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What changed in WINNEBAGO INDUSTRIES INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of WINNEBAGO INDUSTRIES INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+185 added−175 removedSource: 10-K (2023-10-18) vs 10-K (2022-10-19)

Top changes in WINNEBAGO INDUSTRIES INC's 2023 10-K

185 paragraphs added · 175 removed · 141 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe RVIA classifies motorhomes into four types, all of which we manufacture and sell under the Winnebago and Newmar brand names, which are defined as follows: Type Description Winnebago product offerings Newmar product offerings Class A Built on a heavy truck chassis in both diesel and gas models with the ability to tow a small vehicle Gas: Adventurer, Sunstar, and Vista Gas: Bay Star and Bay Star Sport Diesel: Forza and Journey Diesel: Canyon Star, Dutch Star, Essex, King Aire, Kountry Star, London Aire, Mountain Aire, New Aire, and Ventana Class B Built by adding a taller roof and amenities to an existing van, which allows for easy maneuvering Gas: Travato and Solis N/A Diesel: Era, Boldt, and Revel Class C Built on a medium truck chassis in both diesel and gas models with similar features and amenities to Class A models Gas: Ekko, Spirit, and Minnie Winnie Diesel: Super Star and Supreme Aire Diesel: View and Navion Accessibility Enhanced Vehicle with a wheelchair lift to allow individuals with physical disabilities access to the motorhome Gas: Roam AE N/A Diesel: Inspire AE Our Class A, B, C and accessibility enhanced motorhomes are sold by dealers in the retail market with manufacturer's suggested retail prices ranging from approximately $115,000 to $1,600,000, depending on size and model, plus optional equipment and delivery charges.
Biggest changeThe RVIA classifies motorhome RVs into three types, all of which we manufacture and sell under the Winnebago and Newmar brand names, which are defined as follows: Type Description Winnebago product offerings Newmar product offerings Class A Built on a heavy truck chassis in both diesel and gas models with the ability to tow a small vehicle Gas: Adventurer, Sunstar, and Vista Gas: Bay Star and Bay Star Sport Diesel: Forza and Journey Diesel: Canyon Star, Dutch Star, Essex, King Aire, Kountry Star, London Aire, Mountain Aire, New Aire, and Ventana Class B Built by adding a taller roof and amenities to an existing van, which allows for easy maneuvering Gas: Solis and Travato N/A Diesel: Boldt, Era, Revel, and Roam Class C Built on a medium truck chassis in both diesel and gas models with similar features and amenities to Class A models Gas: Ekko, Minnie Winnie, and Spirit Diesel: Super Star and Supreme Aire Diesel: Navion, Porto, View, and Vita Our Class A, Class B, and Class C motorhome RVs are sold by dealers in the retail market with manufacturer's suggested retail prices ranging from approximately $140,000 to $1,650,000, which can vary depending on size and model, plus optional equipment and delivery charges.
A more detailed description of our Towable, Motorhome, and Marine order backlog is included in Item 7 of Part II in this Annual Report on Form 10-K. Distribution and Financing We distribute our RV and marine products primarily through independent dealers throughout the U.S. and Canada, who then retail the products to the end consumer.
A more detailed description of our Towable RV, Motorhome RV, and Marine order backlog is included in Item 7 of Part II in this Annual Report on Form 10-K. Distribution and Financing We distribute our RV and marine products primarily through independent dealers throughout the U.S. and Canada, who then retail the products to the end consumer.
From August 2010 to March 2012, he served as Vice President, Residential and Landscape Contractor Businesses. Prior to that, he held a series of senior leadership positions throughout his career across a variety of Toro's domestic and international divisions. Mr. Bhattacharya joined Winnebago Industries in June 2016 as Vice President, Strategic Planning and Development.
From August 2010 to March 2012, he served as Toro's Vice President, Residential and Landscape Contractor Businesses. Prior to that, he held a series of senior leadership positions throughout his career across a variety of Toro's domestic and international divisions. Mr. Bhattacharya joined Winnebago Industries in June 2016 as Vice President, Strategic Planning and Development.
Prior to his employment with Ecolab, Inc., he worked for Ernst & Young, a public accounting firm. Mr. Tubman joined Winnebago Industries in August 2022 as President of Newmar Corporation. Mr. Tubman joined Winnebago Industries from Whirlpool Corporation, a multinational manufacturer of home appliances, where he served in a variety of leadership and executive roles for over 25 years.
Prior to his employment with Ecolab, he worked for Ernst & Young, a public accounting firm. Mr. Tubman joined Winnebago Industries in August 2022 as President of Newmar Corporation. Mr. Tubman joined Winnebago Industries from Whirlpool Corporation, a multinational manufacturer of home appliances, where he served in a variety of leadership and executive roles for over 25 years.
We believe that we are currently in compliance with applicable environmental laws and regulations in all material aspects. Trademarks Our products are marketed under a variety of valuable trademarks. Some of the more important trademarks used in our business include Winnebago, Grand Design, Newmar, Chris-Craft, and Barletta.
We believe that we are currently in compliance with applicable environmental laws and regulations in all material aspects. Trademarks Our products are marketed under a variety of valuable trademarks. Some of the more important trademarks used in our business include Winnebago, Grand Design, Newmar, Chris-Craft, Barletta and Lithionics.
We recognize the importance of having diverse perspectives on our Board of Directors and aspire to promote diversity as we build and refresh our Board of Directors. Our IDEA framework, which serves as a roadmap to guide us forward on our inclusion journey, includes the Board of Directors, leadership development, and engagement.
We also recognize the importance of having diverse perspectives on our Board of Directors and aspire to promote diversity as we build and refresh our Board of Directors. Our IDEA framework, which serves as a roadmap to guide us forward on our inclusion journey, includes the Board of Directors, leadership development, and engagement.
Woodson Senior Vice President, Human Resources and Corporate Relations (2015) 52 Officers are elected annually by the Board of Directors and hold office until their successors are chosen and qualify or until their death or resignation. There are no family relationships between or among any of the Executive Officers or Directors of the Company. Mr.
Woodson Senior Vice President, Human Resources and Corporate Relations (2015) 53 Officers are elected annually by the Board of Directors and hold office until their successors are chosen and qualify or until their death or resignation. There are no family relationships between or among any of the Executive Officers or Directors of the Company. Mr.
Certain parts, especially motorhome chassis, are available from a small group of suppliers. Our marine products are produced in the states of Indiana and Florida at two different campuses. We manufacture certain components and purchase other components from suppliers and install them on the boat. Certain parts, especially motors, are available from a small group of suppliers.
Certain parts, especially motorhome RV chassis, are available from a small group of suppliers. Our marine products are produced in the states of Indiana and Florida at two different assembly campuses. We manufacture certain components and purchase other components from suppliers and install them on the boat. Certain parts, especially motors, are available from a small group of suppliers.
See Note 12 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K. 7 Table of Contents Competition The RV and marine markets are highly competitive with many other manufacturers selling products which compete directly with our products.
See Note 12 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K, for more information. 7 Table of Contents Competition The RV and marine markets are highly competitive with many other manufacturers selling products which compete directly with our products.
These changes generally include new floor plans, features, functionality, and sizes as well as design and decor modifications. Most of our raw materials such as steel, aluminum, fiberglass, and wood products are obtainable from numerous sources. Our towables are produced at two assembly campuses located in Middlebury, Indiana.
These changes generally include new floor plans, features, functionality, and sizes as well as design and decor modifications. Most of our raw materials such as steel, aluminum, fiberglass, and wood products are obtainable from numerous sources. Our towable RVs are produced at two assembly campuses located in Middlebury, Indiana.
Our motorhomes range in length from 18 to 45 feet. Motorhome parts and service activities represent revenues generated by service work we perform for retail customers at our Forest City, Iowa and Nappanee, Indiana facilities as well as revenues from the sale of unit parts.
Our motorhome RVs range in length from 18 to 45 feet. Motorhome RV parts and service activities represent revenues generated by service work we perform for retail customers at our Forest City, Iowa and Nappanee, Indiana facilities as well as revenues from the sale of unit parts.
Commitment to Inclusion, Diversity, Equity, and Action ("IDEA") We embrace the ideals of IDEA in our company. We believe in the value of building a company and community where every person feels welcome, is treated fairly, and has an equal opportunity to succeed while bringing their authentic self to work.
Commitment to Inclusion, Diversity, Equity, and Action ("IDEA") We believe in the value of building a company and community where every person feels welcome, is treated fairly, and has an equal opportunity to succeed while bringing their authentic self to work.
West joined Winnebago Industries in September 2016 as Vice President, Operations and was appointed Senior Vice President, Enterprise Operations in October 2020. He previously was Vice President of Global Supply Chain for Joy Global, a worldwide 10 Table of Contents mining equipment manufacturer, from 2014 to 2016, and Operations Director from 2012 to 2014. Mr.
West joined Winnebago Industries in September 2016 as Vice President, Operations and was appointed Senior Vice President, Enterprise Operations in October 2020. He previously was Vice President of Global Supply Chain for Joy Global, a worldwide mining equipment manufacturer, from 2014 to 2016, and Operations Director from 2012 to 2014. Mr.
The majority of components are comprised of frames, appliances, and furniture, and are purchased from multiple suppliers. Our motorhomes are produced in the states of Iowa and Indiana at five different campuses. Our motorhome business utilizes vertically integrated supply streams, with the principal exceptions being chassis, engines, generators, and appliances that we purchase from multiple suppliers.
The majority of components are comprised of frames, appliances, and furniture, and are purchased from multiple suppliers. Our motorhome RVs are produced in the states of Iowa and Indiana at five different assembly campuses. Our motorhome RV business utilizes vertically integrated supply streams, with the principal exceptions being chassis, engines, generators, and appliances that we purchase from multiple suppliers.
We manufacture and sell conventional travel trailers and fifth wheels under the Winnebago and Grand Design brand names, which are defined as follows: Type Description Winnebago product offerings Grand Design product offerings Travel trailer Towed by means of a hitch attached to the frame of the vehicle HIKE, Micro Minnie, Minnie, and Voyage Transcend, Imagine, Momentum, and Reflection Fifth wheel Constructed with a raised forward section that is connected to the vehicle with a special fifth wheel hitch N/A Reflection, Momentum, and Solitude Our travel trailer and fifth wheel towables are sold by dealers in the retail market with manufacturer's suggested retail prices ranging from approximately $33,000 to $154,000, depending on size and model, plus optional equipment and delivery charges. 5 Table of Contents Motorhome A motorhome is a self-propelled mobile dwelling used primarily as temporary living quarters during vacation and camping trips, or to support active and mobile lifestyles.
We manufacture and sell conventional travel trailers and fifth wheels under the Winnebago and Grand Design brand names, which are defined as follows: Type Description Winnebago product offerings Grand Design product offerings Travel trailer Towed by means of a hitch attached to the frame of the vehicle HIKE, Micro Minnie, Minnie, and Voyage Imagine, Momentum, Reflection, and Transcend Fifth wheel Constructed with a raised forward section that is connected to the vehicle with a special fifth wheel hitch N/A Momentum, Reflection, and Solitude Our travel trailer and fifth wheel towable RVs are sold by dealers in the retail market with manufacturer's suggested retail prices ranging from approximately $30,000 to $150,000, which can vary depending on size and model, plus optional equipment and delivery charges. 5 Table of Contents Motorhome RV A motorhome RV is a self-propelled mobile dwelling used primarily as temporary living quarters during vacation and camping trips, or to support active and mobile lifestyles.
As of August 27, 2022, our RV and marine dealer network in the U.S. and Canada included approximately 750 physical dealer locations, many of which carry more than one of our brands. None of our dealer organizations accounted for more than 10% of our net revenues during each of the past three fiscal years.
