UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended February ~~27, 2021~~

26, 2022

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to _________________

Commission File Number:

001-06403

WINNEBAGO INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

~~Iowa~~Minnesota

42-0802678

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

~~P. O. Box 152~~13200 Pioneer Trail

~~Forest City~~Eden Prairie

~~Iowa~~Minnesota

~~50436~~55347

(Address of principal executive offices)

(Zip Code)

~~641-~~

~~585-3535~~952-829-8600

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.50 par value per share	WGO	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒ Accelerated Filer ☐ Non-accelerated filer ☐

Smaller Reporting Company ☐ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

~~The number~~As of March 17, 2022, there were 32,776,455 shares of common stock, par value $0.50 per share, ~~outstanding on March 18, 2021 was 33,600,159.~~outstanding.

Winnebago Industries, Inc.

Quarterly Report on Form 10-Q

For the Quarterly Period Ended February 26, 2022

Table of Contents

PART I. FINANCIAL ~~INFORMATION.~~INFORMATION

Item 1. ~~Condensed~~ Consolidated Financial ~~Statements.~~Statements

Winnebago Industries, Inc.

~~Condensed~~ Consolidated Statements of Income and Comprehensive Income

(Unaudited)


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
(in thousands, except per share data)	(in thousands, except per share data)	February 27, 2021		February 29, 2020		February 27, 2021		February 29, 2020		(in thousands, except per share data)	February 26, 2022		February 27, 2021		February 26, 2022		February 27, 2021
Net revenues	Net revenues	$	839,886	$	626,810	$	1,633,017	$	1,215,268	Net revenues	$	1,164,731	$	839,886	$	2,320,471	$	1,633,017
Cost of goods sold	Cost of goods sold	683,304		547,028		1,339,431		1,056,873		Cost of goods sold	948,154		683,304		1,874,482		1,339,431
Gross profit	Gross profit	156,582		79,782		293,586		158,395		Gross profit	216,577		156,582		445,989		293,586
Selling, general, and administrative expenses	Selling, general, and administrative expenses	53,016		42,164		101,415		93,269		Selling, general, and administrative expenses	71,795		53,016		146,665		101,415
Amortization of intangible assets		3,591		7,974		7,181		11,588
Amortization										Amortization	8,015		3,591		16,187		7,181
Total operating expenses	Total operating expenses	56,607		50,138		108,596		104,857		Total operating expenses	79,810		56,607		162,852		108,596
Operating income	Operating income	99,975		29,644		184,990		53,538		Operating income	136,767		99,975		283,137		184,990
Interest expense		10,052		8,651		19,993		14,700
Non-operating income		(311)		(270)		(217)		(386)
Interest expense, net										Interest expense, net	10,325		10,052		20,567		19,993
Non-operating loss (income)										Non-operating loss (income)	6,507		(311)		12,864		(217)
Income before income taxes	Income before income taxes	90,234		21,263		165,214		39,224		Income before income taxes	119,935		90,234		249,706		165,214
Provision for income taxes	Provision for income taxes	21,166		3,995		38,723		7,888		Provision for income taxes	28,760		21,166		58,901		38,723
Net income	Net income	$	69,068	$	17,268	$	126,491	$	31,336	Net income	$	91,175	$	69,068	$	190,805	$	126,491

Income per common share:
Earnings per common share:										Earnings per common share:
Basic	Basic	$	2.06	$	0.51	$	3.77	$	0.95	Basic	$	2.75	$	2.06	$	5.75	$	3.77
Diluted	Diluted	$	2.04	$	0.51	$	3.74	$	0.95	Diluted	$	2.69	$	2.04	$	5.58	$	3.74

Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic	Basic	33,533		33,614		33,571		32,840		Basic	33,098		33,533		33,210		33,571
Diluted	Diluted	33,910		33,918		33,821		33,143		Diluted	33,934		33,910		34,168		33,821

Net income	Net income	$	69,068	$	17,268	$	126,491	$	31,336	Net income	$	91,175	$	69,068	$	190,805	$	126,491
Other comprehensive income (loss):
Amortization of net actuarial loss (net of tax of $3, $3, $6, and $5)		8		8		17		16
Interest rate swap activity (net of tax of $0, $0, $0, and $22)		0		0		0		(68)
Total other comprehensive income (loss)		8		8		17		(52)
Other comprehensive income:										Other comprehensive income:
Amortization of net actuarial loss (net of tax of $3, $3, $6, and $6)										Amortization of net actuarial loss (net of tax of $3, $3, $6, and $6)	9		8		18		17
Comprehensive income	Comprehensive income	$	69,076	$	17,276	$	126,508	$	31,284	Comprehensive income	$	91,184	$	69,076	$	190,823	$	126,508

~~See~~

The accompanying Notes to ~~Condensed~~ Consolidated Financial ~~Statements.~~Statements are an integral part of these consolidated financial statements.

Table of Contents

Winnebago Industries, Inc.

~~Condensed~~ Consolidated Balance Sheets

~~(Unaudited)~~


(in thousands, except per share data)	February 26, 2022		August 28, 2021
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	134,832	$	434,563
Receivables, less allowance for doubtful accounts ($294 and $307, respectively)	380,039		253,808
Inventories, net	469,454		341,473
Prepaid expenses and other current assets	25,139		29,069
Total current assets	1,009,464		1,058,913
Property, plant, and equipment, net	239,034		191,427
Goodwill	484,176		348,058
Other intangible assets, net	485,619		390,407
Investment in life insurance	29,306		28,821
Operating lease assets	43,473		28,379
Other long-term assets	18,361		16,562
Total assets	$	2,309,433	$	2,062,567

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	211,280	$	180,030
Income taxes payable	—		8,043
Accrued expenses:
Accrued compensation	59,947		67,541
Product warranties	113,818		91,222
Self-insurance	17,871		19,296
Promotional	13,723		10,040
Accrued interest and dividends	4,489		10,720
Other current liabilities	42,918		20,384
Total current liabilities	464,046		407,276
Long-term debt, net	536,990		528,559
Deferred income taxes	11,458		13,429
Unrecognized tax benefits	6,222		6,483
Long-term operating lease liabilities	42,420		26,745
Deferred compensation benefits, net of current portion	9,425		9,550
Other long-term liabilities	29,885		13,582
Total liabilities	1,100,446		1,005,624
Contingent liabilities and commitments (Note 11)	0		0
Shareholders' equity:
Preferred stock, par value $0.01: 10,000 shares authorized; Zero shares issued and outstanding	—		—
Common stock, par value $0.50: 120,000 shares authorized; 51,776 shares issued and outstanding	25,888		25,888
Additional paid-in capital	238,159		218,490
Retained earnings	1,357,812		1,172,996
Accumulated other comprehensive loss	(473)		(491)
Treasury stock, at cost: 19,045 and 18,713 shares, respectively	(412,399)		(359,940)
Total shareholders' equity	1,208,987		1,056,943
Total liabilities and shareholders' equity	$	2,309,433	$	2,062,567

(in thousands, except per share data) February 27,
2021 August 29,
2020
Assets
Current assets:
Cash and cash equivalents $ 333,015 $ 292,575
Receivables, less allowance for doubtful accounts ($301 and $353, respectively) 232,349 220,798
Inventories, net 278,468 182,941
Prepaid expenses and other assets 21,146 17,296
Total current assets 864,978 713,610
Property, plant, and equipment, net 173,609 174,945
Other assets:
Goodwill 348,058 348,058
Other intangible assets, net 397,587 404,768
Investment in life insurance 28,301 27,838
Operating lease assets 27,833 29,463
Other assets 15,429 15,018
Total assets $ 1,855,795 $ 1,713,700
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 144,604 $ 132,490
Income taxes payable 0 8,840
Accrued expenses:
Accrued compensation 47,086 36,533
Product warranties 76,040 64,031
Self-insurance 17,469 17,437
Promotional 11,719 12,543
Accrued interest 4,260 4,652
Other 19,825 23,864
Total current liabilities 321,003 300,390
Non-current liabilities:
Long-term debt, less current maturities 520,284 512,630
Deferred income taxes 16,528 15,608
Unrecognized tax benefits 6,207 6,511
Operating lease liabilities 25,942 27,048
Deferred compensation benefits, net of current portion 10,521 11,130
Other 12,946 12,917
Total non-current liabilities 592,428 585,844
Contingent liabilities and commitments (Note 10) 0 0
Stockholders' equity:
Preferred stock, par value $0.01: Authorized-10,000 shares; Issued-0 0 0
Common stock, par value $0.50: Authorized-120,000 shares; Issued-51,776 shares 25,888 25,888
Additional paid-in capital 209,727 203,791
Retained earnings 1,032,020 913,610
Accumulated other comprehensive loss (509) (526)
Treasury stock, at cost: 18,225 and 18,133 shares, respectively (324,762) (315,297)
Total stockholders' equity 942,364 827,466
Total liabilities and stockholders' equity $ 1,855,795 $ 1,713,700

~~See~~The accompanying Notes to ~~Condensed~~ Consolidated Financial ~~Statements.~~Statements are an integral part of these consolidated financial statements.

Table of Contents

Winnebago Industries, Inc.

~~Condensed~~ Consolidated Statements of Cash Flows

(Unaudited)


		Six Months Ended					Six Months Ended
(in thousands)	(in thousands)	February 27, 2021		February 29, 2020		(in thousands)	February 26, 2022		February 27, 2021
Operating activities:
Operating activities						Operating activities
Net income	Net income	$	126,491	$	31,336	Net income	$	190,805	$	126,491
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by operating activities						Adjustments to reconcile net income to net cash provided by operating activities
Depreciation	Depreciation	8,559		7,720		Depreciation	10,767		8,559
Amortization of intangible assets		7,181		11,588
Amortization						Amortization	16,187		7,181
Non-cash interest expense, net	Non-cash interest expense, net	6,769		4,182		Non-cash interest expense, net	7,326		6,769
Amortization of debt issuance costs	Amortization of debt issuance costs	1,229		1,457		Amortization of debt issuance costs	1,225		1,229
Last-in, first-out expense		552		664
Last in, first-out expense						Last in, first-out expense	2,772		552
Stock-based compensation	Stock-based compensation	6,981		3,640		Stock-based compensation	6,891		6,981
Deferred income taxes	Deferred income taxes	914		576		Deferred income taxes	(1,977)		914
Contingent consideration fair value adjustment						Contingent consideration fair value adjustment	12,887		—
Other, net	Other, net	(3,460)		252		Other, net	2,212		(3,460)
Change in assets and liabilities:
Receivables		(11,547)		11,734
Inventories		(96,079)		45,275
Change in operating assets and liabilities, net of assets and liabilities acquired						Change in operating assets and liabilities, net of assets and liabilities acquired
Receivables, net						Receivables, net	(123,595)		(11,547)
Inventories, net						Inventories, net	(109,304)		(96,079)
Prepaid expenses and other assets	Prepaid expenses and other assets	2,321		(4,081)		Prepaid expenses and other assets	5,613		2,321
Accounts payable	Accounts payable	12,487		4,688		Accounts payable	26,703		12,487
Income taxes and unrecognized tax benefits	Income taxes and unrecognized tax benefits	(10,698)		(966)		Income taxes and unrecognized tax benefits	(7,941)		(10,698)
Accrued expenses and other liabilities	Accrued expenses and other liabilities	15,222		1,099		Accrued expenses and other liabilities	5,570		15,222
Net cash provided by operating activities	Net cash provided by operating activities	66,922		119,164		Net cash provided by operating activities	46,141		66,922

Investing activities:
Purchases of property and equipment		(14,920)		(19,057)
Investing activities						Investing activities
Purchases of property, plant, and equipment						Purchases of property, plant, and equipment	(43,426)		(14,920)
Acquisition of business, net of cash acquired	Acquisition of business, net of cash acquired	0		(264,280)		Acquisition of business, net of cash acquired	(228,159)		—
Proceeds from sale of property and equipment		7,778		0
Proceeds from the sale of property, plant, and equipment						Proceeds from the sale of property, plant, and equipment	49		7,778
Other, net	Other, net	(223)		179		Other, net	(245)		(223)
Net cash used in investing activities	Net cash used in investing activities	(7,365)		(283,158)		Net cash used in investing activities	(271,781)		(7,365)

Financing activities:
Financing activities						Financing activities
Borrowings on long-term debt	Borrowings on long-term debt	1,647,764		1,412,294		Borrowings on long-term debt	1,943,583		1,647,764
Repayments on long-term debt	Repayments on long-term debt	(1,647,764)		(1,115,044)		Repayments on long-term debt	(1,943,583)		(1,647,764)
Purchase of convertible bond hedge		0		(70,800)
Proceeds from issuance of warrants		0		42,210
Payments of cash dividends	Payments of cash dividends	(8,075)		(7,174)		Payments of cash dividends	(11,991)		(8,075)
Payments for repurchases of common stock	Payments for repurchases of common stock	(12,109)		0		Payments for repurchases of common stock	(64,218)		(12,109)
Payments of debt issuance costs	Payments of debt issuance costs	(224)		(10,761)		Payments of debt issuance costs	—		(224)
Other, net	Other, net	1,291		(1,223)		Other, net	2,118		1,291
Net cash (used in) provided by financing activities		(19,117)		249,502
Net cash used in financing activities						Net cash used in financing activities	(74,091)		(19,117)

Net increase in cash and cash equivalents		40,440		85,508
Net (decrease)/increase in cash and cash equivalents						Net (decrease)/increase in cash and cash equivalents	(299,731)		40,440
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	292,575		37,431		Cash and cash equivalents at beginning of period	434,563		292,575
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	333,015	$	122,939	Cash and cash equivalents at end of period	$	134,832	$	333,015

Table of Contents


Supplemental cash flow disclosure:
Supplemental Disclosures						Supplemental Disclosures
Income taxes paid, net	Income taxes paid, net	$	47,804	$	7,652	Income taxes paid, net	$	71,344	$	47,804
Interest paid	Interest paid	$	12,244	$	9,938	Interest paid	11,891		12,244

Non-cash transactions:
Issuance of Winnebago common stock for acquisition of business		$	0	$	92,572
Non-cash investing and financing activities						Non-cash investing and financing activities
Issuance of common stock for acquisition of business						Issuance of common stock for acquisition of business	$	22,000	$	—
Capital expenditures in accounts payable	Capital expenditures in accounts payable	$	195	$	118	Capital expenditures in accounts payable	1,126		195
Increase (decrease) in lease assets in exchange for lease liabilities:						Increase (decrease) in lease assets in exchange for lease liabilities:
Operating leases						Operating leases	17,164		(142)
Finance leases						Finance leases	1,698		(10)

~~See~~The accompanying Notes to ~~Condensed~~ Consolidated Financial ~~Statements.~~Statements are an integral part of these consolidated financial statements.

Table of Contents

Winnebago Industries, Inc.

~~Condensed~~ Consolidated Statements of Changes in ~~Stockholders'~~Shareholders' Equity

(Unaudited)


		Three Months Ended February 27, 2021															Three Months Ended February 26, 2022
(in thousands, except per share data)	(in thousands, except per share data)	Common Shares			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Stockholders' Equity		(in thousands, except per share data)	Common Shares			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Shareholders' Equity
		Number	Amount								Number	Amount					Number	Amount								Number	Amount
Balances at November 28, 2020		51,776	$	25,888	$	204,551	$	966,945	$	(517)	(18,275)	$	(325,309)	$	871,558
Stock-based compensation, net of forfeitures		—	—		4,622		—		—		1	5		4,627
Balance at November 27, 2021																Balance at November 27, 2021	51,776	$	25,888	$	233,727	$	1,272,697	$	(482)	(18,476)	$	(372,572)	$	1,159,258
Stock-based compensation																Stock-based compensation	—	—		4,157		—		—		1	23		4,180
Issuance of stock, net	Issuance of stock, net	—	—		554		—		—		58	1,045		1,599		Issuance of stock, net	—	—		275		—		—		31	645		920
Repurchase of common stock	Repurchase of common stock	—	—		—		—		—		(9)	(503)		(503)		Repurchase of common stock	—	—		—		—		—		(601)	(40,495)		(40,495)
Common stock dividends; $0.12 per share		—	—		—		(3,993)		—		—	—		(3,993)
Actuarial loss, net of tax		—	—		—		—		8		—	—		8
Common stock dividends; $0.18 per share																Common stock dividends; $0.18 per share	—	—		—		(6,060)		—		—	—		(6,060)
Total comprehensive income																Total comprehensive income	—	—		—		—		9		—	—		9
Net income	Net income	—	—		—		69,068		—		—	—		69,068		Net income	—	—		—		91,175		—		—	—		91,175
Balances at February 27, 2021		51,776	$	25,888	$	209,727	$	1,032,020	$	(509)	(18,225)	$	(324,762)	$	942,364
Balance at February 26, 2022																Balance at February 26, 2022	51,776	$	25,888	$	238,159	$	1,357,812	$	(473)	(19,045)	$	(412,399)	$	1,208,987

		Six Months Ended February 27, 2021															Three Months Ended February 27, 2021
(in thousands, except per share data)	(in thousands, except per share data)	Common Shares			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Stockholders' Equity		(in thousands, except per share data)	Common Shares			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Shareholders' Equity
		Number	Amount								Number	Amount					Number	Amount								Number	Amount
Balances at August 29, 2020		51,776	$	25,888	$	203,791	$	913,610	$	(526)	(18,133)	$	(315,297)	$	827,466
Stock-based compensation, net of forfeitures		—	—		6,968		—		—		1	13		6,981
Balance at November 28, 2020																Balance at November 28, 2020	51,776	$	25,888	$	204,551	$	966,945	$	(517)	(18,275)	$	(325,309)	$	871,558
Stock-based compensation																Stock-based compensation	—	—		4,622		—		—		1	5		4,627
Issuance of stock, net	Issuance of stock, net	—	—		(1,032)		—		—		149	2,631		1,599		Issuance of stock, net	—	—		554		—		—		58	1,045		1,599
Repurchase of common stock	Repurchase of common stock	—	—		—		—		—		(242)	(12,109)		(12,109)		Repurchase of common stock	—	—		—		—		—		(9)	(503)		(503)
Common stock dividends; $0.24 per share		—	—		—		(8,081)		—		—	—		(8,081)
Actuarial loss, net of tax		—	—		—		—		17		—	—		17
Common stock dividends; $0.12 per share																Common stock dividends; $0.12 per share	—	—		—		(3,993)		—		—	—		(3,993)
Total comprehensive income																Total comprehensive income	—	—		—		—		8		—	—		8
Net income	Net income	—	—		—		126,491		—		—	—		126,491		Net income	—	—		—		69,068		—		—	—		69,068
Balances at February 27, 2021		51,776	$	25,888	$	209,727	$	1,032,020	$	(509)	(18,225)	$	(324,762)	$	942,364
Balance at February 27, 2021																Balance at February 27, 2021	51,776	$	25,888	$	209,727	$	1,032,020	$	(509)	(18,225)	$	(324,762)	$	942,364

