Winnebago Industries Earnings 2020-05-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

wgo-20200530

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 30, 2020

☐

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

WINNEBAGO INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Iowa

42-0802678

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

P. O. Box 152

Forest City

Iowa

50436

(Address of principal executive offices)

(Zip Code)

641-

585-3535

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.50 par value per share	WGO	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒ Accelerated Filer ☐ Non-accelerated filer ☐

Smaller Reporting Company ☐ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of common stock, par value $0.50 per share, outstanding on June 19, 2020 was 33,699,082.

Winnebago Industries, Inc.

Table of Contents

PART I. FINANCIAL INFORMATION.

Item 1. Condensed Consolidated Financial Statements.

Winnebago Industries, Inc.

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)


	Three Months Ended						Nine Months Ended
(in thousands, except per share data)	May 30, 2020		May 25, 2019		May 30, 2020		May 25, 2019
Net revenues	$	402,458	$	528,940	$	1,617,726	$	1,455,278
Cost of goods sold	370,434		442,356		1,427,307		1,231,269
Gross profit	32,024		86,584		190,419		224,009
Selling, general, and administrative expenses	33,271		35,332		126,540		106,303
Amortization of intangible assets	6,926		2,278		18,514		7,204
Total operating expenses	40,197		37,610		145,054		113,507
Operating (loss) income	(8,173)		48,974		45,365		110,502
Interest expense	8,440		4,446		23,140		13,293
Non-operating income	(74)		(360)		(460)		(1,330)
(Loss) income before income taxes	(16,539)		44,888		22,685		98,539
(Benefit) provision for income taxes	(4,186)		8,717		3,702		18,609
Net (loss) income	$	(12,353)	$	36,171	$	18,983	$	79,930

Income (loss) income per common share:
Basic	$	(0.37)	$	1.15	$	0.57	$	2.53
Diluted	$	(0.37)	$	1.14	$	0.57	$	2.52

Weighted average common shares outstanding:
Basic	33,625		31,493		33,102		31,546
Diluted	33,625		31,644		33,289		31,722

Net (loss) income	$	(12,353)	$	36,171	$	18,983	$	79,930
Other comprehensive income (loss):
Amortization of net actuarial loss (net of tax of $3, $3, $9, and $8)	8		8		24		24
Interest rate swap activity (net of tax of $141, $114, $163, and $327)	(432)		(362)		(500)		(1,018)
Total other comprehensive loss	(424)		(354)		(476)		(994)
Comprehensive (loss) income	$	(12,777)	$	35,817	$	18,507	$	78,936

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

Winnebago Industries, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


(in thousands, except per share data)	May 30, 2020		August 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	152,480	$	37,431
Receivables, less allowance for doubtful accounts ($381 and $160, respectively)	163,590		158,049
Inventories, net	190,359		201,126
Prepaid expenses and other assets	21,566		14,051
Total current assets	527,995		410,657
Property, plant, and equipment, net	175,431		127,572
Other assets:
Goodwill	348,058		274,931
Other intangible assets, net	408,358		256,082
Investment in life insurance	27,336		26,846
Operating lease assets	29,790		—
Other assets	16,072		8,143
Total assets	$	1,533,040	$	1,104,231

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	81,998	$	81,635

Accrued expenses:
Accrued compensation	24,907		20,328
Product warranties	60,665		44,436
Self-insurance	16,860		13,820
Promotional	11,677		10,896
Accrued interest	1,992		4,059
Other	16,408		13,678
Current maturities of long-term debt	13,668		8,892
Total current liabilities	228,175		197,744
Non-current liabilities:
Long-term debt, less current maturities	451,306		245,402
Deferred income taxes	16,708		12,032
Unrecognized tax benefits	6,269		3,591
Operating lease liabilities	27,366		—
Deferred compensation benefits, net of current portion	11,454		12,878
Other	6,952		372
Total non-current liabilities	520,055		274,275
Contingent liabilities and commitments (Note 12)
Stockholders' equity:
Preferred stock, par value $0.01: Authorized-10,000 shares; Issued-zero	—		—
Common stock, par value $0.50: Authorized-60,000 shares; Issued-51,776 shares	25,888		25,888
Additional paid-in capital	200,456		91,185
Retained earnings	874,911		866,886
Accumulated other comprehensive loss	(967)		(491)
Treasury stock, at cost: 18,146 and 20,262 shares, respectively	(315,478)		(351,256)
Total stockholders' equity	784,810		632,212
Total liabilities and stockholders' equity	$	1,533,040	$	1,104,231

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

Winnebago Industries, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended
(in thousands)	May 30, 2020		May 25, 2019
Operating activities:
Net income	$	18,983	$	79,930
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	11,854		9,788
Amortization of intangible assets	18,514		7,204
Non-cash interest expense, net	7,440		—
Amortization of debt issuance costs	2,181		1,186
Last-in, first-out expense	1,450		1,544
Stock-based compensation	3,332		5,735
Deferred income taxes	365		362
Other, net	516		1,265
Change in assets and liabilities:
Receivables	31,440		(20,961)
Inventories	91,938		2,701
Prepaid expenses and other assets	159		(653)
Accounts payable	(13,528)		3,954
Income taxes and unrecognized tax benefits	(2,622)		(13,898)
Accrued expenses and other liabilities	(9,585)		4,692
Net cash provided by operating activities	162,437		82,849