As of August 26, 2023, our RV and marine dealer network in the U.S. and Canada included approximately 750 physical dealer locations, many of which carry more than one of our brands. None of our dealer organizations accounted for more than 10% of our net revenues during each of the past three fiscal years.
We launched our first employee resource group, the Women’s Inclusion Network ("WIN"), whose mission is to support the professional development of women by encouraging access to learning, mentoring, and networking. WIN’s goal is to increase women’s sense of belonging and the percentage of women in leadership roles within our businesses.
We launched our first employee resource group in 2022, the Women’s Inclusion Network ("WIN"), whose mission is to support the professional development of women by encouraging access to learning, mentoring, and networking. WIN’s goal is to provide programming and tools, increase women’s sense of belonging, and the percentage of women in leadership roles within our businesses.
Most recently, he served as Vice President and Global Platform Leader from February 2022 to July 2022. He also served as Vice President of Product Marketing from January 2020 to February 2022, and Vice President and General Manager from October 2015 to January 2020. Mr.
Most recently, he served as Vice President and Global Platform Leader from February 2022 to July 2022. He also served as Vice President of Product Marketing from January 2020 to February 2022, and Vice President and General Manager from October 2015 to January 2020. 10 Table of Contents Mr.
Hughes joined Winnebago Industries as Vice President, Chief Financial Officer of the Company in May 2017 and was appointed Senior Vice President, Finance, IT, and Strategic Planning and Chief Financial Officer in October 2020. Mr.
Hughes joined Winnebago Industries as Vice President, Chief Financial Officer of the Company in May 2017 and was appointed Senior Vice President, Finance, Information Technology and Strategic Planning, and Chief Financial Officer, in October 2020. Mr.
Fiscal 2022 refers to the fiscal year ended August 27, 2022, Fiscal 2021 refers to the fiscal year ended August 28, 2021, and Fiscal 2020 refers to the fiscal year ended August 29, 2020. The financial statements presented are all 52-week fiscal periods. Available Information Our internet website, located at www.winnebagoind.com, provides additional information about us.
Fiscal 2023 refers to the fiscal year ended August 26, 2023, Fiscal 2022 refers to the fiscal year ended August 27, 2022, and Fiscal 2021 refers to the fiscal year ended August 28, 2021. The financial statements presented are all 52-week fiscal periods. Available Information Our internet website, located at www.winnebagoind.com, provides additional information about us.
We protect these trademarks as appropriate through registrations in the United States and other jurisdictions. Depending on jurisdiction, trademarks are generally valid as long as they are in use or their registrations are properly maintained and they have not been found to have become generic.
We protect these trademarks as appropriate through registrations in the U.S. and other jurisdictions. Depending on jurisdiction, trademarks are generally valid as long as they are in use or their registrations are properly maintained and they have not been found to have become generic.
The Recreation Vehicle Industry Association ("RVIA") classifies towables into four types: conventional travel trailers, fifth wheels, folding camper trailers, and truck campers.
The Recreation Vehicle Industry Association ("RVIA") classifies towable RVs into four types: conventional travel trailers, fifth wheels, folding camper trailers, and truck campers.
Type Chris-Craft product offerings Barletta product offerings Boats Launch, Launch GT, Calypso, Catalina Lusso, Corsa, Cabrio Our boats are sold by dealers in the retail market with manufacturer's suggested retail prices ranging from approximately $63,000 to $782,000, depending on size and model, plus optional equipment and delivery charges.
Type Chris-Craft product offerings Barletta product offerings Boats Calypso, Catalina, Launch, and Launch GT Aria, Cabrio, Corsa, Lusso, and Reserve Our boats are sold by dealers in the retail market with manufacturer's suggested retail prices ranging from approximately $60,000 to $770,000, which can vary depending on size and model, plus optional equipment and delivery charges.
Our competitive strategy is to provide proprietary manufactured parts through our dealer network, which we believe increases customer satisfaction and the value of our motorhomes. Marine We manufacture and sell premium quality boats under our Chris-Craft and Barletta brands in the recreational powerboat industry through an established network of independent authorized dealers. We acquired Barletta on August 31, 2021.
Our competitive strategy is to provide proprietary manufactured parts through our dealer network, which we believe increases customer satisfaction and the value of our motorhome RVs. Marine We manufacture and sell premium quality recreational boats under our Chris-Craft and Barletta brands through an established network of independent authorized dealers.
Winnebago Industries, Inc. is one of the leading North American manufacturers of recreation vehicles ("RV"s) and marine products with a diversified portfolio used primarily in leisure travel and outdoor recreational activities. We produce our towable units in Indiana; our motorhome units in Iowa and Indiana; and our marine units in Indiana and Florida.
Winnebago Industries, Inc. is one of the leading North American manufacturers of recreation vehicles ("RV"s) and marine products with a diversified portfolio used primarily in leisure travel and outdoor recreational activities.
As of August 27, 2022, we employed approximately 7,445 persons, of which 28% and 72% were non-production and production workers, respectively. In addition, 14% and 86% were salaried and hourly employees, respectively. None of our employees are covered under a collective bargaining agreement. We believe our relations with our employees are good.
As of August 26, 2023, we employed approximately 6,250 persons, of which approximately 28% and 72% were non-production and production workers, respectively. In addition, approximately 18% and 82% were salaried and hourly employees, respectively. None of our employees are covered under a collective bargaining agreement. We believe our relations with our employees are good.
Bhattacharya Senior Vice President, Business Development, Advanced Technology (2016) 60 Stacy L. Bogart Senior Vice President, General Counsel, Secretary and Corporate Responsibility; President, Winnebago Industries Foundation (2018) 59 Huw S. Bower President, Winnebago Outdoors (2020) 48 Donald J. Clark President of Grand Design RV (2016) 62 Bryan L.
Happe President and Chief Executive Officer (2016) 52 Ashis N. Bhattacharya Senior Vice President, Business Development, Advanced Technology and Strategic Planning (2016) 61 Stacy L. Bogart Senior Vice President, General Counsel, Secretary and Corporate Responsibility President, Winnebago Industries Foundation (2018) 60 Huw S. Bower President, Winnebago Outdoors (2020) 49 Donald J. Clark President, Grand Design RV (2016) 63 Bryan L.
We distribute our RV and marine products primarily through independent dealers throughout 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.
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.
Refer to Note 2 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K for further detail regarding the acquisition.
Refer to Note 2 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K, for further detail regarding the acquisition. 6 Table of Contents Production We generally produce towable RVs, motorhome RVs, and marine products made to order for dealers.
Hughes Chief Financial Officer; Senior Vice President, Finance, IT and Strategic Planning (2017) 53 Casey J. Tubman President of Newmar Corporation (2022) 50 Christopher D. West Senior Vice President, Enterprise Operations (2016) 50 Bret A.
Hughes Chief Financial Officer; Senior Vice President, Finance, Investor Relations and Information Technology (2017) 54 Casey J. Tubman President, Newmar Corporation (2022) 51 Christopher D. West Senior Vice President, Enterprise Operations and Barletta Boats (2016) 51 Bret A.
At the leadership level, 24% of our officers and directors are women, and 9% are racially or ethnically diverse as of August 27, 2022. We continue to expand our partnerships with nonprofit organizations led by and for communities of color and women and organizations helping to diversify the talent pipeline including Camber Outdoors and the Society of Women Engineers.
We continue to expand our partnerships with nonprofit organizations led by and for communities of color and women and organizations helping to diversify the talent pipeline including Camber Outdoors and the Society of Women Engineers.
Hughes joined Winnebago Industries from Ecolab, Inc., a water technologies and services company, where he served as Senior Vice President and Corporate Controller from 2014 to 2017, as Vice President of Finance from 2008 to 2014 and in various management positions from 1996 to 2008.
Hughes joined Winnebago Industries from Ecolab, Inc., a global sustainability leader offering water, hygiene and infection prevention solutions and services to customers in the food, healthcare, life sciences, hospitality and industrial markets, where he served as Senior Vice President and Corporate Controller from 2014 to 2017, Vice President of Finance from 2008 to 2014 and in various management positions from 1996 to 2008.
Winnebago Specialty Vehicles We also manufacture other specialty commercial vehicles custom designed for the buyer's specific needs and requirements, such as law enforcement command centers, mobile medical clinics, and mobile office space. These specialty commercial vehicles are manufactured in Forest City, Iowa and sold through our dealer network.
In addition, we also manufacture other specialty commercial vehicles custom designed for the buyer's specific needs and requirements, such as law enforcement command centers, mobile medical clinics, and mobile office space. We also provide commercial vehicles as bare shells to third-party upfitters for conversion at their facilities.
We believe our company and our brands should reflect the diversity of outdoor enthusiasts. We also believe we thrive and are more successful when we empower, value, and respect our employees and our communities. We are committed to continuing to build a stronger, more inclusive culture and workplace.
As of August 26, 2023, 22% of our Board of Directors were women, and 22% were racially or ethnically diverse. We believe our company and our brands should reflect the diversity of outdoor enthusiasts. We also believe we thrive and are more successful when we empower, value, and respect our employees and our communities.
Principal Products Our operations are organized into three reportable segments, Towable, Motorhome, and Marine, based on similarities within their markets, products, operations and distributions. Towable A towable is a non-motorized vehicle that is designed to be towed by automobiles, pickup trucks, SUVs, or vans and is used as temporary living quarters for recreational travel.
Principal Products Our operations are organized into three reportable segments, Towable RV, Motorhome RV, and Marine, based on similarities within their markets, products, operations and distributions.
We advance our strategy by listening and learning, including by establishing an IDEA Speaker series, where subject matter experts provide inspiration, tools, and resources to create an inclusive culture. We also instituted our Courageous Conversations program, which builds connections with employees through conversations that provide awareness and understanding around community and cultural sensitivities that can be difficult in the workplace.
In addition, our Courageous Conversations program helps build connections with employees through conversations that provide awareness and understanding around community and cultural sensitivities that can be difficult in the workplace.
Employee Well-being and Safety We are committed to designing, operating, and maintaining safe and controlled working conditions, including a "zero-harm" culture for all employees. We have implemented actions to build an increasingly risk-informed perspective within our culture to reduce the occurrences of injuries and illness.
We are committed to continuing to build a stronger, more inclusive culture and workplace. Employee Well-being and Safety Winnebago Industries is committed to designing, operating, and maintaining safe, controlled working conditions and a zero-harm culture. We operate under the principle that all workplace injuries and illnesses are predictable and preventable.
With the mental, emotional, and physical well-being of our employees as a key focus, we have provided resources for employees to manage remote work and balance parental and other family responsibilities. 9 Table of Contents Information about our Executive Officers Name Office (Year First Elected an Officer) Age Michael J. Happe President and Chief Executive Officer (2016) 51 Ashis N.
With the mental, emotional, and physical well-being of our employees as a key focus, we have provided resources for employees to manage remote work and balance parental and other family responsibilities. In Fiscal 2023, our total recordable incident rate ("TRIR") was 4.93, a 16% improvement compared to 5.85 in Fiscal 2022.
We remain involved with CEO Action for Diversity & Inclusion, including supporting its inaugural mentoring program with mentors from our executive leadership team and mentees from WIN. We are committed to increasing inclusion across our industry and beyond.
We remain involved with partners who help advance our goals including CEO Action for Diversity & Inclusion, Society of Women Engineers, Women in Manufacturing, RV Women’s Alliance, and more. We are committed to increasing inclusion across our industry and beyond. Approximately 24% of our executive and senior leadership team members are women and 11% are racially or ethnically diverse.
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In addition, we also provide commercial vehicles as bare shells to third-party upfitters for conversion at their facilities. 6 Table of Contents Production We generally produce towable, motorhome, and marine products made to order for dealers.
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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.
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“All In, Outdoors” is a deliberate approach to how we act and treat each other at Winnebago Industries, and a roadmap for creating a better sense of belonging in our workplace, our communities and the outdoors.
