Winnebago earnings up, fuel prices pose threatFOREST CITY, IA

- Winnebago Industries, Inc. (NYSE:WGO) says revenues for the second quarter 2011 fell 3.6 percent to $106.6 million, but generated net income of $3.3 million versus $706,000 for the second quarter of fiscal 2010.

Gas prices are putting a crimp on sales, and commodity prices threaten profitability in the complex construction of the firm's richly appointed recreational vehicles, many outfitted with wood cabinetry, french doors and paneling.

Net income for the quarter reflected a $2.2 million tax benefit from various tax planning initiatives and tax settlements, Winnebago Industries said, including results of the the annual physical inventory of work-in-process recorded during the quarter, due to lower actual inventory scrap and production loss, which had the effect of increasing gross profit and inventories by $3.5 million.

The quarter was also favorably impacted by higher average selling prices due to mix and less promotional incentives as the economy improved.
CEO Bob Olson said he was pleased with WInnebago Industries "ability to overcome very tough shipment comparisons with the second quarter last fiscal year. We had significantly ramped up our production to meet our dealers' increased demands for product as they grew their inventories from the lows experienced during the depths of the recession."

Olson said increased show traffic and retail sales within the past few months indicate an improved economy and consumer confidence in the U.S. "as we enter the important spring market. We remain cautious, however, in light of the volatility of fuel prices due primarily to the violence and turmoil in the Middle East, as well as increasing commodity costs."

Winnebago Industries is integrating SunnyBrook RV towable recreational vehicles into operations since it was acquired. "We have been adding staff strategically within Winnebago Industries Towables to strengthen the SunnyBrook brand, while creating a separate and unique Winnebago brand. We plan to introduce new Winnebago towable products this summer and will soon begin to market these products to our Winnebago brand dealers."

Winnebago Industries said at an investment presentation last fall that it employs 2,000 non-union workers at its manufacturing facilities in Forest City, Iowa and sells through 230 dealer locations. It holds about 18.4 percent market share followed by 18 percent for rival Thor Industries;d 14.7 percent for Fleetwood RV; and 11.4 percent for FOrest River RV.  The vertical integration of its manufacturing, including production of wood furnishings, cabinetry and wood interiors and mixed materials, was detailed in this table.

Vertical Integration
 Why we are vertically integrated:
  • Our remote location
  • Have more control over our quality
  • Provides flexibility

Vertical integration processes:

  • Aluminum extrusion
  • Cabinetry/wood working
  • Soft goods (furniture, curtains, upholstery)
  • Vacuum formed plastics
  • Rotational molding
  • Steel fabrication
  • Panel lamination
  •  Multiple painting processes


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