Winnebago Industries (NYSE:WGO) shares fell in pre-market trade after the recreational vehicle (RV) maker reported a sharp slide in third-quarter revenue as it gave bigger discounts in a more challenging market for motorhomes.
Revenue for the three months to May 27, 2023, amounted to $900.8 million, down 38% from a year earlier and below the $977 expected by Wall Street.
Apart from higher discounts and allowances, the company also attributed the decline to lower unit shares related to RV retail market conditions.
However, adjusted earnings per share (EPS) of $2.13, down 48%, still beat the Street’s estimate of $1.78.
“Our diverse portfolio of premium brands across the outdoor recreation industry continues to drive resiliency in our consolidated results, as top-line declines in our RV segments were offset by robust profitability in Towable RVs and continued growth in our Marine businesses. The Barletta brand, in particular, remains a bright spot in our portfolio, delivering strong market share gains in aluminum pontoons,” president and CEO Michael Happe said in a statement.
During the quarter, Winnebago noted it benefited from its highly variable cost structure and managed selling, general & administrative (SG&A) spending proactively, delivering double-digit adjusted EBITDA margin amid the challenging RV market conditions.
It also announced and closed the strategic vertical technology acquisition of Lithionics Battery, which it said will accelerate its innovation capabilities in diverse battery solutions, advance its overall electrical supply ecosystem and create opportunities for its RV and marine customers to enjoy fully immersive, off-the-grid outdoor experiences.
“We are entering our fourth and final quarter of fiscal 2023 with a strong balance sheet, having completed multiple inorganic and organic investments in support of future growth strategies and a sequentially improved inventory and working capital position,” Happe continued.
“We are closely tracking and adjusting to market conditions, with a focus on maintaining solid profitability, market competitiveness, and a preferred lot position for our premium brands with our channel partners.”
The company’s shares were down 5.3% at $60.75 ahead of the market opening.
Contact the author at stephen.gunnion@proactiveinvestors.com