		Three Months Ended February 29, 2020															Six Months Ended February 26, 2022
(in thousands, except per share data)	(in thousands, except per share data)	Common Shares			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Stockholders' Equity		(in thousands, except per share data)	Common Shares			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Shareholders' Equity
		Number	Amount								Number	Amount					Number	Amount								Number	Amount
Balances at November 30, 2019		51,776	$	25,888	$	198,733	$	877,469	$	(551)	(18,177)	$	(315,930)	$	785,609
Stock-based compensation, net of forfeitures		—	—		1,830		—		—		0	8		1,838
Balances at August 28, 2021																Balances at August 28, 2021	51,776	$	25,888	$	218,490	$	1,172,996	$	(491)	(18,713)	$	(359,940)	$	1,056,943
Stock-based compensation																Stock-based compensation	—	—		6,859		—		—		1	32		6,891
Issuance of stock for acquisition																Issuance of stock for acquisition	—	—		14,709		—		—		379	7,291		22,000
Issuance of stock, net	Issuance of stock, net	—	—		188		—		—		25	430		618		Issuance of stock, net	—	—		(1,899)		—		—		225	4,436		2,537
Repurchase of common stock	Repurchase of common stock	—	—		—		—		—		(1)	(74)		(74)		Repurchase of common stock	—	—		—		—		—		(937)	(64,218)		(64,218)
Common stock dividends; $0.11 per share		—	—		—		(3,743)		—		—	—		(3,743)
Actuarial loss, net of tax		—	—		—		—		8		—	—		8
Common stock dividends; $0.18 per share																Common stock dividends; $0.18 per share	—	—		—		(6,060)		—		—	—		(6,060)
Other																Other	—	—		—		71		—		—	—		71
Total comprehensive income																Total comprehensive income	—	—		—		—		18		—	—		18
Net income	Net income	—	—		—		17,268		—		—	—		17,268		Net income	—	—		—		190,805		—		—	—		190,805
Balances at February 29, 2020		51,776	$	25,888	$	200,751	$	890,994	$	(543)	(18,153)	$	(315,566)	$	801,524
Balances at February 26, 2022																Balances at February 26, 2022	51,776	$	25,888	$	238,159	$	1,357,812	$	(473)	(19,045)	$	(412,399)	$	1,208,987

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Six Months Ended February 29, 2020
(in thousands,
except per share data) Common Shares Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Treasury Stock Total Stockholders' Equity
Number Amount Number Amount
Balances at August 31, 2019 51,776 $ 25,888 $ 91,185 $ 866,886 $ (491) (20,262) $ (351,256) $ 632,212
Stock-based compensation, net of forfeitures — — 3,624 — — — 17 3,641
Issuance of stock, net — — (2,031) — — 153 2,649 618
Issuance of stock for acquisition — — 57,811 — — 2,000 34,761 92,572
Repurchase of common stock — — — — — (44) (1,737) (1,737)
Common stock dividends; $0.22 per share — — — (7,228) — — — (7,228)
Actuarial loss, net of tax — — — — 16 — — 16
Interest rate swap activity, net of tax — — — — (68) — — (68)
Equity component of convertible senior notes and offering costs, net of tax of $20,840 — — 61,335 — — — — 61,335
Convertible note hedge purchase, net of tax of $17,417 — — (53,383) — — — — (53,383)
Warrant transactions — — 42,210 — — — — 42,210
Net income — — — 31,336 — — — 31,336
Balances at February 29, 2020 51,776 $ 25,888 $ 200,751 $ 890,994 $ (543) (18,153) $ (315,566) $ 801,524


	Six Months Ended February 27, 2021
(in thousands, except per share data)	Common Shares			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Shareholders' Equity
	Number	Amount								Number	Amount
Balances at August 29, 2020	51,776	$	25,888	$	203,791	$	913,610	$	(526)	(18,133)	$	(315,297)	$	827,466
Stock-based compensation	—	—		6,968		—		—		1	13		6,981
Issuance of stock, net	—	—		(1,032)		—		—		149	2,631		1,599
Repurchase of common stock	—	—		—		—		—		(242)	(12,109)		(12,109)
Common stock dividends; $0.24 per share	—	—		—		(8,081)		—		—	—		(8,081)
Total comprehensive income	—	—		—		—		17		—	—		17
Net income	—	—		—		126,491		—		—	—		126,491
Balances at February 27, 2021	51,776	$	25,888	$	209,727	$	1,032,020	$	(509)	(18,225)	$	(324,762)	$	942,364

~~See~~The accompanying Notes to ~~Condensed~~ Consolidated Financial ~~Statements.~~Statements are an integral part of these consolidated financial statements.

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Winnebago Industries, Inc.

Notes to ~~Condensed~~ Consolidated Financial Statements

(Unaudited)

(All amounts in tables are in thousands, except share and per share data, unless otherwise designated)

Note 1:1. Basis of Presentation

~~Unless~~The consolidated financial statements include the ~~context otherwise requires, the~~accounts of Winnebago Industries, Inc. and its wholly owned subsidiaries. Significant intercompany account balances and transactions have been eliminated.

The use of the terms "Winnebago Industries," ~~"Winnebago",~~"Winnebago," "we," "our," and ~~"the Company"~~"us" in ~~these Notes to Condensed Consolidated Financial Statements~~this Quarterly Report on Form 10-Q, unless the context otherwise requires, refers to Winnebago Industries, Inc. and its ~~wholly-owned~~wholly owned subsidiaries.

InThe interim unaudited consolidated financial statements included herein are prepared pursuant to the ~~opinion~~rules and regulations of ~~management,~~ the ~~accompanying Condensed~~United States (“U.S.”) Securities and Exchange Commission (“SEC”). The information furnished in these consolidated financial statements includes normal recurring adjustments, unless noted otherwise in the Notes to Consolidated Financial Statements, ~~contain~~and reflects all adjustments that are, in management’s opinion, necessary for a fair presentation ~~as prescribed by accounting principles generally accepted~~of such financial statements. The consolidated financial statements are prepared in ~~the United States~~accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). ~~All adjustments were comprised of normal recurring adjustments, except as noted~~GAAP requires us to make estimates and assumptions that affect amounts reported. Certain information and footnote disclosures normally included in ~~these Notes~~financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to ~~Condensed Consolidated Financial Statements.~~SEC rules and regulations.

~~Interim results are not necessarily indicative of the results to be expected for the full year.~~ The ~~interim Condensed Consolidated Financial Statements~~consolidated financial statements included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited ~~Consolidated Financial Statements~~consolidated financial statements and notes thereto included in ~~the Company's~~our Annual Report on Form 10-K for the fiscal year ended August ~~29, 2020.~~

~~Fiscal Period~~

~~The Company follows a 52-/53-week~~28, 2021 filed with the SEC. Interim results of operations are not necessarily indicative of the results to be expected for the full fiscal year ending ~~the last Saturday in August. Fiscal 2021 and Fiscal 2020 are both a 52-week year.~~

~~Cash and cash equivalents~~

Cash equivalents include all investments with original maturities of three months or less or which are readily convertible into known amounts of cash and are not legally restricted. Accounts at each banking institution are insured by the Federal Deposit Insurance Corporation up to $250,000, while the remaining balances are uninsured.August 27, 2022.

Subsequent Events

In preparing the accompanying unaudited ~~Condensed Consolidated Financial Statements, the Company~~consolidated financial statements, we have evaluated subsequent events for potential recognition and disclosure through the date of this ~~filing. There were~~filing noting no material subsequent events except for the item noted ~~below.~~below:

~~Dividend~~

On March ~~17, 2021, the Company's~~16, 2022, our Board of Directors declared a quarterly cash dividend of ~~$0.12~~$0.18 per share payable on April ~~28, 2021~~27, 2022 to common ~~stockholders~~shareholders of record at the close of business on April ~~14, 2021.~~13, 2022.

CARES Act

The Coronavirus Aid, Relief, and Economic Security ("CARES") Act was signed into law on March 27, ~~2020. The Company is taking~~2020 to help alleviate the impact of the COVID-19 pandemic in the U.S. We took advantage of the employer payroll tax ~~("FICA")~~ deferral offered by the CARES Act, which ~~allows the Company~~allowed us to defer the payment of employer payroll taxes for the period from March 27, 2020 to December 31, 2020. The deferred ~~FICA~~employer payroll tax liability paid in the first six months of Fiscal 2022 was $8.0 million and the liability left to pay as of February ~~27, 2021~~26, 2022 was ~~$16.2~~$8.2 million, ~~and~~which will be ~~payable~~paid in ~~equal installments at December 2021 and~~ December 2022. ~~Additionally, the Company~~We also took advantage of a tax credit granted to companies under the CARES Act who continued to pay their employees when operations were fully or partially suspended. The refundable tax credit available through the end of the third quarter of Fiscal 2020 reflected in cost of goods sold on the Consolidated Statements of Income and Comprehensive Income was approximately $4.0 million. The entire amount is expected to be received during calendar year 2022. As of February 26, 2022, $2.3 million remains outstanding within other current assets ~~is approximately $4.0 million, of which $3.2 million is outstanding, and will be received in Fiscal 2021.~~on the Consolidated Balance Sheets.

Recently Adopted Accounting Pronouncements

~~The Company adopted~~ Accounting Standards ~~Codification~~Update ("~~ASC"~~ASU") Topic ~~326,~~740, ~~Financial Instruments—Credit Losses~~Income Taxes: ~~(“Topic 326”)~~Simplifying the Accounting for Income Taxes, ~~effective August 30, 2020.~~was adopted in the first quarter of Fiscal 2022. The new ~~impairment model (known as~~standard eliminates certain exceptions to Topic 740's general principles, improves consistent application and simplifies its application. We adopted the current expected credit loss ("CECL") model) is based on expected losses rather than incurred losses. Topic 326 is applicable to financial assets measured at amortized cost, such as accounts receivable and deposits. It requires historical loss data to be adjusted to reflect changesnew guidance in asset-specific considerations, current conditions and reasonable and supportable forecasts of future economic conditions. The expected credit losses are adjusted each period for changes in expected lifetime credit losses. The Company adopted Topic 326 using the modified retrospective transition approach, which involves recognizing the cumulative effect of initial adoption of Topic 326 as an adjustment to its opening retained earnings as of August 30, 2020. Therefore, comparative information prior to the adoption date has not been adjusted. As a result of adoption of Topic 326, the Company did not recognize an incremental allowance for credit losses on its accounts receivable for the first ~~six months ended February 27, 2021. The adoption~~quarter of ~~this standard did~~Fiscal 2022, and there was not ~~materially~~a material impact ~~the Company's Condensed Consolidated Financial Statements.~~to our financial condition, results of operations or disclosures.

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Recently Issued Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board ("FASB") issued ~~Accounting Standards Update ("ASU")~~ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40)~~. ASU 2020-06~~ which reduces the number of models used to account for convertible instruments, amends diluted ~~EPS~~earnings per share ("EPS") calculations for convertible instruments, and amends the requirements for a contract (or embedded derivative) that is potentially settled in an entity's own shares to be classified in equity. ~~The amendments add certain~~Certain disclosure requirements were also added to increase transparency and decision-usefulness ~~about~~regarding a convertible instrument's terms and features. ~~Under the amendment, the Company must use~~Additionally, the if-converted method for including convertible instruments must be used in diluted EPS as opposed to the treasury stock method. ~~ASU 2020-06~~The new guidance is effective for annual reporting periods beginning after December 15, 2021, ~~(the Company's~~which is our Fiscal ~~2023).~~2023. Early adoption is ~~allowed under the standard with~~permitted using either a

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modified retrospective or full retrospective ~~method. The Company expects~~approach. We expect to adopt the new guidance in the first quarter of Fiscal ~~2023. While it~~2023 and have not yet evaluated the impact the adoption of this guidance will have on our financial condition, results of operations or disclosures; however, the new guidance is expected to change ~~the Company's~~our diluted EPS ~~reporting, the extent to which the standard will have a material impact on the Company's consolidated financial statements is uncertain at this time.~~reporting.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of Effects of Reference Rate Reform on Financial Reporting~~. ASU 2020-04~~, which provides practical expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The expedients and exceptions provided by ~~the amendments in~~ this ~~update~~guidance apply only to contracts, hedging relationships, and other transactions that reference the London interbank offered rate (“LIBOR”) or another reference rate expected to be discontinued as a result of reference rate reform. ~~These amendments are~~This guidance is not applicable to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. ~~ASU 2020-04 is effective as of March 12, 2020~~The guidance can be applied immediately through December 31, ~~2022 and may be applied to contract modifications and hedging relationships from the beginning of an interim period that includes or is subsequent to March 12, 2020. The Company~~2022. We will adopt this standard when LIBOR is discontinued and ~~does~~do not expect a material impact to ~~its consolidated~~our financial ~~statements.~~condition, results of operations or disclosures based on the current debt portfolio and capital structure.

Note 2. Business Combinations

~~In December 2019,~~

On August 31, 2021, we purchased 100% of the ~~FASB~~equity interests of Barletta Boat Company, LLC and Three Limes, LLC (collectively, "Barletta"), a manufacturer of high-quality, premium pontoon boats that are sold through a network of independent authorized dealers.

The acquisition of Barletta resulted in a newly created Marine reportable segment that includes the Barletta and Chris-Craft operating segments.

We acquired Barletta for a purchase price of $286.3 million, including cash payments of $240.1 million, $25.0 million in common stock issued ~~ASU 2019-12,~~ ~~Income Taxes (Topic 740):Simplifying the Accounting for Income Taxes. ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions~~ to the ~~general principles~~sellers (subject to a discount noted below), and contingent consideration from earnout provisions. The common stock fair value included in the purchase price reflects a 12% discount, due to the lack of ~~Topic 740.~~marketability as these are unregistered shares that have a one-year lockup restriction, which reduced the value of the common stock to $22.0 million. The ~~standard~~contingent consideration includes both a potential stock payout as well as a potential cash payment based on achievement of certain financial performance metrics over the next few years. The maximum payout under the earnout is ~~effective~~$50.0 million in cash and $15.0 million in stock if all metrics are achieved. The fair value of the earnout as of August 31, 2021 was $24.2 million. The fair value of the earnout as of February 26, 2022 was $37.1 million, of which $13.8 million is included in other current liabilities and $23.3 million is included in other long-term liabilities on the Consolidated Balance Sheets.

The total purchase price was allocated to the acquired net tangible and intangible assets of Barletta, based on their preliminary fair values at the date of the acquisition. We expect to finalize the allocation of the purchase price when our valuation of the acquired intangible assets, goodwill, and tax accounts is complete.

The following table summarizes the preliminary fair values assigned to the Barletta net assets acquired as of the date of acquisition:


(in thousands)	August 31, 2021
Cash	$	11,903
Other current assets	24,564
Property, plant, and equipment	17,250
Goodwill	136,118
Other intangible assets	111,400
Total assets acquired	301,235
Accounts payable	7,181
Product warranties	4,656
Other current liabilities	3,146
Total liabilities assumed	14,983
Total purchase price	$	286,252

Goodwill from the Barletta acquisition is recognized in our newly created Marine segment. We expect that the full amount of goodwill will be deductible for ~~annual reporting periods beginning after December 15, 2020 (the Company's Fiscal 2022), including interim periods within those annual reporting periods.~~ tax purposes.

The ~~Company expects~~intangible assets acquired include a trade name, dealer network, and backlog. The trade name has an indefinite life, while the backlog and dealer network will be amortized on a straight line basis over 10 months and 12 years, respectively.

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Total transaction costs related to ~~adopt~~ the ~~new guidance in~~Barletta acquisition were $3.1 million, of which $2.4 million were expensed during the first quarter of Fiscal 2022 and ~~does~~$0.7 million were expensed during the fourth quarter of Fiscal 2021. Transaction costs are included in selling, general and administrative expenses in the accompanying Consolidated Statements of Income and Comprehensive Income.

Pro forma results of operations for this acquisition have not ~~expect a material impact~~been presented as they were immaterial to ~~its consolidated financial statements.~~the reported results.

Note 2:3. Business Segments

~~The Company has 6~~We have 7 operating segments: 1) Grand Design towables, 2) Winnebago towables, 3) Winnebago motorhomes, 4) Newmar motorhomes, 5) Chris-Craft marine, 6) Barletta marine and 6)7) Winnebago specialty vehicles. ~~The Company evaluates~~Financial performance is evaluated based on each operating segment's Adjusted ~~EBITDA,~~Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), as defined below, which excludes certain corporate administration expenses and non-operating income and expense.

The ~~Company's 2~~acquisition of Barletta resulted in a newly created Marine reportable segment effective for the first quarter of Fiscal 2022. The segment consists of Barletta and our existing Chris-Craft operating segment. Prior year amounts for Chris-Craft have been reclassified from Corporate / All Other category to the Marine segment.

Our 3 reportable segments ~~include: 1)~~are: Towable ~~(comprised of products which are not motorized and are generally towed by another vehicle as well as other related manufactured products and services), which is an~~(an aggregation of the Grand Design towables and the Winnebago towables operating ~~segments and 2)~~segments); Motorhome ~~(comprised of products that include a motorized chassis as well as other related manufactured products and services), which is an~~(an aggregation of the Winnebago motorhomes and Newmar motorhomes operating ~~segments.~~segments); and Marine (an aggregation of the Chris Craft marine and Barletta marine operating segments). Towable is comprised of non-motorized products that are generally towed by another vehicle, along with other related manufactured products and services. Motorhome is comprised of products that include a motorized chassis, along with other related manufactured products and services. Marine is comprised of products that include boats, along with other manufactured products and services.

