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Winnebago's profit rises, driven by rebounding RV demand

By James B. Kelleher

CHICAGO (Reuters) - Winnebago Industries Inc , the No. 1 U.S. motor-home manufacturer, reported a stronger-than-expected profit on Thursday and said its backlog continued to grow in the most recent quarter as rebounding consumer confidence prompted dealers to increase vehicle orders.

The news sent the company's shares up nearly 6 percent in early afternoon trading on the New York Stock Exchange.

In an interview with Reuters, Winnebago's CEO said the recovery confidence was being driven by several factors, including continued low interest rates and the ongoing "healing of the housing market."

"It's just a lot of things going in the right direction finally," said Randy Potts, Winnebago's chairman, chief executive and president.

The company, small but closely watched because of the view it provides on spending on big-ticket discretionary items, said the backlog for its products - which range in price from about $65,000 to more than $300,000 - grew for the sixth consecutive quarter.

During a conference call to discuss the results, Potts said the rebound in consumer and dealer confidence was creating "a great environment for growth" and he was upbeat about the outlook for the coming year.

Potts said that over the past three years, as the RV market has rebounded, Winnebago executives have pointedly stressed that they were "cautiously optimistic" that the recovery was sustainable.

"Based on the results of fiscal '13 and the outlook for the future, we're ready to drop 'cautiously,'" he said.

Winnebago reported a profit of $10.6 million, or 38 cents a share, for the fiscal fourth quarter that ended on August 31, compared with $40.9 million, or $1.41 a share a year earlier.

Analysts on average expected earnings of 28 cents a share, according to Thomson Reuters I/B/E/S. Excluding a year-earlier noncash tax item, Winnebago's profit more than doubled from 14 cents a share.

Sales during the most recent quarter rose 32 percent to $214.2 million, above the $208 million analysts expected.

Winnebago is the latest RV maker to report strong growth in consumer and dealer demand for motor homes.

Last month, Elkhart, Indiana-based rival Thor Industries Inc , which makes RVs sold under the Thor, Airstream, Heartland and Dutchmen brand names, reported a 35 percent increase in fourth-quarter profit on a 19 percent increase in overall sales.

Analysts say both Thor and Winnebago have benefited from the RV industry's shakeout that came in the wake of the economic downturn, which has left fewer manufacturers in the space and the top three accounting for nearly 80 percent of all sales.

Industry shipments to dealers, which peaked at 71,800 motor homes in 2004, tumbled to just 13,200 motorhomes in 2009, according to the Recreational Vehicle Industry Association (RVIA) trade group. That sent several manufacturers into bankruptcy.

RVIA expects manufacturers to ship 37,100 units in 2013, up 32 percent from 2012.

Potts was asked on the conference call if dealers had reported any drop-off in showroom traffic in recent weeks as a result of the uncertainty created by the 16-day government shutdown, which ended overnight.

"The answer is 'no,'" he said.

Winnebago shares were up 5.7 percent at $28.83 on Thursday afternoon on the New York Stock Exchange. Earlier in the day, the shares rose to $29.50, their highest level in about six years.

Over the past 12 months, the company's stock has more than doubled in value, outperforming the S&P, which is up 17 percent.

That has extended the company's winning streak on Wall Street. Over the past five years, Winnebago shares have risen 348 percent, versus 74 percent for the S&P 500. <.SPX>

(Editing by Lisa Von Ahn, Maureen Bavdek and Matthew Lewis)

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