WINNEBAGO INDUSTRIES INC

Previous wording

Our business continues to be challenged by macroeconomic conditions impacting retail consumers and our dealers, such as inflation and elevated interest rates. 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 the first six months of Fiscal 2025, these trends resulted in decreased sales due to declines in unit volume. We expect that as consumer demand stabilizes, which we anticipate will occur as we enter the spring selling season, dealers will return to more stable ordering patterns. 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.

Current wording

Our business continues to be challenged by 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. In the first nine months of Fiscal 2025, these trends resulted in decreased sales due to declines in unit volume. While market pressures have been 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.

Previous wording

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 (loss) income before interest expense, provision for income taxes, and depreciation and amortization expense. Adjusted EBITDA is defined as net (loss) 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.

Current wording

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.

Previous wording

Included in "Results of Operations" below for the three and six months ended March 1, 2025 compared to the comparable prior year period is a reconciliation of EBITDA and Adjusted EBITDA from net (loss) 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.

Current wording

Included in "Results of Operations" below for the three and nine months ended May 31, 2025 compared to the comparable prior year period 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, change in fair value of note receivable, contingent consideration fair value adjustment, loss on note repurchase, asset impairment, and non-operating income or loss.

Previous wording

Net revenues decreased primarily due to a reduction in average selling price per unit related to product mix, partially offset by targeted price increases. Volume was essentially flat, with reductions in the Motorhome RV segment mostly offset by volume increases in the Towable RV and Marine segments.

Current wording

Net revenues decreased primarily due to a reduction in average selling price per unit related to product mix, partially offset by targeted price increases. Unit volume growth in the Towable RV and Marine segments was partially offset by volume declines in the Motorhome RV segment as dealers continue their efforts to right-size field inventories in this segment.

Previous wording

Gross profit as a percentage of revenue decreased primarily due to deleverage associated with product mix, partially offset by operational efficiencies.

Current wording

Gross profit as a percentage of revenue decreased primarily due to higher warranty experience, and deleverage associated with product mix, partially offset by operational efficiencies.

Previous wording

The following table reconciles net (loss) income to consolidated EBITDA and Adjusted EBITDA for the three months ended March 1, 2025 and February 24, 2024:

Current wording

The following table reconciles net income to consolidated EBITDA and Adjusted EBITDA for the three months ended May 31, 2025 and May 25, 2024:

Previous wording

Net revenues increased primarily due to unit volume, partially offset by a shift in product mix toward lower price-point models.

Current wording

Net revenues decreased primarily due to a shift in product mix toward lower price-point models, partially offset by higher unit volume.

Previous wording

Net revenues decreased primarily due to lower unit volume related to current market conditions, partially offset by favorable product mix.

Current wording

Net revenues decreased primarily due to lower unit volume related to current market conditions, partially offset by product mix.

Previous wording

Adjusted EBITDA margin decreased primarily due to volume deleverage and higher discounts and allowances, partially offset by operational efficiencies.

Current wording

Adjusted EBITDA margin decreased primarily due to higher discounts and allowances, volume deleverage, and operational inefficiencies with the Winnebago motorhome business.

Previous wording

Adjusted EBITDA margin increased due to targeted price increases, leverage and operational efficiencies, partially offset by product mix and higher operating expenses, including incentive-based compensation.

Current wording

Adjusted EBITDA margin increased due to targeted price increases and volume leverage, partially offset by product mix and higher warranty expense.

Previous wording

The following is an analysis of changes in key items included in the Consolidated Statements of Income for the six months ended March 1, 2025 compared to the six months ended February 24, 2024:

Current wording

The following is an analysis of changes in key items included in the Consolidated Statements of Income for the nine months ended May 31, 2025 compared to the nine months ended May 25, 2024:

Previous wording

Net revenues increased primarily due to unit volume, partially offset by a reduction in average selling price per unit related to product mix.

Current wording

Net revenues decreased primarily due to a reduction in average selling price per unit related to product mix and lower unit volume, partially offset by targeted price increases.

Previous wording

Gross profit as a percentage of revenue decreased primarily due to deleverage, including that associated with product mix, and higher warranty experience compared to prior year, partially offset by operational efficiencies.

Current wording

Gross profit as a percentage of revenue decreased primarily due to deleverage, including that associated with product mix, and higher warranty experience, partially offset by operational efficiencies.

Previous wording

Operating expenses increased primarily due to the mix of incentive-based compensation plans relative to performance across our businesses and investments to support Grand Design motorized growth and growth in the Barletta business.

Current wording

Operating expenses increased primarily due to investments to support the growth of the Grand Design motorhome and Barletta marine businesses, partially offset by cost reduction initiatives.

Previous wording

The loss on note repurchase recorded in the three months ended March 1, 2025 is related to the tender of $100.0 million of our Senior Secured Notes. The loss on note repurchase recorded in the three months ended February 24, 2024 is related to the refinancing of the 2025 Convertible Notes. 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.

Current wording

The loss on note repurchase recorded in the nine months ended May 31, 2025 is related to the tender of $100.0 million of our Senior Secured Notes. The loss on note repurchase recorded in the nine months ended May 25, 2024 is related to the refinancing of the 2025 Convertible Notes. 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.

Previous wording

Our effective tax rate increased primarily due to the impact of the prior year non-deductible loss on convertible note repurchase.