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We produce our towable RV units in Indiana; our motorhome RV units in Iowa and 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 throughout the U.S. and Canada, who then retail the products to the end consumer.
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During Women’s History month, we hosted a Women in the Workplace panel, which was composed of our two female directors and our female general counsel, for all employees. As of August 27, 2022, 20% of our Board of Directors were women, and 20% were racially or ethnically diverse.
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Reportable Segment Name Changes In the third quarter of Fiscal 2023, we changed the name of our “Towable” segment to “Towable RV” and our “Motorhome” segment to “Motorhome RV.” These name changes had no impact on the composition of our segments, or previously reported results of operations, financial position, cash flows or segment results.
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All sites have established a baseline risk control score with the goal to achieve at least 95% sustainable level control by the end of 2024. Between Fiscal 2021 and Fiscal 2022, we improved our control levels by 20%, and are on track to meet our goal of 95% or greater across all businesses.
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Towable RV A towable RV is a non-motorized vehicle that is designed to be towed by automobiles, pickup trucks, SUVs, or vans and is used primarily as temporary living quarters during vacation and camping trips, or to support active and mobile lifestyles.
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We remained stable on our total recordable incidence rate ("TRIR") in Fiscal 2022 as compared to Fiscal 2021. Our experience and continuing focus on workplace safety enabled us to preserve business continuity and maintain our commitment to keeping our employees and visitors safe, during the continuing stages of the COVID-19 pandemic.
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Winnebago Specialty Vehicles We manufacture accessibility enhanced motorhomes under the Winnebago brand name, which are vehicles with a wheelchair lift to allow individuals with physical disabilities access to the motorhome.
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These specialty commercial vehicles are manufactured in Forest City, Iowa and sold through our dealer network. Lithionics On April 28, 2023, we acquired 100% of the equity interests Lithionics Battery, LLC and Lithionics LLC (collectively, "Lithionics"), a premier lithium-ion battery solutions provider to the recreational equipment and specialty vehicle markets.
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Using a proprietary battery management system called NeverDie® Technology, Lithionics offers a broad range of standard and custom-designed battery configurations delivering “house power” and 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. These batteries are manufactured in Clearwater, Florida.
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In our second year of implementing our “All In, Outdoors” roadmap, we continued to center creating a better sense of belonging in our workplace, our communities, and the outdoors. We advanced our strategy by listening and learning, including by establishing an IDEA Speaker series, where subject matter experts provide inspiration, tools, and resources to create an inclusive culture.
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We aspire to control all workplace exposures to risk on our road to zero-harm, and we embed safety as part of our DNA that guides our purpose, culture, and operations.
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In Fiscal 2023, our days away restricted transfer rate ("DART") was 2.14, a 33% improvement compared to 3.20 in Fiscal 2022. We are an industry leader in workplace safety and our commitment to safety never stops. 9 Table of Contents Information about our Executive Officers Name Office (Year First Elected an Officer) Age Michael J.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeSubstantial increases in interest rates or decreases in the general availability of credit for our dealers or for the retail purchaser may have an adverse impact upon our business and results of operations. 11 Table of Contents Industry Risks If we are unable to continue to enhance existing products and develop and market new or enhanced products that respond to customer needs and preferences, we may experience a decrease in demand for our products and our business could suffer.
Biggest changeIf we are unable to continue to enhance existing products and develop and market new or enhanced products that respond to customer needs and preferences, we may experience a decrease in demand for our products and our business could suffer. One of our growth strategies is to develop innovative, customer-valued products to generate revenue growth.
Coast Guard maintains certification standards for the manufacture of our marine products, and the safety of recreational boats in the U.S. is subject to federal regulation under the Boat Safety Act of 1971, which requires boat manufacturers to recall products for replacement of parts or components that have 15 Table of Contents demonstrated defects affecting safety.
Coast Guard maintains certification standards for the 15 Table of Contents manufacture of our marine products, and the safety of recreational boats in the U.S. is subject to federal regulation under the Boat Safety Act of 1971, which requires boat manufacturers to recall products for replacement of parts or components that have demonstrated defects affecting safety.
If we are unable to properly forecast future demand of our products, our production levels may not meet demands, which could negatively impact our operating results. Our ability to manage our inventory levels to meet our customers' demand for our products is important for our business.
If we are unable to properly forecast future demand of our products, our production levels may not meet demand, which could negatively impact our operating results. Our ability to manage our inventory levels to meet our customers' demand for our products is important for our business.
For some of the components used in production, we depend on a small group of suppliers and the loss of any of these suppliers could affect our ability to obtain components timely or at competitive prices, which would decrease our results of operations, financial condition, and cash flows.
Operational Risks For some of the components used in production, we depend on a small group of suppliers and the loss of any of these suppliers could affect our ability to obtain components timely or at competitive prices, which would decrease our results of operations, financial condition, and cash flows.
Item 1A. Risk Factors. Described below are certain risks that we believe apply to our business and the industry in which we operate. The following risk factors should be considered carefully in addition to the other information contained in this Annual Report on Form 10-K.
Item 1A. Risk Factors. Described below are certain risks that we believe apply to our business and the industries in which we operate. The following risk factors should be considered carefully in addition to the other information contained in this Annual Report on Form 10-K.
We are also subject to federal and numerous state consumer protection and unfair trade practice laws and regulations relating to the sale, transportation, and marketing of motor vehicles, including so-called "Lemon Laws." Federal and state laws and regulations also impose upon vehicle operators various restrictions on the weight, length, and width of motor vehicles, including motorhomes that may be operated in certain jurisdictions or on certain roadways.
We are also subject to federal and numerous state consumer protection and unfair trade practice laws and regulations relating to the sale, transportation, and marketing of motor vehicles, including so-called "Lemon Laws." Federal and state laws and regulations also impose upon vehicle operators various restrictions on the weight, length, and width of motor vehicles, including motorhome RVs that may be operated in certain jurisdictions or on certain roadways.
Decisions by our suppliers to decrease production, production delays or work stoppages by the employees of such suppliers, or price increases could have a material adverse effect on our ability to produce motorhomes and ultimately, on our results of operations, financial condition, and cash flows.
Furthermore, decisions by our suppliers to decrease production, production delays or work stoppages by the employees of such suppliers, or price increases could have a material adverse effect on our ability to produce our products and ultimately, on our results of operations, financial condition, and cash flows.
Goodwill and indefinite-lived intangible assets, such as our trade names, are recorded at fair value at the time of acquisition and are not amortized but are reviewed for impairment at least annually or more frequently if impairment indicators arise.
Goodwill and indefinite-lived intangible assets, such as our trade names in certain instances, are recorded at fair value at the time of acquisition and are not amortized but are reviewed for impairment at least annually or more frequently if impairment indicators arise.
We also issued unsecured Convertible Notes (as described in Note 9 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K) to finance the acquisition of Newmar.
We also issued unsecured Convertible Notes (as described in Note 9 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this 16 Table of Contents Annual Report on Form 10-K) to finance the acquisition of Newmar.
Any disruption or delay at our manufacturing facilities could impair our ability to meet the demands of our customers, and our customers may cancel orders or purchase products from our competitors, which could adversely affect our business and operating results. Unanticipated changes to our distribution channel customers' inventory levels could negatively impact our operating results.
Any disruption or delay at our manufacturing facilities could impair our ability to meet the demands of our customers, and our customers may cancel orders or purchase products from our competitors, which could adversely affect our business and operating results. Unanticipated changes to our dealer inventory levels could negatively impact our operating results.
Product development requires significant financial, technological, and other resources. Product improvements and new product introductions also require significant research, planning, design, development, engineering, and testing at the technological, product, and manufacturing process levels, and we may not be able to timely develop and introduce product improvements or new products.
Product improvements and new product introductions also require significant research, planning, design, development, engineering, and testing at the technological, product, and manufacturing process levels, and we may not be able to timely develop and introduce product improvements or new products.
The risks and uncertainties discussed in this report are not exclusive and other risk factors that we may consider immaterial or do not anticipate may emerge as significant risks and uncertainties. Macroeconomic Risks Our business may be sensitive to economic conditions, including those that impact consumer spending.
The risks and uncertainties discussed in this Annual Report on Form 10-K are not exclusive and other risk factors that we may consider immaterial or do not anticipate may emerge as significant risks and uncertainties. Macroeconomic Risks Our business may be sensitive to economic conditions, including those that impact consumer spending.
Information Systems, Legal and Regulatory Risks We may be subject to information technology system failures, network disruptions, and breaches in data security that could adversely affect our business.
Information Systems, Legal and Regulatory Risks We may be subject to information technology system failures, inefficiencies associated with system implementations, network disruptions, and breaches in data security that could adversely affect our business.
If we overestimate or underestimate demand for any of our products during a given season, we may not maintain appropriate inventory levels, which could negatively impact our net sales or working capital, hinder our ability to meet customer demand, or cause us to incur excess and obsolete inventory charges. The industries in which we operate are highly competitive.
If we overestimate or underestimate demand for any of our products during a given season, we may not maintain appropriate inventory levels, which could negatively impact our net sales or working capital, hinder our ability to meet customer demand, or cause us to incur excess and obsolete inventory charges.
Failure to compete effectively against competitors could negatively impact our business and operating results. The markets for RVs and marine products are very competitive. Competitive factors in the industries include price, design, value, quality, service, brand awareness, and reputation.
Industry Risks The industries in which we operate are highly competitive. Failure to compete effectively against competitors could negatively impact our business and operating results. The markets for RVs and marine products are very competitive. Competitive factors in the industries include price, design, value, quality, service, brand awareness, and reputation.
If we are obligated to repurchase a substantially larger number of units in the future than we estimate, this would increase our costs and could have a material adverse effect on our results of operations, financial condition, and cash flows. Operational Risks Our operations are primarily centered in northern Iowa and northern Indiana.
If we are obligated to repurchase a substantially larger number of units in the future than we estimate, this would increase our costs and could have a material adverse effect on our results of operations, financial condition, and cash flows.
Our results of operations can be adversely affected if we are unable to maintain and develop successful relationships with independent dealers. 12 Table of Contents The financial condition of independent dealers is affected in large part by conditions and events that are beyond our control.
Our results of operations can be adversely affected if we are unable to maintain and develop successful relationships with independent dealers. The financial condition of independent dealers is affected in large part by conditions and events that are beyond our control. Significant deterioration in the financial condition of independent dealers could materially and adversely affect our results of operations.
We sell many of our products through distribution channels and are subject to risks relating to their inventory management decisions and operational and sourcing practices. Our distribution channel customers carry inventories of our products as part of their ongoing operations and adjust those inventories based on their assessments of future needs.
We sell many of our products through our independent dealer network and are subject to risks relating to their inventory management decisions and operational and sourcing practices. Our dealers carry inventories of our products as part of their ongoing operations and adjust those inventories based on their assessments of future needs.
Our independent dealers maintain control over which products they carry and choose to sell, and they may promote other products, or terminate existing relationships if our products are not perceived as being desirable and profitable.
Our success is dependent on our ability to attract new dealers and maintain relationships with existing dealers. Our independent dealers maintain control over which products they carry and choose to sell, and they may promote other products, or terminate existing relationships if our products are not perceived as being desirable and profitable.
Our profitability is affected by significant fluctuations in the prices of the raw materials and the components and parts we use in our products. 13 Table of Contents Additionally, there continues to be uncertainty with respect to the implementation of current trade regulations, future trade regulations and existing international trade agreements, which could continue to increase our cost of goods sold, both directly and as a result of price increases implemented by domestic suppliers, which we may not be able to pass on to our customers.
Additionally, there continues to be uncertainty with respect to the implementation of current trade regulations, future trade regulations and existing international trade agreements, which could continue to increase our cost of goods sold, both directly and as a result of price increases implemented by domestic suppliers, which we may not be able to pass on to our customers.
