Coming off a record fiscal quarter, Winnebago Industries (WGO -2.45%) looks to haul a bigger piece of the thriving recreational vehicle market. A string of acquisitions over the past few years, including entry into the boating segment, shows investors that Winnebago is looking to gain more market share.
To do so, the company will have to overcome burdens including inflation and supply chain inconsistencies, all while fending off robust competition. But with visionary CEO Michael Happe driving the ship, and the imminent launch of its all-electric RV, Winnebago could really go places.
A time-honored classic, reimagined
Winnebago is practically synonymous with RV, and the household name is well-ingrained in American culture. That’s helpful, but against fierce competition such as Thor Industries (THO -1.53%) and Forest River, the RV maker has a perpetual uphill climb ahead. Thor and Forest River collectively accounted for roughly 80% of RV sales last year.
To set itself apart, Winnebago looks to be a “differentiator” in the industry, targeting discerning buyers of premium RVs. One of Winnebago’s secret weapons is its CEO. Recruited to Winnebago in 2016, Michael Happe transformed the company over the next few years with strategic acquisitions.
Starting with the purchase of Grand Design RV in 2016, Happe looked to cover more of the towables market, specifically “fifth wheel” trailers which attach to pickup trucks. This move not only made Winnebago a more well-rounded RV company, but also provided the financial boost to further grow the business.
In 2018, Happe boldly broke the company into the marine industry with the acquisition of Chris-Craft, a premium boat builder. The following year, Winnebago purchased Newmar Corporation, a manufacturer of luxury motorhomes. Its most recent acquisition was Barletta Pontoon Boats in 2021, “the fastest growing boat company in the fastest growing recreational boating segment.”
A rocky road ahead
Supply chain disruptions present Winnebago’s most immediate challenge, which have resulted in a shortage of RV components and have also eaten into profit margins. Additionally, higher operating costs along with rising commodity prices have also been a drag on company performance.
From the customers’ standpoint, high inflation, fears of an impending recession, and rising interest rates could all contribute to a reduction in demand.
Another factor to consider is that over the past year, insiders at Winnebago have sold more shares of stock than they’ve bought. While investors would rather see more buying from company insiders than selling, the biggest single insider sale was at a price well above the lows observed in May and June.
Image Source: Getty Images.
A tradition of innovation
Winnebago posted record Q3 fiscal 2022 results last month, citing 41% organic growth and record revenues of $1.5 billion, a 52% year-over-year increase.
While record setting is good, a more remarkable statistic from Winnebago’s third quarter fiscal 2022 results is its gain in market share. The company continues to claim more and more market share, reporting 13.2% of the RV retail market. Considering Winnebago’s market share was only 3% when Happe took the helm in 2016, that is indeed impressive growth.
Although insiders sold more than they bought last year, institutions have been taking a bigger stake in Winnebago. Two new funds initiated positions and four existing institutional investors increased their positions.
Introduced earlier this year, Winnebago’s e-RV is an all-electric motorhome currently in concept phase. Last month the company proudly announced the e-RV’s completion of a 1,300-mile road trip. While more testing is needed, Winnebago looks to be a leader in this emerging market.
Earlier this month, Winnebago launched its first-ever mobile app during its annual Grand National Rally event for owners. Providing information including vehicle key features and nearby service providers, Winnebago’s new app is another selling point to draw in tech-savvy customers.
A cultural phenomenon for nearly 65 years, perhaps the spirit of Winnebago can be summed up in the words of founder John K. Hanson – “You can’t take sex, booze, or weekends away from the American people.”
