Management's Discussion and Analysis of Financial Condition and Results of Operations.
Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide a reader of our financial statements with a narrative from the perspective of management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. Unless otherwise noted, transactions and other factors significantly impacting our financial condition, results of operations and liquidity are discussed in order of magnitude. Our MD&A is presented in five sections:
•Overview
•Results of Operations
•Analysis of Financial Condition, Liquidity, and Capital Resources
•Critical Accounting Policies and Estimates
•New Accounting Pronouncements
Our MD&A should be read in conjunction with the Consolidated Financial Statements and related Notes included in Item 8 of Part II in this Annual Report on Form 10-K.
The year-over-year comparisons in this MD&A are as of and for the fiscal years ended August 29, 2026 and August 30, 2025, unless stated otherwise. The discussion of Fiscal 2024 results and related year-over-year comparisons as of and for the fiscal years ended August 30, 2025 and August 31, 2024 are found in Item 7 of Part II of our Form 10-K for the fiscal year ended August 30, 2025.
Overview
Winnebago Industries, Inc. is a leading North American manufacturer of outdoor lifestyle products under the Winnebago, Grand
Design, Chris-Craft, Newmar and Barletta brands, which are used primarily in leisure travel and outdoor recreation activities. We also design and manufacture advanced battery solutions that deliver "house power," supporting internal electrical features and appliances for a variety of outdoor products including RVs, boats, specialty and other low-speed vehicles, as well as other industrial applications. Other products manufactured by us consist primarily of original equipment manufacturing parts for other manufacturers and commercial vehicles. We produce our motorhome RV units in Iowa and Indiana; our towable RV units in Indiana; our marine units in Indiana and Florida; and our battery solutions in Florida. We distribute our RV and marine products primarily through independent dealers across the U.S. and Canada, who then retail the products to the end consumer. We also distribute our marine products internationally through independent dealers, who then retail the products to the end consumer. Our battery solutions are primarily sold to customers in the U.S.
Known Trends and Uncertainties
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 Fiscal 2026, these trends resulted in decreased sales due to declines in unit volume. Market pressures have been observed across our portfolio and we have adjusted our production schedule to align with market demand, while also accelerating efforts to provide stronger product value for our consumers in the future.
We continue to monitor developments in international trade policy, including tariffs imposed by the United States and potential retaliatory measures by other countries, which may affect material costs, supply availability, and consumer demand. During February 2026, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") were not authorized by the statute, and related refund processes continue to evolve. We received certain recoveries from suppliers associated with previously incurred tariff costs, which helped offset a portion of tariff-related cost increases during Fiscal 2026. In addition, we implemented pricing and other mitigation actions to reduce the impact of tariffs on our business. The tariff environment remains dynamic, and future changes in trade policy or tariff levels could adversely affect our results of operations, financial condition, or cash flows.
During our third quarter of Fiscal 2026, conflicts among the United States, Israel, and Iran intensified, contributing to higher global energy prices due to supply disruptions in the Middle East. Sustained increases in energy costs may further pressure consumer discretionary spending and demand for RV and marine products. Further, these conditions may contribute to broader inflationary pressures and delay expected interest rate reductions, or cause further increases to interest rates, which could result in higher borrowing costs for consumers.
Despite the current economic uncertainty, we believe in the long-term health of consumer demand for RV and marine products.