Borrowing availability under the ABL Credit Facility is limited to the lesser of the facility total and the calculated borrowing base, which is based on stipulated loan percentages applied to our eligible trade accounts receivable and eligible inventories.
Borrowing availability under the ABL Credit Facility is limited to the lesser of the facility total and the calculated borrowing base, which is based on stipulated loan percentages applied to our eligible trade accounts receivable and eligible inventories. Should the borrowing base decline, our ability to borrow to fund future operations and business transactions could be limited.
Significant deterioration in the financial condition of independent dealers could materially and adversely affect our results of operations. If we are obligated to repurchase a substantially larger number of our products in the future than estimated due to dealer default, these purchases could result in adverse effects on our results of operations, financial condition, and cash flows.
In addition, the loss of a significant dealer could have a material adverse effect on our results of operations. 12 Table of Contents If we are obligated to repurchase a substantially larger number of our products in the future than estimated due to dealer default, these purchases could result in adverse effects on our results of operations, financial condition, and cash flows.
Any disruption or delay at our primary manufacturing facilities could adversely affect our business and operating results. We currently manufacture most of our products in northern Iowa and northern Indiana. We also have a relatively small manufacturing operation on the Gulf Coast of Florida. These facilities may be affected by natural or man-made disasters and other external events.
We currently manufacture most of our products in northern Iowa and northern Indiana. We also have relatively small manufacturing operations on the Gulf Coast of Florida. These facilities may be affected by natural or man-made disasters and other external events.
Our business depends on the performance of independent dealers. 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.
Also, unusually severe weather conditions in some markets may impact demand. Our business depends on the performance of independent dealers. 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.
Failure to effectively manage strategic acquisitions and alliances, joint ventures, or partnerships could have a negative impact on our business. One of our growth strategies is to drive growth through targeted acquisitions and alliances, stronger customer relations, and new joint ventures and partnerships that contribute profitable growth while supplementing our existing brands and product portfolio.
One of our growth strategies is to drive growth through targeted acquisitions and alliances, stronger customer relations, and new joint ventures and partnerships that contribute profitable growth while supplementing our existing brands and product portfolio.
If the inventory levels of our distribution channel customers are higher than they desire, they may postpone product purchases from us, which could cause our sales to be lower than the end-user retail demand for our products and negatively impact our inventory management and working capital goals as well as our operating results.
If the inventory levels of our dealers are higher than they desire, they may postpone product purchases from us, which could cause our sales to be lower than the end-user retail demand for our products and negatively impact our inventory management and working capital goals as well as our operating results. 13 Table of Contents Increases in raw material, commodity, and transportation costs and shortages of certain raw materials could negatively impact our business.
In the event that this lending institution limits or discontinues dealer financing, we could experience a material adverse effect on our results of operations. Our business is also affected by the availability and terms of financing to retail purchasers.
One financial flooring institution held approximately 33% of our total financed dealer inventory dollars that were outstanding at August 26, 2023. In the event that this lending institution limits or discontinues dealer financing, we could experience a material adverse effect on our results of operations. Our business is also affected by the availability and terms of financing to retail purchasers.
Due to uncertainty in the regulatory and legislative processes, as well as the scope of such requirements and initiatives, we cannot currently determine the effect such legislation and regulation may have on our products and operations. Financial Risks An impairment in the carrying value of goodwill and trade names could negatively impact our consolidated results of operations.
Due to uncertainty in the regulatory and legislative processes, as well as the scope of such requirements and initiatives, we cannot currently determine the effect such legislation and regulation may have on our products and operations.
One of our growth strategies is to develop innovative, customer-valued products to generate revenue growth. We may not be able to compete as effectively with our competitors, and ultimately satisfy the needs and preferences of our customers, unless we can continue to enhance existing products and develop new innovative products for the markets in which we compete.
We may not be able to compete as effectively with our competitors, and ultimately satisfy the needs and preferences of our customers, unless we can continue to enhance existing products and develop new innovative products for the markets in which we compete. Product development requires significant financial, technological, and other resources.
Seasonal factors, over which we have no control, also have an effect on the demand for our products. Demand in the RV and marine industries generally declines over the winter season, while sales are generally highest during the spring and summer months. Also, unusually severe weather conditions in some markets may impact demand.
Consequently, the results for any prior period may not be indicative of results for any future period. Seasonal factors, over which we have no control, also have an effect on the demand for our products. Demand in the RV and marine industries generally declines over the winter season, while sales are generally highest during the spring and summer months.
Historically, chassis suppliers resort to an industry-wide allocation system during periods when supply is restricted. These allocations have been based on the volume of chassis previously purchased, which could mean our larger competitors could receive more chassis in a time of scarcity. Sales of motorhomes rely on chassis supply and are affected by shortages from time to time.
These allocations have been based on the volume of chassis previously purchased, which could mean our larger competitors could receive more chassis in a time of scarcity. Sales of motorhome RVs rely on chassis supply and are affected by shortages, instability, or recalls from time to time.
We rely on our dealers to develop and implement effective strategies to create retail demand for our products. If our independent dealers are unsuccessful in doing so, it could have an adverse effect on our results of operations. Our success is dependent on our ability to attract new dealers and maintain relationships with existing dealers.
We also distribute our marine products internationally through independent dealers, who then retail the products to the end consumer. We rely on our dealers to develop and implement effective strategies to create retail demand for our products. If our independent dealers are unsuccessful in doing so, it could have an adverse effect on our results of operations.
If we enter into a transaction that falls under the occurrence-based covenants, we will calculate the ratios and covenant buckets we have available to us to ensure we are in compliance. Likewise, the indenture related to the Convertible Notes issued to help finance the acquisition of Newmar includes certain limited covenants that could impact our ability to operate our business.
In addition, the Senior Secured Notes contain certain occurrence-based covenants that could restrict our ability to undertake certain types of transactions. If we enter into a transaction that falls under the occurrence-based covenants, we will calculate the ratios and covenant buckets we have available to us to ensure we are in compliance.
The RV and marine industries have been characterized by cycles of growth and contraction in consumer demand, reflecting prevailing economic and demographic conditions, which affect disposable income for leisure-time activities. Consequently, the results for any prior period may not be indicative of results for any future period.
Our business is both cyclical and seasonal and is subject to fluctuations in sales and net income. The RV and marine industries have been characterized by cycles of growth and contraction in consumer demand, reflecting prevailing economic and demographic conditions, which affect disposable income for leisure-time activities.
Further, if our price increases are not accepted by our customers and the market, our net sales, profit margins, earnings, and market share could be adversely affected.
Further, if our price increases are not accepted by our customers and the market, our net sales, profit margins, earnings, and market share could be adversely affected. Failure to effectively manage strategic acquisitions and alliances, joint ventures, or partnerships could have a negative impact on our business.
In addition, competition could increase if new companies enter the market, existing competitors consolidate their operations, or if existing competitors expand their product lines or intensify efforts within existing product lines. Our current products, products under development, and our ability to develop new and improved products may be insufficient to enable us to compete effectively with our competitors.
In addition, competition could increase if new companies enter the market, existing competitors consolidate their operations, or if existing competitors expand their product lines or intensify efforts within existing product lines.
Due to our reliance on our information systems, our business processes may be negatively impacted in the event of substantial disruption of service.
Due to our reliance on our information systems, our business processes may be negatively impacted in the event of substantial disruption of service. In addition, continued integration and development of new systems have resulted, and may in the future result in operational inefficiencies that adversely impact our results of operations.
Retail buyers purchasing one of our products may elect to finance their purchase through the dealership or a financial institution of their choice.
Retail buyers purchasing one of our products may elect to finance their purchase through the dealership or a financial institution of their choice. Substantial increases in interest rates or decreases in the general availability of credit for our dealers or for the retail purchaser may have an adverse impact upon our business and results of operations.
Most of our RV and marine components are readily available from numerous sources. However, a few of our components are produced by a small group of suppliers. In the case of motorhome chassis, Mercedes-Benz (USA and Canada), Stellantis N.V., Freightliner Trucks, Ford Motor Company, and Spartan RV Chassis are our major suppliers.
In the case of motorhome RV chassis, Mercedes-Benz (USA and Canada), Stellantis N.V., Freightliner Trucks, Ford Motor Company, and Spartan RV Chassis are our major suppliers. Our relationship with our chassis suppliers is similar to our other supplier relationships in that no specific contractual commitments are engaged in by either party.
Our business is affected by the availability and terms of the financing to dealers. Generally, RV and marine dealers finance their purchases of inventory with financing provided by lending institutions. One financial flooring institution held 33.7% of our total financed dealer inventory dollars that were outstanding at August 27, 2022.
Credit market deterioration and volatility may restrict the ability of our dealers and retail customers to finance the purchase of our products. Our business is affected by the availability and terms of the financing to dealers. Generally, RV and marine dealers finance their purchases of inventory with financing provided by lending institutions.
Our relationship with our chassis suppliers is similar to our other supplier relationships in that no specific contractual commitments are engaged in by either party. This means that we do not have minimum purchase requirements, and our chassis suppliers do not have minimum supply requirements. Our chassis suppliers also supply to our competitors.
This means that we do not have minimum purchase requirements, and our chassis suppliers do not have minimum supply requirements. Our chassis suppliers also supply to our competitors. Historically, chassis suppliers resort to an industry-wide allocation system during periods when supply is restricted.
While we continue to manage through these shortages and delays, if we cannot successfully manage these disruptions and/or these shortages and delays worsen, we may be unable to fulfill orders and deliver our products to our customers in a timely manner. This could materially and adversely affect our results of operations and financial condition.
Within our marine businesses, we purchase a significant portion of our motors from Mercury Marine , which makes us reliant on them for the supply of these engines. If we experience delays and disruptions in obtaining these engines, we may be unable to fulfill orders and deliver our products to our customers in a timely manner.
Removed
The demand, supply, and operational challenges associated with the ongoing COVID-19 pandemic has had and may continue to have a material impact on our business, financial condition, results of operations and cash flows. Our business, operations, and financial results have been, and may continue to be, impacted by the COVID-19 pandemic.
Added
Our current products, products under development, and our ability to develop new and improved products may be insufficient to enable us to 11 Table of Contents compete effectively with our competitors. These competitive pressures may have a material adverse effect on our results of operations.
Removed
Impacts on our business include, but are not limited to: • Inability to meet our dealers’ and consumers’ demands due to disruptions in our manufacturing and supply arrangements caused by delays and disruptions in obtaining certain raw materials and other manufacturing components; and • If the COVID-19 pandemic worsens or re-emerges, our labor force may be negatively impacted by COVID-19 infections, which would negatively impact our ability to produce and sell products.
Added
An increase in dealer consolidation or the loss of a significant dealer could have a material adverse effect on our business. In recent periods there has been an increase in acquisitions and consolidation across the U.S. RV independent dealer network.
Removed
These impacts may have a negative effect on our business, financial condition, results of operations and cash flows. While we have seen increased demand for our products resulting in part from the effects of the COVID-19 pandemic, there can be no assurance that we can maintain or continue to expand demand for products in a post-pandemic environment.
Added
Although none of our dealer organizations accounted for more than 10% of our net revenues during each of the past three fiscal years, continued consolidation of independent dealers could have a material adverse impact on our operating results and our exposure to repurchase obligations.
Removed
The impact of the COVID-19 pandemic may also exacerbate other risks discussed in this Item 1A, Risk Factors , any of which could have a material adverse effect on us. Credit market deterioration and volatility may restrict the ability of our dealers and retail customers to finance the purchase of our products.
Added
Most of our RV and marine components are readily available from numerous sources. However, a few of our components are produced by a small group of suppliers. In Fiscal 2023, one of our suppliers individually accounted for approximately 15% of our consolidated raw material purchases.
Removed
These competitive pressures may have a material adverse effect on our results of operations. Our business is both cyclical and seasonal and is subject to fluctuations in sales and net income.
