Winnebago Industries, Inc.

Good day, and thank you for standing by. Welcome to the Winnebago Industry's Q1 Fiscal 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. I would now like to hand the conference over to your speaker today, Ray Posadas. Vice President, Investor Relations and Market Intelligence. Sir, you may begin.

Thank you, Damon. Good morning, everyone, and thank you for joining us to discuss our fiscal 2025 first quarter earnings results. 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 released with our first quarter results was issued and posted to our website earlier this morning. Please note that the earnings slide deck that follows along with our prepared remarks is also available on the investor relations section of our website under quarterly results. Turning to slide two, 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 we encourage you to read. In addition, on today's call, management will refer to GAAP and non-GAAP financial measures, and the reconciliation of the non-GAAP measures to the comparable GAAP measures are available in our earnings press release. Please turn to slide three. Joining me on today's call are Michael Happy, the President and Chief Executive Officer of Winnebago Industries, and Brian Hughes, Senior Vice President and Chief Financial Officer. Mike will begin with an overview of our Q1 performance. Brian will discuss the associated drivers of our financial results, in addition to sharing our forward view of the market and our fiscal year 2025 guidance. Mike will conclude our prepared remarks with the business outlook, and management will be happy to take your questions. With that, please turn to slide four as I hand the call over to Mike.

Thanks, Ray. Good morning, and thank you for joining us to discuss our first quarter results. When Brian and I spoke with you on our year-end earnings call in October, we conveyed an expectation that the first half of 2025 would be challenging. The outdoor recreation space continues to face a difficult operating environment marked by soft retail demand and a cautious dealer network, resulting in lower segment revenues and profitability in our towable and motorhome RV segments. Our marine segment was the standout performer in the quarter, delivering revenue and margin growth sequentially and year over year. Barletta and Chris Craft Brands generated retail market share growth through October, outperforming the industry in their respective categories. We've seen some recent signs that consumer confidence is beginning to pick up, and we continue to anticipate an improved demand landscape in the second half of the year. Amid the current market dynamics, we continue to execute a proactive and disciplined approach to managing production capacity, output, and costs. Moreover, we remain focused with our dealer partners on tailoring our incentives, support programs, and inventory management to foster confidence and stimulate future orders. These strategies, complemented by our healthy balance sheet, prudent capital spending, and robust liquidity, position us for an anticipated market recovery in the second half of fiscal 2025. For the most part, the RV industry has done a commendable job managing inventory levels in light of the soft consumer demand and more moderated dealer ordering patterns. And Winnebago Industries is positioned well in terms of field inventory levels as we plan for a market recovery. The bottom line is that we are running the business for the long term. Despite challenges within the industry, the Winnebago Industries team's balanced approach to capital allocation has two primary objectives. The first is to sustain annual profitability and maintain a resilient balance sheet while strengthening our competitive market positions and supporting both lot and retail share across our outdoor portfolio. The second is to emphasize strategic investments that drive the long-term growth and value of our brands and overall business. On our year-end call, Brian and I highlighted the strategic leadership changes to address the operational inefficiencies within our Winnebago-branded motorhome and towable businesses. As a reminder, Don Clark has been promoted to Group President of Towable RVs, leading the Winnebago brand's towable RV division, in addition to the Grand Design RV brand. Chris West has been promoted to President of Winnebago Motorhomes and Specialty Vehicles. While it will take some time to effectively evaluate the operational changes within these Winnebago branded businesses, Don and Chris have already begun to lay the groundwork for what we expect to be improved performance and growth for the Winnebago brand in the back half of calendar 2025. Turning to recent RV trends on slide five, From a retail perspective, industry-wide RV shipments were up 2.4% year-over-year in October. Although one month does not make a trend, positive retail comps after 40 consecutive months of year-over-year declines are an encouraging sign as well. On the wholesale side, RV shipments through October stood at approximately 287,000 units. up 7.7% year-to-date compared with the same period in 2023. We now expect calendar year 2024 RV wholesale shipments of approximately 330,000 units. For calendar year 2025, we continue to forecast wholesale RV shipments in the range of 320,000 to 350,000 units. Our median of 335,000 units is slightly more conservative than the current RV Industry Association projection of 346,100 units. The RVIA expects wholesale shipments to remain relatively flat through mid-2025 before accelerating in the second half of the year. We believe that gross field inventory levels in RVs are well-positioned. both in terms of quantity and aging. While RV dealers remain cautious about committing to new orders, we are seeing early signs of optimism driven by the conclusion of the election, the anticipated further easing of interest rates, improving inventory levels, and stabilizing consumer sentiment. Turning to slide six, for the trailing 12 months ended October 31st, our total market share declined 50 basis points to 10.9% compared to the same period in the prior year. In the motorhome RV segment, our Class A and Class C offerings from Winnebago and Newmar are performing well. Grand Design's Lineage Series M is just beginning to ramp. And with two additional models in development, we have high expectations for those products. We continue to maintain strong double-digit market share in Class B, and we have specific actions underway there to drive further share growth through new products and marketing initiatives. In our towable RV segment, Grand Design has done a great job winning in the majority of price points in which it plays. Across the segment, and indeed throughout the business, We continue to be in the process of transforming our product portfolio to satisfy a wide range of price points, including lower price point models in many categories. Rather than decontenting, we are refining product features to focus on delivering what consumers truly value without compromising quality or functionality. Slide 7 details Barletta's steady gains in the U.S. aluminum pontoon market. Over the 12 months ending October 31, 2024, our market share increased by 180 basis points to reach 9.1% compared to the same period in the prior year. we continue to get high marks from our dealer network related to providing a great product that is truly resonating with our mutual end customers. Moving to recent highlights on slide eight, the overwhelmingly positive response to Grand Design's award-winning new Lineage Series M confirms the demand for the brand's innovative approach to motorized RVs. Earlier this month, Grand Design announced the addition of a Class Super C motorhome to its Acclaim Lineage motorized product lineup. The new addition, Series F, is scheduled to debut next month at the 2025 Florida RV Super Show in Tampa. The new Series F will be manufactured alongside Series M at Grand Design's cutting-edge motorized facility in Indiana. We are excited to introduce the next iteration of the lineage line to an RV class that continues to grow and to partner with dealers across the country to bring this product to a new customer base. In the towable RV category, the Super Show will feature products including Grand Design's all-new Momentum 392M, the latest addition to the top-selling Momentum toy hauler lineup. and the Winnebago Access 18DBH and 18RK, the first compact single-axle floor plans in the functional and feature-packed Access series. As we are entering boat show season, I also want to highlight two marine products, the Barletta Aria four-point fish, a new floor plan for the model year 2025 lineup, and the Chris Kraft 28 Sportster Stern Drive, which debuted recently at the Fort Lauderdale International Boat Show. An outboard propulsion version of the 28 Sportster is scheduled to be unveiled at the Miami International Boat Show in February. Now, let me turn the call over to Brian for the financial review.