Investing activities:
Purchases of property and equipment	(28,582)		(31,681)
Acquisition of business, net of cash acquired	(260,965)		(702)
Proceeds from the sale of property	—		134
Other, net	141		1,752
Net cash used in investing activities	(289,406)		(30,497)

Financing activities:
Borrowings on credit agreement	1,495,209		342,549
Repayments of credit agreement	(1,495,209)		(375,438)
Proceeds from issuance of convertible senior notes	300,000		—
Purchase of convertible note hedge	(70,800)		—
Proceeds from issuance of warrants	42,210		—
Payments on long-term debt	(6,500)		—
Payments of offering costs	(10,761)		—
Payments of cash dividends	(10,881)		(10,201)
Payments for repurchase of common stock	—		(7,724)
Other, net	(1,250)		296
Net cash provided by (used in) financing activities	242,018		(50,518)

Net increase in cash and cash equivalents	115,049		1,834
Cash and cash equivalents at beginning of period	37,431		2,342
Cash and cash equivalents at end of period	$	152,480	$	4,176

Table of Contents


Supplement cash flow disclosure:
Income taxes paid, net	$	6,240	$	33,852
Interest paid	$	14,961	$	10,335

Non-cash transactions:
Issuance of Winnebago common stock for acquisition of business	$	92,572	$	—
Capital expenditures in accounts payable	$	255	$	9

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

Winnebago Industries, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity

(Unaudited)


	Three Months Ended May 30, 2020
(in thousands, except per share data)	Common Shares					Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)	Treasury Stock				Total Stockholders' Equity
		Number		Amount												Number	Amount
Balances at February 29, 2020	51,776	$	25,888	$	200,751	$	890,994	$	(543)	(18,153)	$	(315,566)	$	801,524
Stock-based compensation, net of forfeitures	—	—		(315)		—		—		—	7		(308)
Issuance of stock, net	—	—		20		—		—		8	133		153
Repurchase of common stock	—	—		—		—		—		(1)	(52)		(52)
Common stock dividends; $0.11 per share	—	—		—		(3,730)		—		—	—		(3,730)
Actuarial loss, net of tax	—	—		—		—		8		—	—		8
Interest rate swap activity, net of tax	—	—		—		—		(432)		—	—		(432)
Net loss	—	—		—		(12,353)		—		—	—		(12,353)
Balances at May 30, 2020	51,776	$	25,888	$	200,456	$	874,911	$	(967)	(18,146)	$	(315,478)	$	784,810

	Nine Months Ended May 30, 2020
(in thousands, except per share data)	Common Shares					Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)	Treasury Stock				Total Stockholders' Equity
		Number		Amount												Number	Amount
Balances at August 31, 2019	51,776	$	25,888	$	91,185	$	866,886	$	(491)	(20,262)	$	(351,256)	$	632,212
Stock-based compensation, net of forfeitures	—	—		3,309		—		—		1	23		3,332
Issuance of stock, net	—	—		(2,011)		—		—		160	2,782		771
Issuance of stock for acquisition	—	—		57,811		—		—		2,000	34,761		92,572
Repurchase of common stock	—	—		—		—		—		(45)	(1,788)		(1,788)
Common stock dividends; $0.33 per share	—	—		—		(10,958)		—		—	—		(10,958)
Actuarial loss, net of tax	—	—		—		—		24		—	—		24
Interest rate swap activity, net of tax	—	—		—		—		(500)		—	—		(500)
Equity component of convertible senior notes and offering costs, net of tax of $20,840	—	—		61,335		—		—		—	—		61,335
Convertible note hedge purchase, net of tax of $17,417	—	—		(53,383)		—		—		—	—		(53,383)
Warrant transactions	—	—		42,210		—		—		—	—		42,210
Net income	—	—		—		18,983		—		—	—		18,983
Balances at May 30, 2020	51,776	$	25,888	$	200,456	$	874,911	$	(967)	(18,146)	$	(315,478)	$	784,810

	Three Months Ended May 25, 2019
(in thousands, except per share data)	Common Shares					Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)	Treasury Stock				Total Stockholders' Equity
		Number		Amount												Number	Amount
Balances at February 23, 2019	51,776	$	25,888	$	89,682	$	805,851	$	252	(20,292)	$	(351,007)	$	570,666
Stock-based compensation, net of forfeitures	—	—		1,118		—		—		1	12		1,130
Issuance of restricted stock	—	—		(904)		—		—		52	904		—
Repurchase of common stock	—	—		—		—		—		(32)	(1,104)		(1,104)
Common stock dividends; $0.11 per share	—	—		—		(3,516)		—		—	—		(3,516)
Actuarial loss, net of tax	—	—		—		—		8		—	—		8
Interest rate swap activity, net of tax	—	—		—		—		(362)		—	—		(362)
Net income	—	—		—		36,171		—		—	—		36,171
Balances at May 25, 2019	51,776	$	25,888	$	89,896	$	838,506	$	(102)	(20,271)	$	(351,195)	$	602,993

Table of Contents

Winnebago Industries, Inc.