Added
For example, in the first quarter of Fiscal 2023, the Mercedes-Benz Sprinter chassis became subject to a recall notice, which temporarily suspended all retail sales and wholesale shipments of our products built on this chassis until a recall remedy was implemented. The remedy was implemented in the second quarter of Fiscal 2023 in cooperation with Mercedes-Benz AG.
Removed
In Fiscal 2022, one of our suppliers individually accounted for approximately 11% of our consolidated raw material purchases. Increases in raw material, commodity, and transportation costs and shortages of certain raw materials could negatively impact our business.
Added
For example, on September 15, 2023, the United Auto Workers Union ("UAW") announced targeted strikes impacting certain auto manufacturers from which we purchase chassis. While we do not expect immediate disruption from the strike, the situation remains dynamic, and the exact magnitude and duration is difficult to predict at this time.
Removed
We have experienced, and continue to experience, disruption in our supply chain due to the reduced availability of certain raw materials used in the manufacturing of our products, including chassis which depend on semiconductor chips. The constraints limited our ability to increase production to meet demand during Fiscal 2022 and continuing in Fiscal 2023.
Added
However, if the labor disputes are prolonged, there could be an adverse impact on our business, financial condition and results of operations. Our operations are primarily centered in northern Iowa and northern Indiana. Any disruption or delay at our primary manufacturing facilities could adversely affect our business and operating results.
Removed
Should the borrowing base decline, our ability to borrow to fund future operations and business transactions could be limited. 16 Table of Contents In addition, the Senior Secured Notes contain certain occurrence-based covenants that could restrict our ability to undertake certain types of transactions.
Added
Our profitability is affected by significant fluctuations in the prices of the raw materials and the components and parts we use in our products.
Added
Our ESG commitments may impact our reputation, expose us to additional costs, or have other impacts which could adversely affect our business, financial condition, or results of operations. There has been an increased focus from regulators, investors, employees, consumers, and other stakeholders relating to ESG practices.
Added
We periodically communicate our ESG initiatives, which include prioritizing ethics and integrity, safety, people, diversity, equity and inclusion, community, waste, emissions, and product stewardship. Failure to meet our commitments, respond to regulatory requirements, or advance our initiatives could adversely impact our reputation, as well as the demand for our products.
Added
In addition, achieving these initiatives may result in increased costs, which could have a material adverse impact on our business, financial condition, or results of operations. Financial Risks An impairment in the carrying value of goodwill and trade names could negatively impact our consolidated results of operations.
Added
Likewise, the indenture related to the Convertible Notes issued to help finance the acquisition of Newmar includes certain limited covenants that could impact our ability to operate our business.

Item 2. Properties

Properties — owned and leased real estate

3 edited+1 added−0 removed1 unchanged
Biggest changeThe principal facilities used in our operations are in the following locations: Segment Location Status Primary Use Towable Bristol, Indiana Leased Manufacturing (1) Towable Elkhart, Indiana Leased Manufacturing (1) Towable Middlebury, Indiana Owned Manufacturing (1) and office space Towable Middlebury, Indiana Leased Manufacturing (1) and office space Towable White Pigeon, Michigan Leased Manufacturing (1) Motorhome Charles City, Iowa Owned Manufacturing (1) Motorhome Forest City, Iowa Owned Manufacturing (1) and non-production Motorhome Lake Mills, Iowa Owned Manufacturing (1) Motorhome Nappanee, Indiana Owned Manufacturing (1) Motorhome Nappanee, Indiana Leased Manufacturing (1) and office space Motorhome Waverly, Iowa Owned Manufacturing (1) Marine Bristol, Indiana Owned Manufacturing (1) and office space Marine Sarasota, Florida Owned Manufacturing (1) and office space Corporate / All Other Eden Prairie, Minnesota Leased Office space Corporate / All Other Forest City, Iowa Owned Manufacturing (1) (1) Manufacturing includes production, warehouse, maintenance, and service center facilities.
Biggest changeThe principal facilities used in our operations are in the following locations: Segment Location Status Primary Use Towable RV Elkhart, Indiana Leased Manufacturing (1) Towable RV Middlebury, Indiana Owned Manufacturing (1) and office space Towable RV Middlebury, Indiana Leased Manufacturing (1) and office space Towable RV White Pigeon, Michigan Leased Manufacturing (1) Motorhome RV Charles City, Iowa Owned Manufacturing (1) Motorhome RV Forest City, Iowa Owned Manufacturing (1) and office space Motorhome RV Lake Mills, Iowa Owned Manufacturing (1) Motorhome RV Nappanee, Indiana Owned Manufacturing (1) and office space Motorhome RV Nappanee, Indiana Leased Manufacturing (1) Motorhome RV Waverly, Iowa Owned Manufacturing (1) Marine Bristol, Indiana Leased Manufacturing (1) Marine Bristol, Indiana Owned Manufacturing (1) and office space Marine Sarasota, Florida Owned Manufacturing (1) and office space Corporate / All Other Clearwater, Florida Leased Manufacturing (1) and office space Corporate / All Other Eden Prairie, Minnesota Leased Office space Corporate / All Other Forest City, Iowa Owned Manufacturing (1) Corporate / All Other Savage, Minnesota Leased Research and development, and office space (1) Manufacturing includes production, warehouse, maintenance, and service center facilities.
Also see 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 more information regarding our leased facilities.
Also see 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 more information regarding our leased facilities. Item 3. Legal Proceedings.
Under our Senior Secured Notes and ABL Credit Facility, we have encumbered substantially all of our real property for the benefit of the lenders under our credit facilities. For additional information, see Note 9 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K.
Under our Senior Secured Notes and ABL Credit Facility, we have encumbered substantially all of our real property for the benefit of the lenders thereunder. For additional information, see Note 9 in the Notes to Consolidated Financial Statements, included in 17 Table of Contents Item 8 of Part II in this Annual Report on Form 10-K.
Added
For a description of our legal proceedings, see Note 12 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K. Item 4. Mine Safety Disclosures. Not Applicable. 18 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

11 edited+2 added−3 removed4 unchanged
Biggest changeBase Period Company/Index August 26, 2017 August 25, 2018 August 31, 2019 August 29, 2020 August 28, 2021 August 27, 2022 Winnebago Industries, Inc. $ 100.00 $ 108.95 $ 94.76 $ 174.59 $ 220.19 $ 186.60 S&P 500 Index 100.00 119.94 124.66 152.32 198.76 181.53 Peer Group 100.00 110.78 75.79 114.84 154.26 128.19 Source: Zacks Investment Research, Inc. 19 Table of Contents Item 6. [Reserved].
Biggest changeBase Period Company/Index August 25, 2018 August 31, 2019 August 29, 2020 August 28, 2021 August 27, 2022 August 26, 2023 Winnebago Industries, Inc. $ 100.00 $ 86.98 $ 160.25 $ 202.11 $ 171.27 $ 181.21 S&P 500 Index 100.00 103.93 126.99 165.71 151.34 167.15 Russell 3000 Recreational Vehicles and Boats Subsector Index 100.00 72.24 105.12 134.70 121.12 120.10 Peer Group 100.00 68.41 103.66 139.25 115.72 123.13 Source: Zacks Investment Research, Inc. 20 Table of Contents Item 6. [Reserved].
It is assumed in the graph that $100 was invested in our common stock, in the Standard & Poor's 500 Index and in the stocks of the peer group companies on August 26, 2017 and that all dividends received within a quarter were reinvested in that quarter.
It is assumed in the graph that $100 was invested in our common stock, in the Standard & Poor's 500 Index and in the stocks of the peer group companies on August 25, 2018 and that all dividends received within a quarter were reinvested in that quarter.
We continually evaluate if share repurchases reflect a prudent use of our capital and, subject to compliance with our ABL Credit Facility and outstanding Senior Secured Notes, we may purchase shares in the future. As of August 27, 2022, we have $350.0 million remaining on our Board of Directors approved repurchase authorization.
We continually evaluate if share repurchases reflect a prudent use of our capital and, subject to compliance with our ABL Credit Facility and outstanding Senior Secured Notes, we may purchase shares in the future. As of August 26, 2023, we have $300.0 million remaining on our Board of Directors approved repurchase authorization.
Item 5. Market for the Registrant's Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities. Market Information Our common stock is listed on the New York Stock Exchange under the ticker symbol of WGO. As of October 13, 2022, there were 2,120 shareholders of record.
Item 5. Market for the Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock is listed on the New York Stock Exchange under the ticker symbol of WGO. As of October 12, 2023, there were 2,050 shareholders of record.
(2) Shares not purchased as part of a publicly announced program were repurchased from employees who vested in Company shares and elected to pay their payroll tax via the value of shares delivered as opposed to cash. (3) Pursuant to a $200.0 million share repurchase program authorized by our Board of Directors on October 13, 2021.
(2) Shares not purchased as part of a publicly announced program were repurchased from employees who vested in Company shares and elected to pay their payroll tax via the value of shares delivered as opposed to cash. (3) Pursuant to a $350.0 million share repurchase program authorized by our Board of Directors on August 17, 2022.
On August 17, 2022, our Board of Directors authorized a share repurchase program in the amount of $350.0 million, also with no time restriction on the authorization, which replaces the previous authorization that was fully depleted in the fourth quarter of Fiscal 2022.
On August 17, 2022, our Board of Directors authorized a share repurchase program in the amount of $350.0 million with no time restriction on the authorization. This share repurchase program was effective immediately and replaced the prior program that was fully depleted in the fourth quarter of Fiscal 2022.
Dividends On August 17, 2022, our Board of Directors declared a quarterly cash dividend of $0.27 per share, totaling $8.2 million, to be paid on September 28, 2022 to common shareholders of record at the close of business on September 14, 2022.
Dividends On August 16, 2023, our Board of Directors declared a quarterly cash dividend of $0.31 per share, totaling $9.2 million, to be paid on September 27, 2023 to common shareholders of record at the close of business on September 13, 2023.
Our Senior Secured Notes also contain covenants that may limit our ability to make distributions or payments with respect to purchases of our common stock. See additional information on our ABL Credit Facility in Note 9 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K.
See additional information on our ABL Credit Facility and our Senior Secured Notes in Note 9 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K.
There is no time restriction on this authorization. 18 Table of Contents Stock Performance Graph The following graph compares our five-year cumulative total shareholder return (including reinvestment of dividends) with the cumulative total return on the Standard & Poor's 500 Index and a peer group.
There is no time restriction on this authorization. 19 Table of Contents Stock Performance Graph The following graph compares our five-year cumulative total shareholder return (including reinvestment of dividends) with the cumulative total return on the Standard & Poor's 500 Index, the Russell 3000 Recreational Vehicles and Boats Subsector Index, and the peer group used in previously filings, consisting of THOR Industries, Inc., Polaris Inc., and Brunswick Corporation.
During Fiscal 2022, we repurchased 3,577,000 shares of our common stock at a cost of $209.7 million, and 62,000 shares of our common stock at a cost of $4.6 million to satisfy tax obligations on employee equity awards as they vested.
During Fiscal 2023, we repurchased approximately 795,000 shares of our common stock at a cost of $50.0 million, and approximately 90,000 shares of our common stock at a cost of $5.1 million to satisfy tax obligations on employee equity awards as they vested.
Purchases of our common stock during each fiscal month of the fourth quarter of Fiscal 2022 are as follows: Period (1) Total Number of Shares Purchased (2) Average Price Paid per Share Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (2)(3) 05/29/22 - 07/02/22 273,442 $ 50.47 273,442 $ 66,200,000 07/03/22 - 07/30/22 796,391 $ 54.87 796,391 $ 22,500,000 07/31/22 - 08/27/22 364,299 $ 61.77 364,252 $ 350,000,000 Total 1,434,132 $ 55.78 1,434,085 $ 350,000,000 (1) Number of shares in the above table are shown in whole numbers.