The Corporate / All Other category includes the ~~Chris-Craft marine and~~ Winnebago specialty vehicles operating ~~segments~~segment as well as ~~expenses related to~~ certain corporate administration expenses ~~for~~related to the oversight of the ~~enterprise. These expenses include items~~enterprise, such as corporate leadership and administration costs.

Identifiable assets of the reportable segments exclude general corporate assets, which principally consist of cash and cash equivalents and certain deferred tax balances. The general corporate assets are included in the Corporate / All Other category.

~~The Company's chief operating decision maker ("CODM") is its~~Our Chief Executive ~~Officer. The Company's CODM relies on internal management reporting that analyzes~~Officer (the Chief Operating Decision Maker ("CODM")) regularly reviews consolidated financial results in their entirety and ~~each~~ operating ~~segment's~~segment financial information through Adjusted ~~EBITDA. The Company's CODM~~EBITDA and has ultimate responsibility for enterprise decisions. ~~The Company's~~Our CODM ~~determines, in particular, resource allocation~~is responsible for allocating resources and ~~monitors the~~assessing performance of the consolidated enterprise, ~~the Towable~~reportable segments and between operating segments. Management of each operating segment ~~and the Motorhome segment. The operating segments' management have~~has responsibility for operating decisions, allocating resources and assessing performance within their respective ~~segments.~~operating segment. The accounting policies of ~~both~~all reportable segments are the same ~~and are~~as those described in Note 1 ~~Summary of Significant Accounting Policies, of~~to the ~~Notes to~~ Consolidated Financial Statements included in ~~the Company's~~Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended August ~~29, 2020.~~28, 2021.

~~The Company evaluates the~~We monitor and evaluate operating performance of ~~its~~our reportable segments based on Adjusted EBITDA. We believe disclosing Adjusted EBITDA is useful to securities analysts, investors and other interested parties when evaluating companies in our industries. 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 toover period. 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.

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~~and equipment, and non-operating income. The following table shows~~Financial information by reportable ~~segment:~~segment is as follows:


	Three Months Ended				Six Months Ended
(in thousands)	February 26, 2022		February 27, 2021		February 26, 2022		February 27, 2021
Net Revenues
Towable	$	646,601	$	439,284	$	1,297,625	$	894,185
Motorhome	417,565		382,575		839,044		704,964
Marine	97,309		14,463		176,627		26,357
Corporate / All Other	3,256		3,564		7,175		7,511
Consolidated	$	1,164,731	$	839,886	$	2,320,471	$	1,633,017

Adjusted EBITDA
Towable	$	100,573	$	62,366	$	212,650	$	125,509
Motorhome	46,095		50,969		96,248		81,312
Marine	12,953		1,024		23,523		1,878
Corporate / All Other	(8,892)		(6,394)		(14,460)		(11,441)
Consolidated	$	150,729	$	107,965	$	317,961	$	197,258

Capital Expenditures
Towable	$	10,181	$	2,714	$	21,339	$	6,851
Motorhome	7,875		3,268		15,626		7,271
Marine	1,912		249		2,540		798
Corporate / All Other	243		—		3,921		—
Consolidated	$	20,211	$	6,231	$	43,426	$	14,920


		Three Months Ended				Six Months Ended
(in thousands)	(in thousands)	February 27, 2021		February 29, 2020		February 27, 2021		February 29, 2020		(in thousands)	February 26, 2022		August 28, 2021
Net Revenues
Assets										Assets
Towable	Towable	$	439,284	$	283,463	$	894,185	$	624,713	Towable	$	850,244	$	790,257
Motorhome	Motorhome	382,575		325,542		704,964		551,433		Motorhome	910,496		728,060
Marine										Marine	402,395		102,901
Corporate / All Other	Corporate / All Other	18,027		17,805		33,868		39,122		Corporate / All Other	146,298		441,349
Consolidated	Consolidated	$	839,886	$	626,810	$	1,633,017	$	1,215,268	Consolidated	$	2,309,433	$	2,062,567

Adjusted EBITDA
Towable		$	62,366	$	34,746	$	125,509	$	70,531
Motorhome		50,969		14,946		81,312		24,277
Corporate / All Other		(5,370)		(4,263)		(9,563)		(7,331)
Consolidated		$	107,965	$	45,429	$	197,258	$	87,477

Capital Expenditures
Towable		$	2,714	$	5,640	$	6,851	$	9,666
Motorhome		3,268		5,372		7,271		7,612
Corporate / All Other		249		1,421		798		1,779
Consolidated		$	6,231	$	12,433	$	14,920	$	19,057

(in thousands) February 27,
2021 August 29,
2020
Total Assets
Towable $ 723,388 $ 718,253
Motorhome 694,077 600,304
Corporate / All Other 438,330 395,143
Consolidated $ 1,855,795 $ 1,713,700

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Reconciliation of net income to consolidated Adjusted ~~EBITDA:~~EBITDA is as follows:


		Three Months Ended				Six Months Ended					Three Months Ended				Six Months Ended
(in thousands)	(in thousands)	February 27, 2021		February 29, 2020		February 27, 2021		February 29, 2020		(in thousands)	February 26, 2022		February 27, 2021		February 26, 2022		February 27, 2021
Net income	Net income	$	69,068	$	17,268	$	126,491	$	31,336	Net income	$	91,175	$	69,068	$	190,805	$	126,491
Interest expense		10,052		8,651		19,993		14,700
Interest expense, net										Interest expense, net	10,325		10,052		20,567		19,993
Provision for income taxes	Provision for income taxes	21,166		3,995		38,723		7,888		Provision for income taxes	28,760		21,166		58,901		38,723
Depreciation	Depreciation	4,399		4,134		8,559		7,720		Depreciation	5,461		4,399		10,767		8,559
Amortization of intangible assets		3,591		7,974		7,181		11,588
Amortization										Amortization	8,015		3,591		16,187		7,181
EBITDA	EBITDA	108,276		42,022		200,947		73,232		EBITDA	143,736		108,276		297,227		200,947
Acquisition-related fair-value inventory step-up		0		3,634		0		4,810
Acquisition-related costs	Acquisition-related costs	0		0		0		9,950		Acquisition-related costs	486		—		3,870		—
Litigation reserves										Litigation reserves	—		—		4,000		—
Restructuring expenses	Restructuring expenses	0		43		93		(129)		Restructuring expenses	—		—		—		93
Gain on sale of property and equipment		0		0		(3,565)		0
Gain on sale of property, plant and equipment										Gain on sale of property, plant and equipment	—		—		—		(3,565)
Contingent consideration fair value adjustment										Contingent consideration fair value adjustment	6,517		—		12,887		—
Non-operating income	Non-operating income	(311)		(270)		(217)		(386)		Non-operating income	(10)		(311)		(23)		(217)
Adjusted EBITDA	Adjusted EBITDA	$	107,965	$	45,429	$	197,258	$	87,477	Adjusted EBITDA	$	150,729	$	107,965	$	317,961	$	197,258

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Note 3:4. Investments and Fair Value Measurements

In determining the fair value of financial assets and liabilities, we utilize market data or other assumptions that we believe market participants would use in pricing the asset or liability in the principal or most advantageous market and adjust for non-performance and/or other risks associated with us as well as counterparties, as appropriate. Assets and liabilities measured at fair value are classified using the following hierarchy, which is based upon the transparency of inputs to the valuation as of the measurement date:

Level 1 — Unadjusted quoted prices which are available in active markets for identical assets or liabilities accessible at the measurement date.

Level 2 — Inputs other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 — Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

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Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

~~The Company accounts for fair value measurements in accordance with ASC 820,~~ ~~Fair Value Measurements and Disclosures~~, which defines fair value, establishes a framework for measurement, and expands disclosure about fair value measurement. The fair value hierarchy requires the use of observable market data when available. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset or liability.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels as follows:

~~Level 1~~ ~~- Unadjusted quoted prices that are available in active markets for the identical assets or liabilities at the measurement date.~~

~~Level 2~~ ~~- Other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:~~

•~~Quoted prices for similar assets or liabilities in active markets;~~

•~~Quoted prices for identical or similar assets in nonactive markets;~~

•~~Inputs other than quoted prices that are observable for the asset or liability; and~~

•~~Inputs that are derived principally from or corroborated by other observable market data.~~

~~Level 3~~ - Unobservable inputs that cannot be corroborated by observable market data and reflect the use of significant management judgment. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

~~The following tables set forth by level within the fair value hierarchy the Company's financial~~Financial assets and liabilities ~~that were accounted for~~measured at fair value on a recurring basis ~~at February 27, 2021 and August 29, 2020 according to the valuation techniques the Company used to determine their fair values:~~are as follows:


		Fair Value at		Fair Value Hierarchy							Fair Value at		Fair Value Hierarchy
(in thousands)	(in thousands)	February 27, 2021		Level 1		Level 2		Level 3		(in thousands)	February 26, 2022		Level 1		Level 2		Level 3
Assets that fund deferred compensation:
Assets that fund deferred compensation										Assets that fund deferred compensation
Domestic equity funds	Domestic equity funds	$	838	$	838	$	0	$	0	Domestic equity funds	$	1,265	$	1,265	$	—	$	—
International equity funds	International equity funds	36		36		0		0		International equity funds	68		68		—		—
Fixed income funds	Fixed income funds	47		47		0		0		Fixed income funds	184		184		—		—
Total assets at fair value	Total assets at fair value	$	921	$	921	$	0	$	0	Total assets at fair value	$	1,517	$	1,517	$	—	$	—

Contingent consideration										Contingent consideration
Earnout liability										Earnout liability	$	37,078	$	—	$	—	$	37,078
Total liabilities at fair value										Total liabilities at fair value	$	37,078	$	—	$	—	$	37,078


	Fair Value at		Fair Value Hierarchy
(in thousands)	August 28, 2021		Level 1		Level 2		Level 3
Assets that fund deferred compensation
Domestic equity funds	$	940	$	940	$	—	$	—
International equity funds	41		41		—		—
Fixed income funds	46		46		—		—
Total assets at fair value	$	1,027	$	1,027	$	—	$	—

Fair Value at Fair Value Hierarchy
(in thousands) August 29,
2020 Level 1 Level 2 Level 3
Assets that fund deferred compensation:
Domestic equity funds $ 626 $ 626 $ 0 $ 0
International equity funds 34 34 0 0
Fixed income funds 50 50 0 0
Total assets at fair value $ 710 $ 710 $ 0 $ 0

~~The following methods and assumptions were used to estimate the fair value of each class of financial instrument:~~

Assets that ~~fund deferred compensation~~Fund Deferred Compensation

~~The Company's~~Our assets that fund deferred compensation are marketable equity securities measured at fair value using quoted market prices and primarily consist of equity-based mutual funds. These securities, used to fund the Executive Share Option Plan and the Executive Deferred Compensation Plan, are classified as Level 1 as they are traded in an active market for which closing stock prices are readily available. ~~These securities fund the Executive Share Option Plan and the Executive Deferred Compensation Plan.~~ Refer to Note 11 ~~Employee and Retiree Benefits~~, of the Notes to the Consolidated

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Financial Statements included in ~~the Company's~~Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended August ~~29, 2020~~28, 2021 for additional information regarding these plans.

The proportion of the assets that will fund options which expire within a year are included in ~~Prepaid~~prepaid expenses and other assets inon the ~~accompanying Condensed~~ Consolidated Balance Sheets. The remaining assets are classified as non-current and are included in ~~Other assets.~~other assets on the Consolidated Balance Sheets.

Contingent Consideration

Contingent consideration represents the earnout liability related to the Barletta acquisition and is valued using a probability-weighted scenario analysis of projected EBITDA and gross profit results and discounted at a risk-free rate. The contingent consideration is classified as Level 3. Actual EBITDA and gross profit results may differ significantly from those used in the estimate above, which may affect future payments. Changes in future payments will be reflected in future operating results as they occur.

The fair value of the earnout liability that will be settled within a year is included in other current liabilities on the Consolidated Balance Sheets. The remaining earnout liability is included in other long-term liabilities on the Consolidated Balance Sheets.

Assets and Liabilities ~~that are measured~~Measured at Fair Value on a Nonrecurring Basis

~~The Company's non-financial assets, which include goodwill, intangible assets, and property, plant and equipment,~~Certain financial instruments are ~~not required to be~~ measured at fair value on a ~~recurring~~nonrecurring basis. ~~However, if~~These assets primarily include goodwill, intangible assets, property, plant and equipment, and right-of-use lease assets. These assets were originally recognized at amounts equal to the fair value determined at date of acquisition or purchase. If certain triggering events occur, or if an annual impairment test is required, ~~the Company must~~we will evaluate the non-financial asset for impairment. If an impairment has occurred, the asset ~~is required~~will be written down to ~~be recorded at the~~its current estimated fair value. ~~NaN~~No impairments were recorded for non-financial assets in the ~~second quarter of Fiscal 2021~~three or ~~the second quarter of Fiscal 2020.~~six months ended February 26, 2022 or February 27, 2021.

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Assets and Liabilities Not Measured at Fair Value ~~of Financial Instruments~~

~~The Company's~~Certain financial instruments ~~other than those presented in the disclosures above,~~are not measured at fair value but are recorded at carrying amounts approximating fair value based on their short-term nature. These financial instruments include cash and cash equivalents, receivables, accounts payable, other payables, and long-term debt. ~~The fair values of cash, receivables, accounts payable, and other payables approximated carrying values because of the short-term nature of these instruments.~~ If these instruments were measured at fair value in the financial statements, they would be classified as Level 1 in the fair value hierarchy. The fair value of our long-term debt was determined using current quoted prices in active markets for our publicly traded debt obligations, which is classified as Level 1 in the fair value hierarchy. See Note 8, ~~Long-Term Debt~~,9 for ~~information about~~ the fair value of ~~the Company's~~our long-term debt.

Note 4:5. Inventories

Inventories consist of the following:

(in thousands) February 27,
2021 August 29,
2020
Finished goods $ 9,184 $ 17,141
Work-in-process 145,092 86,651
Raw materials 160,577 114,982
Total 314,853 218,774
Less last-in, first-out ("LIFO") reserve 36,385 35,833
Inventories, net $ 278,468 $ 182,941


(in thousands)	February 26, 2022		August 28, 2021
Finished goods	$	14,438	$	12,243
Work-in-process	187,826		184,611
Raw materials	308,926		183,583
Total	511,190		380,437
Less: Excess of FIFO over LIFO cost	41,736		38,964
Inventories, net	$	469,454	$	341,473

Inventory valuation methods consist of the following:

(in thousands) February 27,
2021 August 29,
2020
LIFO basis $ 131,760 $ 88,675
First-in, first-out basis 183,093 130,099
Total $ 314,853 $ 218,774


(in thousands)	February 26, 2022		August 28, 2021
LIFO basis	$	202,162	$	139,544
First-in, first-out basis	309,028		240,893
Total	$	511,190	$	380,437

The above inventory value, ~~of inventories,~~ before reduction for the LIFO reserve, approximates replacement cost at the respective dates.

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Note 5:6. Property, Plant, and Equipment

Property, plant, and equipment is stated at cost, net of accumulated depreciation, and consists of the following:


(in thousands)	(in thousands)	February 27, 2021		August 29, 2020		(in thousands)	February 26, 2022		August 28, 2021
Land	Land	$	9,111	$	11,101	Land	$	10,697	$	9,111
Buildings and building improvements	Buildings and building improvements	147,587		144,565		Buildings and building improvements	168,554		147,629
Machinery and equipment	Machinery and equipment	120,106		117,370		Machinery and equipment	128,707		121,911
Software	Software	28,611		28,456		Software	36,259		36,815
Transportation	Transportation	4,938		4,913		Transportation	5,977		5,335
Construction in progress	Construction in progress	19,216		20,778		Construction in progress	58,075		31,137
Property, plant, and equipment, gross	Property, plant, and equipment, gross	329,569		327,183		Property, plant, and equipment, gross	408,269		351,938
Less accumulated depreciation		155,960		152,238
Less: Accumulated depreciation						Less: Accumulated depreciation	169,235		160,511
Property, plant, and equipment, net	Property, plant, and equipment, net	$	173,609	$	174,945	Property, plant, and equipment, net	$	239,034	$	191,427

Depreciation expense was $5.5 million and $4.4 million for the three months ended February 26, 2022 and ~~$4.1~~February 27, 2021, respectively; and $10.8 million ~~during the second quarters of Fiscal 2021 and 2020, respectively;~~ and $8.6 million ~~and $7.7 million~~ for the ~~first~~ six months ~~of Fiscal~~ended February 26, 2022 and February 27, 2021, ~~and 2020,~~ respectively.

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Note 6:7. Goodwill and Intangible Assets

The changes in the carrying amount of goodwill by reportable segment, ~~were as follows for the first six months of Fiscal 2021 and 2020, of which there were~~with no accumulated impairment ~~losses:~~

(in thousands) Towable Motorhome Corporate / All Other Total
Balances at August 31, 2019 $ 244,684 $ 0 $ 30,247 $ 274,931
Acquisition of Newmar(1)
0 73,929 0 73,929
Balances at February 29, 2020 $ 244,684 $ 73,929 $ 30,247 $ 348,860
Balances at August 29, 2020 and February 27, 2021(2)
$ 244,684 $ 73,127 $ 30,247 $ 348,058
losses, for the six months ended February 26, 2022 and February 27, 2021 are as follows:


(in thousands)	Towable		Motorhome		Marine		Total
Balances at August 29, 2020 and February 27, 2021(1)	$	244,684	$	73,127	$	30,247	$	348,058

Balances at August 28, 2021	$	244,684	$	73,127	$	30,247	$	348,058
Acquisition of Barletta(2)	—		—		136,118		136,118
Balances at February 26, 2022	$	244,684	$	73,127	$	166,365	$	484,176

(1) The change in Motorhome activity is related to the acquisition of Newmar Corporation, Dutch Real Estate Corp., New-Way Transport and New-Serv (collectively "Newmar") that occurred on November 8, 2019. See Note 2, ~~Business Combinations~~ ~~in the Company's Annual Report on Form 10-K for the fiscal year ended August 29, 2020 for additional acquisition information.~~

~~(2)~~ There was no activity in the six months ~~beginning August 29, 2020 and ending~~ended February 27, 2021.

