WGO 10-K & 10-Q changes, risk factors and insider trading
Winnebago Industries Inc. · NYSE · Motor Homes · CIK 107687 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Largest changes
There has been an increased focus from regulators, investors, employees, consumers, and other stakeholders relating to ESG practices. We periodically communicate our ESG initiatives, which include prioritizing ethics and integrity, safety, people, inclusion and belonging, community, waste, emissions, and product stewardship. Failure to meet our commitments, respond to regulatory requirements, or advance our initiatives could adversely impact our reputation, as well as the demand for our products. In addition, achieving these initiatives may result in increased costs, which could have a material adverse impact on our business, financial condition, or results of operations. At the same time, our stakeholders have evolving, varied and sometimes conflicting expectations regarding many aspects of our business, including our operations and ESG-related matters. If we fail or are perceived to fail, in any number of ESG matters, or to effectively respond to changes in, or new, legal, regulatory or reporting requirements concerning climate change or other sustainability concerns, we may be subject to regulatory fines and penalties, and our reputation may suffer.see in full comparison
We purchase raw materials such as steel, aluminum, and other commodities, and components, such as chassis, refrigerators, and televisions, for use in our products. In addition, we are a purchaser of components and parts containing various commodities, including steel, aluminum, copper, lead, rubber, lumber, and others that are integrated into our end products. Our profitability is affected by significant fluctuations in the prices of the raw materials and the components and parts we use in our products.see in full comparisonAdditionally,Recenttherechangescontinuesin trade policy, including tariffs imposed by the U.S. government and reciprocal tariffs imposed by foreign countries, have increased our sourcing costs, and uncertainty remains regarding additional tariff actions in the future. In addition tobeincreaseduncertainty with respect to the implementation of current trade regulations, future trade regulations and existing international trade agreements, which could continue to increase our cost of goods sold, both directly andcosts as a result ofpricetheseincreases implemented by domestic suppliers, whichtariffs, we maynotfacebesupplyablechain disruptions and delays that negatively impact our cost of materials and production processes. The uncertain trade policy environment may also contribute topassdecliningonconsumertoconfidence,our customers. The impact from these tariffswhich couldalso result in decreaseddecrease demand for our products. While we may attempt to take steps to mitigate or avoid some of these increased costs and disruptions, our ability to do so may be limited by operational and supply chain constraints, especially in the short term. All of these conditions could materially and adversely affect our results of operations and financial condition.
If we are unable to properly forecast future demand of our products, oursee in full comparisonproductionoperatinglevelsresults maynot meet demand, which couldbe negativelyimpact our operating results.impacted.
We incurred substantial indebtedness to finance the acquisitions of Grand Design and Newmar Corporation ("Newmar"). Our asset based revolving credit facility ("ABL Credit Facility") and Senior Secured Notes (as described in Note 9 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K) are secured by substantially all of our assets, including cash, inventory, accounts receivable, and certain machinery and equipment. We also issued unsecured convertible senior notes duesee in full comparison2025 ("2025 Convertible Notes") to finance the acquisition of Newmar, and unsecured convertible senior notes due2030 ("2030 Convertible Notes") to execute a partial repurchase oftheother2025 Convertible Notes.indebtedness. If a default of payment occurs, the lenders in our ABL Credit Facility or holders of our Senior SecuredNotes, 2030 Convertible Notes,Notes and20252030 Convertible Notes may elect to declare all of their respective outstanding debt, together with accrued interest and other amounts payable thereunder, to be immediately due and payable. Under such circumstances, we may not have sufficient funds or other resources to satisfy all of our obligations. In addition, the limitations imposed on our ability to incur additional debt and to take other corporate actions might significantly impair our ability to obtain other financing.
Full comparison: every changed paragraph (8)
If we are unable to properly forecast future demand of our products, our productionoperating levelsresults may not meet demand, which couldbe negatively impact our operating results.impacted.
We purchase raw materials such as steel, aluminum, and other commodities, and components, such as chassis, refrigerators, and televisions, for use in our products. In addition, we are a purchaser of components and parts containing various commodities, including steel, aluminum, copper, lead, rubber, lumber, and others that are integrated into our end products. Our profitability is affected by significant fluctuations in the prices of the raw materials and the components and parts we use in our products. Additionally,Recent therechanges continuesin trade policy, including tariffs imposed by the U.S. government and reciprocal tariffs imposed by foreign countries, have increased our sourcing costs, and uncertainty remains regarding additional tariff actions in the future. In addition to beincreased uncertainty with respect to the implementation of current trade regulations, future trade regulations and existing international trade agreements, which could continue to increase our cost of goods sold, both directly andcosts as a result of pricethese increases implemented by domestic suppliers, whichtariffs, we may notface besupply ablechain disruptions and delays that negatively impact our cost of materials and production processes. The uncertain trade policy environment may also contribute to passdeclining onconsumer toconfidence, our customers. The impact from these tariffswhich could also result in decreaseddecrease demand for our products. While we may attempt to take steps to mitigate or avoid some of these increased costs and disruptions, our ability to do so may be limited by operational and supply chain constraints, especially in the short term. All of these conditions could materially and adversely affect our results of operations and financial condition.
