WINNEBAGO INDUSTRIES INC Q2 FY2025 earnings call

• In the Motorhome RV segment, Grand Design's new motorized division is off to a strong start with the Lineage brand's Series M Class C. Newmar leads in the premium motorhome RV category, especially in the Class A diesel market. Winnebago Motorhome is undergoing a revitalization with a refreshed product plan. Winnebago Towables is undergoing a strategic transformation with a new pricing strategy, stronger dealer relationships, and new product strategy. In the Marine segment, Varlita and Chris Craft received customer satisfaction index awards, and Chris Craft has new product launches like the Sportster 28 and Catalina 31.

Towable RV Segment

• Revenues increased modestly year over year primarily due to higher unit volume, partially offset by an industry shift toward more affordable models. Adjusted EBITDA margin declined year over year due to product mix shift, higher warranty experience, and higher input costs.

Motorhome RV Segment

• Second quarter revenues were down from the prior year, with the decrease reflecting lower unit sales related to current market conditions, partially offset by product mix. Sales benefited from the launch of the Grand Design Motorhome Lineage lineup. Adjusted EBITDA margin decreased compared to the prior year primarily due to volume deleverage partially offset by operational efficiencies and favorable warranty experience compared to the prior year.

Marine Segment

• Revenues for the Marine segment were up from the prior year primarily due to unit volume, partially offset by a reduction in average selling price per unit related to product mix. Adjusted EBITDA increased compared to the prior year primarily due to targeted price increases, leverage, and operational efficiencies, partially offset by product mix and higher operating expenses, including incentive-based compensation.

• Reduced adjusted EPS guidance to a range of $2.75 to $3.75 per diluted share from a prior forecast of $3.10 to $4.40.
• Brought in consolidated revenue forecast to a range of $2.8 billion to $3 billion from $2.9 billion to $3.2 billion, largely driven by reduction in consumer confidence and sentiment.

• Uncertainty from pending trade policy around the world.
• Impact of tariffs, including potential cost pressure that may require price adjustments.
• Dependence on consumer confidence and sentiment which could dampen sales.

Q: How much of the EPS cut is specifically on the tariffs?

A: Mike Happe said a better way to think about it is the guidance range incorporates tariff impact, and generally, fiscal 2025 tariff impact will be relatively limited due to existing inventory, supplier negotiations, and pricing actions during the year.

Q: What sort of price increases would be contemplated if certain tariffs go into effect?

A: Mike Happe said they won't share intended pricing actions on the call, but businesses will react to incoming cost pressure, and it will be a mix of price increases and surcharges, with transparency to dealers and consumers.

Q: Any color on phase into top line or margin in second half of year?

A: Bryan Hughes said not to look for particular one-offs, and they expect sequential improvement in top line and margins as we go through Q3 and Q4.

Q: Context on pricing strategy with Winnebago Towables business?

A: Mike Happe said they aim to increase market share, with actions including modifying pricing on current products, getting the product right, and bringing new product to market, with new product likely in fourth quarter of fiscal year.

Q: Thoughts on competitors forming strategic alliances with dealers?

A: Mike Happe said they won't comment specifically on competitors' dealer partnerships, but they feel good about their relationships with dealers and will balance share pursuit with profitability.