Winnebago Industries, Inc.

Certain statements made during today's conference call regarding Winnebago Industries and its operations may be considered forward-looking statements under securities law. 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 filing, 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. Hosting today's call are Michael Happi, 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 first quarter performance, as well as a forward view of the market. Brian will discuss the associated drivers of our financial results and our updated CSCO year 2026 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.

Thank you, Joanne, and good morning, everyone. Winnebago Industries posted strong top and bottom line results in the first quarter, performing ahead of our expectations and advancing meaningfully on our priorities. Revenue increased in all three segments, with operating profitability higher in both our motorhome and towable RV businesses. Marine segment results in Q1 were just slightly below prior year, which we view favorably given the continued softness in the industry. We entered fiscal 2026 with a disciplined plan and a pragmatic view of industry demand conditions. Our Q1 performance reflected steady execution against our controllables, product innovation, operational efficiency, and brand expansions, while navigating a macroeconomic backdrop that remains mixed. Although the recent rate relief from the Fed may be a positive development for consumers, as outlined during our year-end earnings call, our financial outlook remains firmly anchored in the strategic levers within our business and is not solely reliant on industry growth. In our towable RV segment, affordability continues to shape buying power. We are aggressively leaning into the shift towards lower-priced products with models including the Transcend series, Imagine, and Reflection 100 from Grand Design, which enable families to enjoy the outdoors in a great travel trailer that combines quality and value. Winnebago's new Thrive is proving to be an exceptionally popular entry-level travel trailer among consumers whose RV journey is just getting started. While our recent share position in towables has room for growth, we are appropriately prioritizing profitability, stronger product value, and our dual branded strategy. The transformation underway at Winnebago Towables is designed to give us a second strong brand and access to a higher quality and quantity of dealers in that category. An initiative we believe will lead to meaningful share growth over time. On the motorhome RV side, we've grown our share in Class A gas, Class A diesel, and Class C over the most recent multi-month periods ended October 31st. For many motorhome RV buyers, the priorities versus other RV types are greater convenience, premium amenities, reliable power, and more than ever, integrated technology. Our luxury Newmar brand and Grand Design Motorhomes rapidly growing lineage series are hitting those sweet spots. The business refresh initiatives taking shape at our flagship Winnebago Motorhomes business further strengthen that brand as a third pillar of our motorized RV strategy. When you consider that over the trailing 12 months as a premium branded OEM, We have achieved 33.9% share in Class A diesel, 21.4% share in Class B, 13.7% share in Class C, and 12.3% share in Class A gas. We are a formidable and well-diversified player in a dollar-weighted segment we believe will gain momentum as market conditions improve. The right side of slide four highlights several products that contributed to our Q1 performance, including the Cabrio from Barletta, which had strong retail in the first quarter. Barletta continues to grow its position in the U.S. aluminum pontoon space, ranking as the number three brand by market share in the segment. From a financial perspective, we've made outstanding progress over the past two quarters, strengthening our balance sheet, reducing our net leverage ratio, and driving positive operating cash flow. Q1 is a seasonally tougher cash generation period historically, and I am very pleased with our balance sheet standing going into calendar 2026. Brian will provide more details on that shortly. Looking at key RV retail trends on slide five, based on preliminary SSI data, industry RV retail registrations declined 7.6% year-over-year in October before final adjustments, following a 2.2% net increase in the prior month. Keep in mind gross monthly