(2) The change in marine activity is related to the acquisition of Barletta that occurred on August 31, 2021. See Note 2 to the Consolidated Financial Statements included in Item 1 of Part I of this quarterly report on Form 10-Q.

Other intangible assets, net of accumulated amortization, consist of the following:

February 27, 2021 August 29, 2020
($ in thousands) Weighted Average Life-Years Cost Accumulated Amortization Weighted Average Life-Years Cost Accumulated Amortization
Trade names Indefinite $ 275,250 Indefinite $ 275,250
Dealer networks 12.1 159,581 $ 39,070 12.2 159,581 $ 32,487
Backlog 0.5 28,327 28,327 0.5 28,327 28,327
Non-compete agreements 4.3 6,647 4,821 4.1 6,647 4,223
Other intangible assets, gross 469,805 72,218 469,805 65,037
Less accumulated amortization 72,218 65,037
Other intangible assets, net $ 397,587 $ 404,768


	February 26, 2022
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
Trade names	$	352,250	$	—	$	352,250
Dealer networks	179,981		$	53,084	126,897
Backlog	42,327		36,727		5,600
Non-compete agreements	6,647		5,775		872
Other intangible assets	$	581,205	$	95,586	$	485,619

	August 28, 2021
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
Trade names	$	275,250	$	—	$	275,250
Dealer networks	159,581		45,652		113,929
Backlog	28,327		28,327		—
Non-compete agreements	6,647		5,419		1,228
Other intangible assets	$	469,805	$	79,398	$	390,407

The weighted average remaining amortization period for intangible assets as of February ~~27, 2021~~26, 2022 was approximately 109 years.

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~~Remaining estimated aggregate annual~~Estimated future amortization expense ~~by fiscal year~~related to finite-lived intangible assets is as follows:


(in thousands)	Amount
Remainder of Fiscal ~~2021~~2022	$	~~7,180~~
~~Fiscal 2022~~	~~13,719~~13,232
Fiscal 2023	~~13,526~~15,226
Fiscal 2024	~~13,424~~15,124
Fiscal 2025	~~13,219~~14,919
Fiscal 2026	14,865
Fiscal 2027	14,865
Thereafter	~~61,269~~45,138
Total amortization expense remaining	$	~~122,337~~133,369

Note 7:8. Product Warranties

~~The Company provides~~We provide certain service and warranty on ~~its~~our products. From time to time, ~~the Company~~we also voluntarily ~~incurs~~incur costs for certain warranty-type expenses occurring after the normal warranty period expires to help protect the reputation of ~~the Company's~~our products and maintain the goodwill of ~~the Company's~~our customers. Estimated costs related to product warranty are accrued at the time of sale and are based upon

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historical warranty and service claims experience. Adjustments are made to accruals as claim data and cost experience becomes available.

In addition to the costs associated with the contractual warranty coverage provided on products, ~~the Company~~we also occasionally ~~incurs~~incur costs as a result of additional service actions not covered by warranties, including product recalls and customer satisfaction actions. Although ~~the Company estimates~~we estimate and ~~reserves~~reserve for the cost of these service actions when probable and estimable, there can be no assurance that expense levels will remain at current levels or such reserves will continue to be adequate.

Changes in the ~~Company's~~ product warranty liability are as follows:

Three Months Ended Six Months Ended
(in thousands) February 27,
2021 February 29,
2020 February 27,
2021 February 29,
2020
Balance at beginning of period $ 70,502 $ 61,107 $ 64,031 $ 44,436
Business acquisition(1)
0 0 0 15,147
Provision 20,227 15,729 41,930 31,047
Claims paid (14,689) (16,625) (29,921) (30,419)
Balance at end of period $ 76,040 $ 60,211 $ 76,040 $ 60,211


	Three Months Ended				Six Months Ended
(in thousands)	February 26, 2022		February 27, 2021		February 26, 2022		February 27, 2021
Balance at beginning of period	$	102,424	$	70,502	$	91,222	$	64,031
Business acquisition(1)	—		—		4,656		—
Provision	31,163		20,227		57,222		41,930
Claims paid	(19,769)		(14,689)		(39,282)		(29,921)
Balance at end of period	$	113,818	$	76,040	$	113,818	$	76,040

(1) Relates to the acquisition of ~~Newmar~~Barletta on ~~November 8, 2019.~~August 31, 2021. See Note 2 ~~Business Combinations~~to the Consolidated Financial Statements in ~~the Company's Annual Report~~Item 1 of Part I of this quarterly report on Form ~~10-K for the fiscal year ended August 29, 2020~~10-Q for additional acquisition information.

Note 8:9. Long-Term Debt

~~The components~~Long-term debt consists of ~~long-term debt are as follows:~~

(in thousands) February 27,
2021 August 29,
2020
ABL Credit Facility $ 0 $ 0
Senior Secured Notes 300,000 300,000
Convertible Notes 300,000 300,000
Long-term debt, gross 600,000 600,000
Convertible Notes unamortized interest discount (67,525) (74,294)
Debt issuance costs, net (12,191) (13,076)
Long-term debt, net $ 520,284 $ 512,630
the following:


(in thousands)	February 26, 2022		August 28, 2021
ABL Credit Facility	$	—	$	—
Senior Secured Notes	300,000		300,000
Convertible Notes	300,000		300,000
Long-term debt, gross	600,000		600,000
Convertible Notes unamortized interest discount	(53,040)		(60,366)
Debt issuance costs, net	(9,970)		(11,075)
Long-term debt, net	$	536,990	$	528,559

Credit Agreements

On July 8, 2020, ~~the Company~~we closed ~~its~~our private offering (the “Senior Secured Notes Offering”) of ~~$300~~$300.0 million aggregate principal amount of 6.25% Senior Secured Notes due 2028 (the “Senior Secured Notes”). The Senior Secured Notes were issued in accordance with an Indenture dated as of July 8, 2020 (the “Indenture”). The Senior Secured Notes will mature on July 15, 2028 unless earlier redeemed or repurchased. Interest on the Senior Secured Notes accrues starting July 8, 2020 and is payable semi-annually in arrears on January 15 and July 15 of each year, which began on January 15, 2021. ~~The Senior Secured Notes and the~~

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related guarantees are secured by (i) a first-priority lien on substantially all of the Company’s and the subsidiary guarantor parties' existing and future assets (other than certain collateral under the Company’s ABL facility) and (ii) a second-priority lien on the Company’s present and future accounts and receivables, inventory and other related assets and proceeds that secure the ABL facility on a first-priority basis.

~~The Indenture limits certain abilities of the Company~~Debt issuance costs incurred and its subsidiaries (subject to certain exceptions and qualifications) to incur additional debt and provide additional guarantees; make restricted payments; create or permit certain liens; make certain asset sales; use the proceeds from the sale of assets and subsidiary stock; create or permit restrictions on the ability of the Company’s restricted subsidiaries to pay dividends or make other inter-company distributions; engage in certain transactions with affiliates; designate subsidiaries as unrestricted subsidiaries; and consolidate, merge or transfer all or substantially all of the Company’s assets and the assets of its restricted subsidiaries.

~~The Company amortizes debt issuance costs~~capitalized are amortized on a straight-line basis over the term of the associated debt agreement. If early principal payments are made on the Senior Secured Notes, a proportional amount of the unamortized debt issuance costs is expensed. As part of the Senior Secured Notes Offering, ~~the Company~~we capitalized $7.5 million in debt issuance costs that will be amortized over the eight-year term of the agreement.

On November 8, 2016, ~~the Company~~we entered into an asset-based revolving credit agreement ("ABL") and a loan agreement ("Term Loan") with JPMorgan Chase Bank, N.A. ("JPMorgan Chase"), as administrative agent and certain lenders from time to time party thereto. The remaining principal balance of the Term Loan as of July 8, 2020 was $249.8 million, which was repaid with the proceeds from the Senior Secured Notes, and debt issuance costs of $4.7 million were written off upon repayment. In addition, the interest rate swaps with a liability position of $0.6 million hedging the Term Loan interest rates were settled early in July 2020.

Under the ABL, ~~the Company has~~we have a $192.5 million credit facility that matures on October 22, 2024 (subject to certain factors which may accelerate the maturity date) on a revolving basis, subject to availability under a borrowing base consisting of eligible accounts receivable and eligible inventory. The ABL is available for issuance of letters of credit to a specified limit of $19.3 million. ~~The Company pays~~We pay a commitment fee of 0.25% on the average daily amount of the facility available, but unused. ~~The Company~~We can elect to base the interest rate on various rates plus specific spreads depending on the amount of borrowings outstanding. If drawn, ~~the Company~~we would pay interest on ABL borrowings at a floating rate based upon ~~LIBOR plus~~ a spread of between 1.25% and 1.75%, plus LIBOR, depending on the usage of the facility during the most recent quarter. Based on current usage, ~~the Company~~we would pay LIBOR plus 1.25%.

Refer to Note 9 of the Notes to the Consolidated Financial Statements included in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended August 28, 2021 for additional information regarding these credit agreements.

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Convertible Notes

On November 1, 2019, ~~the Company~~we issued $300.0 million in aggregate principal amount of 1.5% unsecured convertible senior notes due 2025 (“Convertible Notes”). The net proceeds from the issuance of the Convertible Notes, after deducting the initial purchasers' transaction fees and offering expense payable by ~~the Company,~~us, were approximately $290.2 million. The Convertible Notes bear interest at the annual rate of 1.5%, payable on April 1 and October 1 of each year, beginning on April 1, 2020, and will mature on April 1, 2025, unless earlier converted or repurchased by ~~the Company.~~us.

The Convertible Notes will be convertible into cash, shares of ~~the Company's~~our common stock or a combination thereof, at the election of ~~the Company,~~us, at an initial conversion rate of 15.6906 shares of common stock per ~~$1,000~~$1 thousand principal amount of Convertible Notes, which is equivalent to an initial conversion price of approximately $63.73 per share, as adjusted pursuant to the terms of the indenture governing the Convertible Notes. The Convertible Notes may be converted at any time on or after October 1, 2024, until the close of business on the second scheduled trading day immediately preceding the maturity date.

The conversion rate of the Convertible Notes may be adjusted in certain circumstances, including in connection with a conversion of the Convertible Notes made following certain fundamental changes and under other circumstances set forth in the indenture. It is ~~the Company's~~our current intent to settle all conversions of the Convertible Notes ~~through settlement of~~in cash. ~~The Company’s~~Our ability to cash settle may be limited depending on the stock price at the time of conversion.

~~Prior to the close of business on the business day immediately preceding October 1, 2024, the Convertible Notes will be convertible only under the following circumstances:~~

(1) during any fiscal quarter commencing after December 31, 2019 if the closing sale price of the common stock is more than 130% of the applicable conversion price on each applicable trading day for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

(2) during the 5 consecutive business day period after any 5 consecutive trading day period (the "measurement period") in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the common stock and the conversion rate for the Convertible Notes on each such trading day; or

~~(3) upon the occurrence of certain specified corporate events set forth in the indenture.~~

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~~The Company may not redeem the Convertible Notes at its option prior to the maturity date, and no sinking fund is provided for the Convertible Notes.~~

On October 29, 2019 and October 30, 2019, in connection with the offering of the Convertible Notes, ~~the Company~~we entered into privately negotiated convertible note hedge transactions (collectively, the “Hedge Transactions”) that cover, subject to customary anti-dilution adjustments, the number of shares of ~~the Company's~~our common stock that initially underlie the Convertible Notes, and are expected generally to reduce the potential dilution and/or offset any cash payments the Company is required to make in excess of the principal amount due, as the case may be, upon conversion of the Convertible Notes in the event that the market price of the Company's common stock is greater than the strike price of the Hedge Transactions, which was initially $63.73 per share (subject to adjustment under the terms of the Hedge Transactions), corresponding to the initial conversion price of the Convertible Notes.

On October 29, 2019 and October 30, 2019, ~~the Company~~we also entered into privately negotiated warrant transactions (collectively, the “Warrant Transactions” and, together with the Hedge Transactions, the “Call Spread Transactions”), whereby ~~the Company~~we sold warrants at a higher strike price relating to the same number of shares of ~~the Company's~~our common stock that initially underlie the Convertible Notes, subject to customary anti-dilution adjustments. The initial strike price of the warrants is $96.20 per share (subject to adjustment under the terms of the Warrant Transactions), which is 100% above the last reported sale price of the Company's common stock on October 29, 2019. The Warrant Transactions could have a dilutive effect to the Company's stockholders to the extent that the market price per share of the Company's common stock, as measured under the terms of the Warrant Transactions, exceeds the applicable strike price of the warrants.

~~The Company used $28.6 million of the net proceeds from the issuance of the Convertible Notes to pay the cost of the Call Spread Transactions.~~

The Hedge Transactions and the Warrant Transactions are separate transactions, in each case, and are not part of the terms of the Convertible Notes and will not affect any holder’s rights under the Convertible Notes. Holders of the Convertible Notes will not have any rights with respect to the Call Spread Transactions.

Accounting Treatment of the Convertible Notes and Related Hedge Transactions and Warrant Transactions

The Call Spread Transactions were classified as equity. ~~The Company~~We bifurcated the proceeds from the offering of the Convertible Notes between liability and equity components. On the date of issuance, the liability and equity components were calculated to be approximately $215.0 million and $85.0 million, respectively. The initial $215.0 million liability component was determined based on the fair value of similar debt instruments excluding the conversion feature assuming a hypothetical interest rate of 8%. The initial $85.0 million ($64.1 million net of tax) equity component represents the difference between the fair value of the initial $215.0 million in debt and the $300.0 million of gross proceeds. The related initial debt discount of $85.0 million is being amortized over the life of the Convertible Notes as non-cash interest expense using the effective interest method.

In connection with the above-noted transactions, ~~the Company~~we incurred approximately $9.8 million of offering-related costs. These offering fees were allocated to the liability and equity components in proportion to the allocation of proceeds and accounted for as debt and equity issuance costs, respectively. ~~The Company~~We allocated $7.0 million of debt issuance costs to the liability component, which were capitalized as deferred financing costs within ~~Long-term debt.~~long-term debt on the Consolidated Balance Sheets. These costs are being amortized as interest expense over the term of the debt using the effective interest method. The remaining $2.8 million of transaction costs allocated to the equity component were recorded as a reduction of the equity component.

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Fair Value and Future Maturities

As of February ~~27,~~26, 2022 and August 28, 2021, the fair value of long-term debt, gross, was ~~$723.1 million. As of August 29, 2020, the fair value of long-term debt, gross, was $674.7 million.~~$663.5 million and $726.6 million, respectively.

Aggregate contractual maturities of debt in future fiscal years are as follows:


(in thousands)	Amount
Remainder of Fiscal ~~2021~~2022	$	0
~~Fiscal 2022~~	0—
Fiscal 2023	0—
Fiscal 2024	0—
Fiscal 2025	300,000
Fiscal 2026	—
Fiscal 2027	—
Thereafter	300,000
Total Senior Secured Notes and Convertible Notes	$	600,000

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Note 9:10. Employee and Retiree Benefits

Deferred compensation liabilities are as follows:


(in thousands)	February 26, 2022		August 28, 2021
Non-qualified deferred compensation	$	9,015	$	9,731
Supplemental executive retirement plan	1,623		1,615
Executive deferred compensation plan	1,520		1,029
Total deferred compensation benefits	12,158		12,375
Less current portion(1)	2,733		2,825
Deferred compensation benefits, net of current portion	$	9,425	$	9,550

(in thousands) February 27,
2021 August 29,
2020
Non-qualified deferred compensation $ 10,583 $ 11,460
Supplemental executive retirement plan 1,864 1,838
Executive deferred compensation plan 924 710
Deferred compensation benefits 13,371 14,008
Less current portion(1)
2,850 2,878
Deferred compensation benefits, net of current portion $ 10,521 $ 11,130

(1) Included in ~~Accrued~~accrued compensation on the ~~Condensed~~ Consolidated Balance Sheets.

Note ~~10:~~11. Contingent Liabilities and Commitments

Repurchase Commitments

Generally, manufacturers in the same industries as ~~the Company~~us enter into repurchase agreements with lending institutions which have provided wholesale floorplan financing to dealers. Most dealers are financed on a "floorplan" basis under which a bank or finance company lends the dealer all, or substantially all, of the purchase price, collateralized by a security interest in the units purchased.

~~The Company's~~Our repurchase agreements generally provide that, in the event of default by the dealer on the agreement to pay the lending institution, ~~Winnebago Industries~~we will repurchase the financed merchandise. The terms of these agreements, which generally can last up to 24 months, provide that ~~the Company's~~our liability will be the lesser of remaining principal owed by the dealer to the lending institution, or dealer invoice less periodic reductions based on the time since the date of the original invoice. ~~The Company's~~Our liability cannot exceed 100% of the dealer invoice. In certain instances, ~~the Company~~we also ~~repurchases~~repurchase inventory from dealers due to state law or regulatory requirements that govern voluntary or involuntary relationship terminations. Although laws vary from state to state, some states have laws in place that require manufacturers of recreational vehicles or boats to repurchase current inventory if a dealership exits the business. The total contingent liability on all of our repurchase agreements ~~of the Company~~ was approximately ~~$916.4~~$1,452.6 million and ~~$798.9~~$727.7 million at February ~~27, 2021~~26, 2022 and August ~~29, 2020,~~28, 2021, respectively.