Results of Operations - Fiscal 2026 Compared to Fiscal 2025
Consolidated Performance Summary
The following is an analysis of changes in key items included in the statements of operations for the fiscal year ended August 29, 2026 compared to the fiscal year ended August 30, 2025:
| (in millions, except per share data) | 2026 | % of Revenues(1) | 2025 | % of Revenues(1) |
$ Change(1) |
% Change(1) | |||||||||||||||||||||||||||||
| Net revenues | $ | 2,703.9 | 100.0 | % | $ | 2,798.2 | 100.0 | % | $ | (94.3) | (3.4) | % | |||||||||||||||||||||||
| Cost of goods sold | 2,353.7 | 87.0 | % | 2,433.1 | 87.0 | % | (79.5) | (3.3) | % | ||||||||||||||||||||||||||
| Gross profit | 350.2 | 13.0 | % | 365.1 | 13.0 | % | (14.8) | (4.1) | % | ||||||||||||||||||||||||||
| Selling, general, and administrative expenses ("SG&A") | 262.3 | 9.7 | % | 285.8 | 10.2 | % | (23.3) | (8.2) | % | ||||||||||||||||||||||||||
| Amortization | 21.7 | 0.8 | % | 22.1 | 0.8 | % | (0.4) | (2.0) | % | ||||||||||||||||||||||||||
| Total operating expenses | 284.0 | 10.5 | % | 307.9 | 11.0 | % | (23.8) | (7.7) | % | ||||||||||||||||||||||||||
| Operating income | 66.2 | 2.4 | % | 57.2 | 2.0 | % | 9.0 | 15.7 | % | ||||||||||||||||||||||||||
| Interest expense, net | 20.9 | 0.8 | % | 25.9 | 0.9 | % | (5.1) | (19.5) | % | ||||||||||||||||||||||||||
| Loss on note repurchase (Note 8) | 0.8 | - | % | 2.0 | 0.1 | % | (1.2) | (61.0) | % | ||||||||||||||||||||||||||
| Non-operating loss (income) | 0.1 | - | % | (0.8) | (0.1) | % | 0.9 | NM | |||||||||||||||||||||||||||
| Income before income taxes | 44.4 | 1.6 | % | 30.1 | 1.1 | % | 14.4 | 47.8 | % | ||||||||||||||||||||||||||
| Income tax provision | 9.9 | 0.4 | % | 4.4 | 0.2 | % | 5.6 | NM | |||||||||||||||||||||||||||
| Net income | $ | 34.5 | 1.2 | % | $ | 25.7 | 0.9 | % | $ | 8.8 | 34.3 | % | |||||||||||||||||||||||
| Diluted earnings per share | $ | 1.21 | $ | 0.91 | $ | 0.30 | 33.0 | % | |||||||||||||||||||||||||||
| Diluted weighted average shares outstanding | 28.4 | 28.3 | 0.1 | 0.4 | % | ||||||||||||||||||||||||||||||
(1) Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided. In addition, percentages may not add in total due to rounding.
NM: Not meaningful.
Net revenues decreased primarily due to lower unit volume, partially offset by selective price adjustments and product mix.
Gross profit as a percentage of revenue was consistent with prior year as volume deleverage was largely offset by selective price adjustments.
Operating expenses decreased primarily due to cost reduction initiatives, partially offset by costs to support the growth of the Grand Design Motorhome business.
The loss on note repurchase recorded in the fiscal years ended August 29, 2026 and August 30, 2025 is related to the repurchase of $100.0 million of our Senior Secured Notes in both periods. Refer to Note 8 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K for further information.
The increase in the effective tax rate was primarily driven by current year state tax adjustments, increased valuation allowances, and a reduced benefit from favorable items due to higher pre-tax income.
Reportable Segment Performance Summary
Towable RV
The following is an analysis of key changes in our Towable RV segment for Fiscal 2026 and 2025:
| (in millions, except ASP and units) | 2026 | % of Revenues(1) | 2025 | % of Revenues(1) |
$ Change(1) |
% Change(1) | |||||||||||||||||||||||||||||
| Net revenues | $ | 1,050.8 | $ | 1,220.2 | $ | (169.4) | (13.9) | % | |||||||||||||||||||||||||||
| Operating income | 47.5 | 4.5 | % | 72.7 | 6.0 | % | (25.2) | (34.7) | % | ||||||||||||||||||||||||||
Average Selling Price ("ASP")(2) | 38,700 | 38,797 | (97) | (0.3) | % | ||||||||||||||||||||||||||||||
| Unit deliveries | 2026 | Product Mix(3) | 2025 | Product Mix(3) | Unit Change | % Change | |||||||||||||||||||||||||||||
| Travel trailer | 20,021 | 74.1 | % | 21,714 | 69.7 | % | (1,693) | (7.8) | % | ||||||||||||||||||||||||||
| Fifth wheel | 6,983 | 25.9 | % | 9,455 | 30.3 | % | (2,472) | (26.1) | % | ||||||||||||||||||||||||||
| Total Towable RV | 27,004 | 100.0 | % | 31,169 | 100.0 | % | (4,165) | (13.4) | % | ||||||||||||||||||||||||||
Dealer Inventory(4) | August 29, 2026 | August 30, 2025 | Unit Change | % Change | |||||||||||||||||||||||||||||||
| Units | 15,471 | 16,200 | (729) | (4.5) | % | ||||||||||||||||||||||||||||||
(1) Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.
(2) ASP excludes off-invoice dealer incentives.
(3) Percentages may not add due to rounding differences.
(4) Data is based on the latest information available from our dealer partners and is subject to timing of reporting and other limitations.