numbers are frequently adjusted upward as additional states report. On the wholesale side, North American RV unit shipments totaled just over 30,000 units in October. This is down about 1% from prior year, although on a calendar year-to-date basis, shipments are up about 4% higher. Specifically, total unit shipments were down about 3% for the month and 4% higher for the calendar year-to-date period. Motorhome unit shipments grew nearly 13% in October and posted a growth rate of 3.5% calendar year to date. Based on RVIA's wholesale industry shipment data through October for calendar year 2025, we are revising our industry forecast upward to a range of 335,000 to 345,000 units, or a midpoint of 340,000 units. compared to our prior midpoint of 330,000 units. Our updated forecast essentially aligns with RVIA's current midpoint projection of 339,700 units for calendar year 2025. Now, for calendar year 2026, we continue to expect North American RV wholesale shipments in the range of 315,000 to 345,000 units. Our midpoint of 330,000 units for 2026 is 5.5% lower than RVIA's current midpoint estimate, but more optimistic than some industry peers. We do expect the RV retail market to stabilize in the back half of our fiscal year. Inventory turns were 1.8 times in the first quarter, reflecting the seasonal shipment dynamics and dealer demand for our new products. Specifically, we are seeing dealer stocking orders on Grand Design Motorhome and Winnebago towables as the channel embraces these new lineups. As noted on our year-end call, we are targeting two turns across all of our businesses generally as a yardstick to measure consistent growth and operational efficiency. This number will be dictated largely by dealer behavior and the rhythm of key business initiatives. Moving to the marine segment on slide six, sales improved modestly in the first quarter. Amid ongoing headwinds for the industry, our Barletta and Chris Krepp brands continued to demonstrate disciplined inventory management and strong dealer relationships. Both brands saw positive retail momentum coming out of the 2025 Fort Lauderdale International Boat Show and received solid dealer orders from their fall dealer meetings. The customer reception to Chris Craft's Sportster series and the new Catalina 31 has been fantastic. Barletta has received accolades for its model year 2026 offerings, including its industry exclusive TEC cover, which has been well received as a practical solution that simplifies the ownership experience. Dealer feedback has reinforced that this innovation addresses a real customer need and reflects our focus on thoughtful, owner-centric design. For the trailing 12 months ended October 31st, Barletta expanded its share of the aluminum pontoon segment in the U.S. by 30 basis points to 9.1% and has seen even stronger recent retail share results on monthly standalone basis. Turning to slide seven, our Winnebago, Newmar, and Grand Design brands earned multiple top honors for the 2026 model year from leading RV industry publications. These include RV of the Year awards across several categories, top debut recognition for standout models like Freedom Air and Sunflyer, best new models for Thrive and Foundation, editor's picks for Supreme Air, and Innovation of the Year for Grand Design's Lineage Shower System. These accolades and many more reflect our relentless focus on innovation, quality, and delivering exceptional experiences for every traveler. In addition, our Grand Design and Newmar businesses both received Dealer Satisfaction Index Awards this past November. Chris Kraft and Barletta received industry customer satisfaction index awards in 2025 as well. On slide eight, I also want to highlight our recent recognition by Newsweek as one of America's most responsible companies. This was the fourth consecutive year we have received this award, reflecting our ongoing commitment to sustainability and social impact. In fiscal 2025, We contributed all in over $3.9 million, volunteered 13,600 employee hours, supported Habitat for Humanity Restores, and grew our employee resource group memberships by 38%. We also advanced inclusion initiatives and began a comprehensive sustainability assessment with our annual and best ever corporate responsibility report coming next month. Together, these achievements demonstrate how we're driving innovation forward while staying true to our values. I will now turn the call over to Brian Hughes for the financial review. Brian?