In addition, increases in other costs of doing business may also adversely affect our profit margins and businesses. For example, an increase in fuel costs may result in an increase in our transportation costs, which also could adversely affect our operating results and businesses. Historically, we have mitigated cost increases, in part, by collaborating with suppliers, reviewing alternative sourcing options, substituting materials, engaging in internal cost reduction efforts, and increasing prices on some of our products, all as appropriate. However, we may not be able to fully offsetmitigate such increased costs in the future. Further, if our price increases are not accepted by our customers and the market, our net sales, profit margins, earnings, and market share could be adversely affected.
Despite our efforts to continuously mature our cybersecurity program, our information systems, and those of our third-party service providers, we are still susceptible to system shutdowns, damage, degraded performance, disruptions or other security incidents. Because the technologies used to obtain unauthorized access are constantly changing and becoming increasingly more sophisticated and often are not recognized until launched against a target, we may be unable to anticipate these techniques or implement sufficient preventative measures. Misuse, leakage, falsification, or breach of security of information could result in a violation of privacy laws and damage our reputation which could, in turn, adversely affect our business or financial results. Amongst other things, the impact could include interruptions or delays in our ability to access information, data loss, processing inefficiencies, lost revenues or other costs resulting from shutdowns, unfavorable publicity, governmental inquiry and oversight, litigation by affected parties, and possible financial obligations for damages related to the theft or misuse of such information. Although these incidents have not historically had a significant impact on our business operations, there can be no guarantee that the actions and controls we have implemented and are implementing will be sufficient to protect our systems, information, or other property. While we maintain cybersecurity insurance to protect against potential losses arising from security incidents, the costs related to threats or disruption may not be fully insured.
Finally, regulations related to climate change are increasing. For example, federal and state authorities have various environmental control standards relating to air, water, noise pollution, greenhouse gases ("GHG"), and hazardous waste generation and disposal that affect us and our operations. Failure by us to comply with present or future laws and regulations could result in fines being imposed on us, potential civil and criminal liability, suspension of production or operations, alterations to the manufacturing process, or costly cleanup or capital expenditures, any or all of which could have a material adverse effect on our results of operations. Other policymakers, such as the SEC and the State of California, have issued requirements for companies to provide expanded climate-related disclosures, which may require us to incur significant additional costs to comply. In addition, foreign, federal, state, and local regulatory and legislative bodies have proposed various legislative and regulatory measures relating to climate change, regulating GHG emissions, and energy policies. If such legislation is enacted, we could incur increased energy, environmental, and other costs and capital expenditures to comply with the limitations. Climate change regulation combined with public sentiment could result in reduced demand for our products, higher fuel prices, or carbon taxes, all of which could materially adversely affect our business. Due to uncertainty in the regulatory and legislative processes, as well as the scope of such requirements and initiatives, we cannot currently determine the effect such legislation and regulation may have on our products and operations.
There has been an increased focus from regulators, investors, employees, consumers, and other stakeholders relating to ESG practices. We periodically communicate our ESG initiatives, which include prioritizing ethics and integrity, safety, people, inclusion and belonging, community, waste, emissions, and product stewardship. Failure to meet our commitments, respond to regulatory requirements, or advance our initiatives could adversely impact our reputation, as well as the demand for our products. In addition, achieving these initiatives may result in increased costs, which could have a material adverse impact on our business, financial condition, or results of operations. At the same time, our stakeholders have evolving, varied and sometimes conflicting expectations regarding many aspects of our business, including our operations and ESG-related matters. If we fail or are perceived to fail, in any number of ESG matters, or to effectively respond to changes in, or new, legal, regulatory or reporting requirements concerning climate change or other sustainability concerns, we may be subject to regulatory fines and penalties, and our reputation may suffer.
We incurred substantial indebtedness to finance the acquisitions of Grand Design and Newmar Corporation ("Newmar"). Our asset based revolving credit facility ("ABL Credit Facility") and Senior Secured Notes (as described in Note 9 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K) are secured by substantially all of our assets, including cash, inventory, accounts receivable, and certain machinery and equipment. We also issued unsecured convertible senior notes due 2025 ("2025 Convertible Notes") to finance the acquisition of Newmar, and unsecured convertible senior notes due 2030 ("2030 Convertible Notes") to execute a partial repurchase of theother 2025 Convertible Notes.indebtedness. If a default of payment occurs, the lenders in our ABL Credit Facility or holders of our Senior Secured Notes, 2030 Convertible Notes,Notes and 20252030 Convertible Notes may elect to declare all of their respective outstanding debt, together with accrued interest and other amounts payable thereunder, to be immediately due and payable. Under such circumstances, we may not have sufficient funds or other resources to satisfy all of our obligations. In addition, the limitations imposed on our ability to incur additional debt and to take other corporate actions might significantly impair our ability to obtain other financing.