Repurchased sales are not recorded as a revenue transaction, ~~but~~rather the net difference between the original repurchase price and the resale price ~~are~~is recorded against the loss reserve, which is a deduction from gross revenue. ~~The Company's~~Our loss reserve for repurchase commitments contains uncertainties because the calculation requires management to make assumptions and apply judgment regarding a number of factors. ~~The Company's~~Our risk of loss related to these repurchase commitments is significantly reduced by the potential resale value of any products that are subject to repurchase and is spread over numerous dealers and lenders. The aggregate contingent liability related to ~~the Company's~~our repurchase agreements represents all financed dealer inventory at the ~~period~~period-end reporting date subject to a repurchase agreement, net of the greater of periodic reductions per the agreement or dealer principal payments. Based on these repurchase agreements and ~~the Company's~~our historical loss experience, an associated loss reserve is established which is included in ~~Accrued~~accrued expenses: ~~Other~~other on the ~~Condensed~~ Consolidated Balance Sheets. ~~The Company's~~Our repurchase accrual was ~~$1.0~~$1.2 million and $0.9 million at February ~~27, 2021~~26, 2022 and August ~~29, 2020.~~28, 2021, respectively. Repurchase risk is affected by the credit worthiness of ~~the Company's~~our dealer ~~network, and management does~~network. We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions used to establish the loss reserve for repurchase commitments.

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There was no material activity related to repurchase agreements during the ~~first~~ six months ended February ~~27, 2021~~26, 2022 and February ~~29, 2020.~~27, 2021.

Litigation

~~The Company is~~We are involved in various legal proceedings which are considered ordinary and routine litigation incidental to the business, some of which are covered in whole or in part by insurance. While ~~the Company believes~~we believe the ultimate disposition of litigation will not have a material adverse effect on ~~the Company's~~our financial position, results of operations or liquidity, ~~there exists~~ the possibility exists that such litigation may have an impact on ~~the Company's~~our results for a particular reporting period in which litigation effects become probable and reasonably estimable. Though ~~the Company does~~we do not believe there is a reasonable likelihood that there will be a material change related to these matters, litigation is subject to inherent uncertainties and ~~management’s~~our view of these matters may change in the future.

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Note ~~11:~~12. Revenue

~~The Company generates all~~All operating revenue is generated from contracts with customers. ~~The Company's~~Our primary revenue source ~~of revenue~~ is generated through the sale of manufactured ~~motorized~~non-motorized towable units, ~~non-motorized towable~~motorized units and marine units to ~~the Company's~~our independent dealer network ~~(the Company's~~(our customers). The following table disaggregates revenue by reportable segment and product category:


	Three Months Ended				Six Months Ended
(in thousands)	February 26, 2022		February 27, 2021		February 26, 2022		February 27, 2021
Net Revenues
Towable
Fifth Wheel	$	281,147	$	226,942	$	606,909	$	467,390
Travel Trailer	356,750		207,042		672,164		415,638
Other(1)	8,704		5,300		18,552		11,157
Total Towable	646,601		439,284		1,297,625		894,185
Motorhome					—		—
Class A	164,999		157,744		360,296		291,910
Class B	167,691		137,170		312,702		246,457
Class C and Other(1)	84,875		87,661		166,046		166,597
Total Motorhome	417,565		382,575		839,044		704,964
Marine	97,309		14,463		176,627		26,357
Corporate / All Other(2)	3,256		3,564		7,175		7,511
Consolidated Net Revenues	$	1,164,731	$	839,886	$	2,320,471	$	1,633,017

Three Months Ended Six Months Ended
(in thousands) February 27,
2021 February 29,
2020 February 27,
2021 February 29,
2020
Net Revenues
Towable:
Fifth Wheel $ 226,942 $ 156,748 $ 467,390 $ 351,937
Travel Trailer 207,042 123,894 415,638 264,357
Other(1)
5,300 2,821 11,157 8,419
Total Towable 439,284 283,463 894,185 624,713
Motorhome:
Class A 157,744 179,705 291,910 245,349
Class B 137,170 81,893 246,457 167,349
Class C 79,263 55,657 148,549 122,533
Other(1)
8,398 8,287 18,048 16,202
Total Motorhome 382,575 325,542 704,964 551,433
Corporate / All Other:
Other(2)
18,027 17,805 33,868 39,122
Total Corporate / All Other 18,027 17,805 33,868 39,122
Consolidated $ 839,886 $ 626,810 $ 1,633,017 $ 1,215,268

(1) Relates to parts, accessories, and services.

(2) Relates to ~~marine,~~ specialty vehicle units, parts, accessories, and services.

~~The Company does~~We do not have material contract assets or liabilities. ~~The Company establishes allowances~~Allowances for uncollectible receivables are established based on historical collection trends, write-off history, consideration of current conditions and expectations for future economic conditions.

Concentration of Risk

~~None of the Company's~~No single dealer ~~organizations accounted for more than 10% of net revenue for each of the second quarter periods of Fiscal 2021 and Fiscal 2020. In addition, none of the Company's dealer organizations~~organization accounted for more than 10% of net revenue for the ~~first~~ six months ~~of Fiscal2021 and Fiscal 2020.~~ended February 26, 2022 or February 27, 2021.

Note ~~12:~~13. Stock-Based Compensation

On December 11, 2018, ~~the Company's~~our shareholders approved the Winnebago Industries, Inc. 2019 Omnibus Incentive Plan ("2019 Plan") as detailed in ~~the Company's~~our Proxy Statement for the 2018 Annual Meeting of Shareholders. The 2019 Plan allows ~~the Company~~us to grant or issue non-qualified stock options, incentive stock options, restricted share ~~awards,~~units, and other equity compensation to key employees and to non-employee directors. The 2019 Plan replaces the 2014 Omnibus Equity, Performance Award, and Incentive Compensation Plan (as amended, the "2014 Plan"). The number of shares of ~~the Company's Common Stock~~our common stock that may be ~~the subject of awards~~awarded and issued under the 2019 Plan is 4.1 million shares, plus the shares subject to any awards outstanding under the 2014 Plan and ~~the Company's~~our predecessor plan, the 2004 Incentive Compensation Plan (the “2004 Plan”), on December 11, 2018 that subsequently expire, are forfeited or canceled, or are settled for cash. Until such time, ~~however,~~ awards under the 2014 Plan and the 2004 Plan, respectively, that ~~are~~were outstanding on December 11, 2018 will continue to be subject to the terms of the 2014 Plan or 2004 Plan, as applicable. Shares remaining available for future awards under the 2014 Plan were not carried over into the 2019 Plan.

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Stock-based compensation expense was ~~$4.6~~$4.2 million and ~~$2.0~~$4.6 million during the ~~second quarters of Fiscal~~three months ended February 26, 2022 and February 27, 2021, respectively; and ~~2020, respectively,~~$6.9 million and $7.0 million ~~and $3.6 million~~ during the ~~first~~ six months ~~of Fiscal~~ended February 26, 2022 and February 27, 2021, ~~and 2020.~~respectively. Compensation expense is recognized over the requisite service or performance period of the award.

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Note ~~13: Restructuring~~

In Fiscal 2020, the Company's Class A diesel production was moved from Junction City, OR to Forest City, IA. In November 2020, a portion of the property in Junction City, OR was sold for net proceeds of $7.7 million with a resulting gain of $3.6 million. The gain on this sale is included within selling, general, and administrative expenses for Fiscal 2021. Total restructuring expenses for the first six months of Fiscal 2021 were immaterial to the overall financial statements.

~~The Company does not expect additional reorganization charges during the remainder of Fiscal 2021.~~

~~Note 14:~~14. Income Taxes

~~The Company's~~Our effective tax rate ~~increased to~~was 24.0% and 23.5% for the three months ended February 26, 2022 and February 27, 2021, respectively, and 23.6% and 23.4% for the six months ended February 26, 2022 and February 27, 2021, ~~from 20.1%~~respectively. The increase in tax rate for the ~~first~~three and six months ended February ~~29, 2020 due~~26, 2022 compared to the three and six months ended February 27, 2021 was driven primarily toby the impact of both consistent tax credits year-over-year ~~credits~~ over ~~higher~~increased income in the current year ~~pre-tax income~~ and ~~favorable research and development discrete items~~a net unfavorable expense in the ~~prior year.~~current year related to stock compensation.

~~The Company files~~We file a U.S. Federal tax return, as well as returns in various international and state jurisdictions. As of February ~~27, 2021, the Company's~~26, 2022, our Federal returns from Fiscal ~~2017~~2018 to present are subject to review by the Internal Revenue Service. With limited ~~exception,~~exceptions, state returns from Fiscal ~~2016~~2017 to present continue to be subject to review by state taxing jurisdictions. ~~The Company is~~We are currently under review by certain U.S. state tax authorities for Fiscal 2016 through Fiscal 2019. ~~The Company believes it has~~We believe we have adequately reserved for ~~its~~our exposure to potential additional payments for uncertain tax positions in ~~its~~our liability for unrecognized tax benefits.

Note ~~15: Income~~15. Earnings Per Share

~~The following table reflects the calculation of basic~~Basic and diluted ~~income~~earnings per ~~share:~~

Three Months Ended Six Months Ended
(in thousands, except per share data) February 27,
2021 February 29,
2020 February 27,
2021 February 29,
2020
Numerator
Net income $ 69,068 $ 17,268 $ 126,491 $ 31,336
Denominator
Weighted average common shares outstanding 33,533 33,614 33,571 32,840
Dilutive impact of stock compensation awards 270 304 250 303
Dilutive impact of convertible notes 107 0 0 0
Weighted average common shares outstanding, assuming dilution 33,910 33,918 33,821 33,143
Anti-dilutive securities excluded from Weighted average common shares outstanding, assuming dilution 0 45 53 94
Basic income per common share $ 2.06 $ 0.51 $ 3.77 $ 0.95
Diluted income per common share $ 2.04 $ 0.51 $ 3.74 $ 0.95
share are calculated as follows:


	Three Months Ended				Six Months Ended
(in thousands, except per share data)	February 26, 2022		February 27, 2021		February 26, 2022		February 27, 2021
Net income	$	91,175	$	69,068	$	190,805	$	126,491

Weighted average common shares outstanding	33,098		33,533		33,210		33,571
Dilutive impact of stock compensation awards	458		270		511		250
Dilutive impact of convertible notes	378		107		447		—
Weighted average common shares outstanding, assuming dilution	33,934		33,910		34,168		33,821

Anti-dilutive securities excluded from weighted average common shares outstanding, assuming dilution	40		—		112		53

Basic earnings per common share	$	2.75	$	2.06	$	5.75	$	3.77
Diluted earnings per common share	$	2.69	$	2.04	$	5.58	$	3.74

~~Anti-dilutive securities were not included in the computation of diluted income per common share because they are considered anti-dilutive under~~Under the treasury stock ~~method.~~method, shares associated with certain anti-dilutive securities have been excluded from the diluted weighted average shares outstanding calculation because the exercise of those options would lead to a net reduction in common shares outstanding or anti-dilution.

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Note ~~16:~~16. Accumulated Other Comprehensive Income (Loss)

Changes in Accumulated Other Comprehensive Income ("AOCI") by component, net of tax, were:

Three Months Ended
February 27, 2021 February 29, 2020
(in thousands) Defined Benefit Pension Items Total Defined Benefit Pension Items Total
Balance at beginning of period $ (517) $ (517) $ (551) $ (551)
Amounts reclassified from AOCI 8 8 8 8
Balance at end of period $ (509) $ (509) $ (543) $ (543)
Six Months Ended
February 27, 2021 February 29, 2020
(in thousands) Defined Benefit Pension Items Total Defined Benefit Pension Items Interest Rate Swap Total
Balance at beginning of period $ (526) $ (526) $ (559) $ 68 $ (491)
OCI before reclassifications 0 0 0 (68) (68)
Amounts reclassified from AOCI 17 17 16 0 16
Net current-period OCI 17 17 16 (68) (52)
Balance at end of period $ (509) $ (509) $ (543) $ 0 $ (543)


	Three Months Ended				Six Months Ended
	February 26, 2022		February 27, 2021		February 26, 2022		February 27, 2021
(in thousands)	Defined Benefit Pension Items		Defined Benefit Pension Items		Defined Benefit Pension Items		Defined Benefit Pension Items
Balance at beginning of period	$	(482)	$	(517)	$	(491)	$	(526)
Amounts reclassified from AOCI	9		8		18		17
Net current-period OCI	9		8		18		17
Balance at end of period	$	(473)	$	(509)	$	(473)	$	(509)

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Reclassifications out of AOCI, net of tax, were:

Three Months Ended Six Months Ended
(in thousands) Location on Consolidated Statements
of Income and Comprehensive Income February 27,
2021 February 29,
2020 February 27,
2021 February 29,
2020
Amortization of net actuarial loss SG&A $ 8 $ 8 $ 17 $ 16


		Three Months Ended				Six Months Ended
(in thousands)	Location on Consolidated Statements of Income and Comprehensive Income	February 26, 2022		February 27, 2021		February 26, 2022		February 27, 2021
Amortization of net actuarial loss	SG&A	$	9	$	8	$	18	$	17

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of ~~Operations.~~Operations

~~Unless the context otherwise requires, the use of the~~The terms "Winnebago," "we," "us," and ~~"our" refers~~"our," unless the context otherwise requires, refer to Winnebago Industries, Inc. and its wholly-owned subsidiaries.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of ~~our~~ management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. Unless otherwise noted, transactions and other factors significantly impacting our financial condition, results of operations and liquidity are discussed in order of magnitude.

Our MD&A should be read in conjunction with the Consolidated Financial Statements and related Notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended August ~~29, 2020~~28, 2021 (including the information presented therein under Risk Factors), as well as our reports on Forms 10-Q and 8-K and other publicly available information. All amounts herein are unaudited. All amounts in tables are in thousands, except share and per share data, unless otherwise noted.

Overview

Winnebago Industries, Inc. is one of the leading North American manufacturers ~~with a diversified portfolio~~ of recreation vehicles ("RV"s) and marine products with a diversified portfolio used primarily in leisure travel and outdoor ~~recreation~~recreational activities. We produce our motorhome units in Iowa and Indiana; our towable units in Indiana; and our marine units in Indiana and 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. We also distribute our marine products internationally through independent dealers, who then retail the products to the end consumer.

~~COVID-19 Pandemic~~Macroeconomic Events

In February 2022, the United States announced targeted economic sanctions on Russia in response to the military conflict in Ukraine. As described in Part I, Item 1A — Risk Factors, in the Annual Report on Form 10-K for the fiscal year ended August 28, 2021, 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. 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.

We continue to monitor guidance from international and domestic authorities, including federal, state and local public health authorities, regarding the COVID-19 pandemic and may take additional actions based on their requirements and recommendations. In these circumstances, there may be developments outside our control requiring us to adjust our operating plan. Overall, t~~There~~here has been strong retail demand by consumers of RVs as a safe travel option, and of marine products as a safe way to experience the outdoors, during the COVID-19 pandemic. ~~In addition, while our~~Our production has experienced certain supply shortages and 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. Despite certain supply shortages and inflationary cost input pressures, we ~~are~~continue to actively ~~managing~~manage through these temporary supply chain disruptions. Refer to the ~~COVID-19-related~~COVID-19 related risk factors disclosed in Item 1A ~~"Risk Factors"~~of Part I in our Annual Report on Form 10-K for the fiscal year ended August ~~29, 2020.~~28, 2021.

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. For further discussion regarding the acquisition, refer to Note 2 to the Notes to Consolidated Financial Statements, included in Item 1 of Part I in this Quarterly Report on Form 10-Q.

The acquisition of Barletta resulted in a newly created Marine reportable segment effective as of the first quarter of Fiscal 2022. The segment consists of Barletta and our existing Chris-Craft operating segment.

Non-GAAP ~~Reconciliation~~Financial Measures

This MD&A includes financial information prepared in accordance with ~~accounting principles~~ generally accepted ~~in the U.S.~~accounting principles ("GAAP"), as well as certain adjusted or non-GAAP financial measures such as EBITDA and Adjusted EBITDA. 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.

These non-GAAP financial measures, which are not calculated or presented in accordance with GAAP, have been provided as information supplemental and in addition to the financial measures presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction

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with, the GAAP financial measures presented herein. The non-GAAP financial measures presented may differ from similar measures used by other companies.

~~Refer~~Included in "Results of Operations" below for the three and six months ended February 26, 2022 compared to the Results of Operations - Current Quarter Compared to the Comparable Prior Year Quarter and the Results of Operations - First Six Months of Fiscal 2021 Compared to the First Six Months of Fiscal 2020 forcomparable prior year period is a ~~detailed~~ reconciliation of ~~items that impacted~~ EBITDA and Adjusted ~~EBITDA.~~EBITDA from net income, the nearest GAAP measure. We have included these non-GAAP performance measures as a comparable measure to illustrate the effect of non-recurring transactions ~~occurring~~that occurred during the reported periods and to improve comparability of our results from period to period. We believe Adjusted EBITDA provides meaningful supplemental information about our operating performance ~~because these measures exclude~~as this measure excludes amounts from net income that we do not consider part of our core operating results when assessing our performance. Examples of items excluded from Adjusted EBITDA include 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.~~income or loss.

Management uses these non-GAAP financial measures (a) to evaluate our historical and prospective financial performance and trends as well as our performance relative to competitors and peers; (b) to measure operational profitability on a consistent basis; (c) in presentations to the members of our ~~board~~Board of ~~directors~~Directors to enable our ~~board~~Board of ~~directors~~Directors to have the same measurement basis of operating performance as is used by management in ~~its assessments~~their assessment of performance and in ~~forecasting and budgeting for our company;~~forecasting; (d) to evaluate potential acquisitions; and (e) to ensure compliance with covenants and restricted activities under the terms of our ABL Credit Facility and outstanding notes, as further described in Note ~~8, Long-Term Debt, of~~9 to the ~~Notes to Condensed~~ Consolidated Financial Statements included in Item 1 of Part I~~Condensed Consolidated Financial Statements,~~ of this Quarterly Report on Form 10-Q. We believe these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties to evaluate companies in ~~our~~the industry.

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~~Reportable Segments~~

We have six operating segments: 1) Grand Design towables, 2) Winnebago towables, 3) Winnebago motorhomes, 4) Newmar motorhomes, 5) Chris-Craft marine, and 6) Winnebago specialty vehicles. We evaluate performance based on each operating segment's Adjusted EBITDA, as defined below, which excludes certain corporate administration expenses and non-operating income and expense.

