Winnebago's Q1 2026 Earnings Call: Contradictions Emerge on Retail Outlook, Pricing Strategies, and Tariff Management

Date of Call: None provided

Financials Results

• Revenue: Net revenue growth exceeded 12% year-over-year in Q1; FY26 consolidated net revenue guidance raised to $2.8B–$3.0B (prior $2.75B–$2.95B).
• EPS: Adjusted EPS of $0.38 in Q1 vs. adjusted net loss of $0.03 in prior-year Q1; FY26 reported EPS guidance $1.40–$2.10 (prior $1.25–$1.95); adjusted EPS guidance $2.10–$2.80 (prior $2.00–$2.70).
• Operating Margin: Towable OI margin 3.8%, up 30 bps year-over-year; Motorhome OI margin improved ~390 bps year-over-year; consolidated operating margin not disclosed.

Guidance:

• FY26 consolidated net revenues raised to $2.8B–$3.0B (prior $2.75B–$2.95B).
• FY26 reported EPS guidance $1.40–$2.10; adjusted EPS $2.10–$2.80 (raised vs prior ranges).
• Towable: expect flat to modest low-single-digit growth for FY26.
• Motorhome: expect OI margin improvement in the low single digits for FY26.
• Expect full-year net revenues to be down vs prior year (industry softness).
• Q2: modest increase vs prior-year Q2 but down sequentially from Q1; Q2 EPS down sequentially, flat to modestly up YoY.
• Target net leverage ~2x by end of FY26 (2.7x at quarter end).

Business Commentary:

* Strong Financial Performance: - Winnebago Industries reported net revenue growth of over 12% in Q1, with operating profitability higher in both Motorhome and Towable RV businesses. - The growth was driven by steady execution against controllable factors, product innovation, and operational efficiency despite a mixed macroeconomic backdrop.

• Product Strategy and Market Share:
• In the Towable RV segment, the company's new models like the Winnebago Thrive and Grand Design's Imagine and Reflection had strong retail performance, contributing to a 15.5% revenue increase.

• The company is prioritizing profitability and has been aggressively leaning into lower-priced models to capture share in an affordability-driven market.

• Motorhome Segment Growth:

• Motorhome RV segment revenue grew 13.5% year-over-year, fueled by favorable product mix and selective price increases.

• The company enjoyed share increases in Class A Gas, Class A Diesel, and Class C segments due to premium offerings in these classes.

• ** Marine Segment Challenges:**

• The Marine segment saw a 2.2% revenue increase, but operating income decreased slightly due to lower unit volume.
• The segment faced ongoing headwinds, but disciplined inventory management and strong dealer relationships helped mitigate the impacts.

Sentiment Analysis:

Overall Tone: Positive

• Management said the company "posted strong top and bottom line results," raised FY26 guidance for revenue and EPS, reported adjusted EBITDA more than doubled to $30.2M and reduced net leverage to 2.7x, and emphasized execution on controllables (product launches, cost initiatives) as drivers of confidence.

Q&A:

• Question from Craig Kennison (Baird): Mike, a lot of optimism building around the 2026 retail consumer driven by lower rates and tax policy. What signals are you looking for to ascertain whether your end markets might grow for the first time since the pandemic?
  Response: Key signs are increased foot traffic and retail appetite at January–March shows and strong consumer/dealer reception to new product launches; expect clearer visibility by the next call in March.

• Question from Craig Kennison (Baird): I'm wondering when we might see an upgrade cycle... are you seeing any of that in your checks or data?
  Response: No meaningful upgrade-cycle momentum yet; management is optimistic it could emerge in early 2026 and says the portfolio is positioned for both entry-level and step-up buyers.

• Question from Joseph Altobello (Raymond James): On the Towable business, incremental margins were light this quarter—what were the big drivers?
  Response: Primary drivers were higher warranty expense and a mix shift toward lower-price products, with limited leverage at current volumes.

• Question from Joseph Altobello (Raymond James): What sort of market share trends on the RV side are you baking into guidance?
  Response: Expect modest share gains in targeted areas (Super C, Winnebago Towables, Grand Design travel trailers and continued Barletta share strength); guidance is grounded in controllables so industry upside would add to results.

• Question from Scott Stember (ROTH MKM): Can you describe the selective price increases on RVs and any pushback at retail?
  Response: Price increases are disciplined and selective—focused on new products and feature enhancements—priced to market with limited broad increases and monitored for commodity-driven pressure.

• Question from Scott Stember (ROTH MKM): How much of the back-half improvement is self-help versus market-driven?
  Response: Back-half loading is typical; management says most of the expected improvement is within their control via cost, product launches, brand extensions and operational initiatives.

• Question from Tristan Thomas-Martin (BMO Capital Markets): You shifted above retail during the quarter tied to new products. How should we think about that retail–wholesale relationship for the rest of the year?
  Response: Targeting ~2x dealer turns while staying disciplined on inventory except for measured stocking for new products; aged inventory is lower year-over-year.

• Question from Tristan Thomas-Martin (BMO Capital Markets): Update on operational margin improvement initiatives—what have you done and what's left?
  Response: Actions include footprint consolidation, assembly-line rationalization, centralized strategic sourcing and engineering harmonization to drive purchasing savings and future gross-margin improvement over multiple quarters.

• Question from Michael Albanese (Benchmark StoneX): Where is Grand Design Motorized tracking relative to the initial $100M dealer stock expectation?
  Response: Grand Design Motorized exceeded $100M in net revenue in the prior year, is on track or ahead of plan, and has gained >4 points of market share 15 months into the initiative.

• Question from Michael Albanese (Benchmark StoneX): Will you provide a sales target for Grand Design Motorized for FY26?
  Response: No specific FY26 sales target disclosed; expect continued growth tied to retail replenishment and new product introductions.

