Q4 2020 Winnebago Industries Inc Earnings Call

[music].

Ladies and gentlemen, thank you for standing by and welcome to the Q4 2021, a bagel earnings Industries' Conference call. At this time all participant lines are in listen only mode. After the speakers presentation. There will be a question and answer session to ask a question during the session you'll need to press star one on your telephone please be advised that todays call.

France is being recorded if you acquire any further assistance. Please press star Zero I would now like to hand, the conference over to your speaker today see Stuber director of financial planner planning, an analyst and Investor Relations. Thank you. Please go ahead Sir.

Thank you Justin.

Good morning, everyone and thank you for joining us today to discuss our fourth quarter and full year earnings results I am joined on the call today by Michael Happy President and Chief Executive Officer, and Brian Hughes, Vice President and Chief Financial Officer.

This call is being broadcast live on our website at Investor WG go does that and a replay of the call will be available on our website later today the news.

The news release with our fourth quarter results was issued and posted to our website earlier this morning.

Before we start I'd like to remind you that certain statements made during todays conference call regarding Winnebago industries and its operations may be considered forward looking statements under securities laws. The couple.

The company cautions you that forward looking statements involve a number of risks and are inherently uncertain and a number of factors many of which are beyond the company's control could cause actual results to differ materially from these statements. These.

These factors are identified in our SEC filings, which I encourage you to read.

With that I would now like to turn the call over to our President and CEO, Michael Happy light.

Thank you, Steve and good morning to everyone on today's call.

We express our hope that each of you and your families are safe and healthy.

Currently and into the future.

We greatly appreciate your interest in Winnebago industries, and taking the time to join US This morning.

I would like to begin with an overview of the progress made by our team in continuing to transform our company during an unprecedented fiscal year 2020.

We will specifically highlight the macro results of our strong fiscal 2024th quarter Andrew.

And review the strategic drivers critical to that success.

I will then turn the call over to our Chief Financial Officer, Brian Hughes, who will provide more detail on the related fourth quarter and full year financial results.

Our final segment will offer some closing thoughts on the state of the outdoor industry early trends, we are seeing in our fiscal Twentytwenty, one first quarter, which we are already more than halfway through and our.

And our core enterprise strategies for the future.

We will conclude the call as always with a question and answer session.

Now it is difficult to overstate just how unique the back half of our fiscal 2020 year Watts from March through August Weve.

We witnessed the incredible hill societal and economic consequences of the worst global pandemic and more than 100 years.

Critical matters of social injustice rose to the forefront during the summer of 2020.

And the depth of our country's political discord seems as magnified as ever.

[noise] 2020 also witnessed and continues to experience and engagement by Americans and the great outdoors at recently unseen levels.

Our consumers combined the imperative of the safety of their families with their strong desire to be immersed in experiences they could control and.

And consequently flocked to the outdoor recreation lifestyle like never before.

The outdoor industry.

Recreational vehicles industry the Murray.

The marine industry.

And Winnebago industries continues to see record interest and outdoor participation as calendar year 2020 progresses.

Thanks to the grid and the incredible resolve of our Winnebago industries team across our four premium Bryant brand platforms and enterprise functions.

The disruption of normalcy caused by the COVID-19 pandemic was just part of the narrative of our fiscal 2020 year.

But not the defining aspect.

I strongly believe that the prevailing theme of fiscal 2020 was that despite all of the chaos, we experienced our fee.

Our 5500, plus strong Winnebago industries employees, we're steadfast in their commitment to safely achieving our strategic goals.

And delivering on our Golden threads of quality innovation and service in all that we do.

So I want to take a moment and acknowledge and thank each of those teammates.

Their continued perseverance to serve our customers and their dedication to our company.

Our dealers and each other.

This team experienced some difficult days in it.

As we navigated the worst of the Pandemics impact on our business.

And they continue to adhere to the stringent safety protocols, we utilize every day.

It is our employees' ongoing commitment to working collaboratively safely and efficiently that drives our business forward.

We also want to take this opportunity to continue to recognize and thank our medical providers first responders and health professionals in each of the communities in which we have a physical presence as an enterprise.

They too are true heroes as the predominant drags on and their efforts remain a constant force against this unfortunate virus.

In fiscal 2020, and especially in our fourth quarter, we made meaningful progress on delivering on our strategic growth initiatives and creating increased value for key stake holders of our business.

While the acute impact of this year's third quarter impeded our ability to deliver full year financial performance reflective of the momentum we have generated in the first half of the year.

The underlying fundamentals of the business remain strong.

Driven by ongoing and tremendous consumer and dealer demand, which has returned in full force evidenced by our significant fourth quarter results.

Throughout the fiscal year, we continued to expand our portfolio organically and Inorganically and.

And gain market share behind our four premium outdoor brands.

We successfully completed the acquisition of the Newmark luxury RV business in November of 2019, which.

Which added yet another outstanding brand to our Winnebago industries family.

And furthered our progress to restore leadership in the motor home are these segment through their ever increasing market share in the class a motorized category.

Winnebago industries also drove organic market share in fiscal year 2020.

Led once again by the surging Grand design, RV brand and its expanding and highly desired travel trailer and fifth wheel lineups.

Our leading offering of Winnebago branded class B bands added almost nine points of market share in fiscal 2020, and Harold that new product launches by our Winnebago Towables team also enabled a significant increase in future orders in that business.

As the pandemic hit our company with unforeseen speed in the Middle of March we ourselves took swift and appropriate actions to protect our employees and the key stakeholders while.

While strengthening our solid financial position and ensuring liquidity and flexibility in the face of uncertainty.

While much of our operations were suspended for six weeks in the spring of 2020, we were.

We wasted no time re imagining our daily operating processes to ensure a safe return to full operating status in may which.

Which allowed us to react appropriately to begin meeting increased and soon to be record levels of consumer demand in the summer of 2020.

We kept our foot on the accelerator in terms of new product development.

Worked to create strategic and mutually beneficial relationships with key suppliers.

And pivoted, our entire portfolio to a committed and confirmed order production system.

These actions and many more set us up to safely and profitably deliver for our end consumers and dealers in the fourth quarter.

Even as a record backlog of new orders accumulated across both our RV and marine businesses.

Throughout the fiscal year Winnebago industries continued to make progress in realizing our vision to be a leading provider of outdoor lifestyle solutions and in creating value for our shareholders.

And communities.

In fiscal 2020, Winnebago industries returned $15 million to shareholders through our increase in sustained dividends.

As Brian Hughes will touch on further our capital allocation priorities are focused on managing our flexibility.

And maintaining our solid financial position.

As we continue to invest in a disciplined manner in the face of an uncertain economic environment.

We feel confident.

But remain constantly diligent in the strength of our balance sheet.

And are pleased with our ability of having delivered positive operating cash flow throughout the fiscal year.

We also maintained our commitment to publishing our first annual corporate social responsibility report for the 2019 calendar year.

With the 2020 addition, just around the corner later this fall.

These reports highlight our efforts to address the environmental social and governance issues that impact our employees, our customers and our world and most directly affect the long term success and sustainability of our business.

It is also indicative of our commitment to developing goals and tracking our progress towards enhance sustainability.

Additionally, in light of the pandemic in the financial hardship and has put on so many in our communities Winnebago industries made a record seven figure donation to the Winnebago Industries Foundation in fiscal 2020.

Supporting National partners and its three impact areas outdoors access in community.

As well as local organizations in our Winnebago industries hometowns like those supporting the pandemic first responders and health care providers and the communities in which our employees live work and play.

Turning now to our consolidated financial results are.

Our fiscal fourth quarter was a strong finish to the year, reflecting the appeal in the market position of our portfolio of leading outdoor lifestyle brands. This.

The strides we have made in safety and operational excellence and the value of our collaborative relationships with our supplier partners and our dealer network.

Consolidated revenues for Winnebago industries were $737.8 million for the fourth quarter of fiscal 2020.

And increase of approximately 39% year over year, and a robust 15.3% organic increase excluding the impact of newmark.

We saw exceptional demand across our product portfolio as consumers invested in safe outdoor lifestyle solutions once the stay at home restriction begin to lift with.

With standout performance by Grand design, and our Towable segment and class. These sales in our motor home segment.

Behind the strength of our Winnebago Grand design and Neumar brands, we saw our RV market share gains continue.

Achieving a 11.3% market share on a trailing 12 month basis, which is a full 1.3 percentage points above last year of which 0.8 percentage points or almost two thirds is organic.

Remember this company had less than 3% total market share at the end of 2015.

This continuation of market share gains is especially encouraging since first time RV buyers make up a larger portion of our purchases. These days.

First time buyers generally gravitate towards more entry level models, where winnebago industries portfolio skews towards more premium offerings.

Yet.

Our market change share gains would reflect that we appear to be competing just fine for these new consumers.

Full year operating cash flow was $270.4 million, an increase of approximately 102%.

Reflecting disciplined working capital management, and our strong sales momentum throughout the year. Despite the acute cobot impact in our fiscal third quarter.

We have continued to be very measured with our cash and have maintained our focus on curtailing expenses and.

And enhancing our liquidity.

Our cash balance rose to $293 million at quarter end.

While our outlook for continued strong consumer and dealer demand trends are positive. We are closely monitoring the evolution of the pandemic and its economic impacts.

The successful Caf management actions that we deployed in the third quarter underscores the high variability of our cost structure and our ability to manage through challenging periods should we face further macro level disruption.

I am also very pleased at Winnebago industries overall quarterly adjusted EBITDA margin.

