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What Helped Winnebago Expand Q3 Profit Margin?

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Winnebago’s Q3 2019 profitability

In the quarter ended May 25, 2019, Winnebago Industries (WGO) reported a gross profit of $86.6 million, up 1.3% YoY despite lower revenue. With this, the company’s gross profit margin improved to 16.4% in the last quarter as compared to a 15.2% gross margin a year ago.

Similarly, its operating profit in the third quarter of fiscal 2019 rose 1.4% to $49.0 million as compared to $48.3 million operating profit in the third quarter of fiscal 2018. Winnebago’s operating margin in the quarter ended May 25, 2019, expanded to 9.3% as compared to 8.6% in the quarter ended May 26, 2018.

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What helped the margins expand?

In the third quarter, Winnebago’s motorhome segment’s adjusted EBITDA margin shrunk to just 0.2%, much worse than 4.8% in the third quarter of fiscal 2018. Nonetheless, the company posted a solid expansion in its profit margin from the owables segment. In the last quarter, Winnebago’s adjusted EBITDA margin from the towables segment expanded to 16.5% from 14.5% a year ago.

The company attributed its overall margin expansion to a positive revenue mix, pricing adjustments, and its consistent cost mitigation efforts. In the first nine months of its fiscal 2019, Winnebago’s operating margin has expanded to 7.8% from 6.8% in the first nine months of its fiscal 2018.

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