Winnebago Industries, Inc.

Welcome to the Q3 fiscal 2025 Winnebago Industries Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ray Posadas, Vice President of Investor Relations and Market Intelligence. Please go ahead.

Thank you, Tanya. Good morning, everyone, and thank you for joining us to discuss our fiscal 2025 third 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 third 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 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 the 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. 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 Q3 performance. Brian will then 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, and then 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, everyone. I want to begin by recognizing the resilience our team has shown in navigating a highly challenging market environment. Their dedication to our customers and commitment to our brands have enabled us to stay sharply focused on advancing the strategic priorities that will enhance long-term value for our stakeholders. Performance was consistent with the preliminary results we shared with you earlier this month. Growing macroeconomic uncertainty led to a notable downshift in RV activity from consumers and dealers as the third quarter progressed. These challenges are likely to continue through the remainder of the calendar year, as anticipated by the RV Industry Association's recent reduction in its wholesale shipment forecast for 2025. While the soft market conditions contributed to lower RV margins in both our towable and motorhome segments in Q3, we saw disproportionate results in our Winnebago-branded motorhome business. Last fall, we installed new leadership at both our Winnebago motorhome and Winnebago towable businesses to strengthen lagging operational performance and reinvigorate their product lineups. Fiscal 25 has seen significant effort to address the root causes of past outcomes. As that work progresses, the rapidly growing interest from both current and prospective Winnebago brand dealer partners in recent months highlights the strong potential of this iconic brand to drive improved margins and meaningful share gains over time. As we navigate an increasingly dynamic market environment, we are focused on executing the areas of the business within our control. As part of the business transformation of the Winnebago Motorhome business, we have taken decisive steps to lower field inventory, improve working capital in the future, align our production schedule to market demand, reduce discretionary expenses, and accelerate stronger product value for our customers. Collectively, these actions support a comprehensive margin recapture plan centered on refreshing the product line, boosting operational efficiency, and rebuilding sustained profitability beginning in fiscal 2026. We are also engaged in a broad set of strategic actions to ensure our long-term competitiveness and enterprise resilience. Across the company, we are conducting a comprehensive capacity utilization analysis, reviewing our manufacturing footprint to identify opportunities for optimization and productivity, and evolving our supply chain in light of expected tariff cost pressure. At the same time, we are reevaluating our organizational structure to streamline operations and eliminate redundancies. These initiatives are not just about incremental improvements. They represent a strategic imperative in our approach to cost management. By rigorously focusing on operational efficiency and discipline resource allocation, we are positioning Winnebago Industries to deliver sustainable value to our investors while maintaining our commitment to quality and innovation. We look forward to sharing further details and progress on these initiatives during our year-end earnings call in October. Moving now to recent strategic highlights. Newmar entered the compact Class C market with the new Freedom Air, part of the Motorhome RV brand's 2026 model year lineup. The Freedom Air debuted earlier this month at the Newmar Country Club International Rally in West Virginia. The dealer ordering process begins this midsummer, with shipments expected to begin by early fiscal Q1. The newest model in the Grand Design Motorhomes lineage series, the VT Class B van on the Ford Transit platform, began initial shipments in the third quarter. More on the trajectory of the lineage lineup momentarily. Winnebago Towables recently launched the Thrive, a completely new travel trailer model arriving at dealerships just in time for the summer travel season. With a starting MSRP below $50,000, Thrive delivers the design features and technology typically found in a much larger and more expensive lightweight travel trailer. Chris Craft's new Catalina 31. and exquisitely designed center console powerboat that builds on the brand's iconic Catalina 30, has begun rolling out to a great response from dealers. Barletta's expansive 2026 model year lineup includes helm redesigns of its Lusso and Aria series, a newly refined Cabrio, and new premium color options for Reserve, Barletta's flagship pontoon series. The Barletta team also has developed new digital resources to assist dealers with inventory planning and streamline the parts ordering process. Lastly, I'm also exceptionally proud to share that Winnebago Industries has been recognized by Newsweek as one of America's most trustworthy companies for the second consecutive year. What makes this award especially meaningful is that it's based on an independent survey of over 25,000 U.S. consumers. This recognition reaffirms our dedication to responsible growth, strong values, and delivering exceptional products and experiences. We also were named one of Newsweek's most responsible companies in America for 2025, highlighting the strength of our corporate responsibility initiatives. Turning to key RV trends on slide five, North America RV retail sales declined by 8.2% in April. This marks the third consecutive month of retail sales dropping by more than 8%, a sign that consumer demand remains pressured as buyers continue to navigate economic headwinds and higher borrowing costs. On the wholesale side, total RV shipments increased by 3.4% in April, with towable RVs, led by conventional travel trailers, rising 4.2% compared to the same month last year. Calendar year-to-date through April, wholesale shipments were up nearly 11%, primarily driven by strong shipments of affordable travel trailers. Inventory levels in the towable segment have largely been balanced. with manufacturers and dealers aligning shipments closely with current retail activity. However, we do not expect dealers to add much more towables total field inventory for the rest of calendar year 2025. In contrast, the motorhome segment still requires further destocking to improve the quality and quantity of field inventory there. Motorhome shipments decreased 3.4% in April, and we're down 8.7% calendar year to date as dealers continue to reduce excess inventory. For calendar 2025, we are lowering our industry forecast for wholesale RV shipments to a range of 315,000 to 335,000 units, or a midpoint of 325,000 units. This is slightly more conservative than the RVIA's recently revised forecast, which anticipates a median shipment of 337,000 units, a 1% increase over calendar 2024. We continue to demonstrate production discipline and a thoughtful approach to inventory management, ensuring our output remains closely aligned with in-market demand. With turns at about 1.8 times, we're effectively balancing the needs of our dealer partners with the realities of today's market environment. Looking ahead, we are targeting a two times turn ratio in all our businesses long term, reflecting our ongoing commitment to operational efficiency and discipline growth. Turning to RV market share on slide six, We have continued to gain share in several core product segments. For motorhomes, our enterprise-wide market share in both the Class A gas and Class A diesel categories increased across the three, six, and 12-month periods through April. Class C enterprise share increased for the trailing six and 12 months. Importantly, new product offerings in these areas provide a great foundation for the future. Since debuting its first lineage motorized model just 12 months ago, Grand Design RV has introduced two additional lineage products to the market, the Series F Class Super C and the Series VT Class B. For the trailing three months through April, Grand Design's lineage series of motorhomes registered a 1.6% retail share, an impressive accomplishment for such a young brand. The lineage lineup is on track to meet or exceed our $100 million plus revenue target in fiscal 2025. Grand Design's towable market share is also gaining momentum, reversing a modest 20 basis point decline over the trailing 12 months through April. In the travel trailer segment, Grand Design has achieved strong market share gains. up 60 basis points in April, 50 over the past three months, and 30 basis points over the past six months, highlighting the success of its increased focus on affordability. As shown on slide seven, Barletta continued to increase its share of the U.S. aluminum pontoon market from 8.8% at the end of fiscal 2024 to 9.2% for the trailing 12 months through April. In the short span of eight years, Barletta has gone from a startup to the number three player in the U.S. aluminum pontoon industry. And with nearly 60 pontoon brands nationally, that is no small achievement. Both Chris Craft and Barletta continue to do an exceptional job managing inventory, building strong dealer networks, and creating an outstanding boating experience for their customers. I'll now turn the call over to Brian Hughes for the financial review. Brian?