Winnebago President and CEO Michael Happe said supply chain issues remain as the fall continues, but that the company expects strong RV demand to continue through its fiscal 2022 year, which would end in the fall of 2023.
Happe referenced RVIA projections for next year when discussing the issue with industry analysts after Winnebago released quarterly financial results.
“It is highly likely that for the next couple of years, and when I say that, I mean, next couple of years, fiscal ‘21 for us and fiscal ‘22, we will see a wholesale shipment environment that is materially more robust than even the retail environment, which we think will continue to be healthy, primarily because of the field inventory situation that we have ongoing,” Happe said, according to a transcript of the call provided by Seeking Alpha. “We believe it will take the better part of the next two fiscal years for our companies to replenish dealer inventory levels to the terms that they were experiencing going into the pandemic and that’s us running at significant high levels of production every day. The higher retail is in the future, the longer it will take to replenish field inventory. The more mild retail is, the OEMs will have a chance to catch up a little bit more quickly.”
Happe told analysts that the company worked through the summer to acquire components to get most production completed by the end of its fiscal year.
“We are now trying to operate at relatively full speed across each of our businesses and the potential impact of supply chain challenges subsequently has a chance to be more impactful,” he said, according to the Seeking Alpha transcript. “Due to some of the supply chain challenges, we are spending more overtime and more hours finishing units. And we are in many cases finishing some of those units off the line at the end of the process to put final components on in a high quality way. We will never sacrifice that.”
The supply chain challenges are not unique to Winnebago, Happe said, and do fluctuate from suppliers and categories.
“We are constantly flexing our assembly schedules based on the supply chain and we have for years. The less disruption mean certainly more uptime for assembly at the OEM level and the higher the disruption means, we at times either have to throttle back the main assembly for certain periods,” Happe said. “Yes, these issues will be present with us throughout probably the first half of fiscal 2021. But, again, I am really confident in our team at Winnebago Industries to navigate through these, to treat our suppliers very fairly and partner with them to try to get our fair share of what they are making based on our growth rates.”
Backlogs, meanwhile, remain elevated, and Happe said they across a variety of product lines.
“The backlog is equally strong really across all of our brands,” he said. “Newmar is very strong right now, Winnebago Towables, and certainly, Grand Design, which often has the longest backlog in terms of time to delivery.
“Our backlogs are certainly meaningfully higher and I would imagine they are similar at our competitors as well. But dealers have inventory levels right now in the field,” he said. “As we probably stand here today, our inventory levels are probably somewhere down in the range of still 35 percent to 40 percent lower than a year ago at this point in October and so dealers still have a high desire to replenish their lots with a larger selection of models and floorplans than they have been able to have this summer.”