Thank you, Mike. Good morning, everyone. Starting on slide nine, in the first quarter, our net revenue growth exceeded 12%. primarily reflecting higher unit volume and selective price increases. Our towable RV and motorhome RV segments each posted double-digit percentage growth in the quarter, with our marine segment up low single digits on the top line compared to prior year. On a consolidated basis, warranty expense was 3.6 percent of net revenue, up 40 basis points from Q4. primarily reflecting our ongoing commitment to ensuring product quality and customer service. Operating expenses declined 3.2% compared to prior year, primarily related to the cost reduction initiatives implemented in the second half of fiscal 2025, partially offset by investments to support the growth of our grand design motorhome business. On the bottom line, we reported adjusted earnings per diluted share of $0.38, compared with an adjusted net loss per share of $0.03 in the first quarter of last year. Turning to our segment results, beginning with towable RV on slide 10, net revenues grew 15.5%. This increase was driven by higher volume from products like the Grand Design Imagine, Grand Design Reflection, Winnebago's New Thrive, and Winnebago Access, all of which are resonating strongly with our dealer partners, along with selective price increases partially offset by a mixed shift toward lower price point products. Operating income margin of 3.8%, improved 30 basis points from prior year primarily due to volume leverage. This increase was partially offset by higher warranty expense. Turning to our motorhome segment performance on slide 11, first quarter net revenues grew 13.5% year-over-year. This was driven primarily by favorable product mix and selective price increases, partially offset by lower unit volume. Motorhome RV segment operating income margin improved 390 basis points from the prior year due to targeted price increases, lower discounts and allowances, and lower warranty expense. As shown on slide 12, net revenues in the marine segment for the first quarter grew 2.2% from prior year due to selective price increases partially offset by lower unit volume. As we noted on our year-end call, both Chris Craft and Barletta have demonstrated strong discipline in managing production, adapting effectively to the cautious retail environment. Dealer inventory for the quarter remained essentially flat versus the comparable period of fiscal 2025. Marine segment operating income decreased less than 1%, primarily due to lower unit volume. Turning to slide 13. We continued to strengthen our balance sheet in the first quarter while further reducing our net leverage ratio. Cash and cash equivalents were $181.7 million at quarter end, driven by $25.4 million in net cash from operating activities. While inventories increased just over 4% in the quarter, accounts receivables decreased by more than 22% from year end, which contributed to improved working capital. We continued to manage working capital prudently, balancing inventory discipline with the flexibility to support retail demand. Adjusted EBITDA more than doubled year over year to $30.2 million, and combined with our cash from operations, reduced our net leverage ratio to 2.7 times at the end of the quarter. we continue to target a net leverage ratio approximating two times by the end of fiscal 2026. Turning to guidance on slide 14, we are raising our fiscal 2026 full year guidance as follows. Consolidated net revenues in the range of $2.8 billion to $3.0 billion versus a prior expectation of $2.75 billion to $2.95 billion. Reported earnings per diluted share in the range of $1.40 to $2.10 compared with $1.25 to $1.95 previously, and adjusted earnings per diluted share in the range of $2.10 to $2.80 versus a prior range of $2 to $2.70. From a segment perspective, we continue to expect flat to modest low single-digit growth in the towable RV segment. In the motorhome RV segment, we remain on track for operating income margin improvement in the low single digits for the fiscal year. Even with some outperformance in the marine segment in the first quarter, industry retail trends remain soft. And as a result, we expect full year net revenues to be down in fiscal 2026 compared to the prior year. Our revenue and earnings expectations for the fiscal year reflect the strength of our performance rather than reliance on industry level unit growth. This approach underscores confidence in our ability to deliver results through disciplined execution and strategic initiatives regardless of external market fluctuations. For Q2, we expect a modest increase versus the prior year's Q2 sales driven by growth in the motorhome segment. We expect Q2 sales to be down sequentially or from Q1 due to the normal seasonal flow of our business further influenced by dealer's preference for low inventories. Similar to sales, we expect EPS to be down sequentially in Q2. Compared to the prior year, we expect EPS to be flat to up modestly, taking into consideration the relatively strong sequential recovery we witnessed in Q2 EPS last year. I want to reiterate that our financial guidance reflects current trade policy positions and prevailing tariff rates, which remain under a broader legal challenge before the U.S. Supreme Court concerning presidential tariff authority. Now let me take a moment to formally introduce Joanne Ondala, who has recently expanded her role to lead investor relations here at Winnebago Industries. Since joining the organization more than four years ago, Joanne has been a critical leader on our enterprise team in building the foundation for our strategic planning, risk management, and business development initiatives, and most recently has led our treasury function. Joanne brings a strong background in strategy, corporate development, and finance, including senior roles at Tenant Company and Ecolab. We are excited to leverage Joanne's broad skill set in this new capacity. Joanne, I'll hand things over to you for some brief comments.