In addition, the Senior Secured Notes contain certain occurrence-based covenants that could restrict our ability to undertake certain types of transactions. If we enter into a transaction that falls under the occurrence-based covenants, we will calculate the ratios and covenant buckets we have available to us to ensure we are in compliance. Likewise, the Indenture related to the 2025 Convertible Notes and the Indenture related to the 2030 Convertible Notes includes certain limited occurrence-based covenants that could impact our ability to operate our business.
Management's Discussion & Analysis (MD&A)
Removed heading “Non-GAAP Financial Measures”
Removed heading “Non-GAAP Reconciliation”
Largest changes
“During the fourth quarter of Fiscal 2024, we recognized a $30.3 million impairment charge equal to the full carrying value of goodwill associated with the Chris-Craft reporting unit. The decline in fair value of the Chris-Craft reporting unit was driven primarily by a downward revision to forecasted cash flows made during the fourth quarter of Fiscal 2024 as part of our annual long range planning process, and a decline in market capitalization observed from guideline public companies. …”see in full comparison
“Included in "Results of Operations - Fiscal 2024 Compared to Fiscal 2023" is a reconciliation of EBITDA and Adjusted EBITDA from net income, the most directly comparable GAAP measure. We have included these non-GAAP performance measures as a comparable measure to illustrate the effect of non-recurring transactions that occurred during the reported periods and to improve comparability of our results from period to period. …”see in full comparison
“Operating expenses increased primarily due to the goodwill impairment charge associated with the Chris-Craft reporting unit, a full year of Lithionics operations and increased intangible amortization, start-up costs associated with the launch of the Grand Design motorized business, and strategic investments in engineering, digital technology development, and increased data and information technology capabilities, partially offset by lower incentive-based compensation.”see in full comparison
“Operating expenses decreased primarily due to prior year goodwill impairment and cost reduction initiatives in the current year, partially offset by investments to support the growth of the Grand Design motorhome and Barletta marine businesses.”see in full comparison
“Operating income margin increased due to prior year goodwill impairment, targeted price increases, and volume leverage.”see in full comparison
“Management uses these non-GAAP financial measures (a) to evaluate our historical and prospective financial performance and trends as well as our performance relative to competitors and peers; (b) to measure operational profitability on a consistent basis; (c) in presentations to the members of our Board of Directors to enable our Board of Directors to have the same measurement basis of operating performance as used by management in its assessments of performance and in forecasting; (d) to evaluate potential acquisitions; …”see in full comparison
Full comparison: every changed paragraph (49)
Winnebago Industries, Inc. is one of thea leading North American manufacturersmanufacturer of recreationoutdoor vehicleslifestyle ("RVs")products under the Winnebago, Grand Design, Chris-Craft, Newmar and marineBarletta productsbrands, withwhich a diversified portfolioare used primarily in leisure travel and outdoor recreationalrecreation activities. We also design and manufacture advanced battery solutions that deliver “house power,” supporting internal electrical features and appliances for a variety of outdoor products including RVs, boats, specialty and other low-speed vehicles, as well as other industrial applications. Other products manufactured by us consist primarily of original equipment manufacturing parts for other manufacturers and commercial vehicles. We produce our motorhome RV units in Iowa and Indiana; our towable RV units in Indiana; our marine units in Indiana and Florida; and our battery solutions in Florida. We distribute our RV and marine products primarily through independent dealers across the U.S. and Canada, who then retail the products to the end consumer. We also distribute our marine products internationally through independent dealers, who then retail the products to the end consumer. Our battery solutions are primarily sold to customers in the U.S.
Our business continues to be challenged by macroeconomic conditions impacting retail consumers and our dealers, such as inflation andinflation, elevated interest rates.rates, and lower consumer confidence. These factors have contributed to lower consumer spending and reduced short-term demand for large discretionary products such as RVs and marine products. In response, our dealers continue to exercise caution when managing stocking levels. In Fiscal 2024,2025, these trends resulted in decreased sales due to declines in unit volume. WeWhile anticipatemarket thatpressures ashave consumerbeen demandobserved stabilizes,across dealersour willportfolio, exhibitthey ahave willingnessbeen most acute in our Winnebago motorhome business. As part of our transformation of this business, we have recently taken significant steps to maintainlower stablefield inventoryinventory, levelsimprove working capital, align our production schedule to market demand, and orderingaccelerate patterns.stronger Weproduct continuevalue tofor produceour and shipconsumers in accordancethe with dealer demand as evidenced and requested by dealer orders.future.