Net revenues decreased primarily due to lower unit volume and a shift in product mix toward lower price-point models, partially offset by selective price adjustments.
Operating income as a percentage of revenues decreased primarily due to volume deleverage, higher discounts and allowances, and product mix, partially offset by selective price adjustments and cost containment initiatives.
Motorhome RV
The following is an analysis of key changes in our Motorhome RV segment for Fiscal 2026 and 2025:
| (in millions, except ASP and units) | 2026 | % of Revenues(1) | 2025 | % of Revenues(1) |
$ Change(1) |
% Change(1) | |||||||||||||||||||||||||||||
| Net revenues | $ | 1,257.5 | $ | 1,159.7 | $ | 97.7 | 8.4 | % | |||||||||||||||||||||||||||
| Operating income (loss) | 33.2 | 2.6 | % | (7.3) | (0.6) | % | 40.4 | NM | |||||||||||||||||||||||||||
ASP(2) | 214,350 | 206,441 | 7,909 | 3.8 | % | ||||||||||||||||||||||||||||||
| Unit deliveries | 2026 | Product Mix(3) | 2025 | Product Mix(3) | Unit Change | % Change | |||||||||||||||||||||||||||||
| Class A | 892 | 15.1 | % | 1,211 | 21.1 | % | (319) | (26.3) | % | ||||||||||||||||||||||||||
| Class B | 1,934 | 32.6 | % | 1,682 | 29.3 | % | 252 | 15.0 | % | ||||||||||||||||||||||||||
| Class C | 3,099 | 52.3 | % | 2,849 | 49.6 | % | 250 | 8.8 | % | ||||||||||||||||||||||||||
| Total Motorhome RV | 5,925 | 100.0 | % | 5,742 | 100.0 | % | 183 | 3.2 | % | ||||||||||||||||||||||||||
Dealer Inventory(4) | August 29, 2026 | August 30, 2025 | Unit Change | % Change | |||||||||||||||||||||||||||||||
| Units | 3,395 | 3,562 | (167) | (4.7) | % | ||||||||||||||||||||||||||||||
(1) Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.
(2) ASP excludes off-invoice dealer incentives.
(3) Percentages may not add due to rounding differences.
(4) Data is based on the latest information available from our dealer partners and is subject to timing of reporting and other limitations.
NM: Not meaningful.
Net revenues increased primarily due to higher unit volume, selective price adjustments, and lower discounts and allowances.
Operating income as a percentage of revenues increased primarily due to lower discounts and allowances and volume leverage.
Marine
The following is an analysis of key changes in our Marine segment for Fiscal 2026 and 2025:
| (in millions, except ASP and units) | 2026 | % of Revenues(1) | 2025 | % of Revenues(1) |
$ Change(1) |
% Change(1) | |||||||||||||||||||||||||||||
| Net revenues | $ | 356.4 | $ | 367.8 | $ | (11.4) | (3.1) | % | |||||||||||||||||||||||||||
| Operating income | 20.9 | 5.9 | % | 27.7 | 7.5 | % | (6.8) | (24.5) | % | ||||||||||||||||||||||||||
ASP(2) | 82,496 | 80,888 | 1,608 | 2.0 | % | ||||||||||||||||||||||||||||||
| Unit deliveries | 2026 | 2025 | Unit Change | % Change | |||||||||||||||||||||||||||||||
| Boats | 4,423 | 4,635 | (212) | (4.6) | % | ||||||||||||||||||||||||||||||
Dealer Inventory(3,4) | August 29, 2026 | August 30, 2025 | Unit Change | % Change | |||||||||||||||||||||||||||||||
| Units | 2,510 | 2,687 | (177) | (6.6) | % | ||||||||||||||||||||||||||||||
(1) Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.
(2) ASP excludes off-invoice dealer incentives.
(3) Due to the nature of the Marine industry, this amount includes a higher proportion of retail sold units than our other segments.
(4) Data is based on the latest information available from our dealer partners and is subject to timing of reporting and other limitations.
NM: Not meaningful.
Net revenues decreased primarily due to a shift in product mix toward lower price-point models and lower unit volume, partially offset by selective price adjustments.
Operating income as a percentage of revenues decreased primarily due to volume deleverage and higher warranty expense, partially offset by selective price adjustments.
