to have the same measurement basis of operating performance as is used by management in its assessments of performance and in forecasting and budgeting for the Company; (d) to evaluate potential acquisitions; and (e) to ensure compliance with restricted activities under the terms of our asset-based revolving ("ABL") credit facility and outstanding notes. Management believes these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties to evaluate companies in our industry.