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Winnebago Industries Inc WGO

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Coronavirus Hammers Winnebago's Fiscal Third Quarter but Demand Has Roared Back

Analyst Note

| David Whiston, CFA, CPA, CFE |

Winnebago reported fiscal third-quarter 2020 results severely hurt by a full manufacturing shutdown for all of April due to coronavirus. That said, the firm’s roughly 85% variable cost structure and good financial health give us confidence it will be stronger after this recession than before the downturn. RV demand is also booming in the U.S. due to COVID-19’s impact on air travel leading many Americans to use an RV vacation as a substitute. We are raising our fair value estimate to $40 from $37 as our March model revision was too punitive on COVID-19's revenue impact for fiscal years 2020-21.

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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 billion in fiscal 2019. Class A motor homes account for 21% of motorized unit sales, Class B about 37%, and Class C holds the rest. Winnebago expanded into towables in 2011 with the acquisition of SunnyBrook and acquired Grand Design in November 2016. Towables made up 83% of unit volume, up from 31% in fiscal 2016. The company's total RV unit volume was 44,420 in fiscal 2019. Winnebago expanded into boating in 2018 with the purchase of Chris-Craft and bought premium motorhome 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 May 31, 2020
Fiscal Year End Aug 31, 2020
Stock Type Cyclical
Employees 4,500