We expect that as consumer demand stabilizes, dealers will return to more stable ordering patterns across our portfolio of businesses. We continue to produce and ship in accordance with dealer demand as evidenced and requested by dealer orders. In addition, we are closely monitoring the potential impact of new or additional U.S. tariffs and retaliatory measures from other countries, which may affect material costs or supply.
Segment Update
In conjunction with the Grand Design RV entrance into the motorized RV category, we established a Grand Design motorhomes operating segment in the first quarter of Fiscal 2025. This newly created operating segment is included in the Motorhome RV reportable segment. Prior period amounts have not been reclassified as the impact was not significant.
Other Matters
During the fourth quarter of Fiscal 2024, we recognized a $30.3 million impairment charge equal to the full carrying value of goodwill associated with the Chris-Craft reporting unit. The decline in fair value of the Chris-Craft reporting unit was driven primarily by a downward revision to forecasted cash flows made during the fourth quarter of Fiscal 2024 as part of our annual long range planning process, and a decline in market capitalization observed from guideline public companies. Projected future cash flows for the Chris-Craft reporting unit have declined compared to prior expectations as a result of sustained macroeconomic challenges impacting consumer demand, such as inflationary pressures and elevated interest rates, and the current uncertainty regarding timing and degree of economic recovery. Refer to Note 7 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K for more information.
During the second quarter of Fiscal 2024, we entered into separate, privately negotiated transactions with certain holders of the 2025 Convertible Notes to repurchase $240.7 million aggregate principal amount of the 2025 Convertible Notes using $293.8 million of the net proceeds received from the issuance of the 2030 Convertible Notes. In connection with the 2025 Convertible Note repurchases, we recorded a loss on note repurchase of $32.7 million in the accompanying Consolidated Statements of Income during Fiscal 2024. The loss on note repurchase represents the difference between the fair value of consideration transferred to the holders of the repurchased 2025 Convertible Notes and the conversion value of 2025 Convertible Notes repurchased pursuant to the original conversion terms. Refer to Note 9 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K for more information.
Non-GAAP Financial Measures
This MD&A includes financial information prepared in accordance with generally accepted accounting principles ("GAAP"), as well as certain adjusted or non-GAAP financial measures, such as EBITDA and Adjusted EBITDA. EBITDA is defined as net income before interest expense, provision for income taxes, and depreciation and amortization expense. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation and amortization expense, and other pretax adjustments made in order to present comparable results from period to period.
These non-GAAP financial measures, which are not calculated or presented in accordance with GAAP, have been provided as information supplemental and in addition to the financial measures presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented herein. The non-GAAP financial measures presented may differ from similar measures used by other companies.
Included in "Results of Operations - Fiscal 2024 Compared to Fiscal 2023" is a reconciliation of EBITDA and Adjusted EBITDA from net income, the most directly comparable GAAP measure. We have included these non-GAAP performance measures as a comparable measure to illustrate the effect of non-recurring transactions that occurred during the reported periods and to improve comparability of our results from period to period. We believe Adjusted EBITDA provides meaningful supplemental information about our operating performance as this measure excludes amounts from net income that we do not consider part of our core operating results when assessing our performance. Examples of items excluded from Adjusted EBITDA include acquisition-related costs, litigation reserves, change in fair value of note receivable and other investments, contingent consideration fair value adjustment, goodwill impairment, loss on note repurchase, and non-operating income or loss.
Management uses these non-GAAP financial measures (a) to evaluate our historical and prospective financial performance and trends as well as our performance relative to competitors and peers; (b) to measure operational profitability on a consistent basis; (c) in presentations to the members of our Board of Directors to enable our Board of Directors to have the same measurement basis of operating performance as used by management in its assessments of performance and in forecasting; (d) to evaluate potential acquisitions; and (e) to ensure compliance with covenants and restricted activities under the terms of our ABL Credit Facility and outstanding notes, as further described in Note 9 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K. We believe these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties to evaluate companies in the industry.
Net revenues decreased primarily due to a reduction in average selling price per unit related to product mix and lower unit salesvolume, relatedpartially tooffset marketby conditions.targeted price increases.
Gross profit as a percentage of revenue decreased primarily due to deleverage,deleverage and slightly higher warranty expense, and operational challenges.experience.
Operating expenses decreased primarily due to prior year goodwill impairment and cost reduction initiatives in the current year, partially offset by investments to support the growth of the Grand Design motorhome and Barletta marine businesses.
Operating expenses increased primarily due to the goodwill impairment charge associated with the Chris-Craft reporting unit, a full year of Lithionics operations and increased intangible amortization, start-up costs associated with the launch of the Grand Design motorized business, and strategic investments in engineering, digital technology development, and increased data and information technology capabilities, partially offset by lower incentive-based compensation.
