Winnebago's (NYSE:WGO) results showed revenue at $224 million, below the $235 million average analyst estimate. EPS was $0.37 compared to the $0.45 estimate. The company blamed "labor constraints and supply chain disruptions, which impacted production and delayed the completion and shipment of motorized units." Also, the average lower selling price of each motor home sold declined though that was expected as mentioned in my previous WGO article Will Cheap Gas Be Enough To Help Winnebago's Earnings? I had stated among other things,
For WGO, a similar thing has been happening. Its 10K likewise mentions "new products introduced in all classes [have been] at lower price points during the year."
My point is this: Even if WGO misses on the earnings side the focus should be on sales. Margins may take a hit in this industry in the short run as some cheaper products are introduced by all players but don't mistake that for manufacturing weakness or some other problem.
In the new earnings release CEO Randy Potts stated, "Further, with double-digit growth in motor home retail registrations, both year over year and on a rolling 12-month basis, consumer demand for our products remains very strong. We look forward to improving results as Fiscal 2015 progresses."
Well, it turns out there obviously were some manufacturing weakness and sales could have been higher if WGO was able to produce and deliver more. In short, it had a bit of a production problem versus demand problem. Backlog shot up 12% sequentially, and as manufacturing ramps up and more efficient those deliveries should improve future quarters. Demand is more important long term so I remain bullish on WGO.
Disclosure: The author is long WGO.
The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.