Expanded over 70 basis points in the fourth quarter compare.

Compared to the same period last year.

As we continued our focus on excellence in operations and delivered our profitable growth safely.

We re imagined our operating processes to support a safe return to running at high speed throughout the fourth quarter and continuing into fiscal year 2021.

Now, let us turn to the segments in more detail.

In the Towable segment fourth quarter revenues of $414 million.

Were up approximately 35% from the prior year period.

Primarily driven by strong demand for safe outdoor lifestyle experiences and the strength of our premium towable portfolio.

The increasing appeal of Grand design products and their tireless focus on quality innovation and service has allowed us to again outpaced the industry.

Adjusted EBITDA margin was 14.8% in the quarter for the Towable segment up 110 basis points compared to the same period last year as a result of fixed cost leverage and profitability initiatives.

Backlog increased to a record $747.9 million, an increase of approximately 219% over the prior year period.

Dealers at the end of August have largely depleted much of their inventories to meet high levels of consumer demand in the fourth quarter.

Our multi branded Towables portfolio has continued to be resilient and successful in gaining share.

And we still see vast opportunity for growth as demand trends remain positive over.

Overall market size expands and our dealers, we look to restore lot inventory levels, especially with our preferred brands.

Our performance emphasizes that our Winnebago brand and Grand design Towables lineups remained strong and reflects the continued appeal of both brands with consumers.

Turning to the motor home segment.

Yes.

The addition of new Mars luxury brands to our motor home platform.

Allowing winnebago industries overall to compete more effectively in the class a and supersede categories.

And more broadly supporting our priority to restore our motor home business to a leadership position.

As demand trends continue and new customers come into the RV lifestyle. Our motor home segment is headed in the right direction to be more balanced and competitive than ever and well.

And well positioned to capture value going forward.

Fourth quarter Motor home segment revenues of $301.8 million were up approximately 50% from the prior year period.

Driven by those same strong demand trends for safe outdoor family experiences.

Excluding newmont organic revenues were 175.5 million down 12.6% from the same period last year.

You may recall that fourth quarter of fiscal year 2019 saw strong class B and class C units sales as we benefited from more normal chassis availability a year ago.

In fourth quarter of fiscal 2020, our strengthening class b sales more than offset by the impact of COVID-19, our CFO.

Our class a and class C sales that did not recover as quickly after the shutdown in Q3.

Yes, Winnebago, our brand increased its class C diesel sales in August and throughout our fiscal year.

Adjusted EBITDA margin for the motor home segment increased to 6.4% in the quarter one.

100 basis points over the fourth quarter in 2019 because of lower input costs.

Our motor home backlog increased to a record $1.1 billion at the end of August and increase of approximately 500 in 36% from the prior year due.

Due to depleted dealer inventory strong consumer demand and the influx of new more orders inorganically.

Our fourth quarter backlog included approximately 7000 units of Winnebago branded motor home units, a low as dealers see increasing promise in the improving lineup a motor home products within that brand.

We have and continue to work closely with our suppliers to ensure that we are supporting them and.

And partnering with them and carefully managing the supply chain.

With more advanced notice on lead times and overall closer communication.

Likewise, we also continue to validate the incredible amount of orders from our dealer partners and prioritize what they need most to continue to sustain impressive retail momentum in the months ahead.

In fiscal year Twentytwenty. One we have continued to ensure that we are strategically sourcing from our supplier partners and sustainability to sustainably replenishing dealer stocks as possible.

Finally, I will touch on our marine segment.

Like our RV business is Chris Crafts strong premium brand and market position has propelled it to grow in the fourth quarter.

As more consumers flocked to experiencing the outdoors by boat as well.

The planning process for capacity expansion at the facility in Sarasota is being considered again as we look to fuel this brand as an integral part of our broader outdoor lifestyle solutions platform.

Summer of 2020 saw record retail for the Chris Craft brand. The introduction of further new models a decline in field inventory with its dealer partners and a material increase in backlog orders stretching deep into spring of calendar Twentytwenty one.

With that summary, I will now turn the call over to our Chief Financial Officer, Brian Hughes to review, our fiscal 2020 full year and fourth quarter financials in more detail.

Brian.

Thanks, Mike and good morning, everyone.

Fourth quarter consolidated revenues were $737.8 million revs.

Revenues, excluding neumar were $611.5 million, reflecting an increase of 15.3% compared to the fiscal 2019 fourth quarter.

Driven by the strong rebound in consumer demand in the towable segment and class B motorized products.

Gross profit was $122.5 million in the fourth quarter, an increase of approximately 47% year over year, reflecting strong growth in the towable segment and the contribution from new Maher.

Gross profit margin of 16.6% was up 90 basis points compared to the same period last year due to lower motor home segment in input costs and towable segment fixed cost leverage.

Partially offset by segment mix as a result of the acquisition of Neumar.

Operating income was $68.4 million for the quarter, an increase of approximately 53% compared to the fourth quarter last year.

Fiscal 2024th quarter net income was 42.5 million, an increase of approximately 33% compared to $31.9 million in the fourth quarter of last year.

And by the growth in operating income, partially offset by increased interest expense.

The increase in interest expense is related to the convertible bond issued to finance the acquisition of new Maher and separately the write off of certain debt issuance costs associated with the termination of the company's term loan B, which as previously announced was refinanced by a bond issuance during the fourth quarter.

Sure.

Earnings per diluted share was $1.25.

Adjusted earnings per diluted share was $1.45.

Representing an increase of 45% compared to adjusted earnings per diluted share of one dollar even in the same period last year.

Consolidated adjusted EBITDA was $76.5 million for the quarter.

Compared to $50.8 million last year.

An increase of approximately 51%.

Now turning to the full year fiscal 2020 and result.

As Mike mentioned earlier, the COVID-19 pandemic and the related shutdown of our operations in the third quarter.

Combined with the momentary disruption to consumer purchasing patterns how to think.

I had a significant impact on our results for fiscal 2020.

Consolidated fiscal 2020 revenues of $2.4 billion increased approximately 19% from $2 billion in fiscal 2019.

As it typically impacted by the acquisition of Newmark, which closed in Q1 of fiscal 2020.

But negatively impacted by the COVID-19, pandemic and related suspension of manufacturing operation.

Gross profit margin decreased 220 basis points prime.

Primarily due to the mix impact of adding new Maher as well as the related purchase accounting impacts and for.

And further impacted by COVID-19 and associated de leverage during the fiscal third quarter.

Operating income for the year was 113.8 million compared to $155.3 million in fiscal 2019 and.

Net income was 61.4 million.

Full year earnings per diluted share were $1.84, a decrease of approximately 48% compared to fiscal 2019.

Adjusted earnings per diluted share was $2.58 for fiscal 2020 compared to adjusted earnings per diluted share a $3.45 in the same period last year.

Fiscal 2020 consolidated adjusted earnings per diluted share excludes costs totaling 25 million or 74 cents per diluted share aftertax.

Related to the noncash portion of interest expense on the convertible bond.

Tumar acquisition related costs.

Debt issuance cost write off due to termination of the term loan b.

And restructuring costs.

[noise] recall also that reported and adjusted earnings per diluted share was also impacted by the 2 million shares issued as consideration and the new more acquisition.

Fiscal 2020 consolidated adjusted EBITDA was 168.1 million a decrease of 6.4% from $179.7 million in fiscal 2019.

Before turning to the individual segments I wanted to mention that amortization of intangibles for the fourth quarter was 3.6 million.

We currently expect amortization of approximately 3.6 million in each quarter of our fiscal 2021.

Now turning to the individual segments, beginning with the Towable segment.

Total segment revenues for the fourth quarter were $414 million up approximately 35% from 307 million in fiscal 2019, primarily driven by strong consumer demand for outdoor experiences, notably Grand designs resilience in popularity with consumers has it.

Again enabled the brand to gain market share.

As of August Grand designs market share was 8.7% of the Towables market on a trailing 12 month basis.

Representing an increase of 1.5 percentage points over the prior year.

Segment adjusted EBIT EBITDA for the fourth quarter was 61.3 million up approximately 46% year over year and adjusted EBITDA margin of 14.8% increased 110 basis points.

Primarily due to fixed cost leverage and profitability initiatives.

For the full year fiscal 2020 revenues for the total segment were 1.2 billion up 2.5% from fiscal 2019, reflecting strong results for three quarters of our fiscal year, partially offset by the severe impact of the suspension of manufacturing and consumer disruption due to the cold at night.

Teen pandemic in the third quarter.

Segment adjusted EBITDA for the full year was 148.3 million down approximately 9% from fiscal 2019.

Adjusted EBITDA margin of 12.1% decreased 160 basis points for the full year, driven again by the cobot related impact during our fiscal third quarter.

Next let's turn to our motor home segment.

In the fourth quarter revenues for the Mono Hall excuse me for the motor home segment were $301.8 million up.

Up approximately 50% from the prior year driven by the addition of new Maher.

Excluding neumar segment revenues decreased 12.6% compared to the prior year as a result of strong class B sale offset by a decline in class a and class C sales due to a slower ramp up of this business. Following the COVID-19 pandemic.

Segment, adjusted EBITDA was $19.5 million up approximately 81% over the prior year due to improved profitability in the Winnebago branded business and the addition of new more partially offset by class net.

Adjusted EBITDA margin was 6.4% an increase of 100 basis points over the prior year, primarily due to lower input costs driven by an improvement in our LIFO reserve of $5 million that was recognized in the quarter.

