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Winnebago Industries Inc WGO

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RV Boom From Pandemic Continues to Boost Winnebago's Results

Analyst Note

| David Whiston, CFA, CPA, CFE |

Winnebago Industries reported an outstanding fiscal 2021 second quarter, and we are raising our fair value estimate to $66 per share from $59. The change is from the time value of money and stronger fiscal 2021 and 2022 results modeled, given how fiscal 2021 is unfolding. The firm’s RV backlog at Feb. 27 was $3.0 billion compared with $725.3 million at the end of February 2020. This impressive demand, our expectation of continued strong demand as the pandemic results in Americans seeking more outdoor experiences, and the company’s continued cost-reduction efforts in restructuring the motor home segment led to the increase. We see risk of supply chain problems for a variety of parts getting worse as fiscal 2021 continues, and the fiscal third quarter will be the last weak year-over-year comparable before the pandemic-induced RV boom began in 2020, but we think the balance sheet and liquidity are strong and we see the company’s future as bright. CEO and president Mike Happe said he’s seeing no indication that first-time RV buyers from 2020 are exiting the outdoor lifestyle, and although we think demand will slow eventually, we don’t see the slowdown happening in fiscal 2021.

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Company Profile

Business Description

Winnebago Industries manufactures Class A, B, and C motor homes along with towables, customized specialty vehicles, and parts and services. With headquarters in Eden Prairie, Minnesota, Winnebago has been producing recreational vehicles since 1958. Revenue was about $2.35 billion in fiscal 2020. Class A motor homes account for 31% of motorized unit sales, Class B about 41%, and Class C the rest. Winnebago expanded into towables in 2011 with the acquisition of SunnyBrook and acquired Grand Design in November 2016. Towables made up 82% of the firm's RV unit volume, up from 31% in fiscal 2016. The company's total RV unit volume was 45,995 in fiscal 2020. Winnebago expanded into boating in 2018 with the purchase of Chris-Craft and bought premium motor home maker Newmar in November 2019.

605 West Crystal Lake Road, P.O. Box 152
Forest City, IA, 50436
T +1 641 585-3535
Sector Consumer Cyclical
Industry Recreational Vehicles
Most Recent Earnings Feb 28, 2021
Fiscal Year End Aug 31, 2021
Stock Type Cyclical
Employees 5,505