Analysis of Financial Condition, Liquidity, and Capital Resources
Cash Flows
The following table summarizes our cash flows from total operations for Fiscal 2026 and 2025:
| (in millions) | 2026 | 2025 | |||||||||
Total cash provided by (used in): | |||||||||||
| Operating activities | $ | 168.7 | $ | 128.9 | |||||||
| Investing activities | (18.5) | (34.8) | |||||||||
| Financing activities | (142.8) | (251.0) | |||||||||
Net (decrease) increase in cash and cash equivalents | $ | 7.4 | $ | (156.9) | |||||||
Operating Activities
During Fiscal 2026, cash provided by operating activities was $168.7 million compared to $128.9 million in Fiscal 2025. The change in operating cash flow is primarily driven by higher profitability adjusted for non-cash items, favorable changes in accounts receivable and accounts payable balances due to timing of receipts and payments, partially offset by changes in inventory levels.
Investing Activities
Cash used in investing activities decreased primarily due to lower capital expenditures compared to the prior year.
Financing Activities
Cash used in financing activities decreased primarily due to the maturity of 2025 Convertible Notes in Fiscal 2025, combined with lower share repurchase activity in the current year. We repurchased $100.0 million of the Senior Secured Notes in both Fiscal 2025 and Fiscal 2026.
Debt and Capital
On August 20, 2026, we renewed our $350.0 million asset-based revolving credit facility ("ABL Credit Facility") with an extended maturity date of August 20, 2031, subject to certain factors which may accelerate the maturity date. As of August 29, 2026, we had no borrowings against the ABL Credit Facility and $181.4 million in cash and cash equivalents. Our cash and cash equivalent balances consist of high quality, short-term money market instruments.
On January 23, 2024, we issued $350.0 million in aggregate principal amount of 3.25% unsecured convertible senior notes due 2030 ("2030 Convertible Notes").
On July 8, 2020, we closed our private offering (the "Senior Secured Notes Offering") of $300.0 million aggregate principal amount of 6.25% Senior Secured Notes due 2028 (the "Senior Secured Notes").
On November 1, 2019, we issued $300.0 million in aggregate principal amount of 1.5% unsecured Convertible Senior Notes due 2025 ("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.
As of August 29, 2026, we had no debt maturing in the next twelve months that is classified as current on our Consolidated Balance Sheets.
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.
Refer to Note 8 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K for additional information.
Working Capital
Working capital as of August 29, 2026 and August 30, 2025 was $419.1 million and $465.1 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.
Capital Expenditures
We anticipate capital expenditures in Fiscal 2027 of approximately $35.0 million to $45.0 million. We will continue to support organic growth through facility improvements to support a safe operating environment, operational improvements, and investments in software and our digital capabilities. We believe cash on hand, funds generated from operations, and the borrowing capacity available under our ABL Credit Facility and other debt instruments will be sufficient to support our capital expenditures for the foreseeable future.
Share Repurchases and Dividends
We repurchase our common stock and pay dividends pursuant to programs approved by our Board of Directors. Our long-term capital allocation strategy is to first fund operations and investments in growth, maintain reasonable liquidity, maintain a leverage ratio that reflects a prudent capital structure in light of the cyclical industries we compete in, and then return excess cash over time to shareholders through dividends and share repurchases. Refer to Item 5 of Part II of this Annual Report on Form 10-K for discussion about our share repurchase program and dividend declared on August 12, 2026.
Cash Requirements
Our cash requirements within the next twelve months include accounts payable, current maturities of long-term debt, accrued expenses, purchase commitments and other current liabilities.
Our cash requirements greater than twelve months from various contractual obligations and commitments include:
Debt Obligations and Interest Payments
Refer to Note 8 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K for information regarding our debt and the timing of expected future principal and interest payments. Interest payments are based on fixed interest rates for the 2030 Convertible Notes and the Senior Secured Notes.
Operating and Finance Leases
Refer to Note 9 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K for information regarding our lease obligations and the timing of expected future payments.
Deferred Compensation Obligations
Refer to Note 10 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K for information regarding our deferred compensation plans. We expect to pay $1.2 million in the next 12 months and $4.3 million beyond 12 months.
Contracted Services
Contracted services include agreements with third-party service providers primarily for software, payroll services, and equipment maintenance services for periods up to Fiscal 2029. We expect to pay approximately $19.7 million in the next 12 months and approximately $6.2 million beyond 12 months.
Contingent Repurchase Obligations
Refer to Note 11 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K for information regarding our contingent repurchase commitment and estimated obligation, most of which we expect to expire within one year.
We expect to satisfy our short-term and long-term obligations through a combination of cash on hand, funds generated from operations, and the borrowing capacity available under our ABL Credit Facility and other debt instruments.