This reduction in the LIFO reserve was driven by our initiative that produce a dramatic reduction in inventory in the Winnebago motor home business.

Currently recognized in Q3 and Q4.

For the full year of fiscal 2020 revenues for the motor home segment were 1.1 billion approximately 50% compared to fiscal 2019.

Revenues, excluding neumar were 668.4 million.

Down 5.4% from fiscal 2019, as a result of manufacturing and distribution disruption through the COVID-19 pandemic.

Segment adjusted EBITDA for the full year was 32.9 million up 20% over fiscal 2019, driven by the addition of new more adjusted EBITDA margin of 3.1% was down 80 basis points for the full year due to the impact of COVID-19 during the fiscal 220 23rd quarter part.

The offset by the addition of new Maher.

Turning to the balance sheet.

As of the end of the fiscal year. The company had outstanding debt of 512.6 million comprised of 600 million of gross debt net of convertible note discount of 74.3 million and net of debt issuance cost of 13.1 million.

Working capital was 400 413.2 million.

Our current net debt to adjusted EBITDA ratio was 1.7 times.

At the end of June we took an opportunity to restructure the term loan b portion of our outstanding debt.

This action took advantage of favorable financing rates in the debt markets to add further flexibility to our overall debt position by allowing us to extend maturity date without any maintenance covenant restrictions.

I'll touch more on this a bit later.

Annual fiscal year 2020 cash flow from operations was 270.4 million an increase of 136.7 million from the same period of fiscal 2019.

Our disciplined approach to preserving cash was critical in our ability to navigate the cobot related temporary shutdown in Q3, we.

We also made dramatic improvements during the year to the inventory position of the motor home business and this was the primary contributor to the extremely strong cash flow generated this year as compared to last year.

And finally, we continue to maintain a very healthy liquidity position as Mike mentioned earlier, our cash balance increased to approximately 293 million at the end of the fiscal year and we currently have nothing drawn on our 193 million HDL.

The effective income tax rate for the full year was 20.5 compared to 20.5% compared to 19.5% for fiscal 2019.

On August 19, 2020, the company's board of directors approved a quarterly cash dividend of 12 cents per share payable on September Thirtyth 2020 to common stockholders of record at the close of business on September 16, 2020. This.

This represents a 9% increase from the prior dividend of 11 cents per share.

As Mike mentioned earlier Winnebago industries, we turned to 12 total of $15 million to shareholders during the fiscal year 2020.

Before I turn the call back to Mike I want to touch a bit more on our capital structure.

The acquisition of Neumar November introduced 300 million of convertible debt and.

In late June during our fiscal Q4, we refinanced our term loan B and issued senior secured note also valued at 300 million.

There are a couple of important considerations that are deserving of some additional comments.

The first is that the convertible debt instrument, which matures in 2025 is not pre payable.

The secured notes mature in 2028 and prepaying during the first three years, it's cost prohibitive.

Second the convertible notes will have a dilutive accounting impact on outstanding shares once the average share price during the reporting period exceeds the conversion price $63.73.

Since we structured this convertible instrument with a call spread overlay ECP.

Economic dilution to our shareholders does not materialize until the share price exceeds $96.20.

As such if our reported EPS were reporting period reflects the dilution required by the accounting rules.

Our adjusted EPS will remove this dilution up until the average share price exceeds $96.20.

And finally as it relates to our capital allocation priorities, we continue to prioritize reaching our target leverage ratio of 0.9 to 1.5.

Given the nature of our debt instruments, we will achieve this through the utilization of two lovers.

Through the accumulation of cash and the resulting lower net debt.

And increasing adjusted EBITDA over the coming quarters, particularly once we lap fiscal 20 Q3 result.

That concludes my review of our quarterly financials and with that I will now turn the call back to Mike to provide some closing comments Mike back to you.

Thanks, Brian.

The environment, we are operating under in our industry and our world more broadly is materially different than the one we imagined when new leadership first presented our enterprise strategies and transformation goals for Winnebago industries in 2017, how.

However, I am pleased to say that despite our annual fiscal 2020 financial results being significantly impacted by cold at 19.

The relative performance of our diverse and balanced portfolio. During these unprecedented times is a reflection of the progress we've made on our enterprise strategies.

We remain a company moving forward positively.

Culturally strategically and financially and.

And now also from a corporate responsibility perspective.

Our transformation efforts have undoubtedly position Winnebago industries to be more competitive in the future in the markets we serve.

And the weather potentially challenging times should they arise leveraging our highly variable fixed cost structure and strengthened financial position.

We foresee a continued operational rebound thanks to more efficient and safer internal operations and we are committed to creating long term value as demand for our expanded and upgraded portfolio of high quality innovative and iconic brands continues to drive our growth.

As we look ahead to fiscal 2021.

We are encouraged by the ongoing demand trends that we are experiencing peak.

People are rethinking their recreational priorities and turning to the outdoors as a primary venue for leisure and travel and a safer alternative for gathering with loved ones.

The recent fall 2020, K O a camping report confirm that indeed customers, new and experience have flocked to the outdoors and or recreating in record numbers.

They are broadly confident that many of these consumers will continue to do so in calendar year Twentytwenty, one as well.

We do not see retail momentum for rvs and both slowing any time soon.

And with dealer inventory levels exceedingly low the knee.

The need for wholesale shipments to restore a full line offering and selection on lots of Crossamerica is and will remain high.

Recently, the recreational vehicle industry Association issued their wholesale shipment forecast for calendar 2020, and the calendar Twentytwenty one.

The 424000 unit forecast for calendar 2020, or roughly 4.5% overall growth is reasonable in our minds for that 2020 period.

Further the record number of 507000 units forecasted for wholesale shipments in calendar Twentytwenty one.

Also appears reasonable in our view.

Even considering well documented and real ongoing supply chain challenges.

Underpinning these shipment assumptions is a belief.

That there remains enough consumer interest in the outdoor industry.

To drive low to mid single digit percentage retail increases in calendar year 2021 as well.

That is saying something considering the record retail in the summer and fall of 2020.

And I can communicate that.

That our September and October RV retail at Winnebago industries continues to grow at rates similar to what we saw in our fiscal 2024th quarter.

With this backdrop, we look forward to growing our position and share in the market as our customers and end consumers continue to view our brands as a trusted and safe way to have extra ordinary experiences as they travel live work and play in the outdoors.

Barring any unexpected setbacks related to COVID-19 macroeconomic strike or hang over from a contentious general election cycle later this fall.

We are optimistic that our company's current momentum will continue into our fiscal Q1 and beyond.

Our expectation is that we will be working hard with our suppliers and dealers to efficiently work through our backlog in an intentional urgent, but disciplined manner and replenish a portion of the dealer pipeline with quality inventory to meet ongoing consumer demand.

We are selectively investing in additional capacity assembly and vertical integration capabilities.

In fiscal 2021 throughout various businesses and well continue to invest and introduce new products and models to drive preference to our brands.

Now as many on the call are aware supply chain issues do exist in both the RV and Marine industries.

As evidenced by our fourth quarter performance, we are confident that this multifaceted supply chain challenge.

We'll continue to be managed in a fashion by our team that allows us to compete vigorously for retail in lot space in the market.

The supply chain issues are real but our enterprise strategic sourcing team is working very closely with our purchasing resources within each business unit. The chart a mutually agreeable path forward with our supplier partners.

Candidly, we view this as a competitive and strategic differentiation opportunity versus solely a headwind.

In recent meetings with our board of directors, we have achieved alignment on our enterprise strategies for Winnebago industries for fiscal year 2021, and we have created in organic long range strategic and financial plan for the next three fiscal years.

This is a plan our senior leadership and our board of directors are excited about.

Given the continued dynamic nature of the ongoing pandemic and possible further uncontrollable factors in fiscal year 2021, we will not be releasing our next generation of long term goals publicly quite yet.

Internally, though we are aligned but we will.

But we will wait for a stronger sense of certainty externally before sharing any of our behalf.

In light of our increasing cash flow. We also continue carefully any possible business development opportunities.

These disciplined assessments are always carefully considered with other means of managing our capital assets and our commitment to drive our net leverage ratio to our desired range remains a priority.

We have established five core enterprise strategies for fiscal year, 2021, and beyond here at Winnebago industries.

Number one we will strengthen and inclusive high performance culture.

Number two we will build the exceptional outdoor lifestyle brands.

Number three we will create a lifetime of customer intimacy.

Number four we will drive operational excellence and portfolio synergy.

Number five we will utilize technology and information as business catalysts.

Going forward, we remain committed to managing our business in a disciplined fashion. So we are best positioned to build on our momentum captured the numerous opportunities. We believe lie ahead and deliver further value to the customers communities and shareholders we serve.

Thanks very much for your time today on these extended comments I will now turn the line back over to the operator.

Take questions. Thank you Sir as a reminder to ask the question you need to press Star one on your telephone to withdraw your question press. The pound key please standby will be compiled the Q and a roster.

And our first question comes from Craig Kennison from Baird. Your.

Your line is now open.

Okay, great. Thanks for taking my question.

Mike you finished with a 2021 retail expectations very much appreciate those comments and I think you're calling for low to mid single digit increase I suspect a lot of people on the call are wondering how can the industry grow against what has been tremendous pandemic related demand. So maybe just share.

Your views on why you think you know next year could be an up year. Despite what was clearly an unusual year in 2020.

Yes, Thank you Craig and good morning.

Well I think the answer to that question from my perspective is we continue to see.

