Winnebago Industries (WGO)

Risks

• The COVID-19 pandemic has had and may still have a material impact on our business, financial condition, results of operations and cash flows.
• Our business may be sensitive to economic conditions, including those that impact consumer spending.
• Credit market deterioration and volatility may restrict the ability of our dealers and retail customers to finance the purchase of our products.
• 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.
• 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.
• The industries in which we operate is highly competitive. Failure to compete effectively against competitors could negatively impact our business and operating results.
• 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.
• Our operations are primarily centered in northern IA and northern IN. Any disruption at these sites could adversely affect our business and operating results.
• Unanticipated changes to our distribution channel customers' inventory levels could negatively impact our operating results.
• 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.
• Increases in raw material, commodity, and transportation costs and shortages of certain raw materials could negatively impact our business.
• Failure to effectively manage strategic acquisitions and alliances, joint ventures, or partnerships could have a negative impact on our business.
• If we fail to identify, attract, and retain appropriately qualified employees, including employees in key positions, our operations and profitability may be harmed. Changes in market compensation rates may adversely affect our profitability.
• Significant product repair and/or replacement costs due to product warranty claims and product recalls could have a material adverse impact on our results of operations, financial condition, and cash flows.
• 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. Failure to prevent or effectively respond to a breach or system failure could expose our customers', clients', or suppliers' confidential information, and expose us to substantial costs and reputational damage as well as litigation and enforcement actions. In addition, the benefits of our new enterprise resource planning system that is being implemented in the Winnebago Motorhome business may not be realized, or we may incur unanticipated costs or delays, which may result in decreased sales, increased overhead costs, excess or obsolete inventory, and product shortages, causing our business, reputation, financial condition, and operating results to suffer.
• Our continued success is dependent on positive perceptions of our brands which, if impaired, could adversely affect our results of operations or financial condition. In addition, if the frequency and size of product liability and other claims against us increase, our reputation and business may be harmed.
• We are subject to certain government regulations that could have a material adverse impact on our business, including changing climate-related regulations that may require us to incur additional costs in order to be in compliance.
• An impairment in the carrying value of goodwill and trade names could negatively impact our consolidated results of operations.
• The terms of our notes and other debt instruments could adversely affect our operating flexibility and pose risks of default.