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Winnebago Industries Inc WGO

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Winnebago Raises Dividend by 50%

Analyst Note

| David Whiston, CFA, CPA, CFE |

After the market closed on Aug. 18, Winnebago Industries announced a large dividend increase and the relocation of its corporate headquarters. We are not changing our fair value estimate. The quarterly dividend will rise by 50% to $0.18 per share starting with the first dividend payable in fiscal 2022 on Sept. 29 to shareholders of record at the close of business on Sept. 15. We calculate an aggregate annual dividend of about $24.2 million, which we believe the company can easily service, given free cash flow in the first nine months of fiscal 2021 was about $124.4 million and the company’s RV backlog at May 29 was about $3.7 billion. The dividend yield is about 1%. We don’t think an incremental roughly $8 million in annual dividend payout means that acquisitions will necessarily slow, as management will likely keep looking for outdoor lifestyle companies with a premium brand such as the July 20 announcement of a deal to buy Barletta pontoon boats as discussed in our note that day. We would like to see the company integrate Barletta before making another large deal. We see the RV industry’s excellent demand along with Winnebago’s desirable brand portfolio as enabling good prospects for the foreseeable future and are glad to see management return incremental cash to shareholders to share the company’s good fortune.

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Company Profile

Business Description

Winnebago Industries manufactures Class A, B, and C motor homes along with towables, customized specialty vehicles, and parts and services. With headquarters in Eden Prairie, Minnesota, Winnebago has been producing recreational vehicles since 1958. Revenue was about $2.35 billion in fiscal 2020. Class A motor homes account for 31% of motorized unit sales, Class B about 41%, and Class C the rest. Winnebago expanded into towables in 2011 with the acquisition of SunnyBrook and acquired Grand Design in November 2016. Towables made up 82% of the firm's RV unit volume, up from 31% in fiscal 2016. The company's total RV unit volume was 45,995 in fiscal 2020. Winnebago expanded into boating in 2018 with the purchase of Chris-Craft and bought premium motor home maker Newmar in November 2019.

605 West Crystal Lake Road, P.O. Box 152
Forest City, IA, 50436
T +1 641 585-3535
Sector Consumer Cyclical
Industry Recreational Vehicles
Most Recent Earnings May 31, 2021
Fiscal Year End Aug 31, 2021
Stock Type Cyclical
Employees 5,505