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RVs That Float

Interesting news release from Winnebago:

Winnebago Industries, Inc. (NYSE:WGO), a leading outdoor lifestyle product manufacturer, today announced that it has acquired Chris-Craft, an iconic recreational boat builder, from Stellican Ltd., which has owned Chris-Craft since 2001. Terms of the transaction were not disclosed.

With a brand heritage that dates back to 1874, Chris-Craft is an industry leader in recreational boating craftsmanship and quality. The business is poised to leverage its strong brand reputation and drive future growth through the introduction of new models and product lines, category extension opportunities supported by increased production capacity and expanded dealer reach.

“Chris-Craft is an iconic, premium brand that shares many similarities with our own heritage Winnebago brand, including a commitment to providing customers with the highest quality products and services,” said Winnebago Industries President and Chief Executive Officer, Michael Happe. “The company’s strong brand, high-quality product line and premium position in the marine market make Chris-Craft an attractive addition to our portfolio. Chris-Craft marks Winnebago’s first entry into the marine market, which we believe has significant runway for growth, with a large and increasing population of current and new boaters who enjoy extraordinary experiences on the water.”

Mr. Happe continued, “Importantly, this acquisition aligns with our strategic initiative to further diversify Winnebago Industries within the outdoor lifestyle market and gives us a strong base on which to build an additional revenue platform over time. We believe there will be synergies realized across our value chain and that the Chris-Craft business has material expansion opportunities available. Additionally, we see significant intersection between the RV and marine lifestyles and view marine as a natural adjacency to our existing outdoor lifestyle portfolio, with similar customer demographics and significant ownerhip crossover. With a broader, more balanced portfolio of products uniquely positioned across the outdoor lifestyle and leisure travel industries, we expect to continue to drive improved profitability and shareholder value over the long term. I look forward to working with the talented Chris-Craft team and to welcoming them to the Winnebago family.”

“I am delighted that Chris-Craft has found an ideal partner in Winnebago Industries,” added Chris-Craft Chairman and Stellican Ltd. Founding Partner, Stephen Julius. “Winnebago is a natural fit for Chris-Craft’s premium brand, with a similarly iconic brand, complementary cultures, and a shared dedication to design, craftsmanship, quality, and customer service.”

Financial details about the deal are limited although Winnebago made the following observations to their investors:

  • Undisclosed transaction value, expected to be paid with cash on hand and debt
  • Provides platform to drive expanded revenue growth opportunities
  • Transaction expected to be immediately accretive to fiscal 2019 EPS
  • Continue to expect to reach our goal of 1.5x or lower Debt-to-EBITDA by end-Fiscal 2018

Interesting to see an RV manufacturer diversify this way. Chris Craft is primarily focused on outboard and sterndrive boats although they do offer one cruiser, the Commander. Perhaps Winnebago intends to go further upscale and leverage common components in systems that tend to crossover between RVs and marine. They do note in the investor material that Chris-Craft’s current focus is primarily on 21-38’ boats. And that 90% of all boats sold in the U.S. are < 25’.

RV Of The Year

RV Business recently named the RV of the Year. And the winner?

A Winnebago.

Interesting.

The Winnebago Horizon is a Class A diesel and it seems to be comparable in price and features to coaches like the Newmar Ventana although there are no tags available in the 40-foot model of the Winnebago.

My concern would be the quality of this product. When I read David’s experience with his Winnebago, I thought to myself, life is too short for dealing with way too many build issues. And, my goodness, what an experience he had with his new build. Eventually the sale did not go through. His story, unfortunately is not unique. You can download this couple’s pdf and get a sense for the anger and frustration caused by the lack of quality control.

Quality was one of the reasons why the Winnebago product never made its way to our short list.

The RV industry is certainly under pressure to deliver. Record demand puts a lot more strain on the manufacturers. Hopefully this Horizon is a better built coach. It is one thing to get an award from an industry publication. It is another to build a solid reputation with customers.