Purchases of our common stock during each fiscal month of the fourth quarter of Fiscal 2023 are as follows: Period Total Number of Shares Purchased (1,2) Average Price Paid per Share Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1,2) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (3) (in millions) 05/28/23 - 07/01/23 93,729 $ 64.09 93,606 $ 324.0 07/02/23 - 07/29/23 281,394 67.56 281,209 305.0 07/30/23 - 08/26/23 76,011 68.12 73,407 300.0 Total 451,134 $ 66.93 448,222 $ 300.0 (1) Number of shares in the above table are shown in whole numbers.
Removed
On October 13, 2021, our Board of Directors authorized a share repurchase program in the amount of $200.0 million with no time restriction on the authorization, which took effect immediately and replaced the prior program.
Added
Our Senior Secured Notes also contain covenants that may limit our ability to make distributions or payments with respect to purchases of our common stock.
Removed
No shares were repurchased pursuant to a $350.0 million share repurchase program authorized by our Board of Directors on August 17, 2022.
Added
The Russell 3000 Recreational Vehicles and Boats Subsector Index replaces the peer group in this analysis and going forward, as it is a widely utilized industry index that is representative of our current busin ess.
Removed
The peer group companies consisting of THOR Industries, Inc., Polaris, Inc., and Brunswick Corporation were selected by us as they also manufacture recreation products.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

44 edited+19 added−18 removed24 unchanged
Biggest changeReportable Segment Performance Summary Towable The following is an analysis of key changes in our Towable segment for Fiscal 2022 and 2021: (in thousands, except ASP and units) 2022 % of Revenues 2021 % of Revenues $ Change % Change Net revenues $ 2,597,358 $ 2,009,959 $ 587,399 29.2 % Adjusted EBITDA 383,622 14.8 % 289,007 14.4 % 94,615 32.7 % Average Selling Price ("ASP") (1) 43,038 33,271 9,767 29.4 % Unit deliveries 2022 Product Mix (2) 2021 Product Mix (2) Unit Change % Change Travel trailer 40,739 68.1 % 39,943 66.5 % 796 2.0 % Fifth wheel 19,125 31.9 % 20,163 33.5 % (1,038) (5.1) % Total Towable 59,864 100.0 % 60,106 100.0 % (242) (0.4) % August 27, 2022 August 28, 2021 Change % Change Backlog (3) Units 14,588 46,590 (32,002) (68.7) % Dollars $ 576,491 $ 1,704,393 $ (1,127,902) (66.2) % Dealer Inventory Units 22,797 10,126 12,671 125.1 % (1) ASP excludes off-invoice dealer incentives.
Biggest changeNon-GAAP Reconciliation The following table reconciles net income to consolidated EBITDA and Adjusted EBITDA for Fiscal 2023 and 2022: (in millions) 2023 2022 Net income $ 215.9 $ 390.6 Interest expense, net 20.5 41.3 Provision for income taxes 63.3 124.1 Depreciation 29.2 24.2 Amortization 17.7 29.4 EBITDA 346.6 609.6 Acquisition-related costs 7.5 5.2 Litigation reserves (0.4) 6.6 Contingent consideration fair value adjustment 0.6 29.4 Non-operating loss (income) 0.4 (1.9) Adjusted EBITDA $ 354.7 $ 648.9 23 Table of Contents Reportable Segment Performance Summary Towable RV The following is an analysis of key changes in our Towable RV segment for Fiscal 2023 and 2022: (in millions, except ASP and units) 2023 % of Revenues (1) 2022 % of Revenues (1) $ Change (1) % Change (1) Net revenues $ 1,415.3 $ 2,597.4 $ (1,182.1) (45.5) % Adjusted EBITDA 172.1 12.2 % 383.6 14.8 % (211.5) (55.1) % Average Selling Price ("ASP") (2) 45,568 43,038 2,530 5.9 % Unit deliveries 2023 Product Mix (3) 2022 Product Mix (3) Unit Change % Change Travel trailer 21,352 68.8 % 40,739 68.1 % (19,387) (47.6) % Fifth wheel 9,701 31.2 % 19,125 31.9 % (9,424) (49.3) % Total Towable RV 31,053 100.0 % 59,864 100.0 % (28,811) (48.1) % August 26, 2023 August 27, 2022 Change (1) % Change (1) Backlog (4) Units 5,111 14,588 (9,477) (65.0) % Dollars $ 208.1 $ 576.5 $ (368.4) (63.9) % Dealer Inventory Units 16,744 22,797 (6,053) (26.6) % (1) Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.
Our significant 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.
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.
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. No impairments were recorded in Fiscal 2022, 2021, and 2020.
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. No impairments were recorded in Fiscal 2023, 2022, and 2021.
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 trade name fair value model uses the income (relief-from-royalty) approach, which includes the use of significant unobservable inputs (Level 3 inputs).
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).
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 trade name exceeds the fair value of the asset.
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.
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.
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 27 Table of Contents to shareholders through dividends and share repurchases.
If we determine that it is more likely than not that the carrying value of goodwill exceeds the fair value of goodwill, we perform the quantitative test to determine the amount of the impairment. • Quantitative test - Used to calculate the fair value of goodwill or the trade name.
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.
Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates, royalty rates and asset lives, among other items. We used the income approach to value certain intangible assets.
Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash flows, discount rates, royalty rates and asset lives, among other items. 28 Table of Contents We used the income approach to value certain intangible assets.
Our cash requirements greater than twelve months from various contractual obligations and commitments include: Debt Obligations and Interest Payments 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 further detail of our debt and the timing of expected future principal and interest payments.
Our cash requirements greater than twelve months from various contractual obligations and commitments include: Debt Obligations and Interest Payments 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 debt and the timing of expected future principal and interest payments.
Goodwill and Indefinite-lived Intangible Assets We test goodwill and indefinite-lived intangible assets (trade names) for impairment at least annually in the fourth quarter and more frequently if events or circumstances occur that would indicate a reduction in fair value.
Goodwill and Indefinite-lived Intangible Assets We test goodwill and other indefinite-lived intangible assets (trade names in certain instances) for impairment at least annually in the fourth quarter and more frequently if events or circumstances occur that would indicate a reduction in fair value.
Interest payments are based on fixed interest rates for the Senior Secured Notes and Convertible Notes. Operating and Finance Leases 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 further detail of our lease obligations and the timing of expected future payments.
Interest payments are based on fixed interest rates for the Senior Secured Notes and Convertible Notes. Operating and Finance Leases 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 lease obligations and the timing of expected future payments.
Contingent Repurchase Obligations Refer to Note 12 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K for further detail of our contingent repurchase commitment and estimated obligation, most of which we expect to expire within one year.
Contingent Repurchase Obligations Refer to Note 12 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.
If the carrying value of the reporting unit or trade name exceeds the fair value, the impairment is calculated as the difference between the carrying value and fair value.
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.
Examples of items excluded from Adjusted EBITDA include acquisition-related fair-value inventory step-up, acquisition-related costs, litigation reserves, restructuring expenses, gain or loss on sale of property, plant and equipment, contingent consideration fair value adjustment, and non-operating income or loss.
Examples of items excluded from Adjusted EBITDA include acquisition-related costs, litigation reserves, restructuring expenses, gain or loss on property, plant, and equipment, contingent consideration fair value adjustment, and non-operating income or loss.
(2) Our backlog includes all accepted orders from dealers which generally have been requested to be shipped within the next six months. Orders in backlog generally can be cancelled or postponed at the option of the dealer at any time without penalty; therefore, backlog may not necessarily be an accurate measure of future sales.
(2) ASP excludes off-invoice dealer incentives. (3) Our backlog includes all accepted orders from dealers which generally have been requested to be shipped within the next six months. Orders in backlog generally can be cancelled or postponed at the option of the dealer at any time without penalty; therefore, backlog may not necessarily be an accurate measure of future sales.
The discussion of Fiscal 2020 results and related year-over-year comparisons as of and for the fiscal years ended August 28, 2021 and August 29, 2020 are found in Item 7 of Part II of our Form 10-K for the fiscal year ended August 28, 2021.
The discussion of Fiscal 2021 results and related year-over-year comparisons as of and for the fiscal years ended August 27, 2022 and August 28, 2021 are found in Item 7 of Part II of our Form 10-K for the fiscal year ended August 27, 2022.
EBITDA is defined as net income before interest expense, provision for income taxes, and depreciation and amortization expense. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation and amortization expense, and other pretax 20 Table of Contents adjustments made in order to present comparable results from period to period.
EBITDA is defined as net income before interest expense, provision for income taxes, and depreciation and amortization expense. Adjusted EBITDA is defined as net income before interest expense, provision for income taxes, depreciation and amortization expense, and other pretax adjustments made in order to present comparable results from period to period.
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 17, 2022. 26 Table of Contents Cash Requirements Our cash requirements within the next twelve months include accounts payable, accrued expenses, purchase commitments and other current liabilities.
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 16, 2023. Cash Requirements Our cash requirements within the next twelve months include accounts payable, accrued expenses, purchase commitments and other current liabilities.
The year-over-year comparisons in this MD&A are as of and for the fiscal years ended August 27, 2022 and August 28, 2021, unless stated otherwise.
The year-over-year comparisons in this MD&A are as of and for the fiscal years ended August 26, 2023 and August 27, 2022, unless stated otherwise.
A hypothetical change of a 10% increase or decrease in our warranty liability as of August 27, 2022 would not have a material effect on our net income.
A hypothetical change of a 10% increase or decrease in our warranty liability as of August 26, 2023 would not have a material effect on our net income.
Deferred Compensation 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 further detail of our deferred compensation plans. We expect to pay $2.6 million in the next 12 months and $8.1 million beyond 12 months.
Deferred Compensation 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 deferred compensation plans. We expect to pay $1.8 million in the next 12 months and $7.9 million beyond 12 months.
(2) Percentages may not add due to rounding differences. (3) Our backlog includes all accepted orders from dealers which generally have been requested to be shipped within the next six months.
(2) ASP excludes off-invoice dealer incentives. (3) Percentages may not add due to rounding differences. (4) Our backlog includes all accepted orders from dealers which generally have been requested to be shipped within the next six months.
(2) Percentages may not add due to rounding differences. (3) Our backlog includes all accepted orders from dealers which generally have been requested to be shipped within the next six months.
(2) ASP excludes off-invoice dealer incentives. (3) Percentages may not add due to rounding differences. (4) Our backlog includes all accepted orders from dealers which generally have been requested to be shipped within the next six months.
The determination of the fair value of other assets acquired and liabilities assumed involves assessing factors such as the expected future cash flows associated with individual assets and liabilities and appropriate discount rates at the date of the acquisition.
This method uses the replacement of the asset as an indicator of the fair value of the asset. The determination of the fair value of other assets acquired and liabilities assumed involves assessing factors such as the expected future cash flows associated with individual assets and liabilities and appropriate discount rates at the date of the acquisition.
Included in "Results of Operations - Fiscal 2022 Compared to Fiscal 2021" is a reconciliation of EBITDA and Adjusted EBITDA from net income, the nearest GAAP measure.
Included in "Results of Operations - Fiscal 2023 Compared to Fiscal 2022" is a reconciliation of EBITDA and Adjusted EBITDA from net income, the most directly comparable GAAP measure.
Overview Winnebago Industries, Inc. is one of the leading North American manufacturers of recreation vehicles ("RV"s) and marine products with a diversified portfolio used primarily in leisure travel and outdoor recreational activities. We produce our motorhome units in Iowa and Indiana; our towable units in Indiana; and our marine units in Indiana and Florida.
Overview Winnebago Industries, Inc. is one of the leading North American manufacturers of recreation vehicles ("RVs") and marine products with a diversified portfolio used primarily in leisure travel and outdoor recreational activities.
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.
We produce our motorhome RV units in Iowa and Indiana; our towable RV units in Indiana; and our marine units in Indiana and 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.