Our two reportable segments include: 1) Towable (comprised of products which are not motorized and are generally towed by another vehicle as well as other related manufactured products and services), which is an aggregation of the Winnebago towables and Grand Design towables operating segments and 2) Motorhome (comprised of products that include a motorized chassis as well as other related manufactured products and services), which is an aggregation of the Winnebago motorhomes and Newmar motorhomes operating segments.

The Corporate / All Other category includes the Chris-Craft marine and Winnebago specialty vehicles operating segments as well as expenses related to certain corporate administration expenses for the oversight of the enterprise. These expenses include items such as corporate leadership and administration costs.

Industry Trends

~~Key reported statistics for~~The RV and marine industries continue to experience supply chain disruptions, including supply shortages, shipping delays, and material and component cost inflation. While we continue to manage through these supply chain disruptions, they have impacted our ability to increase production to meet existing demand in the ~~North American RV industry are as follows:~~

•~~Wholesale unit shipments: RV product delivered to~~current fiscal year. If these disruptions worsen, we could experience a negative impact on our sales and earnings in the ~~dealers, which is reported monthly by the Recreation Vehicle Industry Association ("RVIA")~~

•~~Retail unit registrations: consumer purchases of RVs from dealers, which is reported monthly by Stat Surveys~~future.

We track RV Industry conditions using these key statistics to monitor trends and evaluate and understand our performance relative to the overall industry. The following is an analysis of changes in these key statistics for the rolling 12 months through January as of 2021 and 2020:

US and Canada Industry
Wholesale Unit Shipments per RVIA Retail Unit Registrations per Stat Surveys
Rolling 12 Months through January Rolling 12 Months through January
2021 2020 Unit Change % Change 2021 2020 Unit Change % Change
Towable(1)
391,747 357,358 34,389 9.6 % 455,723 395,134 60,589 15.3 %
Motorhome(2)
41,651 46,280 (4,629) (10.0) % 53,093 52,135 958 1.8 %
Combined 433,398 403,638 29,760 7.4 % 508,816 447,269 61,547 13.8 %

~~(1) Towable: Fifth wheel and travel trailer products.~~

~~(2) Motorhome: Class A, B, and C products.~~

Due to the onset of the COVID-19 pandemic in March 2020, evidenced by an industry wide shutdown of RV manufacturing in April 2020, shipments declined year over year for the period of March 2020 through May 2020. Shipments returned to growth from June 2020 through January 2021 due to high levels of end consumer demand and extremely low levels of dealer inventories, most notably in the towables segment. The rolling twelve months retail information for 2021 and 2020 illustrates that retail sales remain at healthy levels relative to the industry's historical retail levels. We believe retail demand is the key driver to continued growth in the industry.

The most recent RVIA wholesale shipment forecasts for calendar year 2021, as noted in the table below, indicate that industry shipments are expected to experience growth in 2021. The retail activity is anticipated to remain at healthy levels, and wholesale shipments are expected to reflect a rebound associated with dealers rebuilding their inventories.

Calendar Year
Wholesale Unit Shipment Forecast per RVIA(1)
2021
Forecast 2020
Actual Unit Change % Change
Aggressive 543,600 430,400 113,200 26.3 %
Most likely 533,400 430,400 103,000 23.9 %
Conservative 523,100 430,400 92,700 21.5 %

~~(1) Prepared by ITR Economics for RVIA and reported in the Roadsigns RV Spring 2021 Industry Forecast Issue.~~

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~~Market Share~~

Our retail unit market share, as reported by Stat Surveys based on state records, is illustrated below. Market share is calculated by taking our brands total unit sales divided by the total units sold in the motorized and travel trailer and fifth wheel markets. The data is used to analyze growth and profitability of our products and brands year over year. Note that this data is subject to adjustment and is continuously updated.

Rolling 12 Months through January Calendar Year
US and Canada 2021
2020(1)
2020
2019(1)
2018
Travel trailer and fifth wheels 10.4 % 9.4 % 10.4 % 9.3 % 7.8 %
Motorhome A, B, C 20.7 % 19.9 % 20.8 % 16.1 % 15.5 %
Total market share 11.5 % 10.6 % 11.5 % 10.1 % 8.7 %

~~(1) Includes retail unit market share for Newmar since its acquisition on November 8, 2019.~~

~~Enterprise Resource Planning System~~

In the second quarter of Fiscal 2015, our Board of Directors approved the strategic initiative of implementing an enterprise resource planning ("ERP") system to replace our legacy business applications. The new ERP platform will provide better support for our changing business needs and plans for future growth. Our initial cost estimates have grown for additional needs of the business, such as the opportunity to integrate the ERP system with additional manufacturing systems. The project includes software, external implementation assistance, and increased internal staffing directly related to this initiative. We anticipate that approximately 40% of the cost will be expensed in the period incurred and 60% will be capitalized and depreciated over its useful life.

~~The following table illustrates the cumulative project costs:~~

Six Months Ended Fiscal Year Cumulative Investment
(in thousands) February 27,
2021 2020 2019 Fiscal 2015-2020
Capitalized $ 2,171 $ 3,891 $ 3,875 $ 28,848 59.3 %
Expensed 1,166 1,788 3,709 19,829 40.7 %
Total $ 3,337 $ 5,679 $ 7,584 $ 48,677 100.0 %

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Results of Operations - ~~Current Quarter~~Three Months Ended February 26, 2022 Compared to the ~~Comparable Prior Year Quarter~~Three Months Ended February 27, 2021

Consolidated Performance Summary

The following is an analysis of changes in key items included in the ~~consolidated statements~~Consolidated Statements of ~~income and comprehensive income~~Income for the three months ended February ~~27, 2021~~26, 2022 compared to the three months ended February ~~29, 2020:~~27, 2021:


	Three Months Ended
($ in thousands, except per share data)	February 26, 2022		% of Revenues(1)		February 27, 2021		% of Revenues(1)		$ Change		% Change
Net revenues	$	1,164,731	100.0	%	$	839,886	100.0	%	$	324,845	38.7	%
Cost of goods sold	948,154		81.4	%	683,304		81.4	%	264,850		38.8	%
Gross profit	216,577		18.6	%	156,582		18.6	%	59,995		38.3	%
Selling, general, and administrative expenses	71,795		6.2	%	53,016		6.3	%	18,779		35.4	%
Amortization	8,015		0.7	%	3,591		0.4	%	4,424		123.2	%
Total operating expenses	79,810		6.9	%	56,607		6.7	%	23,203		41.0	%
Operating income	136,767		11.7	%	99,975		11.9	%	36,792		36.8	%
Interest expense, net	10,325		0.9	%	10,052		1.2	%	273		2.7	%
Non-operating loss (income)	6,507		0.6	%	(311)		—	%	(6,818)		(2,192.3)	%
Income before income taxes	119,935		10.3	%	90,234		10.7	%	29,701		32.9	%
Provision for income taxes	28,760		2.5	%	21,166		2.5	%	7,594		35.9	%
Net income	$	91,175	7.8	%	$	69,068	8.2	%	$	22,107	32.0	%

Diluted earnings per share	$	2.69			$	2.04			$	0.65	31.9	%
Diluted weighted average shares outstanding	33,934				33,910				24		0.1	%

Three Months Ended
(in thousands, except percent and per share data) February 27, 2021
% of Revenues(1)
February 29, 2020
% of Revenues(1)
$ Change % Change
Net revenues $ 839,886 100.0 % $ 626,810 100.0 % $ 213,076 34.0 %
Cost of goods sold 683,304 81.4 % 547,028 87.3 % 136,276 24.9 %
Gross profit 156,582 18.6 % 79,782 12.7 % 76,800 96.3 %
Selling, general, and administrative expenses 53,016 6.3 % 42,164 6.7 % 10,852 25.7 %
Amortization of intangible assets 3,591 0.4 % 7,974 1.3 % (4,383) (55.0) %
Total operating expenses 56,607 6.7 % 50,138 8.0 % 6,469 12.9 %
Operating income 99,975 11.9 % 29,644 4.7 % 70,331 237.3 %
Interest expense 10,052 1.2 % 8,651 1.4 % 1,401 16.2 %
Non-operating income (311) — % (270) — % 41 15.2 %
Income before income taxes 90,234 10.7 % 21,263 3.4 % 68,971 324.4 %
Provision for income taxes 21,166 2.5 % 3,995 0.6 % 17,171 429.8 %
Net income $ 69,068 8.2 % $ 17,268 2.8 % $ 51,800 300.0 %
Diluted income per share $ 2.04 $ 0.51 $ 1.53 300.0 %
Diluted average shares outstanding 33,910 33,918 (8) — %

(1) Percentages may not add due to rounding differences.

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Net revenues increased in the second quarter of Fiscal ~~2021~~2022 compared to the second quarter of Fiscal ~~2020~~2021 primarily due to unit growth, including incremental volume from the acquisition of Barletta, and ~~pricing actions.~~price increases related to current and anticipated higher material and component costs.

Gross profit as a percentage of revenue ~~increased~~was essentially flat in the second quarter of Fiscal ~~2021~~2022 compared to the second quarter of Fiscal ~~2020~~2021 primarily due to ~~pricing actions, improved~~price increases ahead of known and anticipated material and component cost inflation, and operating leverage, ~~as a result of higher revenues, productivity initiatives, and a favorable segment sales mix.~~offset by production inefficiencies related to supply constraints.

Operating expenses increased in the second quarter of Fiscal ~~2021~~2022 compared to the second quarter of Fiscal ~~2020~~2021 primarily due to ~~an increase in variable compensation~~higher operating expenses to support increasing sales and ~~increased selling costs partially offset by lower Newmar amortization.~~improved operating performance, and incremental operating expenses and amortization associated with the acquisition of Barletta.

~~Interest expense~~Non-operating loss increased in the second quarter of Fiscal ~~2021~~2022 compared to the second quarter of Fiscal ~~2020 primarily~~2021 due to ~~a higher interest~~the contingent consideration fair value adjustment related to the acquisition of Barletta.

Our effective tax rate ~~on indebtedness as a result of our refinancing of our term loan B~~was relatively flat in the ~~fourth~~second quarter of Fiscal ~~2020.~~

~~The effective tax rate increased~~2022 compared to ~~23.5% for~~ the second quarter of Fiscal 2021 ~~compared to 18.8% for the second quarter of Fiscal 2020~~ primarily due to the impact of consistent ~~year-over-year~~tax credits compared to prior year over ~~higher~~increased income in the current year ~~pre-tax income~~ and ~~favorable research and development discrete items~~net unfavorable expense in the ~~prior year.~~current year related to stock compensation.

Net income and diluted ~~income~~earnings per share increased in the second quarter of Fiscal ~~2021~~2022 compared to the second quarter of Fiscal ~~2020~~2021 primarily due to ~~the profitability impact of~~leverage gained on higher revenues, ~~and improved profit margins,~~ partially offset by aincreased operating expenses and higher ~~effective~~income tax ~~rate.~~expense.

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Non-GAAP Reconciliation

The following table reconciles net income to consolidated EBITDA and Adjusted EBITDA for the three months ended February ~~27, 2021~~26, 2022 and February ~~29, 2020:~~

Three Months Ended
(in thousands) February 27,
2021 February 29,
2020
Net income $ 69,068 $ 17,268
Interest expense 10,052 8,651
Provision for income taxes 21,166 3,995
Depreciation 4,399 4,134
Amortization of intangible assets 3,591 7,974
EBITDA 108,276 42,022
Acquisition-related fair-value inventory step-up — 3,634
Restructuring expenses — 43
Non-operating income (311) (270)
Adjusted EBITDA $ 107,965 $ 45,429
27, 2021:


	Three Months Ended
(in thousands)	February 26, 2022		February 27, 2021
Net income	$	91,175	$	69,068
Interest expense, net	10,325		10,052
Provision for income taxes	28,760		21,166
Depreciation	5,461		4,399
Amortization	8,015		3,591
EBITDA	143,736		108,276
Acquisition-related costs	486		—
Contingent consideration fair value adjustment	6,517		—
Non-operating income	(10)		(311)
Adjusted EBITDA	$	150,729	$	107,965

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Reportable Segment Performance Summary

Towable

The following is an analysis of key changes in our Towable segment for the three months ended February ~~27, 2021~~26, 2022 compared to the three months ended February ~~29, 2020:~~27, 2021:


	Three Months Ended
(in thousands, except ASP and units)	February 26, 2022		% of Revenues		February 27, 2021		% of Revenues		$ Change		% Change
Net revenues	$	646,601			$	439,284			$	207,317	47.2	%
Adjusted EBITDA	100,573		15.6	%	62,366		14.2	%	38,207		61.3	%

Average Selling Price ("ASP")(1)	41,917				32,377				9,540		29.5	%

	Three Months Ended
Unit deliveries	February 26, 2022		Product Mix(2)		February 27, 2021		Product Mix(2)		Unit Change		% Change
Travel trailer	10,764		70.4	%	8,876		65.7	%	1,888		21.3	%
Fifth wheel	4,530		29.6	%	4,632		34.3	%	(102)		(2.2)	%
Total towables	15,294		100.0	%	13,508		100.0	%	1,786		13.2	%

(1)

Three Months Ended
(in thousands, except ASP) February 27,
2021 % of Revenues February 29,
2020 % of Revenues $ Change % Change
Net revenues $ 439,284 $ 283,463 $ 155,821 55.0 %
Adjusted EBITDA 62,366 14.2 % 34,746 12.3 % 27,620 79.5 %
Average Selling Price ("ASP")(1)
32,377 32,638 (261) (0.8) %
Three Months Ended
Unit deliveries February 27,
2021
Product Mix(2)
February 29,
2020
Product Mix(2)
Unit Change % Change
Travel trailer 8,876 65.7 % 5,446 62.4 % 3,430 63.0 %
Fifth wheel 4,632 34.3 % 3,287 37.6 % 1,345 40.9 %
Total towables 13,508 100.0 % 8,733 100.0 % 4,775 54.7 %

~~(1)~~ Average selling price excludes off-invoice dealer incentives.

(2) Percentages may not add due to rounding differences.

Net revenues increased in the second quarter of Fiscal ~~2021~~2022 compared to the second quarter of Fiscal ~~2020 driven by~~2021 primarily due to price increases related to current and anticipated higher material and component costs, and unit growth.

Adjusted EBITDA increased in the second quarter of Fiscal ~~2021~~2022 compared to the second quarter of Fiscal ~~2020~~2021 primarily due to price increases ahead of current and anticipated material and component cost inflation, partially offset by higher operating expenses.

Motorhome

The following is an analysis of key changes in our Motorhome segment for the three months ended February 26, 2022 compared to the three months ended February 27, 2021:


	Three Months Ended
(in thousands, except ASP and units)	February 26, 2022		% of Revenues		February 27, 2021		% of Revenues		$ Change		% Change
Net revenues	$	417,565			$	382,575			$	34,990	9.1	%
Adjusted EBITDA	46,095		11.0	%	50,969		13.3	%	(4,874)		(9.6)	%

ASP(1)	$	146,289			$	130,856			15,433		11.8	%

	Three Months Ended
Unit deliveries	February 26, 2022		Product Mix(2)		February 27, 2021		Product Mix(2)		Unit Change		% Change
Class A	588		20.8	%	704		24.4	%	(116)		(16.5)	%
Class B	1,641		58.0	%	1,419		49.2	%	222		15.6	%
Class C	602		21.3	%	762		26.4	%	(160)		(21.0)	%
Total motorhomes	2,831		100.0	%	2,885		100.0	%	(54)		(1.9)	%

(1) ASP excludes off-invoice dealer incentives.

(2) Percentages may not add due to rounding differences.

Net revenues increased in the second quarter of Fiscal 2022 compared to the second quarter of Fiscal 2021 primarily due to price increases.

Adjusted EBITDA decreased in the second quarter of Fiscal 2022 compared to the second quarter of Fiscal 2021 primarily due to production inefficiencies caused by supply constraints, partially offset by price increases ahead of known and anticipated material

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and component cost inflation.

Marine

The following is an analysis of key changes in our Marine segment for the three months ended February 26, 2022 compared to the three months ended February 27, 2021:


	Three Months Ended
(in thousands, except ASP and units)	February 26, 2022		% of Revenues		February 27, 2021		% of Revenues		$ Change		% Change
Net revenues	$	97,309			$	14,463			$	82,846	572.8	%
Adjusted EBITDA	12,953		13.3	%	1,024		7.1	%	11,929		1,164.9	%

ASP(1)	$	73,492			$	209,931			(136,439)		(65.0)	%

	Three Months Ended
Unit deliveries	February 26, 2022				February 27, 2021				Unit Change		% Change
Boats	1,322				69				1,253		1,815.9	%

(1) ASP excludes off-invoice dealer incentives.

Net revenues increased in the second quarter of Fiscal 2022 compared to the second quarter of Fiscal 2021 primarily due to the acquisition of Barletta at the beginning of the first quarter of Fiscal 2022.

Adjusted EBITDA increased in the second quarter of Fiscal 2022 compared to the second quarter of Fiscal 2021 primarily due to the acquisition of Barletta at the beginning of the first quarter of Fiscal 2022.

Results of Operations - Six Months Ended February 26, 2022 Compared to the Six Months Ended February 27, 2021

Consolidated Performance Summary

The following is an analysis of changes in key items included in the Consolidated Statements of Income for the six months ended February 26, 2022 compared to the six months ended February 27, 2021:


	Six Months Ended
($ in thousands, except per share data)	February 26, 2022		% of Revenues(1)		February 27, 2021		% of Revenues(1)		$ Change		% Change
Net revenues	$	2,320,471	100.0	%	$	1,633,017	100.0	%	$	687,454	42.1	%
Cost of goods sold	1,874,482		80.8	%	1,339,431		82.0	%	535,051		39.9	%
Gross profit	445,989		19.2	%	293,586		18.0	%	152,403		51.9	%
Selling, general, and administrative expenses	146,665		6.3	%	101,415		6.2	%	45,250		44.6	%
Amortization	16,187		0.7	%	7,181		0.4	%	9,006		125.4	%
Total operating expenses	162,852		7.0	%	108,596		6.7	%	54,256		50.0	%
Operating income	283,137		12.2	%	184,990		11.3	%	98,147		53.1	%
Interest expense, net	20,567		0.9	%	19,993		1.2	%	574		2.9	%
Non-operating loss (income)	12,864		0.6	%	(217)		—	%	(13,081)		(6,028.1)	%
Income before income taxes	249,706		10.8	%	165,214		10.1	%	84,492		51.1	%
Provision for income taxes	58,901		2.5	%	38,723		2.4	%	20,178		52.1	%
Net income	$	190,805	8.2	%	$	126,491	7.7	%	$	64,314	50.8	%

Diluted earnings per share	$	5.58			$	3.74			$	1.84	49.2	%
Diluted average shares outstanding	34,168				33,821				347		1.0	%

(1) Percentages may not add due to rounding differences.