A high level of interest in consumer demand for recreational vehicles and boats candidly.

And we do not anticipate that that consumer demand will wane in any significant fashion in calendar year 2021.

We're all obviously, hoping for some relief to the virus because of hopefully future of vaccines that are headed our way in calendar 2021.

But we anticipate that consumers will continue to desire experiences in the outdoors with family and friends and that the number of consumers who will remain interested in joining especially the RV lifestyle will remain high.

Now calendar year 2021.

Which I referenced specifically for that retail projection.

Well really be an interesting year in the sense that it is it's really will be made up of three different time periods from a comparative standpoint January through March was relatively normal in calendar 2020.

And so my anticipation is that we should see a decent retail comps against that period, you know in the first three months.

We then head into those difficult months and 2020 in April and May when.

When retail was pressured in the outdoor industries and so again retail should compare favorably in April and May probably even more so in those months than January through March.

And then we get into the back half of the year June through December, which we've all seen arguably record retail.

Increases because of the consumers, especially first time buyers coming into the market.

And so retail comps in the back half of the year may be challenged and subsequently you'll see that net total for the year, probably come backwards a little in the back six months, but we still believe in calendar 2021, it should be able to settle in a positive or not.

Come from retail we.

We do believe Craig that we'll continue to see further arrivals of first time buyers into the outdoor space as well.

And again the take away report that we referenced in our comments validated that the interest remains high and first time buyers who did not participate yet.

In 2020 are looking still to participate in 2021.

Perfect. Okay. Thank you.

Thank you.

And the next question comes from Scott Stember from C.L. King Your line is now open.

Good morning, and thank you for taking my questions as well.

Good morning, Scott.

Maybe touch on the supply issues, just a little bit more loves it made about certain components keep.

Keeping units from being shifting delivery could you talk about how much that might have impacted negatively impacted your sales.

But not being able to get these units out and from a profitability standpoint.

Yeah. Thank you Scott.

Specific to the fourth quarter performance I would say that the impact.

Impact on our topline was a mild that's probably the word that comes to mind there.

You know our team did a good job in the months of.

June July and August and ultimately acquiring the components that we needed to get most of our production out the door by the end of our fiscal years. So I I think the impact on fourth quarter results was mild and I think the profitability impacts in the fourth quarter due to the supply chain, we're probably.

Really.

Pretty mild as well we won't put a dollar.

Range on that but it is possible that mild may turn into a a slightly higher degree of mild in the quarter. One fiscal 2021, arguably because that that quarter for us September through November.

He is now more of a normal operated Korea, we're not ramping up anymore. Like we were in the first part of the fourth quarter we are.

We are now trying to operate at relatively full speed across each of our businesses.

And the potential impact of supply chain challenges subsequently has a chance to.

To be more impactful, but.

But were we won't put a number on that this morning I you heard me comment in my my my prepared notes that the teams are working hard on that.

They're arguably are some headwinds in terms of profitability or working capital do this.

Due to some of the supply chain challenges, we are spending more overtime and more hours, finishing units and we are in many cases, finishing some of those units off the line at the end of the process to put final components on in a high quality way, we will never sacrifice that.

But that does mean from a working capital standpoint that we may have a little bit more inventory on average on a daily basis than we otherwise would so so again I think Q4 was was really mildly impacted Scott Q.

Q1 could possibly be more impacted just because the the supply chain challenges are going to be with us from really day, one through through day 90 in that quarter, but.

We view it as a competitive differentiation opportunity if we can work with our suppliers effectively.

And you know get our products to market and a slightly higher rate than our competition and time will tell.

They've got all that Brian I'll add on just a little bit to that to go one level deeper well. It was mild overall I think that's it obviously that's exactly how we feel about it at the motor home level was probably impact a little bit more than the towable I'm just considering the complexity of that motorized chassis and the you know the efforts.

Took by those parts.

Particular suppliers on the motorized side to get back up and running.

And you know that's the high level of complexity of that business, probably a little bit more disruption on the motor high motorized side than on the towable side on balance as Mike said pretty mild impact overall, but if you look down in the financials of the motorized versus Towables I would say I see a little bit more of an impact from that.

Top line as well as a little bit of profitability impact on the motorized side.

Got it and Mike you talked about the backlog happening I think 7000 units.

Core like.

Legacy Winnebago branded product in there it sounds can you just talk about what.

What's fueling that is it just the general market picking up.

It seems like class C. You guys are doing a little bit better just talk about that and how you expect that to play out.

Thanks.

Yeah, well you know our backlogs are certainly me.

Meaningfully higher and I would imagine they are similar at our competitors as well.

But you know dealers have inventory or inventory levels right now in the field as we probably stand here today, our inventory led.

Our inventory levels are probably somewhere down in the range of still 35% to 40% lower than a year ago.

At this point in October and so.

And so dealers still have a high desire.

To replenish their lives with a larger selection of models and floor plans.

You know that they've been able to you know have this summer.

We are many months out in most of our businesses I reference that Chris perhaps production system is booked out to spring of 2021.

That is similar on other parts of our RV business.

On on different assembly lines throughout those those brands.

We are very pleased with the backlog on the Winnebago branded motor home business or the.

The number that I referenced at the end of August has continued to grow in the last 45 days here in Q1 of fiscal 21.

And we believe that's a reflection Scott of a very strong class B light up a very well consider class C diesel lineup.

We have some new offerings that are coming to the market on the class eight side, particularly in diesel here in the future. In so we are seeing dealers not just wanting to replenish inventory, but responding well to the Winnebago brand motor home teams lineup that there.

Presenting here for the next you know yourself. So so yes, we're pleased specifically there, but just to be sure that.

The backlog is equally strong really across all of our all of our brands Neumar.

Is very strong right now Winnebago, Towables and certainly Grand design, which you know often has the longest backlog in terms of a time to delivery and as I mentioned, we continue to.

Invest in additional capacity or additional assembly lines and the related vertical integration capabilities that are required to produce more units in the future. So so all hands on deck right now to try to build as many high quality units as possible and get them to the market.

Got it thanks again for taking my questions.

Thank you and thank you and our next question comes from Steve O'hara from Sidoti and company.

Your line is now hi, hi, good morning.

Good morning, good morning.

Yes, so just I mean going back to the Craig's comment or question on gross and you know kind of a strong year and how you can go from here I mean, you know looking at the you know that your backlog looking at where inventory levels are I mean, it wouldn't seem like you'd need that much retail gross to kind of grow <unk>.

In terms of your fiscal year, you know fairly substantially I mean is that the right way to think about it I mean, and maybe you know continued retail gross kinda augments that you know a little more positively.

Yes, Steve.

As you know, we don't generally comment on the future.

Guidance related to our wholesale shipments as a company.

But you can glean some insight from how were thinking when we commented that the RV a shipment forecast for calendar year 2021 of 507000 units is reasonable.

And our perspective and I believe the math on that is roughly a 20%.

20% increase roughly maybe 19 or 20% increase in what they're projecting in shipments for calendar 2020.

So it is highly likely that for the next couple of years and when I say that I mean next couple of years fiscal 21 for us in fiscal 2002, we will see a wholesale shipment environment that is materially more robust than even the retail environment, which we think will continue to be healthy.

Primarily because of the field inventory situation that we have ongoing.

We believe it will take the better part of the next two fiscal years for our company to replenish dealer inventory levels. You know to you know the turns that they were experiencing going into the pandemic.

And that's us running at you know significant high levels of production every day.

The higher retail is in the future the longer it will take to replenish field inventory the more.

The more mild retail is the Oems will have a chance to catch up a little bit more quickly and so we are we are yeah. I think Steve you know you know us we tend to be remain pretty.

Pretty.

Disciplined in the way, we think about the market we are relative.

Relatively bullish on hold the wholesale shipment environment in the next year or two sans any uncontrollable disruptions to the outdoors or the lifestyle.

Okay No that's helpful.

And then you know I guess I was looking at your you know inventory I mean, it looks like you know.

Motorized as lowest since Fourq 13 in total since Fourq you 17, so I mean, it seems like.

You know I guess pretty good to me.

To me a pretty good demand indicator.

And then maybe just on the maybe the margins.

You know at gross margin.

Gross margin was 16.6 in the quarter I think and then obviously a it seemed like the.

Total revenue was a little more.

You know a bigger percentage of the whole. Maybe then then maybe going forward can you talk about you know as motorized.

Maybe catches up with Towables does that you know likely pay.

Likely pressure to the margin kind of firm for Q2.

20.

Steve I'll make a general comment on the on motor.

Motor home profitability, and then I'll turn it over to Brian to more fully answer. Your question. We are very pleased with the step forward that the Winnebago branded motor home business took in terms of profitability.

In the fourth quarter.

And we are.

Optimistic about the progress that we can make in our fiscal 2021 year on profitability for that business as well when you add the neumar business that was already operating at a slightly higher level of profitability than the Winnebago brand the motor homes. So specific to the motor home category you know we we.

I believe that we are on track to.

To drive profitability in the right direction in the future I'll ask Brian to weigh in with any more details.

Yes, Steve I think within your question there was a mix a mixed part.

I missed part of your question as well and the contribution of both mix and the impact that Neumar has been.

Because of the the addition of new Maher.

That caused the motor home segment to grow faster than the towable segment in total during Q4 and throughout most of 2020 as well so that creates a.

Creates a negative mix impact.

And I think that that's what you were asking about is what does that impact from mix I think going forward you know the underlying organic trends.