The loss on note repurchase recorded in Fiscal 2024 is related to the refinancing of the 2025 Convertible Notes. The loss on note repurchase recorded in Fiscal 2025 is related to the tender offer of the Senior Secured Notes. Refer to Note 9 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K for further information.
Our effective tax rate increaseddecreased primarily due to the impactprior of theyear's non-deductible debt inducement loss and non-deductible goodwill impairment and, in Fiscal 2025, increased favorable return to provision adjustments and reduced change in the valuation allowance over a lower pretaxpre-tax income.
Non-GAAP Reconciliation
The following table reconciles net income to consolidated EBITDA and Adjusted EBITDA for Fiscal 2024 and 2023:
(4) Data is based on the latest information available from our dealer partners and is subject to timing of reporting and other limitations.
(4) Our backlog includes all accepted orders from dealers which generally have been requested to be shipped within the next six months. Orders in backlog generally can be cancelled or postponed at the option of the dealer at any time without penalty; therefore, backlog may not necessarily be an accurate measure of future sales.
Net revenues decreased primarily due to a reductionshift in average selling price per unit related to product mix toward lower price-point models and targetedlower priceunit reductions,volume, partially offset by antargeted increaseprice in unit volume.increases.
Operating income margin decreased primarily due to deleverage, including that associated with product mix, and higher warranty experience.
Adjusted EBITDA margin decreased primarily due to deleverage, higher warranty expense due to a favorable prior year trend, and operational challenges at the Winnebago branded towable business.
Backlog decreased due to current market conditions and a cautious dealer network as well as reduced order lead times due to production capacity.
(4) Data is based on the latest information available from our dealer partners and is subject to timing of reporting and other limitations.
NM: Not meaningful.
(4) Our backlog includes all accepted orders from dealers which generally have been requested to be shipped within the next six months. Orders in backlog can be cancelled or postponed at the option of the dealer at any time without penalty; therefore, backlog may not necessarily be an accurate measure of future sales.
Net revenues decreased primarily due to a decline inlower unit volume related to market conditions and higher levels of discounts and allowances,allowances related to the Winnebago motorhome business, partially offset by pricethe increasesintroduction relatedof tothe higherGrand motorizedDesign chassismotorhome cost.business and product mix.
Operating income margin decreased primarily due to higher discounts and allowances and volume deleverage associated with the Winnebago motorhome business.
Adjusted EBITDA margin decreased due to deleverage, higher warranty expense, and operational challenges, partially offset by cost containment efforts.
Backlog decreased due to current market conditions and a cautious dealer network.
(3) Our backlog includes all accepted orders from dealers which generally have been requested to be shipped within the next six months. Orders in backlog generally can be cancelled or postponed at the option of the dealer at any time without penalty; therefore, backlog may not necessarily be an accurate measure of future sales.
(4) Data is based on the latest information available from our dealer partners and is subject to timing of reporting and other limitations.
NM: Not meaningful.
Net revenues decreasedincreased primarily due to a decline inhigher unit volume relatedand totargeted marketprice conditions,increases, andpartially offset by product mix.
Operating income margin increased due to prior year goodwill impairment, targeted price increases, and volume leverage.
Adjusted EBITDA margin decreased due to deleverage, partially offset by lower incentive-based compensation and cost containment efforts.
Backlog increased primarily driven by the improvement in inventory position with dealers and continued market share growth.
During Fiscal 2024,2025, cash provided by operating activities was $143.9$128.9 million compared to $294.5$143.9 million in Fiscal 2023.2024. The decrease in operating cash flow is primarily driven by lower profitability adjusted for non-cash items, an increase in accounts receivable due to timing of invoicing and collections, and changes in inventory levels due to market conditions, partially offset by favorableunfavorable changes in accounts payable balances and timing of payments.payments, partially offset by improvement in inventory levels and operational efficiency actions.
Cash used in investing activities decreased compared to prior year, primarily due to ourfavorable acquisitionchanges ofin Lithionicsother duringinvesting the third quarter of Fiscal 2023activities and elevatedlower capital expenditures in Fiscal 2023compared to supportthe operationalprior expansionyear. Other investing activities include cash proceeds from asset sales and organicstrategic growth.investment activity.
Cash used in financing activities decreased compared to prior year,increased primarily due to $39.1partial millionsettlement of nethigh-yield cashnotes proceedsand relatedmaturity of 2025 Convertible Notes, offset by lower share repurchase activity compared to the debt refinancing, partially offset by higher share repurchases compared to prior year.
