Winnebago Industries, Inc.

Good day, and thank you for standing by. Welcome to the first quarter fiscal 2023 Winnebago Industries Financial Results Conference call. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to turn the call over to Ray Posadas, Vice President of Investor Relations and Market Intelligence. You may begin.

Good morning, everyone, and thank you for joining us today to discuss our fiscal 2023 first quarter earnings results. I am joined on the call today by Michael Appy, President and Chief Executive Officer, and Brian Hughes, Senior Vice President and Chief Financial Officer. This call is being broadcast live on our website at investor.wgo.net. and the replay of the call will be available on our website later today. The news release with our first 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 today's 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 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. Mike.

Thanks, Ray. Good morning, everyone. As always, we appreciate your interest in Winnebago Industries and spending time with us to review our fiscal 2023 first quarter financial results. I will initiate the call with a broad overview of our performance during the quarter and then pass the conversation to Brian Hughes to cover our financial results in more detail. We will then offer some closing thoughts before turning to your questions. Winnebago Industries first quarter results are a testament to the strength diversification, and resiliency of our brand portfolio amid more difficult industry and macroeconomic conditions. As we expected, demand for our premium RV product lineups continued to normalize in the first quarter, lapping a period of tremendous growth for the RV lifestyle in our fiscal 2021 and 2022 years. While we believe many of the underlying drivers of this record-setting period are secular and likely to have a significant and positive impact in the long term, including the introduction of thousands of new, younger and more diverse RV families that could remain customers of our premium brands for many years to come, WINNEBAGO INDUSTRIES WILL CONTINUE FACING DIFFICULT COMPARISONS TO OUR FISCAL 22 RESULTS AS THE RV INDUSTRY STABILIZES THROUGHOUT FISCAL 2023. OUR PERFORMANCE WAS ALSO CHALLENGED BY SEVERAL MACROECONOMIC FACTORS THAT WE EXPECT TO IMPACT OUR NEAR-TERM RESULTS. THIS INCLUDES A BROADER ECONOMIC SLOWDOWN, GENERAL INFLATION THAT WHILE TRENDING LOWER IS STILL MEANINGFUL, higher interest rates, and as a result, lower consumer confidence. That said, our outstanding Winnebago Industries team nimbly managed these challenges in the first quarter. I am immensely proud of our teammates for their arduous work to enhance the agility of our supply chain, increase the efficiency of our operations, and drive an increasingly more balanced portfolio of profit streams that are at various places in the outdoor economic cycle. The result was reasonable revenue stability and solid bottom line results that exceeded most external expectations. While we certainly cannot control the overall size of the outdoor recreation market in the immediate near term, we can stay focused on strengthening and investing in our golden threads of quality, innovation, and experience that will drive our profitable growth for years to come. Ultimately, Winnebago Industries achieved $952 million in net revenues in the quarter, a decline of 18% from the year-ago period. We realized a consolidated gross margin of 16.8%. WHILE CONSOLIDATED GROSS MARGIN WAS DOWN YEAR OVER YEAR, IT REMAINS WELL ABOVE PRE-PANDEMIC LEVELS, UP 240 BASIS POINTS WHEN COMPARED TO FISCAL 2019 FIRST QUARTER. AND WE DELIVERED ADJUSTED EARNINGS PER DILUTED SHARE OF $2.07. WHILE DOWN COMPARED TO HISTORIC RECORD HIGH LEVELS LAST YEAR, THESE RESULTS REMAIN STRONG. and reflect the resilience of our operating model, the vibrancy of our products, and a more robust organization than we are today. Our results were driven by a few key factors. First, the strength of our premium outdoor lifestyle brands and our innovative product portfolio. Some of you saw our products in action at our Investor Day last month. The best current example of this formula is the Barletta lineup of pontoons. They are simply some of the best premium pontoons on the market today in function and feel. And the marine customers are voting with their purchase decisions. Barletta, which was founded just five years ago and acquired in August of 2021 by Winnebago Industries, has seen its market share begin to approach almost 7% of the market. The growth and profitability of our marine segment is now a material chapter to our story in becoming a more well-rounded outdoor recreation mobility leader. We remain incredibly focused on the organic competitiveness, health, and growth of our business. Our three RV brands, Winnebago, Grand Design, and Newmar, all received the recent Dealer Satisfaction Index Awards from the RV Dealers Association, which places a special emphasis on quality. We recently began full production and shipments of our new Hike 100 FLX Travel Trailer, which was named the Model Year 2023 RV of the Year by RV Business Magazine. This product is part of an initiative to expand into differentiated customer segments and drive innovation with off-grid and off-road capabilities. A second key driver of our results in the first quarter was our flexible operating model that complements a highly variable cost structure and our commitment to operational excellence, which enabled Winnebago Industries to maintain strong profitability despite market pressure on our top line. Our operational excellence initiatives are another example of the shared enterprise capabilities that our individual business units leverage across our enterprise. These initiatives include an outstanding strategic sourcing function, manufacturing best practices, company-wide focus on consumer insights and the consumer experience, and the benefits of an overlapping dealer network with deep long-term relationships. And finally, certain external factors had meaningful impacts on our first quarter performance as well. The most significant was our supplier Mercedes-Benz AG's recent recall of all model year 2019 to 2022 Sprinter chassis. As we discussed during our investor day last month, This recall prevents Winnebago Industries and all industry OEMs, upfitters, and retail dealers using that chassis from currently shipping, selling, or delivering any of the affected products until a remedy is implemented sometime in the first calendar quarter of 2023. This issue negatively impacted our first quarter top and bottom line results, including inventory levels and cash flow. Notably, despite this impact, we grew our motorhome segment revenue in the first quarter and delivered solid profitability, reflecting the continued fundamental strength of our operations and margin profile. The second external factor we are actively managing is the dealer demand for our wholesale towables RV inventory. As I have mentioned previously, each of our reporting segments is experiencing varying forms of channel stocking behavior, which in turn impacts dealer inventory levels, backlog, and production schedules in diverse ways across our portfolio. We are especially and closely managing towable RV production levels to align with normalized dealer inventories in this segment. while our motorhome and marine businesses work carefully to replenish dealer inventories that remain low in various subsegments. We are focused on exercising further rigor and a focus on sustainable long-term value by adjusting production across our businesses to calibrate to the needs of our dealers and in consumer demand levels. Our operating model allows us to do that profitably despite some disruption in our supply chain as we adjust our manufacturing to real-time market dynamics. We are proud of how our results in the first quarter demonstrate that Winnebago Industries can and will deliver strong profitability and performance through challenging cycles. Furthermore, the benefits of our diversified and more balanced portfolio were evidenced by the growth in our motorhome and marine segments, helping to offset the decline in towables. Our marine segment revenues grew 66% year over year in the first quarter and accounted for 14% of our revenue, highlighting the tremendous success of our initiatives in that segment and benefiting from continued strong momentum, specifically in the Barletta brand. At the same time, as I mentioned, our motorhome segment continues its growth trajectory with revenues growing 10% year over year as consumers continue to see the value of our products in the market. Our broad portfolio, enterprise synergy and capabilities, and commitment to quality, innovation, and experience enhance our resiliency and ensure we are well-positioned to create long-term value. With that summary, I will now turn the call over to our Chief Financial Officer, Brian Hughes, to review our fiscal 2023 first quarter financial results in more detail. Brian.