Yeah, we'll lap the numerator acquisition here at the end of Q1, and so we'll still have some impact from the acquisition the acquisition as it relates to Annualization in are coming.

In our coming Q1, and so you'll still see neumar, causing the mix to be a negative impact with motorized going faster than towable. Following that once we get annualizing that acquisition.

Currently our current organic trends our organic growth.

Favors the towable business.

You know so towables continues to grow faster than motorized on an organic basis and that will that will create a positive mix impact because the towables business is more profitable both gross margin and EBITDA margin than.

In the motorized business so.

So that's how I'd encourage you to think about it is you got this mix impact from from Newmark coming on that's dilutive to the.

So the overall, but once we annualize our current momentum in the Towables business should create a a favorable or tailwind impact from a mix perspective.

Okay. No. That's helpful. Thank you very much.

You're welcome.

And thank you and our next question comes from Garrett Johnson from BMO capital markets. Your line is now open.

All right great. Thank you Hey, I've two questions here kind of whats the I guess the first.

I think most on its call know Hugh Bower and I'm sure as Iron respect what was accomplished.

So explain to us what he's doing in your organization and also what talents. He brings that makes him the right person for that position and then number two is do you think your business is election agnostic or is there an outcome or a set of outcomes.

That would be better or worse for your business. Thank you.

Yeah. Good morning, Garik This is Mike.

Thank you for your questions and especially for the first one we are very pleased that we were able to announce the arrival several weeks ago, a few bauer joining winnebago industries as many of you on the <unk> on the call know Hugh has a an outstanding reputation in the outdoor industry as a successful.

All executive with another leading company.

And we are pleased to welcome him to our executive leadership team, we've been very focused through the years and trying to build the the quality and depth of leadership talent within the enterprise Youve seen us do that with acquisitions and then you've seen us do that with individual hires as well and you know certainly Brian Hughes and on this call and Steve.

Stuber are examples of that as well coming in from the outside and Hughes. Just another addition to you will be our president of what were calling Winnebago outdoors Winnebago.

Industry's consists of four brands the Winnebago flagship brand is one of them we will be.

We will be giving essentially the keys to the Winnebago brand to Hugh the product brand and he will oversee a three primary areas. One he will partner with Brian Hazelton, who is now leading our entire lineup of Winnebago branded Rvs, both motor home and towable, So Brian and he will be great partners.

Is there but.

But you will have ultimate oversight and accountability for Winnebago branded Arby's Winnebago specialty vehicles, which many of you know is a is an interest of ours in terms of both incubating technology, but also a try.

Trying to drive the higher levels of scale, there that we believe will come with higher levels of profitability as well. So he will also lead specialty vehicles and then we have charged to when he gets to this in the future to investigate the opportunity to use the winnebago flagship brand.

On other potential profitable revenue opportunities in the outdoors. We are very fortunate to have one of the most well known iconic outdoor brands in all of the world candidly and we think there are some other opportunities to use that brand going forward to.

To build additional revenue stream. So so Hugh has joined US here this month and we're very excited about him.

The second question was around the election cycle, and we'll certainly try to stay pretty agnostic.

Agnostic here in terms of a political leanings, but we are prepared to be successful regardless.

It's probably a relatively political answer but.

But we certainly recognize that there may be some implications in terms of Ah attack.

Of tax based on which administration holds the white house in the future, but we generally do not believe that a different party in power on on Capitol Hill will slow down the demand for outdoor experiences.

By American consumers I literally believe strongly that we are seeing a pivot to the way people want to spend their leisure lead time and that for the foreseeable future that the outdoors is going to win in terms of time and dollars spent.

I truly don't believe that a D oar and our party is going to change that significantly here and especially in the next couple of years.

So we'll run our business well, regardless, hopefully we'll be prepared to deal with any policy changes that come from.

From whatever party isn't power. So garik I I don't think we'll we'll see a huge impact a long term.

Certainly we could see some financial impact of any tax.

Tax policies as an example, our changed.

Great. Thank you Mike.

Thank you Gert.

And thank you and our next question comes from Mike Swartz from Truth.

Your line is now open.

Hey, guys good morning.

Good morning, My good morning, Mike.

Hey, just wanted to touch on the solution applied chain commentary. Thanks for that for the color you provided I guess, it's one of the more pressing questions is maybe how disruptive is this in the near term and it sounds like from what you said, it's fairly manageable, but maybe I ask in another way have you had to take.

Any kind of production downtime or do you plan to it in the next month or two just given what we're what we're seeing out there.

[noise] Yeah, Mike. Thanks for your question and good morning, Yeah. The the supply chain challenges are present across all of our businesses right now and they are just specific to one supplier or one product component category and they do fluctuate.

To be fair from supplier to supplier and from category to category as as the suppliers work hard to to meet the demand of the Oems in these industries.

Specific to your question about assembly downtime, we are constantly flexing or assembly schedule based on the supply chain and we have for years.

The less disruptions mean, it'll certainly more.

You know more uptime for assembly at the OEM level and the higher the disruption means we at times either have to throttle back. The main assembly for you know certain periods there could be a day it could be a week for.

For as I indicated there are times when we go ahead and finish 98% of the units and then the remaining components are installed.

In another final process, usually off the line in a rework area in a very high quality manner.

So we have not had any extended significant shutdowns.

Within our businesses in mass there certainly have been lines, where we've had the throttle back for a little while because of component availability, that's not completely abnormal versus just running the business any here, but I would say.

But I would say the frequency of that discussion is probably a little higher so.

We recognize this is probably topic number one for especially the investor base and even the analyst community. You know, yes. These issues will be present with us throughout probably.

Probably the first half of fiscal 21, but again I'm really confident in our team at Winnebago industries to navigate through these treat our suppliers very fairly and partner with them to try.

To try to get our fair share of what they're making based on our growth rates and I think if we do that.

Will you know we'll be in really good position you know to continue to hold and hopefully grow market share.

You know versus our competition so.

Yeah, like I said that the challenges are real.

But I think there are times when the external community is.

Putting a little bit more weight on it than we are you know here at here at the company.

Okay, Great that's great color, thanks for that Mike and shifting do it. Another question just on the motorized segment I think in your prepared comments you said one of the margin positives for the quarter was input cost. So I guess I I am wondering.

Why that wasn't also true I guess for Towables going in or is what you're talking about maybe some early synergies from neumar or is it you know some of the supply chain initiatives that youve taken across the motor home enterprise over the past year or two.

Yeah, Mike I can take that one.

Yeah, there's a lot going on underneath that comment to me to be Frank or candid like we cited most notably the improvement to our LIFO reserve.

That was $5 million in the quarter and so it's a.

It's a as you know.

A little bit of a difficult calculation to talk people through but it's the result of the the really strong improvement to the motor home inventory level.

That we drove during the year and it's it's a direct outcome or result of some of those initiatives to reduce those inventory levels and when.

And when that happens you you know you have the opportunity to take that reserve down and that generates a piano upside.

So that's certainly one of the inputs. We also had some some things last year, some up and some down last year in Q4, so from a year over year perspective, and that was part of the commentary as well as the year over year comment that we had a lower input costs.

We cited in inventory.

Correction in last years Q4, as you might recall.

We also on the other hand had last year very favorable product mix in Q4.

And those two items largely offset each other last year. So we've got some year over year comparisons that are asking.

I have some complexity to them and then certainly we had as I cited this LIFO reserve.

That helped us in the fourth quarter of 2020.

Okay, great. Thanks, a lot Frank.

Yeah, and overall you know let me just say.

EBITDA margins, we saw in Q4, you know mid six percentage as you know we're pleased with that as it relate to a an improvement versus some of our history certainly not satisfied with that yet you know you take out that LIFO.

Favorable item that we had in the quarter and that a six and a half asphalt to more around 5% you know our aspiration as we've talked about in the past is certainly above that 5% and so.

Well look to drive that board in the coming year as well as in the years ahead and feel that we have the opportunity and the things in place to do that.

Great. Thank you.

And thank you and our next question comes from Brett Andrews from Keybanc capital markets.

Markets. Your line is now open.

Hey, good morning, So just in our conversations with dealers it sounds like consumer deposits in consumer orders, increasing here, just with where the inventory that but is there any color on your backlog you know how many are of your units are pre sold or already have a retail sold name.

Just any any way to quantify that.

Yeah, Brett Good morning, Mrs. Mike I don't have a good answer for that we also here you know really qualitatively and anecdotally from our dealers that Oh, yeah, but that practice is happening that with their lower inventories and maybe the exact floor plan or not available at <unk>.

Present time.

That they are taking those deposits, but we don't have a great way with our systems to identify.

To identify exactly which of those units, especially probably our towable segments or are arguably what we call retail sold we do have a little bit better feeling on the neumar business and the Chris craft business as an example, because.

Because those are luxury items, they're generally are composed of what we call specials or customization to the product by the end consumer and so therefore, we have a better understanding in those.

In those businesses as to when a unit goes down the line is it for a dealer for them to retail in the future or doesn't have an end customer name on it so I.

So I think the number is definitely higher than it was.

Than it was a year ago at this time.

Both in terms of raw units that are retail sold but also in terms of the orders, but also the percentage of the mix I just don't bread have a good number to give you to answer your question quantitatively.

Got it no. Okay I'm here just the last one hoping you can elaborate on some of the capacity expansion comments you made I guess, what is the size and timing of those investments and what brands are you focusing focusing on there I guess I would assume Graham Grand design, it's probably one of those.