Orders in backlog can be cancelled or postponed at the option of the dealer at any time without penalty; therefore, backlog may not necessarily be an accurate measure of future sales. Net revenues increased primarily due to price increases related to higher material and component costs.
Orders in backlog can be cancelled or postponed at the option of the dealer at any time without penalty; therefore, backlog may not necessarily be an accurate measure of future sales.
Contracted Services Contracted services include agreements with third-party service providers for software, payroll services, equipment maintenance services, and audits for periods up to Fiscal 2025. We expect to pay $7.0 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 2026. We expect to pay approximately $16.8 million in the next 12 months and approximately $26.2 million beyond 12 months.
Investing Activities Cash used in investing activities increased in Fiscal 2022 compared to Fiscal 2021 primarily due to our acquisition of Barletta during the first quarter of Fiscal 2022. Financing Activities Cash used in financing activities increased in Fiscal 2022 compared to Fiscal 2021 primarily due to an increase in stock repurchases in Fiscal 2022.
Investing Activities Cash used in investing activities decreased in Fiscal 2023 compared to Fiscal 2022 primarily due to our acquisition of Barletta during the first quarter of Fiscal 2022 compared to the acquisition of Lithionics during the third quarter of Fiscal 2023.
Orders in backlog can be cancelled or postponed at the option of the dealer at any time without penalty; therefore, backlog may not necessarily be an accurate measure of future sales. Net revenues increased primarily due to price increases related to higher material and component costs, and unit growth.
Orders in backlog generally can be cancelled or postponed at the option of the dealer at any time without penalty; therefore, backlog may not necessarily be an accurate measure of future sales.
We will continue to support organic growth through capacity expansion in our facilities and make capital improvements as necessary. 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.
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.
The Marine reportable segment consists of the Barletta and Chris-Craft operating segments. Non-GAAP Financial Measures This MD&A includes financial information prepared in accordance with generally accepted accounting principles ("GAAP"), as well as certain adjusted or non-GAAP financial measures such as EBITDA and Adjusted EBITDA.
This recall impacted our Motorhome RV segment net sales and profitability in Fiscal 2023. 21 Table of Contents Non-GAAP Financial Measures This MD&A includes financial information prepared in accordance with generally accepted accounting principles ("GAAP"), as well as certain adjusted or non-GAAP financial measures, such as EBITDA and Adjusted EBITDA.
We believe these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties to evaluate companies in the industry. Industry Trends The RV and marine industries continue to experience shipping delays, and material and component cost inflation. In addition, both industries continue to experience supply chain disruptions and shortages, particularly within the Motorhome and Marine segments.
We believe these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties to evaluate companies in the industry.
On November 1, 2019, we issued $300.0 million in aggregate principal amount of 1.5% unsecured Convertible Senior Notes due 2025 ("Convertible Notes"), which were used to partially fund the Newmar acquisition. 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 additional details.
On November 1, 2019, we issued $300.0 million in aggregate principal amount of 1.5% unsecured Convertible Senior Notes due 2025 (“Convertible Notes”), which were used to partially fund the Newmar acquisition. We continue to evaluate the financial stability of the counterparties and counterparty risk for the Convertible Notes, the Senior Secured Notes, and the ABL Credit Facility.
On July 8, 2020, we closed our private offering (the "Senior Secured Notes Offering") of $300.0 million in aggregate principal amount of 6.25% Senior Secured Notes due 2028 (the "Senior Secured Notes"). 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 additional details.
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”).
Adjusted EBITDA increased primarily due to revenue growth, partially offset by higher operating expenses to support increasing sales. 23 Table of Contents Motorhome The following is an analysis of key changes in our Motorhome segment for Fiscal 2022 and 2021: (in thousands, except ASP and units) 2022 % of Revenues 2021 % of Revenues $ Change % Change Net revenues $ 1,911,196 $ 1,539,084 $ 372,112 24.2 % Adjusted EBITDA 237,992 12.5 % 169,205 11.0 % 68,787 40.7 % ASP (1) 156,917 138,999 17,918 12.9 % Unit deliveries 2022 Product Mix (2) 2021 Product Mix (2) Unit Change % Change Class A 2,640 21.9 % 2,957 27.1 % (317) (10.7) % Class B 6,748 56.0 % 5,431 49.8 % 1,317 24.2 % Class C 2,670 22.1 % 2,521 23.1 % 149 5.9 % Total Motorhome 12,058 100.0 % 10,909 100.0 % 1,149 10.5 % August 27, 2022 August 28, 2021 Change % Change Backlog (3) Units 12,024 18,254 (6,230) (34.1) % Dollars $ 1,687,571 $ 2,303,504 $ (615,933) (26.7) % Dealer Inventory Units 3,824 2,465 1,359 55.1 % (1) ASP excludes off-invoice dealer incentives.
Backlog decreased compared to the prior year due to continued softness in retail conditions and a cautious dealer network. 24 Table of Contents Motorhome RV The following is an analysis of key changes in our Motorhome RV segment for Fiscal 2023 and 2022: (in millions, except ASP and units) 2023 % of Revenues (1) 2022 % of Revenues (1) $ Change (1) % Change (1) Net revenues $ 1,560.1 $ 1,911.2 $ (351.1) (18.4) % Adjusted EBITDA 142.0 9.1 % 238.0 12.5 % (96.0) (40.3) % ASP (2) 185,514 156,917 28,597 18.2 % Unit deliveries 2023 Product Mix (3) 2022 Product Mix (3) Unit Change % Change Class A 2,142 25.5 % 2,640 21.9 % (498) (18.9) % Class B 3,845 45.8 % 6,748 56.0 % (2,903) (43.0) % Class C 2,407 28.7 % 2,670 22.1 % (263) (9.9) % Total Motorhome RV 8,394 100.0 % 12,058 100.0 % (3,664) (30.4) % August 26, 2023 August 27, 2022 Change (1) % Change (1) Backlog (4) Units 3,828 12,024 (8,196) (68.2) % Dollars $ 688.6 $ 1,687.6 $ (999.0) (59.2) % Dealer Inventory Units 4,068 3,824 244 6.4 % (1) Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.
For further discussion regarding the acquisition, refer to Note 2 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K. The acquisition of Barletta resulted in a newly created Marine reportable segment effective as of the first quarter of Fiscal 2022.
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 additional information. Other Financial Measures Working capital as of August 26, 2023 and August 27, 2022 was $600.7 million and $571.7 million, respectively.
Net revenues and Adjusted EBITDA increased primarily due to the acquisition of Barletta at the beginning of the first quarter of Fiscal 2022. 25 Table of Contents Analysis of Financial Condition, Liquidity, and Capital Resources Cash Flows The following table summarizes our cash flows from total operations for Fiscal 2022 and 2021: (in thousands) 2022 2021 Total cash provided by (used in): Operating activities $ 400,622 $ 237,279 Investing activities (315,670) (33,009) Financing activities (237,343) (62,282) Net (decrease) increase in cash and cash equivalents $ (152,391) $ 141,988 Operating Activities Cash provided by operating activities increased in Fiscal 2022 compared to Fiscal 2021 due to higher profitability, a $36.6 million increase in accrued expenses and other liabilities, and a $27.2 million increase in accounts payable to support the growth in the business, partially offset by a $171.3 million increase in inventory to support operational activities during a period impacted by continued supply chain challenges.
Backlog decreased primarily driven by cautious dealer sentiment related to rising inventory levels. 26 Table of Contents Analysis of Financial Condition, Liquidity, and Capital Resources Cash Flows The following table summarizes our cash flows from total operations for Fiscal 2023 and 2022: (in millions) 2023 2022 Total cash provided by (used in): Operating activities $ 294.5 $ 400.6 Investing activities (170.0) (315.7) Financing activities (96.8) (237.3) Net increase (decrease) in cash and cash equivalents $ 27.7 $ (152.4) Operating Activities During Fiscal 2023, cash provided by operating activities was $294.5 million compared to $400.6 million in Fiscal 2022.
Debt and Capital We maintain an ABL Credit Facility subject to certain factors which may accelerate the maturity date. On July 15, 2022, our ABL Credit Facility was amended and restated to, among other things, increase the commitments thereunder to $350.0 million, from $192.5 million, and extend the maturity date to July 15, 2027 from October 22, 2024.
Financing Activities Cash used in financing activities decreased in Fiscal 2023 compared to Fiscal 2022 primarily due to a decrease in share repurchases in Fiscal 2023. Debt and Capital We maintain a $350.0 million asset-based revolving credit facility ("ABL Credit Facility") with a maturity date of July 15, 2027 subject to certain factors which may accelerate the maturity date.
Despite these developments, current macroeconomic trends such as inflation, rising interest rates and low consumer sentiment, as well as global political tensions, contribute to reduced short-term consumer demand for large discretionary products such as RVs and Marine products, which could in turn impact our future revenue and profits. 21 Table of Contents Results of Operations - Fiscal 2022 Compared to Fiscal 2021 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 27, 2022 compared to the fiscal year ended August 28, 2021: (in thousands, except percent and per share data) 2022 % of Revenues (1) 2021 % of Revenues (1) $ Change % Change Net revenues $ 4,957,730 100.0 % $ 3,629,847 100.0 % $ 1,327,883 36.6 % Cost of goods sold 4,028,393 81.3 % 2,979,484 82.1 % 1,048,909 35.2 % Gross profit 929,337 18.7 % 650,363 17.9 % 278,974 42.9 % Selling, general, and administrative expenses ("SG&A") 316,420 6.4 % 228,581 6.3 % 87,839 38.4 % Amortization 29,419 0.6 % 14,361 0.4 % 15,058 104.9 % Total operating expenses 345,839 7.0 % 242,942 6.7 % 102,897 42.4 % Operating income 583,498 11.8 % 407,421 11.2 % 176,077 43.2 % Interest expense, net 41,313 0.8 % 40,365 1.1 % 948 2.3 % Non-operating loss (income) 27,463 0.6 % (394) — % (27,857) (7,070.3) % Income before income taxes 514,722 10.4 % 367,450 10.1 % 147,272 40.1 % Provision for income taxes 124,086 2.5 % 85,579 2.4 % 38,507 45.0 % Net income $ 390,636 7.9 % $ 281,871 7.8 % $ 108,765 38.6 % Diluted earnings per share $ 11.84 $ 8.28 $ 3.56 43.0 % Diluted weighted average shares outstanding 32,985 34,056 (1,071) (3.1) % (1) Percentages may not add due to rounding differences.
Results of Operations - Fiscal 2023 Compared to Fiscal 2022 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 26, 2023 compared to the fiscal year ended August 27, 2022: (in millions, except per share data) 2023 % of Revenues (1) 2022 % of Revenues (1) $ Change (1) % Change (1) Net revenues $ 3,490.7 100.0 % $ 4,957.7 100.0 % $ (1,467.1) (29.6) % Cost of goods sold 2,904.6 83.2 % 4,028.4 81.3 % (1,123.8) (27.9) % Gross profit 586.1 16.8 % 929.3 18.7 % (343.3) (36.9) % Selling, general, and administrative expenses ("SG&A") 267.7 7.7 % 316.4 6.4 % (48.7) (15.4) % Amortization 17.7 0.5 % 29.4 0.6 % (11.7) (39.8) % Total operating expenses 285.4 8.2 % 345.8 7.0 % (60.5) (17.5) % Operating income 300.7 8.6 % 583.5 11.8 % (282.8) (48.5) % Interest expense, net 20.5 0.6 % 41.3 0.8 % (20.7) (50.1) % Non-operating loss 1.0 — % 27.5 0.6 % (26.5) (96.5) % Income before income taxes 279.2 8.0 % 514.7 10.4 % (235.6) (45.8) % Provision for income taxes 63.3 1.8 % 124.1 2.5 % (60.8) (49.0) % Net income $ 215.9 6.2 % $ 390.6 7.9 % $ (174.8) (44.7) % Diluted earnings per share $ 6.23 $ 11.84 $ (5.61) (47.4) % Diluted weighted average shares outstanding 35.4 33.0 2.5 7.5 % (1) Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.