• Question from Michael Albanese (Benchmark StoneX): Is the consumer mix shift to value continuing or stabilizing?
  Response: Consumers remain value-conscious; company is addressing both ends—improving lower-price offerings while also selling premium products—claiming retail-dollar-share gains.

• Question from Bret Jordan (Jefferies): What is your assumption on the rate backdrop for 2026 and what Fed move would change your outlook?
  Response: Plan assumes about 2–3 25-bp cuts over the next year; watching the 10-year rate closely as it materially affects floorplan and retail financing costs.

• Question from Noah Zatzkin (KeyBanc Capital Markets): Can you quantify the magnitude of margin recapture in Winnebago Motorhomes and how much runway remains?
  Response: Winnebago Motorhome's Q1 contribution was limited; management expects larger benefits ahead in FY26/FY27 and reiterates Motorhome segment target of low-single-digit OI yield versus -0.6% in '25.

• Question from Noah Zatzkin (KeyBanc Capital Markets): What's driving recent motorized shipment strength industry-wide?
  Response: Strength is class-dependent—Class C and Super C have driven growth; dealers are concentrating inventory there; company dealer inventory is down ~19% YoY and in a strong position.

• Question from John Healy (Northcoast Research): Any development tying input costs to the tariff environment or supplier cost-sharing?
  Response: Robust tariff risk-management is in place; some suppliers have deferred or shared costs on a case-by-case basis; guidance embeds tariff exposure and centralized sourcing/engineering work aims to capture savings.

• Question from David Whiston (Morningstar): On Newmar and competing in lower-priced segments—are you cutting prices or launching new products?
  Response: Affordability is being addressed via new, lower-priced models (not price cuts) to provide entry points while preserving Newmar's luxury positioning.

Contradiction Point 1

Retail and Wholesale Market Trends

It reflects differing expectations regarding market conditions and the company's strategic response, which are crucial for understanding Winnebago's growth potential and market positioning.

What signals are you monitoring to determine if your end markets will grow post-pandemic? - Craig Kennison(Baird)

20251219-2026 Q1: The retail environment remains soft, with improvement expected in early 2026. Key signals include foot traffic and retail appetite at upcoming shows, as well as consumer reception to new products. - Michael Happe(CEO)

Can you clarify the retail assumptions for 2025 and 2026, given the expected significant destocking in 2025? - James Hardiman(Citigroup Inc., Research Division)

2025Q4: We anticipate dealers to remain selective in restocking, supporting channel stability. For '26, we expect wholesale RV shipments of 315,000 to 345,000, or a median of 330,000 units. - Michael Happe(CEO)

Contradiction Point 2

Pricing Strategy and Market Conditions

It highlights differing perspectives on the company's pricing strategy and market conditions, which are essential for understanding Winnebago's competitive positioning and financial performance.

Can you clarify the selective price increases on RVs and whether there have been any retail pushback issues? - Scott Stember(ROTH MKM)

20251219-2026 Q1: Price increases were intentional and disciplined, focusing on new products and feature enhancements. - Michael Happe(CEO)

Can you clarify the unmitigated portion in your tariff guidance? - Scott Stember(ROTH Capital Partners, LLC)

2025Q4: We are continuously finding avenues to mitigate tariff exposure. Difficult pricing actions have been taken to cover some costs where the market can accept it. - Michael Happe(CEO)

Contradiction Point 3

Towable Pricing Strategy

This contradiction involves the company's approach to pricing in the towable segment, which is crucial for competitive positioning and revenue generation.

Have you implemented selective price increases for RVs and encountered retail pushback as a result? - Scott Stember (ROTH MKM)

20251219-2026 Q1: Price increases were intentional and disciplined, focusing on new products and feature enhancements. - Michael Happe(CEO)

Can you explain the changes to the pricing strategy for Winnebago Towables? - Michael Swartz (Truist Securities)

2025Q2: Winnebago Towables aims for a market share increase from 1.4% to over 3% with a BHAG of 5%. Current pricing reset is part of a comprehensive strategy involving dealer relationships and new products. - Michael Happe(CEO)

Contradiction Point 4

Motorhome Margins and Margin Improvement Initiatives

This contradiction pertains to the expected improvements in motorhome margins and the timeline for these improvements to materialize, which are vital for profitability and investor expectations.

How much did the margin recapture initiatives at Winnebago Motorhomes contribute to the improvement in Motorized margins this quarter? - Noah Zatzkin (KeyBanc Capital Markets)

20251219-2026 Q1: Improvements are expected in the future, but not yet significantly impacting Q1 financials. Long-term margin improvement is planned, with guidance for low single-digit OI yield in Motorhomes. - Michael Happe(CEO), Bryan Hughes(CFO)

Can you provide details on the top line or margin impact in the second half? - Sean Wagner (Citi)

2025Q2: We expect margins to continue to improve throughout the year. We think they can get pretty close to 20% by year-end. - Michael Happe(CEO)

Contradiction Point 5

Tariff Impact and Management Strategy

This contradiction involves the company's approach to managing tariff-related costs and their impact on pricing strategy, which are critical for maintaining competitive pricing and profitability.

What price increases would you consider if tariffs are implemented? - Joseph Altobello (Raymond James)

20251219-2026 Q1: We won't share specific pricing actions due to competitive sensitivity. However, we will pass on increased costs if necessary, and future model year 2026 product lineups will consider potential tariff impacts. - Michael Happe(CEO)

Do you have any comments on tariff-related surcharges? - Tristan Thomas-Martin (BMO Capital Markets)

2025Q2: All options are on the table, including surcharges or embedded price increases. We will be agile in reacting to tariff changes, ensuring transparency with dealers and consumers. - Michael Happe(CEO)