Winnebago Industries, Inc. (NYSE:WGO) Q1 2024 Earnings Call Transcript

The SG&A impact on an annual basis is definitely eight figures incremental to what we have historically planned. But we think it’s the right thing to do to be competitive and prepare the business for the future. And so we’re obviously being as disciplined as we can and we’re spreading those out across, obviously, each of the quarters. But it’s eight figures of incremental spending on an annualized basis that we’re adding here. Now if the business faces tougher market conditions, we will turn the dial as we can on those as well. So just so everybody knows, we are going to be very prudent and reasonable as we make investments in those areas.

David Whiston: And just going back to capital allocation discussed earlier. Can you say if buybacks or M&A would be a priority between those two in fiscal ’24?

Bryan Hughes: I guess broadly speaking, the M&A environment, I guess, continues to cure off the dislocation that we’ve seen over the past couple of years. As you can appreciate, at the peak, companies in our space wanted to sell off that peak with very high prices, and then you hit a trough and then companies want to sell on a forward view. It’s just really hard to find that price that both buyers and sellers can agree to. I think as we start to see some normalization on retail and get a clearer view of the year ahead and what the right multiple would be to pay, we’ll see some better M&A environments, I’d say, to allow us to weigh certain targets and hopefully make some additional investments in that area. So share repurchase is clearly a function of our success on the M&A front.

Without some bigger targets that we can execute on, we’ve had some elevated share repurchases over the past two, three years. Our goal is to continue to prioritize growth. We have stated that historically, that’s still the case. We’re going to prioritize growth in the form of both organic investments, Mike just talked about some of those, as well as inorganic investments. So that will be our priority. We’ll continue to use share repurchase as a great mechanism of returning the cash to shareholders in the absence of M&A.

Operator: And I would now like to turn the conference back over to Ray Posadas for closing remarks.

Ray Posadas: That is the end of our first quarter earnings call. Thank you, everyone, for joining us. We hope you all have a safe and happy holiday season. Enjoy the rest of your day. Thank you.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.