Yeah, we <unk> at this time, we're not ready to provide much more specifics than the mention that we made this morning in our prepared comments that we we are we do have plans and we are investing.

It really in almost all of our businesses. We are working on expanding capacity. Some of that is organic in some businesses with a continuous improvement and productivity initiatives that unleashed capacity on the same line but.

But in several parts around the company we are.

In the midst of a process of either creating a new line on an existing campus or Ah you know going through an RFP.

An RFP process with even construction companies too so.

To build new buildings, you know in the future as well. So I think you know you and the others have a good idea as to where our growth is happening certainly grand design as one part of that.

We've always had a commitment with that leadership team that we will continue to support their profitable growth and as their business grows we will make sure that they have the capacity to continue to raise.

Raise their market share and give dealers more products, but we're all.

But were also active as I said in the Chris craft business resurrecting that discussion.

And with our class B business breadth young the Winnebago branded motor home side, and our share rising significantly in the last year.

We're we're hard at work there as well so it's really across the board, but again some of this is organic in terms of the investments and some of it is inorganic in terms of adding more square feet than I would imagine probably on our next earnings call in December we'll have a little bit more information for you guys as to.

You know where some of that specifically is and you know how much where potentially adding but we're not prepared quite yet to give you all the details on that because we're still working working through some of those plans ourselves.

All right. Thank you.

And thank you and our next question comes from Fred Wightman from Wolfe Research.

You're likely going to more.

Thanks, Hey, guys. Good morning, just wondering if given some of the supply chain tightness that you've touched on and the fact that you're finishing some units off line off the traditional production line, how should we think about the cadence of reported R&D <unk> wholesale numbers over the next few months.

[noise] well you know the RV shipments are self reported the RV a by the members.

And so you know.

I can only speak for our company, Fred but when we ship it.

Ship a unit ultimately we provide a report to the RV a on on the units that were shipped in that period and of what type.

You know the retail is a different answer you know FSRU is the primary external source for capturing retail as you all know.

And that process is less precise from a timing standpoint as you know there are reckons conciliations that ER and adjustments that are made you know post fact on that but the.

But the shipment numbers are in my opinion pretty accurate of the behavior of the respective Oems.

And Oh listen Weve I think most of US use similar revenue recognition rules and processes and you know I think so I think the integrity of the RV shipment data both in total and on a monthly basis. In my opinion is is still pretty high right now, but again I can only.

Speak about how our our company is reporting our data to the trade Association.

Okay. That's fair, maybe just to follow up on your comments about the retail data. That's out there you did mention you were seeing similar momentum in September and October versus what you saw in the fiscal fourth quarter could you just put a finer point on that and talk about what exactly you're seeing and what you think that means for a broad.

It or industry read through.

[noise], Yeah, I am extremely pleased with the retail performance in our Q1 to date you know there there there are concerns or current president tons that are some of the lower inventory in the field. You know will ultimately were down on the you know the comparative.

Percentage results year over year, just because you know as as we talked earlier within the Q and a other dealers sometimes don't have the exact model and they're taking deposits and not able to consummate a retail sale currently because of lack of inventory, but generally our businesses through the first.

You know six seven weeks of our Q1 have performed very well at retail and like I said in a similar comp.

Level versus what we were seeing to end Q4 and in August.

Again, I can't speak for our competitors and again my comments on on retail going forward were specific the calendar year.

You know 2021, but.

Yeah, we continue to be very pleased and you know that we're type of retail performance continues to put further pressure on on dealer inventory levels in the field were probably collectively as an industry not making a lot of headway yet in restocking dealer inventory levels are in macro.

So again I think its a.

Again, I think it's a positive sign that consumers are still engaged their shopping they're looking for products that are the renting a they're doing the peer to peer sharing on a couple of different platforms that are out there and our dealers are reporting no real slow down outside of obviously relative to seasonality.

But no real slowdown you know year over year wise in consumer interest and that's a very good sign as we head into the winter months and towards calendar 2021.

Perfect. Thank you.

And thank you and our next question comes from Bret Jordan from Jefferies. Your line is now open.

Good morning, This is mark Jordan on for Brett.

I'm just thinking about the mix of first time buyers I think we've heard to a wide range of what they might represent a retail do you have a read of what they might represent.

Yeah, I read Mark good morning by the way is it solely anecdotal as well we do not have a a great system quantitatively of of always being able to understand of that buyer is a first time participant in the lifestyle or not we.

We've generally been agreeable with some of the estimates that the first time buyers are representing in some cases as much as half of the retail in the summer months of up 2020.

I'm not quite sure how that will change seasonality wise as we go into the fall and winter months here over the next three or four no calendar months, but we.

But we generally believe that it remains you know high probably 40% to 50%.

And as my comments indicated in the script or the.

The you know our market share increases on a trailing three month trial.

Trailing six month would show that we are competing for some of those first time buyers as well I know there's been some question as to whether our premium brands are positioned well for for those first time buyers and and to be fair and honest in some cases, they're not we're not an opening price point company, we don't compete.

For the lowest cost travel trailers as an example, which a lot of first time buyers will consider but I.

But I I believe our our dealers are advocates of our brands and with first time buyers. They are representing our brands as a legitimate option for those consumers as well so so.

So yeah I'm very interested in how that trend continues but I don't believe you're going to see that.

That number diminish much as we head into the spring of 2021, I genuinely believe that there are met.

There are many many more consumers out there who did not get to the RV or boating lifestyle in 2020 that we'll look at it seriously in 2021.

Okay, Great and I guess, just kind of further thinking about that is there maybe a thought that some of these first time buyers could be completely new to the industry and you know wouldn't to participate or otherwise, but maybe the pandemic drove them to.

To consider our season, the outdoor lifestyle, Tom or is there perhaps a concern that since may have pulled forward some future demand from Ah, perhaps first time buyers that would have transpired over the next few years.

Well I think candidly, it's probably some of both I mean, there's no doubt I think you're seeing interest from consumers that probably honestly would have never considered a in a recreational vehicle unless the stay at home orders on the you know really the pandemic itself had not presented itself.

But I do believe that there probably are some of those consumers who would have been in the market in the next year or three.

And decided to act on it sooner as well so so I'm not sure we'll ever really know the answer to those questions.

And and we fully recognize that we will not keep 100% of the first time buyers in the lifestyle, there will be a percentage of them who for various reasons as as they always do you know say this isn't for me and then you'll see some used equipment coming on the Mark.

Get it in the next couple of years that candidly, we think will be healthy as well.

Especially with dealer inventories that'll be lighter.

You know in the next couple of years I I think some of that some of the used inventory will be welcome to those dealers and be healthy and keeping more affordable units in play.

For the whole of the industries. So we again, we view this as a very net positive trend regardless of timing regardless of retention.

Because we strongly believe that a majority of first time buyers will have a positive experience and when will become advocates for the outdoor lifestyle and total going forward. So again, we think its a still a good outcome.

Hey, Mark one more angle on that I'll add to make sure that you're thinking about is a there's a large percentage of of campers who use tense historically in one of the things that I've read.

In some industry literature is that there is a desire to avoid public restrooms.

Considering what's going on if he's got this conversion of historical Tensar is very very dedicated campers, but albeit they use a tenant that are now interested in the RV lifestyle as well. So these aren't all necessarily in these first time buyers aren't all necessarily new to the the outdoor lifestyle are new to the camping.

Lifestyle.

They are new entrants into the RV purchases as they seek to get you know different accommodation.

To help alleviate.

Alleviate some of those concerns on using the public restrooms of campgrounds. So hopefully that helps you also understand you know from what you had another angle where the first time buyers are coming from.

Great Thats very good thank you very much.

And thank you.

And our next question comes from Shawn Collins from Citigroup.

Your line is now open.

Great great.

Like straight and Steve Good morning.

Good morning ideas.

Hi, My question is on a specialty are these and specifically motorized electric vehicles electric.

Electric vehicles. It certainly has captured significant investor interest and perhaps machination can you just talk about what you are doing in the electric vehicle segment and how you think about that opportunity. Please.

Yes. Thank you for the question good morning, we.

We are active in the electric vehicle space and we do believe that will be part of the the motorized RV you know world and the future.

And not just for specialty vehicles, but even mainstream rvs at some point in the future and we also recognize that the vehicles that will probably be towing more travel trailers and fifth wheels will be electric as well and that will present, some integration opportunities between the truck or the S. U V and the towable unit as well.

Well, so so our teams.

So our teams are working on many fronts either inside the businesses or potentially you know we have an advanced technology group here at the company as well that works on things at an enterprise level that maybe the businesses.

Our prioritizing here in the next couple of years.

Specific to specialty vehicles, we have a relationship with an organization called modem, which is one of the you know the preeminent companies out there that are essentially takes specialize chasses and transforms them into an electric all electric platform and we.

And we have several electric vehicles that are in real world use right now in specialty applications.

You know one of the ones. We talk about often is a a unit that I believe was sold to.

Sold to the new CLA Medical Center and these vehicles are in the field today, they're they're being used by real customers. You know, we're trying to learn from those experiences and understand what's happening.

Well, we work very closely with the chassis suppliers and some of the conversion companies in the industry to see.

To stay on top of the technology trends, but but also candidly do our own you know.

Work ourselves from an R&D standpoint, you know to be prepared to take advantage of that technology convergence in the future. So I don't want to get into too many more specifics for competitive reasons, but we are active we do believe the world will be much more electrified in the future and you know our company will work very hard to beat.

Position to try to take it.

