Winnebago stock down over 10% on concerns over future RV demand

Winnebago announced fourth-quarter results that were better than expected, but Chief Executive Michael Happe warned that rising interest rates and uncertain economic conditions means that demand in 2023 will likely soften.

Winnebago shares lost 10% Wednesday. The Eden Prairie-based company reported net income for the quarter was down 1.8% to $82.6 million, but earnings per share increased 6.5% to $2.61 a share.

Still, constrained supply chains, low dealer inventories, waning short-term demand from the peak outdoor lifestyle interest driven by the pandemic and challenging economic conditions means Winnebago will remain focused on production and dealer inventory levels, officials said Wednesday.

"We have exercised further rigor and a focus on sustainable long-term value by constantly adjusting production in certain business segments to calibrate to the needs of our dealers and the end consumer demand levels," Happe said during a call with analysts.

Happe said last week during the Minnesota Chamber of Commerce's Manufacturers' Summit that Winnebago's remake is still in the early stages.

"Our business is about helping people build outdoor stories and extraordinary experiences," Happe said.

Happe, CEO since 2016, has steadily reshaped the company, executing big deals and adding new products to re-establish the Winnebago brand.

Among the deals to achieve those goals was the 2016 acquisition of Grand Design RV, the fastest-growing name in towables. For growth in motorhomes, it bought Newmar Corp. Then in 2018, it expanded into the boat business by buying Chris-Craft and then pontoon boat-maker Barletta Boat Co.

Winnebago's market cap has grown from $400 million to $1.8 billion under Happe. However, he said the company is still only in the third or fourth inning of transformation.

"We find a lot of synergies in our RV business and in our bourgeoning marine business," Happe said.

Revenue for the fourth quarter increased 13.8% to $1.2 billion, aided by the 2021 acquisition of the Barletta pontoon boat business. The Barletta business helped offset a drop in the number of towable RVs sold, the company said. Nearly a full year of Barletta sales also helped Winnebago push revenue for the full fiscal year to a record $5 billion.

Adjusted quarterly earnings were $3.02 a share, better than the $2.76 expected by analysts. Revenue also topped expectations.