Winnebago Industries, Inc. (WGO)

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Winnebago Industries, Inc. (WGO)

F1Q10 Earnings Call

December 17, 2009 10:00 am ET


Sheila Davis – Public Relations & Investor Relations Manager

Robert J. Olsen – Chairman of the Board, President & Chief Executive Officer

Sarah N. Nielsen – Chief Financial Officer & Vice President


Scott Stember – Sidoti & Company, LLC.

Craig R. Kennison – Robert W. Baird & Co., Inc.

Kathryn Thompson – Thompson Research Group

Analyst for Greg Badishkanian – Citigroup Global Markets, Inc.

[Eddie Sharp – Sharp Associates]



Welcome to the first quarter Winnebago Industries earnings conference call. At this time all participants are in a listen only mode. We will conduct a question and answer session towards the end of this conference. (Operator Instructions) I would now like to turn the call over to Ms. Sheila Davis, Public Relations and Investor Relations Manager.

Sheila Davis

Welcome to the Winnebago Industries Incorporated conference call to review the company’s results for the first quarter of fiscal year 2010 ended November 28, 2009. Conducting the call today are Bob Olsen, Winnebago Industries’ Chairman of the Board, Chief Executive Officer and President and Sarah Nielsen, Vice President & Chief Financial Officer.

I trust each of you have received a copy of the news release with our earnings results this morning. This call is being broadcast live on our website at A replay of the call will be available on our website at approximately 12 o’clock noon central time today. If you have any questions about accessing any of this information, please call our investor relations department at 641-585-6803 following the conference call.

Before we start, it’s my duty to inform you that this presentation may contain certain 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. These factors are identified in our filings with the Securities & Exchange Commission over the last 12 months, copies of which are available from the SEC or from the company upon request.

I’ll now turn the call over to Bob Olsen.

Robert J. Olsen

Welcome to Winnebago Industries’ first quarter conference call. Sarah will go in to the results for our first quarter of fiscal year 2010 shortly but it is evident from our news release that we are extremely pleased to see an improvement in our motor home delivery volumes. As a result of these increased volumes, we were also able to achieve an increase in revenues and have posted a small gross profit in our first quarter. Last quarter I said we were hopeful that we were at or near the bottom of the downward cycle and that the worst may soon be over. I truly believe we have reached the bottom during our first quarter.

While the winter months may still be challenging, I believe we can now look for growth. The general economy is looking healthier with slightly improved consumer confidence, stable fuel prices, low interest rates and an improved equity market. The credit market is still difficult but improving. There are fewer lenders now available and those who remain have more stringent expectations of who they lend to. Existing lenders are also more cautious but fortunately they are focused on partnering with strong manufacturers like Winnebago Industries.

Along with these economic improvements, our product line up for 2010 continues to be very well received by our dealers as well as retail customers. The latest results from Statistical Surveys Incorporated, the retail reporting service for the RV industry demonstrates we are gaining market share. Calendar year-to-date through October 2009 results were reported earlier this week and illustrated market share growth for Winnebago Industries in the combined Class A and C market as well as substantial improvement in our Class A diesel market.

Combined market share results for calendar 2009 year-to-date through October were 19.3% compared to 18.3% for the same period last year. Our Class A diesel market share was 11.3% compared to 8% for the same period last year. We had an excellent reception to all of our new 2010 products at the Louisville RV Show held earlier this month and we’re pleased with the significant improvement with orders placed during the show this year as compared to last. Many dealers also indicated during the show that they are interested in carrying fewer manufacturers’ product lines. Instead, they intend to partner with manufacturers who are financial stable and able to provide quality product, sales and service support for the long term.

As mentioned earlier we feel we have reached the bottom of the cycle during the first quarter and the replenishment cycle has begun. This statement is based on our sales order backlog on November 28, 2009 of 1,520 units or $149.5 million which has grown by 350% on a unit basis and 440% on a dollar basis compared to a year ago. In addition, dealer inventories also hit historic low levels during the quarter with 1,567 motor homes in dealer inventory at the end of the quarter down 52% from a year ago.

Although retail sales are still depressed, they have outpaced wholesale shipments throughout the past 18 months. I believe we have a significant opportunity for increased wholesale shipments going forward in order for dealers to restock their inventories to more closely match retail demand. We announced in our fourth quarter conference call that we are utilizing all three production lines each week starting in mid October. We have continued to further increase production since that time.

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