Current wording

The change in our effective tax rate was driven primarily by the impact of the prior year non-deductible loss on note repurchase.

Previous wording

The following table reconciles net income to consolidated EBITDA and Adjusted EBITDA for the six months ended March 1, 2025 and February 24, 2024:

Current wording

The following table reconciles net income to consolidated EBITDA and Adjusted EBITDA for the nine months ended May 31, 2025 and May 25, 2024:

Previous wording

The following is an analysis of key changes in our Towable RV segment for the six months ended March 1, 2025 compared to the six months ended February 24, 2024:

Current wording

The following is an analysis of key changes in our Towable RV segment for the nine months ended May 31, 2025 compared to the nine months ended May 25, 2024:

Previous wording

Net revenues decreased primarily due to a shift in product mix toward lower price-point models and lower unit volume due to market conditions.

Current wording

Net revenues decreased primarily due to a shift in product mix toward lower price-point models and lower unit volume due to market conditions, partially offset by targeted price increases.

Previous wording

Net revenues decreased primarily due to lower unit volume related to market conditions, partially offset by the introduction of the Grand Design motorized business.

Current wording

Net revenues decreased primarily due to lower unit volume related to market conditions, partially offset by the introduction of the Grand Design motorhome business, and product mix.

Previous wording

The following is an analysis of key changes in our Marine segment for the six months ended March 1, 2025 compared to the six months ended February 24, 2024:

Current wording

The following is an analysis of key changes in our Marine segment for the nine months ended May 31, 2025 compared to the nine months ended May 25, 2024:

Previous wording

Adjusted EBITDA margin increased due to targeted price increases, operational efficiencies and leverage, partially offset by product mix and higher operating expenses, including incentive-based compensation.

Current wording

Adjusted EBITDA margin increased due to targeted price increases and volume leverage, partially offset by product mix.

Previous wording

During the six months ended March 1, 2025, net cash used in operating activities was $27.2 million compared to net cash provided by operating activities of $3.8 million during the same period last year. The change in operating cash flow is primarily driven by lower profitability adjusted for non-cash items and an increase in inventory to support the spring selling season, partially offset by a change in accounts receivable due to timing of invoicing and collections.

Current wording

During the nine months ended May 31, 2025, net cash used in operating activities was $52.5 million compared to net cash provided by operating activities of $103.2 million during the same period last year. The change in operating cash flow is primarily driven by lower profitability adjusted for non-cash items, an increase in inventory to support the growth of the Grand Design motorhome business and an increase in accounts receivable due to timing of invoicing and collections.

Previous wording

Cash used in financing activities increased primarily due to partial settlement of high-yield notes and higher share repurchases compared to the prior year.

Current wording

Cash used in financing activities increased primarily due to partial settlement of high-yield notes and maturity of 2025 Convertible Notes.

Previous wording

As of March 1, 2025, we had $115.5 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.

Current wording

As of May 31, 2025, we had $10.5 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.

Previous wording

On November 1, 2019, we issued $300.0 million in aggregate principal amount of 1.50% unsecured Convertible Senior Notes due 2025 (the “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.

Current wording

On November 1, 2019, we issued $300.0 million in aggregate principal amount of 1.50% unsecured Convertible Senior Notes due 2025 (the “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.

Previous wording

As of March 1, 2025, we had$59.3 million of net debt maturing in the next twelve months that is classified as current on our Consolidated Balance Sheets.

Current wording

As of May 31, 2025, we have no debt maturing in the next twelve months that is classified as current on our Consolidated Balance Sheets.

Previous wording

We believe cash flow from operations, existing lines of credit, and access to debt and capital markets will be sufficient to meet our current liquidity needs, and we have committed liquidity and cash reserves in excess of our anticipated funding requirements. 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.

Current wording

We believe cash flow from operations, existing lines of credit, and access to debt and capital markets will be sufficient to meet our current liquidity needs, and we have committed liquidity and cash reserves in excess of our anticipated funding requirements. We evaluate the financial stability of the counterparties for the 2030 Convertible Notes, the Senior Secured Notes, and the ABL Credit Facility, and will continue to monitor counterparty risk on an on-going basis.

Previous wording

Working capital at March 1, 2025 and August 31, 2024 was $438.4 million and $584.0 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.

Current wording

Working capital at May 31, 2025 and August 31, 2024 was $444.2 million and $584.0 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.

Previous wording

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 six months ended March 1, 2025, we repurchased approximately 951,000 shares of our own common stock at a cost of $50.0 million under this authorization, and approximately 62,000 shares at a cost of $3.6 million 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 March 1, 2025, we have $180.0 million remaining on our Board approved repurchase authorization.

Current wording

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 nine months ended May 31, 2025, we repurchased approximately 951,000 shares of our own common stock at a cost of $50.0 million under this authorization, and approximately 64,000 shares at a cost of $3.6 million 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 May 31, 2025, we have $180.0 million remaining on our Board approved repurchase authorization.

Previous wording

•Risks related to our 2025 Convertible Notes, 2030 Convertible Notes and Senior Secured Notes, including our ability to satisfy our obligations under these notes.

Current wording

•Risks related to our 2030 Convertible Notes and Senior Secured Notes, including our ability to satisfy our obligations under these notes.