Take advantage of that with grants and so stay tuned.

That's great. Thanks, Mike that said very interesting I. Appreciate it just ask a quick second question, Oh and part of the seasonality.

We are certainly in a new and different Covanta environmental World.

Last earnings call I know you stated that you thought seasonality, maybe pushed off and diesel for camping in outdoor activities right.

Given that we're now in mid and late October in California for what it's worth here in the northeast, we certainly have very.

Positive and can call on whether I'm. Just wondering if you are seeing this sounds like a business trends also thanks.

[noise], Yeah, I think time will tell in terms of Ah you know that question what happens seasonality wise I mean, certainly we're seeing elevated retail.

As we head into here to the fall months that is at a higher level.

As a percentage of the total year than what we've seen in years past.

My sense is this will need to go through a full cycle or two here over the next year or two to see if any of you know any of the seasonality trends or our transitional or or more sticky in terms of more structural timing change. My my sense is they're probably transitional over the next year or two.

And you'll probably see retail trends be.

More seasonally progressive in your wholesale trends.

You know again, given some of the limitations capacity wise in the industry will probably remain closer to a you know traditional numbers in terms of what percentage.

A mix each month is of the year, so, but I you know as I as I said before consumer interest in recreational vehicles and boats.

He is not diminishing very much as we head into the colder colder months and Ah you know, we'll have to keep track of.

Of how that interest turns into retail.

Here in the future, but we're optimistic that [laughter] that the the the lowest seasonality wise here are going to be a little less low than they have in the past couple of years and I and that'll be a really good thing, especially for our dealer base.

Gotcha Gotcha that said, it's great to hear it makes a life.

I appreciate the time and the insight.

Thank you Shawn and thank you and I'm showing no further questions I would now like to turn the call back over to the stupid for further remarks.

Great. Thanks, Justin and thank you all thank you.

Thank you everyone for joining us this morning, and your continued interest in Winnebago industries. We certainly do appreciate your time. This concludes our fiscal 2024th quarter and full year Conference call. We hope you and your families stay safe and well.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.

[music].

[music].

[music].

Ladies and gentlemen, thank you for standing by and welcome to the Q4 2021 of the Big <unk> earnings Industries' Conference call. At this time all participant lines are in listen only mode. After the speakers presentation. There will be a question and answer session. That's the question during the session you'll need to press star one.

One on your telephone.

Please be advised that todays conference is being recorded if you acquire any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today, They stupor director financial planner planning, an analyst and Investor Relations. Thank you. Please go ahead Sir.

Thank you Justin good.

Good morning, everyone and thank you for joining us today to discuss our fourth quarter and full year earnings results I'm joined on the call today by Michael Happy President and Chief Executive Officer, and Brian is Vice President and Chief Financial Officer.

This call is being broadcast live on our website at Investor <unk> W.G.O. shot that and a replay of the call will be available on our website later today the news.

The news release with our fourth quarter results was issued and posted to our website earlier this morning.

Before we start I'd like to remind you that certain statements made during todays conference call regarding Winnebago industries and its operations may be considered forward looking statements under securities laws.

The company cautions you that forward looking statements involve a number of risks and are inherently uncertain and a number of factors many of which are beyond the company's control could cause actual results to differ materially from these statements. These.

These factors are identified in our SEC filings, which I encourage you to read.

With that I would now like to turn the call over to our President <unk> CEO, Mike well happy like <unk>.

Thank you, Steve and good morning to everyone on today's call.

We express our hope that each of you and your families are safe and healthy.

Currently and into the future.

We greatly appreciate your interest in Winnebago industries, and taking the time to join US This morning.

I would like to begin with an overview of the progress made by our team in continuing to transform our company during that unprecedented fiscal year 2020.

We will specifically highlight the macro results of our strong fiscal 2024th quarter <unk>.

And review the strategic drivers critical to that success.

I will then turn the call over to our Chief Financial Officer, Brian do well.

Well provide more detail on the related fourth quarter and full year financial results.

Our final segment will offer some closing thoughts on the state of the outdoor industry.

Early trends, we are seeing in our fiscal Twentytwenty, one first quarter, which we are already more than halfway through.

And our core enterprise strategies for the future.

We will conclude the call as always with a question and answer session.

Now it is difficult to overstate just how unique the back half of our fiscal 2020 year Watts from March through August we.

We witnessed the incredible hill societal and economic consequences of the worst global pandemic in more than 100 years.

Critical matters of social injustice rose to the forefront during the summer of 2020.

And the depth of our country's political discord seems is magnified as ever.

[noise] 2020 also witnessed and continues to experience and engagement by Americans and the great outdoors at recently unseen levels.

Our consumers combined the imperative of the safety of their families with their strong desire to be immersed in experiences they could control and.

And consequently flocked to the outdoor recreation lifestyle like never before.

The outdoor industry.

The recreational vehicles industry the Murray.

The marine industry.

And Winnebago industries continues to see record interest and outdoor participation as calendar year 2020 progressive.

Thanks to the grid and the incredible resolve of our Winnebago industries team across our four premium brand platforms and enterprise functions.

The disruption of normalcy caused by the COVID-19 pandemic was just part of the narrative of our fiscal 2020 year.

Not the defining aspect.

I strongly believe that the prevailing theme of fiscal 2020 was that despite all of the chaos we experienced our.

Our 5500, plus strong Winnebago industries employees worse.

We're steadfast in their commitment to safely achieving our strategic goals.

Delivering on our goal than threats of quality innovation and service in all that we do.

So I want to take a moment and acknowledge and thank each of those teammates for their continued perseverance to serve our customers and their dedication to our company our dealers and each other.

This team experienced some difficult days in it.

As we navigated the worst of the pandemic impact on our business.

And they continue to adhere to the stringent safety protocols, we utilize every day.

It is our employees' ongoing commitment to working collaboratively safely and efficiently that drives our business forward.

We also want to take this opportunity to continue to recognize and thank our medical providers first responders and health professionals in each of the communities in which we have a physical presence as an enterprise.

They too are true heroes as the pandemic drags on and their efforts remain a constant force against this unfortunate virus.

In fiscal 2020, and especially in our fourth quarter, we made meaningful progress on delivering on our strategic growth initiatives and creating increased value for key stake holders of our business.

While the acute impact of this year's third quarter impeded our ability to deliver full year financial performance reflective of the momentum we have generated in the first half of the year.

The underlying fundamentals of the business remain strong drip.

Driven by ongoing and tremendous consumer and dealer demand, which has returned in full force evidenced by our significant fourth quarter results.

Throughout the fiscal year, we continued to expand our portfolio.

Organically and Inorganically and.

And gain market share behind our four premium outdoor brands.

We successfully completed the acquisition of the Newmark luxury RV business in November of 2019.

Added yet another outstanding brand to our Winnebago industries family.

And furthered our progress to restore leadership in the motor home RV segment through their ever increasing market share in the class a motorized category.

Winnebago industries also drove organic market share in fiscal year 2020.

Led once again by the surging Grand design, RV brand and its expanding and highly desired travel trailer and fifth wheel leidos.

Our leading offering of Winnebago branded class B bands added almost nine points of market share in fiscal 2020, and Harold that new product launches by our Winnebago Towables team also enabled a significant increase in future orders in that business.

As the pandemic hit our company with unforeseen speed in the Middle of March we ourselves took swift and appropriate actions to protect our employees and the key stakeholders well.

While strengthening our solid financial position and ensuring liquidity and flexibility in the face of uncertainty.

While much of our operations were suspended for six weeks in the spring of 2020, we wait.

We wasted no time re imagining our daily operating processes to ensure a safe return to full operating status in may which.

Which allowed us to react appropriately to begin meeting increased and soon to be record levels of consumer demand in the summer of 2020.

We kept our foot on the accelerator in terms of new product development.

Worked to create strategic and mutually beneficial relationships with key suppliers.

And pivoted, our entire portfolio to a committed and confirmed order production system.

These actions and many more set us up to safely and profitably deliver for our end consumers and dealers in the fourth quarter.

Even as they record backlog of new orders accumulated across both our RV and marine businesses.

Throughout the fiscal year Winnebago industries continue to make progress in realizing our vision to be a leading provider of outdoor lifestyle solutions and in creating value for our shareholders.

And communities.

In fiscal 2020, Winnebago industries returned $15 million to shareholders through our increase and sustain dividends.

As Brian Hughes will touch on further our capital allocation priorities are focused on managing our flexibility.

And maintaining our solid financial position.

As we continue to invest in a disciplined manner in the face of an uncertain economic environment.

We feel confident.

But remain constantly diligent in the strength of our balance sheet.

And are pleased with our ability of having delivered positive operating cash flow throughout the fiscal year.

We also maintained our commitment to publishing our first annual corporate social responsibility report for the 2019 calendar year.

With the 2020 addition, just around the corner later this fall.

These reports highlight our efforts to address the environmental social and governance issues that impact our employees, our customers and our world and most directly affect the long term success and sustainability of our business.

It is also indicative of our commitment to developing goals and tracking our progress towards enhanced sustainability.

Additionally, in light of the pandemic in the financial hardship and has put on so many in our communities Winnebago industries made a record seven figure donation to the Winnebago Industries Foundation in fiscal 2020.

Supporting National partners, and its three impact areas outdoors access and community.

As well as local organizations in our Winnebago industries hometowns like those supporting the pandemic first responders and health care providers and the communities in which our employees live work and play.

Turning now to our consolidated financial results are.