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Net revenues increased in the first six months of Fiscal 2022 compared to the first six months of Fiscal 2021 primarily due to price increases related to current and anticipated higher material and component costs, and unit growth, including incremental volume from the acquisition of Barletta.

Gross profit as a percentage of revenue increased in the first six months of Fiscal 2022 compared to the first six months of Fiscal 2021 primarily due to improved operating leverage on higher revenues and price increases, partially offset by higher material and component costs.

Operating expenses increased in the first six months of Fiscal 2022 compared to the first six months of Fiscal 2021 primarily due to higher operating expenses to support increasing sales and improved operating performance, acquisition-related costs, and incremental operating expenses and amortization associated with the acquisition of Barletta.

Non-operating loss increased in the first six months of Fiscal 2022 compared to the first six months of Fiscal 2021 due to the contingent consideration fair value adjustment related to the acquisition of Barletta.

Our effective tax rate was relatively flat in the first six months of Fiscal 2022 compared to the first six months of Fiscal 2021 primarily due to the impact of consistent tax credits compared to prior year over increased income in the current year and a net unfavorable expense in the current year related to stock compensation.

Net income and diluted earnings per share increased in the first six months of Fiscal 2022 compared to the first six months of Fiscal 2021 primarily due to leverage gained on higher revenues, partially offset by increased operating expenses and higher income tax expense.

Non-GAAP Reconciliation

The following table reconciles net income to consolidated EBITDA and Adjusted EBITDA for the six months ended February 26, 2022 and February 27, 2021:


	Six Months Ended
(in thousands)	February 26, 2022		February 27, 2021
Net income	$	190,805	$	126,491
Interest expense, net	20,567		19,993
Provision for income taxes	58,901		38,723
Depreciation	10,767		8,559
Amortization	16,187		7,181
EBITDA	297,227		200,947
Acquisition-related costs	3,870		—
Litigation reserves	4,000		—
Restructuring expenses	—		93
Gain on sale of property, plant and equipment	—		(3,565)
Contingent consideration fair value adjustment	12,887		—
Non-operating income	(23)		(217)
Adjusted EBITDA	$	317,961	$	197,258

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Reportable Segment Performance Summary

Towable

The following is an analysis of key changes in our Towable segment for the six months ended February 26, 2022 compared to the six months ended February 27, 2021:


	Six Months Ended
(in thousands, except ASP and units)	February 26, 2022		% of Revenues		February 27, 2021		% of Revenues		$ Change		% Change
Net revenues	$	1,297,625			$	894,185			$	403,440	45.1	%
Adjusted EBITDA	212,650		16.4	%	125,509		14.0	%	87,141		69.4	%

ASP(1)	40,529				32,229				8,300		25.8	%

	Six Months Ended
Unit deliveries	February 26, 2022		Product Mix(2)		February 27, 2021		Product Mix(2)		Unit Change		% Change
Travel trailer	21,907		69.1	%	18,036		65.1	%	3,871		21.5	%
Fifth wheel	9,818		30.9	%	9,686		34.9	%	132		1.4	%
Total towables	31,725		100.0	%	27,722		100.0	%	4,003		14.4	%

	February 26, 2022				February 27, 2021				Change		% Change
Backlog(3)
Units	47,438				39,855				7,583		19.0	%
Dollars	$	1,873,159			$	1,206,695			$	666,464	55.2	%
Dealer Inventory
Units	21,738				15,952				5,786		36.3	%

(1) Average selling price excludes off-invoice dealer incentives.

(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. 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.

Adjusted EBITDA increased in the first six months of Fiscal 2022 compared to the first six months of Fiscal 2021 primarily due to an increase in unit sales and ~~improved pricing.~~price increases ahead of current and anticipated material and component cost inflation, partially offset by higher operating expenses.

2629

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Motorhome

The following is an analysis of key changes in our Motorhome segment for the ~~three~~six months ended February 26, 2022 compared to the six months ended February 27, ~~2021 compared to the three months ended February 29, 2020:~~2021:


		Three Months Ended													Six Months Ended
(in thousands, except ASP)		February 27, 2021		% of Revenues		February 29, 2020		% of Revenues		$ Change		% Change
(in thousands, except ASP and units)														(in thousands, except ASP and units)	February 26, 2022		% of Revenues		February 27, 2021		% of Revenues		$ Change		% Change
Net revenues	Net revenues	$	382,575			$	325,542			$	57,033	17.5	%	Net revenues	$	839,044			$	704,964			$	134,080	19.0	%
Adjusted EBITDA	Adjusted EBITDA	50,969		13.3	%	14,946		4.6	%	36,023		241.0	%	Adjusted EBITDA	96,248		11.5	%	81,312		11.5	%	14,936		18.4	%

ASP(1)	ASP(1)	130,856				145,554				(14,698)		(10.1)	%	ASP(1)	149,366				133,550				15,816		11.8	%

		Three Months Ended													Six Months Ended
Unit deliveries	Unit deliveries	February 27, 2021		Product Mix(2)		February 29, 2020		Product Mix(2)		Unit Change		% Change		Unit deliveries	February 26, 2022		Product Mix(2)		February 27, 2021		Product Mix(2)		Unit Change		% Change
Class A	Class A	704		24.4	%	843		37.7	%	(139)		(16.5)	%	Class A	1,332		23.9	%	1,302		25.0	%	30		2.3	%
Class B	Class B	1,419		49.2	%	784		35.0	%	635		81.0	%	Class B	3,088		55.5	%	2,517		48.3	%	571		22.7	%
Class C	Class C	762		26.4	%	612		27.3	%	150		24.5	%	Class C	1,146		20.6	%	1,396		26.7	%	(250)		(17.9)	%
Total motorhomes	Total motorhomes	2,885		100.0	%	2,239		100.0	%	646		28.9	%	Total motorhomes	5,566		100.0	%	5,215		100.0	%	351		6.7	%

															February 26, 2022				February 27, 2021				Change		% Change
Backlog(3)														Backlog(3)
Units														Units	17,255				14,974				2,281		15.2	%
Dollars														Dollars	$	2,214,470			$	1,816,503			$	397,967	21.9	%
Dealer Inventory														Dealer Inventory
Units														Units	3,099				2,739				360		13.1	%

(1) ~~ASP~~ Average selling price excludes off-invoice dealer incentives.

(2) Percentages may not add due to rounding differences.

~~Net revenues increased in the second quarter of Fiscal 2021 compared to the second quarter of Fiscal 2020 primarily due to unit growth and increased pricing partially offset by unfavorable mix.~~

Adjusted EBITDA increased in the second quarter of Fiscal 2021 compared to the second quarter of Fiscal 2020 driven by revenue growth and margin expansion as a result of pricing, operating leverage, and productivity improvements.

~~Table of Contents~~

~~Results of Operations - First Six Months of Fiscal 2021 Compared to the First Six Months of Fiscal 2020~~

~~Consolidated Performance Summary~~

The following is an analysis of changes in key items included in the consolidated statements of income and comprehensive income for the six months ended February 27, 2021 compared to the six months ended February 29, 2020:

Six Months Ended
(in thousands, except percent and per share data) February 27, 2021
% of Revenues(1)
February 29, 2020
% of Revenues(1)
$ Change % Change
Net revenues $ 1,633,017 100.0 % $ 1,215,268 100.0 % $ 417,749 34.4 %
Cost of goods sold 1,339,431 82.0 % 1,056,873 87.0 % 282,558 26.7 %
Gross profit 293,586 18.0 % 158,395 13.0 % 135,191 85.4 %
Selling, general, and administrative expenses 101,415 6.2 % 93,269 7.7 % 8,146 8.7 %
Amortization of intangible assets 7,181 0.4 % 11,588 1.0 % (4,407) (38.0) %
Total operating expenses 108,596 6.7 % 104,857 8.6 % 3,739 3.6 %
Operating income 184,990 11.3 % 53,538 4.4 % 131,452 245.5 %
Interest expense 19,993 1.2 % 14,700 1.2 % 5,293 36.0 %
Non-operating income (217) — % (386) — % (169) (43.8) %
Income before income taxes 165,214 10.1 % 39,224 3.2 % 125,990 321.2 %
Provision for income taxes 38,723 2.4 % 7,888 0.6 % 30,835 390.9 %
Net income $ 126,491 7.7 % $ 31,336 2.6 % $ 95,155 303.7 %
Diluted income per share $ 3.74 $ 0.95 $ 2.79 293.7 %
Diluted average shares outstanding 33,821 33,143 678 2.0 %

~~(1) Percentages may not add due to rounding differences.~~

~~Net revenues increased in the first six months of Fiscal 2021 compared to the first six months of Fiscal 2020 primarily due to organic unit growth, pricing actions, and our acquisition of Newmar.~~

Gross profit as a percentage of revenue increased in the first six months of Fiscal 2021 compared to the first six months of Fiscal 2020 primarily due to improved leverage as a result of higher revenues, pricing actions, and productivity initiatives.

Operating expenses increased in the first six months of Fiscal 2021 compared to the first six months of Fiscal 2020 due to an increase in variable compensation and incremental Newmar operating costs partially offset by prior year acquisition-related costs, lower Newmar amortization, and a gain recognized in the first quarter of Fiscal 2021 on the sale of certain assets.

Interest expense increased in the first six months of Fiscal 2021 compared to the first six months of Fiscal 2020 primarily due to a higher interest rate as a result of our refinancing of our term loan B in the fourth quarter of Fiscal 2020.

The effective tax rate increased to 23.4% for the first six months of Fiscal 2021 compared to 20.1% for the first six months of Fiscal 2020 primarily due to consistent year-over-year credits over higher current year pre-tax income and favorable research and development discrete items in the prior year.

Net income and diluted income per share increased in the first six months of Fiscal 2021 compared to the first six months of Fiscal 2020 primarily due to the profitability impact of higher organic revenues and improved profit margins, partially offset by higher operating expenses and a higher effective tax rate.

~~Table of Contents~~

~~Non-GAAP Reconciliation~~

~~The following table reconciles net income to consolidated EBITDA and Adjusted EBITDA for the first six months ended February 27, 2021 and February 29, 2020:~~

Six Months Ended
(in thousands) February 27, 2021 February 29, 2020
Net (loss) income $ 126,491 $ 31,336
Interest expense 19,993 14,700
Provision for income taxes 38,723 7,888
Depreciation 8,559 7,720
Amortization of intangible assets 7,181 11,588
EBITDA 200,947 73,232
Acquisition-related fair-value inventory step-up — 4,810
Acquisition-related costs — 9,950
Restructuring expenses 93 (129)
Gain on sale of property and equipment (3,565) —
Non-operating income (217) (386)
Adjusted EBITDA $ 197,258 $ 87,477

~~Reportable Segment Performance Summary~~

~~Towable~~

~~The following is an analysis of key changes in our Towable segment for the~~(3) ~~first six months ended February 27, 2021 compared to the first six months ended February 29, 2020, and as of February 27, 2021 compared to February 29, 2020:~~

Six Months Ended
(in thousands, except ASP) February 27, 2021 % of Revenues February 29, 2020 % of Revenues $ Change % Change
Net revenues $ 894,185 $ 624,713 $ 269,472 43.1 %
Adjusted EBITDA 125,509 14.0 % 70,531 11.3 % 54,978 77.9 %
ASP(1)
32,229 32,836 (607) (1.8) %
Six Months Ended
Unit deliveries February 27, 2021
Product Mix(2)
February 29, 2020
Product Mix(2)
Unit Change % Change
Travel trailer 18,036 65.1 % 11,782 60.9 % 6,254 53.1 %
Fifth wheel 9,686 34.9 % 7,550 39.1 % 2,136 28.3 %
Total towables 27,722 100.0 % 19,332 100.0 % 8,390 43.4 %
($ in thousands) February 27, 2021 February 29, 2020 Change % Change
Backlog(3)
Units 39,855 9,790 30,065 307.1 %
Dollars $ 1,206,695 $ 330,738 $ 875,957 264.8 %
Dealer Inventory
Units 15,952 19,731 (3,779) (19.2) %

~~(1) ASP excludes off-invoice dealer incentives.~~

~~(2) Percentages may not add due to rounding differences.~~

~~Table of Contents~~

~~(3) We include in our~~Our backlog includes all accepted orders from dealers which generally have been requested to ~~generally~~ 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 and,~~penalty; therefore, backlog may not necessarily be an accurate measure of future sales.

Net revenues increased in the first six months of Fiscal ~~2021~~2022 compared to the first six months of Fiscal ~~2020 driven by~~2021 primarily due to price increases and unit growth.

Adjusted EBITDA increased in the first six months of Fiscal ~~2021~~2022 compared to the first six months of Fiscal ~~2020~~2021 primarily due to an increase in unit sales and ~~improved pricing.~~pricing, partially offset by higher input costs and operating expenses.

~~We have seen an increase in backlog as~~

Table of February 27, 2021 compared to February 29, 2020 due to the continued strong retail demand by consumers of RVs as a safe travel option during the COVID-19 pandemic. As a result of this high retail demand, dealer inventory levels are lower, creating higher order backlog.Contents

Marine

~~Motorhome~~

The following is an analysis of key changes in our ~~Motorhome~~Marine segment for the~~first~~ six months ended February 26, 2022 compared to the six months ended February 27, ~~2021 compared to the first six months ended February 29, 2020, and as of February 27, 2021 compared to February 29, 2020:~~2021:


	Six Months Ended
(in thousands, except ASP and units)	February 26, 2022		% of Revenues		February 27, 2021		% of Revenues		$ Change		% Change
Net revenues	$	176,627			$	26,357			$	150,270	570.1	%
Adjusted EBITDA	23,523		13.3	%	1,878		7.1	%	21,645		1,152.6	%

ASP(1)	71,849				202,973				(131,124)		(64.6)	%

	Six Months Ended
Unit deliveries	February 26, 2022				February 27, 2021				Unit Change		% Change
Boats	2,457				130				2,327		1,790.0	%

	February 26, 2022				February 27, 2021				Change		% Change
Backlog(2)
Units	3,059				339				2,720		802.4	%
Dollars	$	277,860			$	72,595			$	205,265	282.8	%
Dealer Inventory
Units	2,062				180				1,882		1,045.6	%

(1)

Six Months Ended
(in thousands, except ASP) February 27, 2021 % of Revenues February 29, 2020 % of Revenues $ Change % Change
Net revenues $ 704,964 $ 551,433 $ 153,531 27.8 %
Adjusted EBITDA 81,312 11.5 % 24,277 4.4 % 57,035 234.9 %
ASP(1)
133,550 129,344 4,206 3.3 %
Six Months Ended
Unit deliveries February 27, 2021
Product Mix(2)
February 29, 2020
Product Mix(2)
Unit Change % Change
Class A 1,302 25.0 % 1,242 30.1 % 60 4.8 %
Class B 2,517 48.3 % 1,593 38.7 % 924 58.0 %
Class C 1,396 26.7 % 1,286 31.2 % 110 8.6 %
Total motorhomes 5,215 100.0 % 4,121 100.0 % 1,094 26.5 %
($ in thousands) February 27, 2021 February 29, 2020 Change % Change
Backlog(3)
Units 14,974 2,856 12,118 424.3 %
Dollars $ 1,816,503 $ 394,570 $ 1,421,933 360.4 %
Dealer Inventory
Units 2,739 5,507 (2,768) (50.3) %

~~(1)~~ ASP excludes off-invoice dealer incentives.

(2) ~~Percentages may not add due to rounding differences.~~

~~(3) We include in our~~ Our backlog includes all accepted orders from dealers which generally have been requested to ~~generally~~ 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 and,~~penalty; therefore, backlog may not necessarily be an accurate measure of future sales.

Net revenues increased in the first six months of Fiscal ~~2021~~2022 compared to the first six months of Fiscal ~~2020~~2021 primarily due to ~~our~~the acquisition of ~~Newmar, organic unit growth, and increased pricing.~~Barletta at the beginning of the first quarter of Fiscal 2022.

Adjusted EBITDA increased in the first six months of Fiscal ~~2021~~2022 compared to the first six months of Fiscal ~~2020 driven by pricing actions, higher organic revenue, productivity initiatives, and our~~2021 primarily due to the acquisition of ~~Newmar.~~Barletta at the beginning of the first quarter of Fiscal 2022.

We have seen an increase in the volume and dollar value of backlog as of February 27, 2021 compared to February 29, 2020 due to the continued strong retail demand by consumers of RVs as a safe travel option during the COVID-19 pandemic. As a result of this high retail demand, dealer inventory levels are lower, creating higher order backlog.

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Analysis of Financial Condition, Liquidity, and Resources

Cash Flows

The following table summarizes our cash flows from ~~operations for the six months ended February 27, 2021 and February 29, 2020:~~

Six Months Ended
(in thousands) February 27,
2021 February 29,
2020
Total cash provided by (used in):
Operating activities $ 66,922 $ 119,164
Investing activities (7,365) (283,158)
Financing activities (19,117) 249,502
Net increase in cash and cash equivalents $ 40,440 $ 85,508
operations:


	Six Months Ended
(in thousands)	February 26, 2022		February 27, 2021
Total cash provided by (used in):
Operating activities	$	46,141	$	66,922
Investing activities	(271,781)		(7,365)
Financing activities	(74,091)		(19,117)
Net increase (decrease) in cash and cash equivalents	$	(299,731)	$	40,440

Operating Activities

Cash provided by operating activities decreased for the six months ended February ~~27, 2021~~26, 2022 compared to the six months ended February ~~29, 2020 primarily~~27, 2021 due to ~~an increase~~investments in ~~our inventory~~working capital to support current year revenue growth, partially offset by higher ~~profitability~~profitability. The investments in ~~the first six months~~working capital included a $123.6 million increase in accounts receivable due to timing of ~~Fiscal 2021.~~invoicing/collections, a $109.3 million increase in inventory to support customer demand and to support operational activities during a period

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impacted by supply chain disruption, partially offset by a $26.7 million increase in accounts payable due to inventory growth and timing of payments.

