Winnebago Industries, Inc. today reported financial results for the Company’s second quarter Fiscal 2019.
Second Quarter Fiscal 2019 Results
Revenues for the Fiscal 2019 second quarter ended February 23, 2019, were $432.7 million, a decrease of 7.6% compared to $468.4 million for the Fiscal 2018 period. Gross profit was $66.4 million, a decrease of 1.8% compared to $67.7 million for the Fiscal 2018 period. Gross profit margin increased 100 basis points in the quarter, driven by revenue mix, pricing and Motorhome segment operational improvements, partially offset by inflationary cost pressures and heightened dealer incentives. Operating income was $28.9 million for the quarter, a decrease of 18.0% compared to $35.3 million in the second quarter of last year, driven primarily by the decline in RV unit sales. Fiscal 2019 second quarter net income was $21.6 million, a decrease of 2.2% compared to $22.1 million in the same period last year. Earnings per diluted share were $0.68, a decrease of 1.4% compared to earnings per diluted share of $0.69 in the same period last year. Net Income and earnings per share were favorably impacted by discrete tax items totaling $2.5 million, or $0.08. Consolidated Adjusted EBITDA was $34.5 million for the quarter, compared to $39.4 million last year, a decrease of 12.4%.
President and Chief Executive Officer Michael Happe commented on the progress of the company over the last three years.
In the second quarter, revenues for the Motorhome segment were $164.7 million, down 17.3% from the prior year driven primarily by a decrease in Class A and Class C unit sales, partially offset by an increase in Class B unit sales. Segment Adjusted EBITDA was $4.4 million, down 23.4% from the prior year. Adjusted EBITDA margin decreased 30 basis points, driven primarily by the decline in sales, and further impacted by investments in SG&A, partially offset by favorable product mix. Backlog decreased 38.6%, in dollars, versus the prior year, reflecting dealers continuing to right-size inventory levels and prior year Class B new product order timing.
Revenues for the Towable segment were $250.7 million for the second quarter, down 5.9% from the prior year, driven by dealer network efforts to reduce inventory levels and comparing against very strong shipments in the prior year, partially offset by pricing. Segment Adjusted EBITDA was $33.6 million, down 7.3% from the prior year. Adjusted EBITDA margin of 13.4% decreased 20 basis points, reflecting pricing actions taken during the last twelve months which did not fully recover increases to cost inputs. Backlog levels remained strong at over 8,000 units but declined 5.7%, in dollars, versus the prior year, reflecting the positive impact of utilizing additional capacity added during calendar 2018 and dealers continuing to right-size inventory levels.
Our effective tax rate for the second quarter was 12.8%, driven lower primarily by favorable discrete items. These discrete items, totaling $2.5 million, were primarily related to R&D tax credits and had an $0.08 impact to earnings per share. Considering our first quarter tax provision and the second quarter favorable discrete items, as well as our current ongoing tax rate assumptions for the remainder of the year, we expect our full year fiscal 2019 tax rate to be approximately 22%. Under the current tax code, our ongoing tax rate in fiscal 2020 and beyond is expected to be in the range of 23% to 24%.
Balance Sheet and Cash Flow
As of February 23, 2019, the Company had total outstanding debt of $276.9 million ($283.3 million of debt, net of debt issuance costs of $6.4 million) and working capital of $175.3 million. The debt-to-equity ratio decreased to 48.5% from 54.5% as of August 25, 2018, and the ratio of net debt to Adjusted EBITDA was 1.6x as of the end of the quarter. Cash flow from operations was $51.9 million for the first six months of Fiscal 2019, an increase of $36.9 million from the same period in Fiscal 2018.
Quarterly Cash Dividend
On March 8, 2019, the Company’s board of directors approved a quarterly cash dividend of $0.11 per share payable on April 17, 2019, to common stockholders of record at the close of business on April 3, 2019.