Iowa's Winnebago Industries tops the $2 billion mark, sees revenues double in two years

Kevin Hardy | The Des Moines Register

Show Caption Hide Caption Tour Winnebago factory in north Iowa Go behind the scenes of the Winnebago Industries manufacturing plant in Forest City as president and CEO Michael Happe talks about the iconic motorhome company's future in Iowa.

Iowa's Winnebago Industries earned more than $2 billion in fiscal year 2018 — a figure that has more than doubled in just two years.

This year's earnings, announced to investors Wednesday morning, capped off a steep revenue climb over the last decade: Winnebago's earnings this year were nearly 10 times larger than 2009's earnings of about $211 million.

The news validates many of the diversification efforts pushed by Winnebago CEO Michael Happe, who took over in January 2016 with a mandate to create change at the iconic RV company, which saw revenues crater during the Great Recession.

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Winnebago's 2018 annual earnings of $2.016 billion were up from 2017's tally of $1.55 billion and represented the first time the company has ever topped the $2 billion mark. Those revenues created a gross profit of nearly $300 million in 2018.

"We enter fiscal 2019 in what we believe is good shape to continue outpacing the industry in terms of growth the next 12 months," Happe said on a Wednesday morning call with investors. "We must remain focused on keeping it that way."

Much of the growth for the Forest City-based company has come in the way of acquisitions: The company in 2016 purchased Grand Design, which was the nation's fastest-growing RV maker. And in the summer of 2018, Winnebago acquired luxury boat builder Chris-Craft.

But Winnebago also benefited from organic sales growth in 2018, primarily on the towable side of the business. Happe has worked to deepen Winnebago's presence in the towable market. Those campers, pulled behind a pickup or SUV, are cheaper than Winnebago's motorized RVs and they dominate the overall RV market.

Still, the brand has worked to rejuvenate its line of more expensive motorhomes. The company introduced both new models designed for off-the-grid millennials and top-of-the-line models for buyers who desire the biggest and most luxurious coaches.

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Happe told analysts that Winnebago executives were watching macroeconomic conditions closely. That includes concerns over tariffs on steel and aluminum, consumer confidence and the Federal Reserve's suggestion that it will continue to increase interest rates.

But even with increased pressure, Happe said the market for recreational vehicles — and the wider market for outdoor products and gear — still touts strong fundamentals.

"Multiple generations of customers from baby boomers to millennials and even younger, view the appeal of an outdoor lifestyle as increasingly enticing," he said. "Our customers want to be active, healthy and mobile."