On November 1, 2019, we issued $300.0 million in aggregate principal amount of 1.5% unsecured Convertible Senior Notes due 2025 (“2025 Convertible Notes”). On January 18, 2024, we entered into privately negotiated transactions (the "2025 Convertible Note Repurchases") with certain holders of the 2025 Convertible Notes to repurchase $240.7 million aggregate principal amount of the 2025 Convertible Notes using proceeds received from the 2030 Convertible Notes. On April 1, 2025, the 2025 Convertible Notes matured. We paid $59.3 million in aggregate principal amount and $0.4 million in accrued interest to holders of the notes, fully settling the outstanding balance (the "2025 Convertible Note Maturity Settlement"). The settlement was funded with cash on hand, consistent with our stated intent, with no shares of common stock issued.
As of August 31,30, 2024,2025, we had $59.1 million ofno debt maturing in the next twelve months that is classified as current on our Consolidated Balance Sheets.
We evaluate the financial stability of the counterparties for the 2030 Convertible Notes, the 2025 Convertible Notes, the Senior Secured Notes, and the ABL Credit Facility, and will continue to monitor counterparty risk on an on-going basis.
Refer to Note 9 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K for information regarding our debt and the timing of expected future principal and interest payments. Interest payments are based on fixed interest rates for the 2030 Convertible Notes, the 2025 Convertible Notes,Notes and the Senior Secured Notes.
During the fourth quarter of Fiscal 2024,2025, we completed our annual assessment of indefinite-lived intangible assets and determined that there was no indication of impairment. Comparatively, during the fourth quarter of Fiscal 2024, we determined that the carrying value of the Chris-Craft reporting unit exceeded its fair value, resulting in a $30.3 million impairment charge, which represents the full goodwill balance attributable to the reporting unit. Comparatively, noNo impairments were recorded in Fiscal 2023 and Fiscal 2022.2023.
What changed in the latest 10-Q
Risk Factors
There have been no material changes from the risk factors previously disclosed in Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K for the fiscal year ended August 30, 2025.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
Largest changes
“Recently, conflicts among the United States, Israel, and Iran intensified, contributing to higher global energy prices due to supply disruptions in the Middle East. Sustained increases in energy costs may further pressure consumer discretionary spending and demand for RV and marine products. Further, these conditions may contribute to broader inflationary pressures and delay expected interest rate reductions, which could result in higher borrowing costs for consumers.”see in full comparison
On February 20, 2026, the United States Supreme Court issued a decision concluding that the International Emergency Economic Powers Act (IEEPA) does not authorize the imposition of tariffs. The financial impact of this decision cannot be reasonably estimated at thissee in full comparisontime.time;Anyhowever,potentialthisrecoveriesdecisionofdidpreviouslynotpaidhavetariffsawillmaterialdependimpact onfurtherourlegalfinancialinterpretationstatementsandforadministrativetheprocedures.nine months ended May 30, 2026. We will continue to monitor developments and will assess the effect of the ruling or of impending refund of tariffs directly associated with IEEPA on future reporting periods as additional information becomes available.
Results of Operations -see in full comparisonSixNine Months EndedFebruaryMay28,30, 2026 Compared to theSixNine Months EndedMarchMay1,31, 2025
Our business also continues to be challenged by additional macroeconomic conditions impacting retail consumers and our dealers, such as inflation, elevated interest rates, and lower consumer confidence. These factors have contributed to lower consumer spending and reduced short-term demand for large discretionary products such as RVs and marine products. In response, our dealers continue to exercise caution when managing stocking levels.see in full comparisonWhile competitiveCompetitive market pressureshavecontinuebeento be observed across ourportfolio, they have been most acute in our Winnebago motorhome business. As part of our transformation of this business, we have recently taken significant steps to lower field inventory, improve working capital, align our production schedule to market demand, and accelerate stronger product value for our consumers in the future.portfolio.
Cash used in financing activities decreased primarily due to the purchase of Senior Secured Notes pursuant to the 2025 tender offer and maturity of the 1.5% unsecured Convertible Senior Notes due 2025 in the prior year partially offset by the partial redemption of the Senior Secured Notes in the current year, and minimal share repurchase activity in the current year compared to higher share repurchases in the prior year. During thesee in full comparisonsixnine months endedFebruaryMay28,30, 2026 andMarchMay1,31, 2025, $100.0 million and $159.9 million of debt was repurchased in eachperiod.period, respectively.
“The loss on note repurchase recorded in the three months ended February 28, 2026 and March 1, 2025 is related to the repurchase of $100.0 million of our Senior Secured Notes in both periods. Refer to Note 8 in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.”see in full comparison
Full comparison: every changed paragraph (42)
Recently, conflicts among the United States, Israel, and Iran intensified, contributing to higher global energy prices due to supply disruptions in the Middle East. Sustained increases in energy costs may further pressure consumer discretionary spending and demand for RV and marine products. Further, these conditions may contribute to broader inflationary pressures and delay expected interest rate reductions, which could result in higher borrowing costs for consumers.
