Forest City-based Winnebago Industries saw profits rise in its latest quarter as the recreational vehicle manufacturer’s bottom line was helped by lower costs amid continued sluggish demand.
Winnebago reports its fiscal second-quarter profit of $9.4 million, or 35-cents per share. The results exceeded Wall Street expectations, with the average estimate of analysts being 34-cents per share. Winnebago president and CEO Michael Happe says they were pleased with the sales of some of their products but feel there’s room for growth.
Happe says in the second quarter, Winnebago achieved strong sales and profit improvement results in the towable portion of the business, as shipments grew faster than the industry due to new product introductions and further expansion of their dealer channels. He says the company is not completely satisfied with the revenue achieved in the quarter of their motorhome business, especially in light of the solid growth in the motorized segment industry-wide.
Happe says one of his goals is to address a backlog of orders and improve the quality of what’s being manufactured. He says they intentionally added labor hours and lengthened internal inspection processes to increase their focus on product quality, in turn, protecting the brand’s reputation in the future. Happe says that’s temporarily decreased manufacturing efficiency and is impacting their shipment capacity for the quarter.
He says they are seeing positive early signs that renewed focus on quality will pay off, and in turn, the company is optimistic they’ll see lower warranty expenses and increased productivity as they streamline the product quality processes in the future. Along with the company’s focus on the “Class B” and “Class C” touring coach type of recreational vehicles, he says they’ll work to address where they can profitably compete in the growing value segment of “Class A” gas-powered motorhomes.
Happe says they’re aware of the market trend and considering certain strategies on how they mitigate that share erosion. He says not withstanding those factors, their team worked extremely hard in achieving higher profitability for the company overall and they remain focused on finding further areas of productivity and profit leverage in the future. Shares of Winnebago are up more than three percent since January 1st, but the stock has dropped 13 percent over the last 12 months.
Happe took over as the company’s CEO in January after Randy Potts agreed to resign in August after heading the company for over four years.
By Bob Fisher, KRIB, Mason City