Our fiscal fourth quarter was a strong finish to the year, reflecting the appeal and the market position of our portfolio of leading outdoor lifestyle brands. This.

The strides we have made in safety and operational excellence and the value of our collaborative relationships with our supplier partners and our dealer network.

Consolidated revenues for Winnebago industries were $737.8 million for the fourth quarter of fiscal 2020.

An increase of approximately 39% year over year, and a robust 15.3% organic increase excluding the impact of noble.

We saw exceptional demand across our product portfolio as consumers invested in safe outdoor lifestyle solutions once the stay at home restriction begin to lift with.

With standout performance by Grand design, and our Towable segment and class. These sales in our motor home segment.

Well I'm the strength of our one of Banco Grand design and Neumar brands, we saw our RV market share gains continue.

Achieving a 11.3% market share on a trailing 12 month basis, which is a full 1.3 percentage points above last year of which 0.8 percentage points or almost two thirds is organic.

Remember this company had less than 3% total market share at the end of 2015.

This continuation of market share gains is especially encouraging sense first time RV buyers make up a larger portion of our purchases. These days.

First time buyers generally gravitate towards more entry level models for Winnebago industries portfolio skews towards more premium offerings.

Yet.

Our market chain share gains would reflect that we appear to be competing just fine for these new consumers.

Full year operating cash flow was $270.4 million, an increase of approximately 102%.

Reflecting disciplined working capital management, and our strong sales momentum throughout the year. Despite the acute cobot impact in our fiscal third quarter.

We have continued to be very measured with our cash and have maintained our focus on curtailing expenses and.

And enhancing our liquidity.

Our cash balance rose to $293 million at quarter end.

While our outlook for continued strong consumer and dealer demand trends are positive. We are closely monitoring the evolution of the pandemic and its economic impacts.

The successful cost management actions that we deployed in the third quarter underscores the high variability of our cost structure and our ability to manage through challenging periods should we face further macro level disruption.

I am also very pleased at Winnebago industries overall quarterly adjusted EBITDA margin.

Expanded over 70 basis points in the fourth quarter compare.

Compared to the same period last year.

As we continued our focus on excellence in operations and delivered our profitable growth safely.

We re imagined our operating processes to support a safe return to running at high speed throughout the fourth quarter and continuing into fiscal year 2021.

Now, let us turn to the segments in more detail.

In the Towable segment fourth quarter revenue was up $414 million.

Were up approximately 35% from the prior year period.

Primarily driven by strong demand for safe outdoor lifestyle experiences and the strength of our premium towable portfolio.

The increasing appeal of Grand design products and their tireless focus on quality innovation and service has allowed us to again outpaced the industry.

Adjusted EBITDA margin was 14.8% in the quarter for the Towable segment up 110 basis points compared to the same period last year as a result of fixed cost leverage and profitability initiatives.

Backlog increased to a record $747.9 million, an increase of approximately 219% over the prior year period.

Dealers at the end of August had largely depleted much of their inventories to meet high levels of consumer demand in the fourth quarter.

Our multi branded Towables portfolio has continued to be resilient and successful in gaining share.

And we still see vast opportunity for growth as demand trends remain positive over.

Overall market size expands and our dealers relook to restore lot inventory levels, especially with our preferred brands.

Our performance emphasizes that our Winnebago brand and Grand design Towables lineups remained strong and reflects the continued appeal of both brands with consumers.

Turning to the motor home side, but.

Yes.

The addition of new Mars luxury brands to our motor home platform.

Allowing winnebago industries overall to compete more effectively in the class a and supersede categories.

And more broadly supporting our priority to restore our motor home business to a leadership position.

As demand trends continue and new customers come into the RV lifestyle. Our motor home segment is headed in the right direction to be more balanced and competitive than ever and well.

And well positioned to capture value going forward.

Fourth quarter Motor home segment revenues of $301.8 million were up approximately 50% from the prior year period.

Driven by those same strong demand trends for safe outdoor family experiences.

Excluding neumar organic revenues were $175.5 million down 12.6% from the same period last year.

You may recall that fourth quarter of fiscal year 2019 saw strong class B and class C units sales as we benefited from more normal chassis availability a year ago.

In fourth quarter of fiscal 2020, our strengthening class b sales more than offset by the impact of COVID-19, our CFO.

Our class a and class C sales that did not recover as quickly after the shutdown in Q3.

Yes, Winnebago, our brand increased its class C diesel sales in August and throughout our fiscal year.

Adjusted EBITDA margin for the motor home segment increased to 6.4% in the quarter one.

100 basis points over the fourth quarter in 2019 because of lower input costs.

Our motor home backlog increased to a record $1.1 billion at the end of August and increase of approximately 536% from the prior year due.

Due to depleted dealer inventory strong consumer demand and the influx of new Maher orders Inorganically.

Our fourth quarter backlog included approximately 7000 units of Winnebago branded motor home units, a law and dealer see increasing promise in the improving lined up a motor home products within that brand.

We have and continue to work closely with our suppliers to ensure that we are supporting them and.

And partnering with them and carefully managing the supply chain.

With more advance notice on lead times and overall closer communication.

Likewise, we also continue to validate the incredible amount of orders from our dealer partners and prioritize what they need most to continue to sustain the impressive retail momentum in the months ahead.

In fiscal year 2021, we have continued to ensure that we are strategically sourcing from our supplier partners and sustainability to sustainably replenishing dealer stocks as possible.

Finally, I will touch on our marine segment.

Like our RV business is Chris Crafts strong premium brand and market position has propelled it to grow in the fourth quarter.

As more consumers flocked to experiencing the outdoors by boat as well.

The planning process for capacity expansion at the facility in Sarasota is being considered again as we look to fuel this brand as an integral part of our broader outdoor lifestyle solutions platform.

Some are up 2020 saw record retail for the Chris craft brand. The introduction of further new models a decline in field inventory with its dealer partners and a material increase in backlog orders stretching deep into spring of calendar Twentytwenty one.

With that summary, I will now turn the call over to our Chief Financial Officer, Brian Hughes to review, our fiscal 2020 full year and fourth quarter financials in more detail.

Brian.

Thanks, Mike and good morning, everyone.

Fourth quarter consolidated revenues were $737.8 million revs.

Revenues, excluding neumar were $611.5 million, reflecting an increase of 15.3% compared to the fiscal 2019 fourth quarter.

Driven by the strong rebound in consumer demand in the towable segment and clapped the motorized products.

Gross profit was $122.5 million in the fourth quarter, an increase of approximately 47% year over year, reflecting strong growth in the towable segment and the contribution from new Maher.

Gross profit margin of 16.6% was up 90 basis points compared to the same period last year due to lower motor home segment in input costs and towable segment fixed cost leverage.

Partially offset by segment mix as a result of the acquisition of Neumar.

Operating income was 68.4 million for the quarter, an increase of approximately 53% compared to the fourth quarter last year.

Fiscal 2024th quarter net income was 42.5 million, an increase of approximately 33% compared to $31.9 million in the fourth quarter of last year.

Given by the growth in operating income, partially offset by increased interest expense.

The increase in interest expense is related to the convertible bond issued to finance the acquisition of Neumar and separately the write off of certain debt issuance costs associated with the termination of the company's term loan B, which as previously announced was refinanced by a bond issuance during the fourth quarter.

Sure.

Earnings per diluted share was $1.25.

Adjusted earnings per diluted share was $1.45.

Representing an increase of 45% compared to adjusted earnings per diluted share of one dollar even in the same period last year.

Consolidated adjusted EBITDA, let's say.

It was $76.5 million for the quarter.

Compared to $50.8 million last year.

An increase of approximately 51%.

Now turning to the full year fiscal 2020 result.

As Mike mentioned earlier, the COVID-19 pandemic and the related shutdown of our operations in the third quarter.

Combined with a momentary disruption to consumer purchasing patterns how to think.

Had a significant impact on our results for fiscal 2020.

Consolidated fiscal 2020 revenues of $2.4 billion increased approximately 19% from $2 billion in fiscal 2019.

Positively impacted by the acquisition of Neumar, which closed in Q1 of fiscal 2020.

But negatively impacted by the COVID-19, pandemic and related suspension of manufacturing operation.

Gross profit margin decreased 220 basis points.

I merely due to the mix impact of adding new Maher as well as the related purchase accounting impact.

And further impacted by COVID-19 and associated de leverage during the fiscal third quarter.

Operating income for the year was 113.8 million compare.

Compared to 155.3 million in fiscal 2019.

And net income was 61.4 million.

Full year earnings per diluted share were $1.84, a decrease of approximately 48% compared to fiscal 2019.

Adjusted earnings per diluted share was $2.58 for fiscal 2020 compared to adjusted earnings per diluted share a $3.45 in the same period last year.

Fiscal 2020 consolidated adjusted earnings per diluted share excludes costs totaling 25 million or 74 cents per diluted share aftertax.

Related to the noncash portion of interest expense on the convertible bond.

Neumar acquisition related costs.

Debt issuance cost write off due to termination of the term loan b.

Restructuring costs.

Recall also that reported and adjusted earnings per diluted share was also impacted by the 2 million shares issued as consideration and the new more acquisition.

Fiscal 2020 consolidated adjusted EBITDA was 168.1 million a decrease of 6.4% from 179.7 million in fiscal 2019.

Before turning to the individual segments I wanted to mention that amortization of intangibles for the fourth quarter was 3.6 million.

We currently expect amortization of approximately $3.6 million in each quarter of our fiscal 2021.