Adjusted EBITDA increased primarily due to revenue growth, partially offset by higher material and component costs, and operating expenses. 24 Table of Contents Marine The following is an analysis of key changes in our Marine segment for Fiscal 2022 and 2021: (in thousands, except ASP and units) 2022 % of Revenues 2021 % of Revenues $ Change % Change Net revenues $ 425,269 $ 60,209 $ 365,060 606.3 % Adjusted EBITDA 60,831 14.3 % 5,177 8.6 % 55,654 1,075.0 % ASP (1) 75,023 202,450 (127,427) (62.9) % Unit deliveries 2022 2021 Unit Change % Change Boats 5,692 296 5,396 1,823.0 % August 27, 2022 August 28, 2021 Change % Change Backlog (2) Units 3,595 531 3,064 577.0 % Dollars $ 314,718 $ 116,926 $ 197,792 169.2 % Dealer Inventory Units 2,077 70 2,007 2,867.1 % (1) ASP excludes off-invoice dealer incentives.
Backlog decreased due to continued softness in retail conditions and a cautious dealer network. 25 Table of Contents Marine The following is an analysis of key changes in our Marine segment for Fiscal 2023 and 2022: (in millions, except ASP and units) 2023 % of Revenues (1) 2022 % of Revenues (1) $ Change (1) % Change (1) Net revenues $ 469.7 $ 425.3 $ 44.4 10.5 % Adjusted EBITDA 60.5 12.9 % 60.8 14.3 % (0.3) (0.6) % ASP (2) 83,060 75,023 8,037 10.7 % Unit deliveries 2023 2022 Unit Change % Change Boats 5,714 5,692 22 0.4 % August 26, 2023 August 27, 2022 Change (1) % Change (1) Backlog (3) Units 2,545 3,595 (1,050) (29.2) % Dollars $ 194.7 $ 314.7 $ (120.0) (38.1) % Dealer Inventory (4) Units 3,376 2,077 1,299 62.5 % (1) Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.
Our effective tax rate increased primarily due to the impact of consistent tax credits compared to the prior year over increased income in the current year and a net unfavorable expense in the current year related to nondeductible compensation.
Non-operating loss decreased due to a lower contingent consideration fair value adjustment related to the earnout from the acquisition of Barletta. Our effective tax rate decreased primarily due to both an increase in tax credits year-over-year over decreased income in the current year and favorable return to provision adjustments.
Our cash and cash equivalent balances consist of high quality, short-term money market instruments. Other Financial Measures Working capital as of August 27, 2022 and August 28, 2021 was $571.7 million and $651.6 million, respectively. Capital Expenditures We anticipate capital expenditures in Fiscal 2023 of approximately $75.0 million to $100.0 million.
As of August 26, 2023, we had $309.9 million in cash and cash equivalents and no borrowings against the ABL Credit Facility. Our cash and cash equivalent balances consist of high quality, short-term money market instruments.
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Macroeconomic Events In February 2022, the United States announced targeted economic sanctions on Russia in response to the military conflict in Ukraine.
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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.
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As described in Part I, Item 1A — Risk Factors , in this Annual Report on Form 10-K, our business may be sensitive to economic conditions such as the adverse impact of global tensions, which could impact input costs, consumer spending, and fuel prices.
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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. Change in Presentation In the first quarter of Fiscal 2023, we changed our presentation in tables from thousands to millions, unless otherwise designated.
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As our operations are primarily in North America, we have no direct exposure to Russia and Ukraine. However, we are actively monitoring the broader economic impact of the crisis, especially the potential impact of rising commodity and fuel prices, and the potential decreased demand for our products.
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As a result, certain rounding adjustments have been made to prior period disclosed amounts in order to conform to the current year presentation. In addition, certain prior period amounts may not recalculate due to rounding. These changes were not significant, and no other updates were made to previously reported financial information.
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COVID-19 Pandemic The COVID-19 pandemic has resulted in strong retail demand by consumers of RVs as a safe travel option, and of marine products as a safe way to experience the outdoors. However, the pandemic has also caused global supply chain disruption.
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Known Trends and Uncertainties Our business continues to be challenged by macroeconomic conditions impacting retail consumers, such as inflation and rising interest rates. These factors have contributed to lower consumer spending and reduced short-term demand for large discretionary products such as RVs and marine products.
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Our production has experienced certain supply shortages, particularly within our Motorhome and Marine segments, as well as material and component cost inflation. If these disruptions continue, or if there are additional disruptions in our supply chain, it could materially or adversely impact our operating results and financial condition.
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In the fourth quarter of 2023, these trends resulted in decreased sales due to declines in unit volume associated with the retail market conditions and a cautious dealer network. In response, we are working closely with dealer partners across all our segments to align field inventory levels to meet end consumer demand.
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Despite certain supply shortages and inflationary cost input pressures, we continue to operate and adapt to these temporary supply chain disruptions. Refer to the COVID-19 related risk factor disclosed in Item 1A of Part I in this Annual Report on Form 10-K.
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We anticipate that as field inventory levels further normalize and consumer demand stabilizes, dealers will exhibit a growing willingness to replenish inventories in the second half of Fiscal 2024. We continue to produce and ship in accordance with dealer demand as evidenced and requested by dealer orders.
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Acquisition of Barletta On August 31, 2021, we completed our acquisition of all the equity interests of Barletta for $286.3 million funded with cash payments of $240.1 million, $25.0 million in common stock issued to the sellers (subject to a 12% discount), and contingent consideration from earnout provisions.
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Despite the current economic uncertainty, we believe in the long-term health of consumer demand for RV and marine products. Other Matters On September 15, 2023, the UAW announced targeted strikes impacting certain auto manufacturers from which we purchase chassis.
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While we continue to operate and adapt to these supply chain disruptions, they impacted our ability to increase production to meet existing demand during Fiscal 2022 and continuing in Fiscal 2023.
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While we do not expect immediate disruption from the strike, the situation remains dynamic, and the exact magnitude and duration is difficult to predict at this time. Refer to Item 1A — Risk Factors in this Annual Report on Form 10-K for additional information.
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We believe field inventory for our Towable segment is returning to normalized levels to adequately serve end consumer demand, whereas field inventory for our Motorhome and Marine segments remains lower than desired by our dealer network, which indicates future strength in wholesale shipments.
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In the first quarter of Fiscal 2023, Mercedes-Benz AG issued a global recall related to an electronic parking brake defect affecting 2019 through 2022 Sprinter chassis. As a result, all retail sales and wholesale shipments of our products built on this chassis were temporarily suspended until a recall remedy was implemented.
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We continue to produce and ship in accordance with dealer demand as evidenced and requested by dealer orders. RV industry retail sales have been softening compared to record high prior year levels; however, we still believe in the long-term health of consumer demand for RV and marine products.
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During the second quarter of Fiscal 2023, the recall remedy was implemented in cooperation with Mercedes-Benz AG.
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More people are pursuing outdoor activities, household penetration of RVs is increasing, and campers are more diverse than ever.
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In addition, percentages may not add in total due to rounding. 22 Table of Contents Net revenues decreased primarily due to lower unit sales related to retail market conditions and higher discounts and allowances compared to prior year, partially offset by carryover price increases.
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According to statistics published by Kampgrounds of America, Inc., over 14 million households camped for the first time in 2020 and 2021, and combined with record levels of first-time buyers of RVs over the past two years, we believe a positive outlook exists for new product and upgrade-related sales.
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Gross profit as a percentage of revenue decreased primarily due to volume deleverage and higher discounts and allowances compared to prior year. Operating expenses decreased primarily due to lower incentive and volume-based compensation related to performance, lower amortization related to Barletta intangible assets, lower legal settlement expenses, and other cost reduction efforts, partially offset by strategic investments.
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Net revenues increased primarily due to incremental sales from the acquisition of Barletta, price increases, and unit growth. Gross profit as a percentage of revenue increased primarily due to improved operating leverage on higher revenues and price increases, partially offset by higher material and component costs, and production inefficiencies caused by supply constraints.
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Net revenues decreased primarily due to a decline in unit volume associated with retail market conditions, a reduction in dealer inventories, and higher levels of discounts and allowances compared to prior year, partially offset by carryover price increases.
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Operating expenses increased primarily due to higher operating expenses to support increased sales, acquisition-related costs, incremental operating expenses and amortization associated with the acquisition of Barletta, and higher incentive-based compensation related to operating performance. Non-operating loss increased predominantly due to the contingent consideration fair value adjustment related to the acquisition of Barletta.
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Adjusted EBITDA margin decreased primarily due to volume deleverage and higher discounts and allowances compared to prior year, partially offset by successful cost reduction initiatives and favorable warranty experience.
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Net income and diluted earnings per share increased primarily due to leverage gained on higher revenues, partially offset by increased operating expenses and higher income tax expense. 22 Table of Contents Non-GAAP Reconciliation The following table reconciles net income to consolidated EBITDA and Adjusted EBITDA for Fiscal 2022 and 2021: (in thousands) 2022 2021 Net income $ 390,636 $ 281,871 Interest expense, net 41,313 40,365 Provision for income taxes 124,086 85,579 Depreciation 24,238 18,201 Amortization 29,419 14,361 EBITDA 609,692 440,377 Acquisition-related costs 5,222 725 Litigation reserves 6,551 — Restructuring expenses (1) — 112 Gain on sale of property, plant and equipment — (4,753) Contingent consideration fair value adjustment 29,382 — Non-operating income (1,919) (394) Adjusted EBITDA $ 648,928 $ 436,067 (1) Balance excludes depreciation expense classified as restructuring as the balance is already included in the EBITDA calculation.
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Net revenues decreased primarily due to a decline in unit volume related to retail market conditions and higher levels of discounts and allowances compared to prior year, partially offset by price increases related to higher chassis costs. Adjusted EBITDA margin decreased due to volume deleverage, higher discounts and allowances, and operational efficiency challenges.
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As of August 27, 2022, we had $282.2 million in cash and cash equivalents and no borrowings against the ABL Credit Facility. We continue to evaluate the financial stability of the counterparties and counterparty risk for the Convertible Notes, the Senior Secured Notes, and the ABL Credit Facility.
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(4) Due to the nature of the Marine industry, this amount includes a higher proportion of retail sold units than our other segments. Net revenues increased primarily due to price increases, partially offset by higher discounts and allowances. Adjusted EBITDA margin decreased due to higher discounts and allowances compared to prior year.
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Share Repurchases and Dividends We repurchase our common stock and pay dividends pursuant to programs approved by our Board of Directors.
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The decrease is primarily driven by lower profitability adjusted for non-cash items, partially offset by net favorable changes in operating assets and liabilities.
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This 27 Table of Contents method uses the replacement of the asset as an indicator of the fair value of the asset.
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The favorable impact of operating assets and liabilities is primarily due to changes in accounts receivable due to lower sales and timing of invoicing/collections, and changes in inventory due to elevated purchases in Fiscal 2022 to support customer demand, partially offset by a decrease in accounts payable due to lower purchasing requirements.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. The assets we maintain to fund deferred compensation have market risk, but we maintain a corresponding liability for these assets. The market risk is therefore borne by the participants in the deferred compensation program. Interest Rate Risk As of August 27, 2022, we have no interest rate swaps outstanding.
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. The assets we maintain to fund deferred compensation have market risk, but we maintain a corresponding liability for these assets. The market risk is therefore borne by the participants in the deferred compensation program.
The ABL Credit Facility is our only floating rate debt instrument, which remains undrawn as of August 27, 2022. 28 Table of Contents
Interest Rate Risk The ABL Credit Facility is our only floating rate debt instrument, which remains undrawn as of August 26, 2023. 29 Table of Contents

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