Our business also continues to be challenged by additional macroeconomic conditions impacting retail consumers and our dealers, such as inflation, elevated interest rates, and lower consumer confidence. These factors have contributed to lower consumer spending and reduced short-term demand for large discretionary products such as RVs and marine products. In response, our dealers continue to exercise caution when managing stocking levels. While competitiveCompetitive market pressures havecontinue beento be observed across our portfolio, they have been most acute in our Winnebago motorhome business. As part of our transformation of this business, we have recently taken significant steps to lower field inventory, improve working capital, align our production schedule to market demand, and accelerate stronger product value for our consumers in the future.portfolio.
On February 20, 2026, the United States Supreme Court issued a decision concluding that the International Emergency Economic Powers Act (IEEPA) does not authorize the imposition of tariffs. The financial impact of this decision cannot be reasonably estimated at this time.time; Anyhowever, potentialthis recoveriesdecision ofdid previouslynot paidhave tariffsa willmaterial dependimpact on furtherour legalfinancial interpretationstatements andfor administrativethe procedures.nine months ended May 30, 2026. We will continue to monitor developments and will assess the effect of the ruling or of impending refund of tariffs directly associated with IEEPA on future reporting periods as additional information becomes available.
Results of Operations - Three Months Ended FebruaryMay 28,30, 2026 Compared to Three Months Ended MarchMay 1,31, 2025
The following is an analysis of changes in key items included in the Consolidated Statements of Income for the three months ended FebruaryMay 28,30, 2026 compared to the three months ended MarchMay 1,31, 2025:
Net revenues increased primarily due to selective price adjustments and product mix, partially offset by lower unit volume.
GrossNet profit as a percentage of revenuerevenues decreased primarily due to productlower mix,unit volume, partially offset by selective price adjustments.adjustments and product mix.
Gross profit as a percentage of revenue was consistent with prior year as higher input costs and deleverage were largely offset by selective price adjustments.
The loss on note repurchase recorded in the three months ended February 28, 2026 and March 1, 2025 is related to the repurchase of $100.0 million of our Senior Secured Notes in both periods. Refer to Note 8 in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.
The change in our effective tax rate is primarily attributable to higheran pre-taxincrease income,in partially offset by the impact of discreteR&D tax benefits in the current year as compared to the prior year.credits.
The following is an analysis of key changes in our Towable RV segment for the three months ended FebruaryMay 28,30, 2026 compared to the three months ended MarchMay 1,31, 2025:
Net revenues decreased primarily due to lower unit volume and a shift in product mix toward lower price-point models and lower unit volume,models, partially offset by selective price adjustments.
Operating income margin decreased primarily due to higher input costs, volume deleveragedeleverage, and product mix, largelypartially offset by selective price adjustments and cost containment initiatives.
The following is an analysis of key changes in our Motorhome RV segment for the three months ended FebruaryMay 28,30, 2026 compared to the three months ended MarchMay 1,31, 2025:
NM: Not meaningful.
Net revenues increased primarily due to higher unit volume drivenand byselective newprice products, partially offset by product mix.adjustments.
Operating income margin increased primarily due to higher unit volume leverage.driven by new products and selective price adjustments, partially offset by higher input costs.
The following is an analysis of key changes in our Marine segment for the three months ended FebruaryMay 28,30, 2026 compared to the three months ended MarchMay 1,31, 2025:
Operating income margin decreased primarily due to higher warrantyinput expensecosts and volume deleverage.deleverage, partially offset by selective price adjustments.
Results of Operations - SixNine Months Ended FebruaryMay 28,30, 2026 Compared to the SixNine Months Ended MarchMay 1,31, 2025
The following is an analysis of changes in key items included in the Consolidated Statements of Income for the sixnine months ended FebruaryMay 28,30, 2026 compared to the sixnine months ended MarchMay 1,31, 2025:
Net revenues increased primarily due to selective price adjustments, higher unit volume,increases and product mix.mix, partially offset by lower unit volume.
Gross profit as a percentage of revenue was consistent with prior year as selective price adjustments were offset by higher input costs andwere slightlylargely higheroffset warrantyby expense.selective price adjustments.
The loss on note repurchase recorded in the sixnine months ended FebruaryMay 28,30, 2026 and MarchMay 1,31, 2025 is related to the repurchase of $100.0 million of our Senior Secured Notes in both periods. Refer to Note 8 in the Notes to Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q for further information.
The change in our effective tax rate was driven primarily by higherthe pre-taximpact incomeof increased R&D tax credits and discrete tax benefits in the current year as compared to the prior year.
The following is an analysis of key changes in our Towable RV segment for the sixnine months ended FebruaryMay 28,30, 2026 compared to the sixnine months ended MarchMay 1,31, 2025:
Net revenues increaseddecreased primarily due to selectivelower priceunit adjustments,volume partially offset byand a shift in product mix toward lower price-point models.models, partially offset by selective price adjustments.