Condensed Consolidated Statements of Changes in Stockholders' Equity (continued)

(Unaudited)


	Nine Months Ended May 25, 2019
(in thousands, except per share data)	Common Shares					Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)	Treasury Stock				Total Stockholders' Equity
		Number		Amount												Number	Amount
Balances at August 25, 2018	51,776	$	25,888	$	86,223	$	768,816	$	892	(20,243)	$	(347,374)	$	534,445
Stock-based compensation, net of forfeitures	—	—		5,683		—		—		4	69		5,752
Issuance of restricted stock	—	—		(2,056)		—		—		208	3,584		1,528
Issuance of stock under ESPP	—	—		46		—		—		15	250		296

Price	37.80	EPS	3
Shares	34	P/E	14
MCap	1,273	P/FCF	8
Net Debt	460	EBIT	138
TEV	1,733	TEV/EBIT	13
TTM 2019-11-30, in MM, except price, ratios

10-Q	2020-05-30	Filed 2020-06-24
10-Q	2020-02-29	Filed 2020-03-25
10-Q	2019-11-30	Filed 2019-12-20
10-K	2019-08-31	Filed 2019-10-23
10-Q	2019-05-25	Filed 2019-06-20
10-Q	2019-02-23	Filed 2019-03-26
10-Q	2018-11-24	Filed 2018-12-20
10-K	2018-08-25	Filed 2018-10-18
10-Q	2018-05-26	Filed 2018-06-21
10-Q	2018-02-24	Filed 2018-03-22
10-Q	2017-11-25	Filed 2017-12-21
10-K	2017-08-26	Filed 2017-10-20
10-Q	2017-05-27	Filed 2017-06-23
10-Q	2017-02-25	Filed 2017-03-23
10-Q	2016-11-26	Filed 2016-12-29
10-K	2016-08-27	Filed 2016-10-18
10-Q	2016-05-28	Filed 2016-06-22
10-Q	2016-02-27	Filed 2016-03-24
10-Q	2015-11-28	Filed 2015-12-23
10-K	2015-08-29	Filed 2015-10-27
10-Q	2015-05-30	Filed 2015-06-26
10-Q	2015-02-28	Filed 2015-03-27
10-Q	2014-11-29	Filed 2014-12-30
10-K	2014-08-30	Filed 2014-10-28
10-Q	2014-05-31	Filed 2014-06-27
10-Q	2014-03-01	Filed 2014-03-28
10-Q	2013-11-30	Filed 2014-01-03
10-K	2013-08-31	Filed 2013-10-29
10-Q	2013-06-01	Filed 2013-06-28
10-Q	2013-03-02	Filed 2013-04-04
10-Q	2012-12-01	Filed 2013-01-04
10-K	2012-08-25	Filed 2012-10-23
10-Q	2012-05-26	Filed 2012-06-29
10-Q	2012-02-25	Filed 2012-03-30

8-K	2020-07-08	Enter Agreement, Leave Agreement, Off-BS Arrangement, Exhibits
8-K	2020-06-30	Other Events, Exhibits
8-K	2020-06-30	Regulation FD, Other Events, Exhibits
8-K	2020-06-24
8-K	2020-04-29
8-K	2020-04-08
8-K	2020-03-25
8-K	2020-03-23
8-K	2019-12-20
8-K	2019-12-18
8-K	2019-12-17
8-K	2019-11-08
8-K	2019-10-29
8-K	2019-10-28
8-K	2019-10-23
8-K	2019-10-22
8-K	2019-09-15
8-K	2019-06-19
8-K	2019-06-19
8-K	2019-03-25
8-K	2018-12-19
8-K	2018-12-11
8-K	2018-10-17
8-K	2018-09-21
8-K	2018-06-20
8-K	2018-03-21
8-K	2018-03-14
8-K	2018-03-07

EX-31.1	a2020q3exh311.htm
EX-31.2	a2020q3exh312.htm
EX-32.1	a2020q3exh321.htm
EX-32.2	a2020q3exh322.htm


PART I.	FINANCIAL INFORMATION.	3
Item 1.	Condensed Consolidated Financial Statements.	3
	Condensed Consolidated Statements of Income and Comprehensive Income	3
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Cash Flows	5
	Condensed Consolidated Statements of Changes in Stockholders' Equity	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	39
Item 4.	Controls and Procedures.	39

PART II.	OTHER INFORMATION.	41
Item 1.	Legal Proceedings.	41
Item 1A.	Risk Factors.	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	44
Item 6.	Exhibits.	45

SIGNATURES			46

WGO 10Q Quarterly Report

Winnebago Industries Earnings 2020-05-30