Critical Accounting Policies and Estimates
The consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures. We base our assumptions, estimates, and judgments on historical experience, current trends, and other factors believed to be relevant at the time the consolidated financial statements are prepared. Because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.
Our critical accounting policies are discussed in Note 1 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K. We believe that the following accounting policies and estimates are the most critical to aid in fully understanding and evaluating our reported financial results. These estimates require our most difficult, subjective, or complex judgments because they relate to matters that are inherently uncertain. We have reviewed these critical accounting policies and estimates and related disclosures with the Audit Committee of our Board of Directors.
We have not made any material changes during the past three fiscal years, nor do we believe there is a reasonable likelihood of a material future change to the accounting methodologies for the areas described below.
Goodwill and Indefinite-lived Intangible Assets
We test goodwill and other indefinite-lived intangible assets, such as trade names, for impairment at least annually in the fourth quarter and more frequently if events or circumstances occur that would indicate an impairment may have occurred prior to the annual assessment. Our test of impairment begins by either performing a qualitative evaluation or a quantitative test:
•Qualitative evaluation - Performed to determine whether it is more likely than not that the carrying value of goodwill or the indefinite-lived trade name exceeds the fair value of the asset. During our qualitative assessment, we make significant estimates, assumptions, and judgments, including, but not limited to, the macroeconomic conditions, industry and market conditions, cost factors, overall financial performance of the Company and the reporting units, changes in our share price, and relevant company-specific events. If we determine that it is more likely than not that the carrying value of the goodwill or indefinite-lived trade name exceeds the fair value, we perform the quantitative test to determine the amount of the impairment.
•Quantitative test - Used to calculate the fair value of goodwill or the indefinite-lived trade name. If the carrying value of the reporting unit or indefinite-lived trade name exceeds the fair value, the impairment is calculated as the difference between the carrying value and fair value. Our goodwill fair value model uses a blend of the income (discounted future cash flow) and market (guideline public company) approaches, which includes the use of significant unobservable inputs (Level 3 inputs). Our indefinite-lived trade name fair value model uses the income (relief-from-royalty) approach, which includes the use of significant unobservable inputs (Level 3 inputs). During these valuations, we make significant estimates, assumptions, and judgments, including current and projected future levels of income based on management's plans, business trends, market and economic conditions, and market-participant considerations. Actual results may differ from assumed and estimated amounts, which could result in future impairment losses.
During the fourth quarter of Fiscal 2026, we completed our annual assessment of goodwill and indefinite-lived intangible assets and determined that there was no indication of impairment. However, we observed a reduction in the fair value cushion for the Chris-Craft trade name, as the estimated fair value exceeded its $29.3 million carrying value by less than 10% as of the assessment date. The fair value of a trade name is determined by the relief-from-royalty method, which requires significant judgment, and includes assumptions for royalty rate, future revenue growth rates and discount rate. A 50 bps reduction rate in royalty rate, a 10% decline in sales volume, or a 100 bps increase in the discount rate would all result in the fair value approximating carrying value for the Chris-Craft trade name. A sustained decline in revenues or other adverse changes in macroeconomic or industry conditions could result in an impairment charge in a future reporting period. No impairments were recorded in Fiscal 2025. During the fourth quarter of Fiscal 2024 we determined that the carrying value of the Chris-Craft reporting unit exceeded its fair value, resulting in a $30.3 million impairment charge, which represents the full goodwill balance attributable to the reporting unit.
For further information regarding goodwill and intangible assets, see Note 6 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K.
Warranty
We provide certain service and warranty on our products. Estimated costs related to product warranty are accrued at the time of sale and are based upon past warranty claims and unit sales history. Estimates are adjusted as needed to reflect actual costs incurred as information becomes available.
In addition to the costs associated with the contractual warranty coverage provided on our products, we also occasionally incur costs as a result of additional service actions not covered by our warranties, including product recalls and customer satisfaction actions. Although we estimate and reserve for the cost of these service actions, there can be no assurance that expense levels will remain at current levels or such reserves will continue to be adequate.
A significant increase in dealership labor rates, the cost of parts, or the frequency of claims could have a material adverse impact on our operating results for the period or periods in which such claims or additional costs materialize. A hypothetical change of a 10% increase or decrease in our warranty liability as of August 29, 2026 would not have a material effect on our net income.
New Accounting Pronouncements
For a summary of new applicable accounting pronouncements, see Note 1 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K.