Operating income margin wasdecreased consistentprimarily withdue priorto yearhigher asinput costs, deleverage, and product mix, partially offset by selective price adjustmentsadjustments, wereand largelycost offsetcontainment by higher warranty expense.initiatives.
The following is an analysis of key changes in our Motorhome RV segment for the sixnine months ended FebruaryMay 28,30, 2026 compared to the sixnine months ended MarchMay 1,31, 2025:
NM: Not meaningful.
Net revenues increased primarily due to higher unit volume, product mix, and selective price adjustments.adjustments and product mix.
Operating income margin increased primarily due to selective price adjustments and volume leverage.leverage, partially offset by higher input costs.
The following is an analysis of key changes in our Marine segment for the sixnine months ended FebruaryMay 28,30, 2026 compared to the sixnine months ended MarchMay 1,31, 2025:
Operating income margin decreased primarily due to higher warrantyinput expensecosts and volumedeleverage, deleverage.partially offset by selective price adjustments.
During the sixnine months ended FebruaryMay 28,30, 2026, net cash provided by operating activities was $0.6$26.2 million compared to net cash used in operating activities of $27.2$52.5 million during the same period last year. The change in operating cash flow is primarily driven by higher profitability adjusted for non-cash items and favorable changes in net working capital.
Cash used in financing activities decreased primarily due to the purchase of Senior Secured Notes pursuant to the 2025 tender offer and maturity of the 1.5% unsecured Convertible Senior Notes due 2025 in the prior year partially offset by the partial redemption of the Senior Secured Notes in the current year, and minimal share repurchase activity in the current year compared to higher share repurchases in the prior year. During the sixnine months ended FebruaryMay 28,30, 2026 and MarchMay 1,31, 2025, $100.0 million and $159.9 million of debt was repurchased in each period.period, respectively.
We maintain a $350.0 million asset-based revolving credit facility ("ABL Credit Facility") with a maturity date of July 15, 2027, subject to certain factors which may accelerate the maturity date. As of FebruaryMay 28,30, 2026, we had no borrowings against the ABL Credit Facility.
As of FebruaryMay 28,30, 2026, we had $47.4$57.1 million in cash and cash equivalents and $350.0 million in unused ABL Credit Facility. Our cash and cash equivalent balances consist of high quality, short-term money market instruments.
As of FebruaryMay 28,30, 2026, we have no debt maturing in the next twelve months that is classified as current on our Consolidated Balance Sheets.
Working capital at FebruaryMay 28,30, 2026 and August 30, 2025 was $403.5$411.6 million and $465.1 million, respectively. We currently expect cash on hand, funds generated from operations, and the borrowing available under our ABL Credit Facility to be sufficient to cover both short-term and long-term operating requirements.
On August 17, 2022, our Board of Directors authorized a new share repurchase program in the amount of $350.0 million with no time restriction on the authorization, which took effect immediately and replaced the prior program. In the sixnine months ended FebruaryMay 28,30, 2026, no shares were repurchased under this authorization. Approximately 55,00057,000 shares at a cost of $1.7 million were repurchased to satisfy tax obligations on employee equity awards vested. We continually evaluate if share repurchases reflect a prudent use of our capital and, subject to compliance with our ABL Credit Facility and Senior Secured Notes, we may purchase shares in the future. As of FebruaryMay 28,30, 2026, we have $180.0 million remaining on our Board approved repurchase authorization.
On MarchMay 18,15, 2026, our Board of Directors approved a quarterly cash dividend of $0.35 per share payable on AprilJune 29,24, 2026, to common stockholders of record at the close of business on AprilJune 15,10, 2026.
WGO insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 3 filings (2 insiders, 2 trade dates, 15,694 shares, about $511.7K; 3 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -15,694 (purchases minus sales); net value about -$511.7K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-19 | Woodson Bret A |
Open-market sale |
1,235 | $31.73 | $39.2K |
| 2026-08-19 | Woodson Bret A |
Option exercise |
1,334 | $27.89 | $37.2K |
| 2026-08-13 | Woodson Bret A |
Open-market sale |
2,414 | $32.66 | $78.8K |
| 2026-08-13 | Woodson Bret A |
Option exercise |
2,666 | $27.89 | $74.4K |
| 2026-08-13 | Happe Michael J |
Open-market sale |
12,045 | $32.68 | $393.6K |
| 2026-08-13 | Happe Michael J |
Option exercise |
13,300 | $27.89 | $370.9K |
| 2026-05-01 | Silver Emily Rosalie |
Grant/award | 1,553 | — | — |
Well-known investors holding WGO (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Oaktree Capital Management (Howard Marks) | 2026-06-30 | 0 | $18.7M | 0.35% | No change |