Investing Activities

Cash used in investing activities ~~decreased for~~increased in the six months ended February 26, 2022 compared to the six months ended February 27, 2021 primarily due to our acquisition of Barletta during the first quarter of Fiscal 2022.

Financing Activities

Cash used in financing activities increased in the six months ended February 26, 2022 compared to the six months ended February ~~29, 2020~~27, 2021 primarily due to ~~our acquisition of Newmar during the first quarter of Fiscal 2020.~~

~~Financing Activities~~

Cash provided by financing activities for the six months ended February 27, 2021 compared to cash used for the six months ended February 29, 2020 changed primarily due to the issuance of Convertible Notes issued in the first quarter of Fiscal 2020 to finance our acquisition of Newmar, partially offset by an increase in stock repurchases in the first ~~quarter~~six months of Fiscal ~~2021.~~2022.

Debt and Capital

~~During the first quarter of Fiscal 2020, we issued the Convertible Notes, which were used to partially fund the Newmar acquisition. Refer to Note 8,~~ ~~Long-Term Debt, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional details.~~

On July 8, 2020, we closed our private offering (the "Senior Secured Notes Offering") of $300 million in aggregate principal amount of 6.25% senior secured notes due 2028 (the "Senior Secured Notes"). The proceeds from the Senior Secured Notes were used to repay the remaining debt on the term loan and for general corporate purposes. Refer to Note 8, ~~Long-Term Debt, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional details.~~

We maintain a $192.5 million asset-based revolving credit facility ("ABL Credit Facility") with a maturity date of October 22, 2024 subject to certain factors which may accelerate the maturity date. As of February ~~27, 2021,~~26, 2022, we had no borrowings against the ABL Credit Facility.

As of February ~~27, 2021,~~26, 2022, we had ~~$333.0~~$134.8 million in cash and cash equivalents and $192.5 million in unused ABL Credit Facility. Our cash and cash equivalent balances consist of high quality, short-term money market instruments.

We believe cash flow from operations, existing lines of credit, and access to debt and capital markets will be sufficient to meet our current liquidity needs, and we have committed liquidity and cash reserves in excess of our anticipated funding requirements. We evaluate the financial stability of the counterparties for the Convertible Notes, the Senior Secured Notes, and the ABL Credit Facility, and will continue to monitor counterparty risk on an on-going basis.

Other Financial Measures

Working capital at February ~~27, 2021~~26, 2022 and August ~~29, 2020~~28, 2021 was ~~$544.0~~$545.4 million and ~~$413.2~~$651.6 million, respectively. We currently expect cash on hand, funds generated from operations, and the borrowing available under our ABL Credit Facility to be sufficient to cover both short-term and long-term operating requirements.

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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. Our long-term capital allocation strategy is to first fund operations and investments in growth, maintain a debt leverage ratio within our targeted zone, maintain reasonable liquidity, and then return excess cash over time to shareholders through dividends and share repurchases.

On October 14, 2020, the Board adopted, subject to shareholder approval, an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of common stock, par value $0.50 per share, by 60 million shares to a total of 120 million shares. This amendment was approved by the Company’s shareholders at the 2020 Annual Meeting of Shareholders on December 15, 2020. The amendment, along with an amended and restated Articles of Incorporation, were made effective upon filing with the Secretary of State of the State of Iowa on December 17, 2020.

~~On October 18, 2017,~~13, 2021, our Board of Directors authorized a new share repurchase program in the amount of ~~$70.0 million. There is~~$200.0 million with no time restriction on the ~~authorization.~~authorization, which took effect immediately and replaced the prior program. In the ~~first~~ six months ~~of Fiscal 2021,~~ended February 26, 2022, we repurchased ~~204,000~~875,000 shares of our own common stock at a cost of ~~$10.4~~$59.6 million under this authorization and ~~38,000~~the previous authorization, and 62,000 shares at a cost of ~~$2.1~~$4.6 million to satisfy tax obligations on employee equity awards vested. We continually evaluate if share repurchases reflect a prudent use of our capital and, subject to compliance with our ABL Credit Facility and Senior Secured Notes, we may purchase shares in the future. At February ~~27, 2021,~~26, 2022, we have ~~$58.8~~$150.0 million remaining on our ~~board~~Board approved repurchase authorization.

On March ~~17, 2021,~~16, 2022, our Board of Directors approved a quarterly cash dividend of ~~$0.12~~$0.18 per share payable on April ~~28, 2021,~~27, 2022, to common stockholders of record at the close of business on April ~~14, 2021.~~13, 2022.

Contractual Obligations and Commercial Commitments

There has been no material change in our contractual obligations since the end of Fiscal ~~2020. Refer to Note 8,~~ ~~Long-Term Debt, of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for additional details on the Convertible Notes and Senior Secured Notes, and see~~2021. See our Annual Report on Form 10-K for the fiscal year ended August ~~29, 2020~~28, 2021 for additional information regarding our contractual obligations and commercial commitments.

~~Significant~~Critical Accounting Policies ~~and Estimates~~

We describe our significant accounting policies in Note 1 ~~Summary of Significant Accounting Policies, of~~to the ~~Notes to~~ Consolidated Financial Statements included in Item 8 of Part II of our Annual Report on Form 10-K for the fiscal year ended August ~~29, 2020.~~28, 2021. We discuss our critical accounting estimates in Item 7 ~~Management's Discussion and Analysis~~ of ~~Financial Condition and Results~~Part II of ~~Operations, in~~ our Annual Report on Form 10-K for the fiscal year ended August ~~29, 2020.~~28, 2021. There have been no ~~significant~~material changes into our ~~significant~~critical accounting policies or critical accounting estimates since the end of Fiscal ~~2020.~~2021.

~~New~~

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Recently Issued Accounting Pronouncements

For a ~~description~~summary of ~~new~~recently issued applicable accounting pronouncements, see Note 1 ~~Basis of Presentation, of~~to the ~~Notes to Condensed~~ Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Safe Harbor Statement Under the Private Securities Litigation Reform Act

Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”), provide a “safe harbor” for forward-looking statements to encourage companies to provide prospective information about their companies. With the exception of historical information, the matters discussed in this Quarterly Report on Form 10-Q are forward-looking statements and may be identified by the use of words such as "anticipate," "assume," "believe," "estimate," "expect," "guidance," "intend," "outlook," "plan," "project," and other words and terms of similar meaning. Such statements reflect our current views and estimates with respect to future market conditions, company performance and financial results, operational investments, business prospects, new strategies, the competitive environment, and other events. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from the potential results discussed in such forward-looking statements. Readers should review Item 1A ~~Risk Factors~~,of Part I of our Annual Report on Form 10-K for the fiscal year ended August ~~29, 2020,~~28, 2021, and Item 1A ~~Risk Factors, in~~of Part II of this Quarterly Report on Form 10-Q, for a description of important factors that could cause our actual results to differ materially from those contemplated by the forward-looking statements made in this Quarterly Report on Form 10-Q. Among the factors that could cause actual results and outcomes to differ materially from those contained in such forward-looking statements are the following: competition and new product introductions by competitors, our ability to attract and retain qualified personnel, increases in market compensation rates, business or production disruptions, sales order cancellations, risk related to the terms of our credit agreements and compliance with debt covenants and leverage ratios, stock price volatility and share dilution, disruptions or unanticipated costs from facility expansions, availability of labor, a slowdown in the economy, low consumer confidence, the effect of global tensions, increases in interest rates, availability of credit, availability of financing for RV and marine dealers, impairment of goodwill, risk related to cyclicality and seasonality of our business, slower than anticipated sales of new or existing products, integration of operations relating to merger and acquisition activities generally, our acquisition of Newmar, the possibility that the Newmar acquisition may not perform as expected or may not result in earnings growth, difficulties and expenses related to integrating Newmar into our business, increased

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focus of management attention and resources on the acquisition of Newmar, risks related to the Convertible Notes and Senior Secured Notes, including our ability to satisfy our obligations under the Convertible Notes and Senior Secured Notes, risks related to our Convertible Note hedge and warrant transactions, inadequate liquidity or capital resources, inventory and distribution channel management, our ability to innovate, our reliance on large dealer organizations, significant increase in repurchase obligations, availability and price of fuel, availability of chassis and other key component parts, increased material and component costs, exposure to warranty claims, ability to protect our intellectual property, exposure to product liability claims, dependence on information systems and web applications, any unexpected expenses related to the implementation of our ERP system, the duration and scope of•Uncertainty surrounding the COVID-19 pandemic, actions governments, businesses, and individuals take in response to the COVID-19 pandemic, including mandatory business closures and restrictions of onsite commercial interactions; the impact of the pandemic and actions taken in response to the pandemic on regional economies and economic activity; the pace of recovery when the COVID-19 pandemic subsides; and generalpandemic.

•General economic uncertainty in key markets and a worsening of domestic economic conditions or low levels of economic ~~growth, risk~~growth.

•Availability of financing for RV and marine dealers.

•Ability to innovate and commercialize new products.

•Ability to manage our inventory to meet demand.

•Competition and new product introductions by competitors.

•Risk related to cyclicality and seasonality of our business.

•Significant increase in repurchase obligations.

•Business or production disruptions.

•Inadequate inventory and distribution channel management.

•Ability to retain relationships with our suppliers.

•Increased material and component costs, including availability and price of fuel and other raw materials.

•Ability to integrate mergers and acquisitions.

•Ability to attract and retain qualified personnel and changes in market compensation rates.

•Exposure to warranty claims.

•Ability to protect our information technology systems from data security, ~~governmental~~cyberattacks, and network disruption risks and the ability to successfully upgrade and evolve our information technology systems.

•Ability to retain brand reputation and related exposure to product liability claims.

•Governmental regulation, including for climate ~~change, risk~~change.

•Impairment of goodwill.

•Risks related to ~~anti-takeover provisions applicable~~our Convertible and Senior Secured Notes, including our ability to ~~us, cyber-attacks and other factors.~~ satisfy our obligations under these notes.

We caution that the foregoing list of important factors is not complete. Any forward-looking statements speak only as of the date they are made, and we assume no obligation to update any forward-looking statement that we may make.

Item 3. Quantitative and Qualitative Disclosures About Market ~~Risk.~~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 February ~~27, 2021,~~26, 2022, we have no interest rate swaps outstanding and the Term Loan, that had been subject to variable interest rates, was repaid in the fourth quarter of Fiscal 2020 using the proceeds from the Senior Secured Notes. The ABL Credit Facility is our only floating rate debt instrument which remains undrawn as of February ~~27, 2021.~~26, 2022.

Item 4. Controls and ~~Procedures.~~Procedures

Evaluation of Disclosure Controls and Procedures

We maintain "disclosure controls and procedures", as such term is defined under Exchange Act 13a-15(e), that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures and believes that such controls and procedures are effective at the reasonable assurance level.

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, ~~has~~ evaluated the effectiveness of the design and operation of our disclosure controls and procedures ~~required by~~(as defined in Rule 13a-15(e) under the Securities Exchange Act ~~Rule 13a-15(b)~~of 1934, as amended (the "Exchange Act")), as of the end of the period covered by this report (the "Evaluation Date"). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer ~~have~~ concluded that our disclosure controls and procedures were effective as of the Evaluation Date.

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Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the second quarter of Fiscal ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER ~~INFORMATION.~~INFORMATION

Item 1. Legal ~~Proceedings.~~Proceedings

For a description of our legal proceedings, see Note ~~10,~~ ~~Contingent Liabilities and Commitments, of~~11 to the ~~Notes to Condensed~~ Consolidated Financial Statements included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Item 1A. Risk ~~Factors.~~Factors

There have been no material changes from the risk factors previously disclosed in ~~Part I,~~ Item 1A ~~Risk Factors~~,of Part I of our Annual Report on Form 10-K for the fiscal year ended August ~~29, 2020.~~28, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of ~~Proceeds.~~Proceeds

Purchases of our common stock during each fiscal month of the second quarter of Fiscal ~~2021 were:~~

Period
Total Number of Shares Purchased(1)
Average Price Paid per Share
Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(2)
11/29/20 - 01/02/21 7,219 $ 58.53 — $ 58,761,000
01/03/21 - 01/30/21 1,227 61.25 — 58,761,000
01/31/21 - 02/27/21 72 71.46 — 58,761,000
Total 8,518 $ 59.03 — $ 58,761,000
2022 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)
11/28/21 - 01/01/22	148,560	$	70.57	141,497	$	180,000
01/02/22 - 01/29/22	158,373	63.14		158,373	170,000
01/30/22 - 02/26/22	294,357	67.94		294,357	150,000
Total	601,290	$	67.33	594,227	$	150,000

(1) Number of shares in the table are shown in whole numbers.

(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.

~~(2)~~ (3) Pursuant to a ~~$70.0~~$200.0 million share repurchase program authorized by our Board of Directors on October ~~18, 2017.~~13, 2021. There is no time restriction on the authorization.

Our Senior Secured ~~notes,~~Notes, as defined in Note 8, ~~Long-Term Debt, of~~9 to the ~~Notes to Condensed~~ Consolidated Financial Statements included in Item 1 ~~Condensed Consolidated Financial Statements~~,of Part I of this Quarterly Report on Form 10-Q, contains occurrence based restrictions that may limit our ability to make distributions or payments with respect to purchases of our common stock without consent of the lenders, except for limited purchases of our common stock from employees, in the event of a significant reduction in our EBITDA or in the event of a significant borrowing on our ABL Credit Facility.

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Item 6. ~~Exhibits.~~Exhibits


~~3a.~~3.1			Articles of Incorporation of the Registrant, as amended and restated on December 17, 2020 previously filed as Exhibit 3a to the Registrant's Quarterly Report for the quarter ended November 28, 2020. of the Registrant, as amended and restated on December 17, 2020 previously filed as Exhibit 3a to the Registrant's Quarterly Report for the quarter ended November 28, 2020.
~~3b.~~			~~Amended By-Laws of the Registrant previously filed as~~Winnebago Industries, Inc., effective January 1, 2022 (incorporated by reference from Exhibit 3.1 to the ~~Registrant's~~Registrant’s Current Report on Form 8-K dated ~~March 16, 2016 (Commission File Number 001-06403) and incorporated~~January 1, 2022).
3.2			By-Laws of the Registrant effective January 1, 2022 (incorporated by reference ~~herein.~~from Exhibit 3.2 to the Registrant’s Current Report on Form 8-K dated January 1, 2022).
4.1			Indenture, dated November 1, 2019, by and between Winnebago Industries, Inc. and U.S. Bank National Association ~~previously filed as~~(incorporated by reference from Exhibit 4.1 ~~with~~to the Registrant’s Current Report on Form 8-K dated October 29, ~~2019.~~2019).
4.2			Form of 1.50% Convertible Senior Note due 2025 (included in Exhibit 4.1).
4.3			Indenture, dated as of July 8, 2020, by and among Winnebago Industries, Inc., the guarantors named therein and U.S. Bank National Association, as trustee ~~previously filed as~~(incorporated by reference from Exhibit 4.1 ~~with~~to the ~~Registrant's~~Registrant’s Current Report on Form 8-K dated July 8, ~~2020.~~2020)
4.4			Form of 6.250% Senior Secured Note due 2028 (included in Exhibit 4.3)
10.1			Amended and Restated Employment Agreement between Winnebago Industries, Inc. and Michael Happe, dated December 15, 2021 (incorporated by reference from Exhibit 10.1 to the Registrant’s Current Report on Form 8-K dated December 14, 2021).
10.2			Winnebago Executive Officer Severance Plan and Summary Plan Description (incorporated by reference from Exhibit 10.2 to the Registrant’s Current Report on Form 8-K dated December 14, 2021).
31.1			Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2			Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002 (filed herewith).
32.1			Certification by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002 (furnished herewith).
32.2			Certification by the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002.~~2002 (furnished herewith).
~~101~~101.INS			~~The following financial statements from our Quarterly Report on Form 10-Q for~~XBRL Instance Document - the ~~second quarter of Fiscal 2021~~instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline Extensible Business Reporting Language ("iXBRL"): (i) the Condensed Consolidated Balance Sheets at February 27, 2021, and August 29, 2020, (ii) the Condensed Consolidated Statements of Income and Comprehensive Income for the three and six months ended February 27, 2021, and February 29, 2020, (iii) the Condensed Consolidated Statements of Cash Flows for the three and six months ended February 27, 2021, and February 29, 2020, (iv) the Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended February 27, 2021, and February 29, 2020, and (v) the Notes to the Condensed Consolidated Financial Statements.XBRL document (furnished herewith).
101.SCH			Inline XBRL Taxonomy Extension Schema Document (furnished herewith).
101.CAL			Inline XBRL Taxonomy Calculation Linkbase Document (furnished herewith).
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document (furnished herewith).
101.LAB			Inline XBRL Taxonomy Label Linkbase Document (furnished herewith).
101.PRE			Inline XBRL Taxonomy Presentation Linkbase Document (furnished herewith).
104			~~The cover page from our Quarterly Report on Form 10-Q for the second quarter of Fiscal 2021 formatted~~Cover Page Interactive Data File (formatted in ~~iXBRL (included as~~Inline XBRL and contained in Exhibit 101) (furnished herewith).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the ~~Registrant~~registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

WINNEBAGO INDUSTRIES, INC.

Date:

March ~~24, 2021~~23, 2022

ByBy:

/s/ Michael J. Happe

Michael J. Happe

Chief Executive Officer, President

(Principal Executive Officer)

Date:

March ~~24, 2021~~23, 2022

ByBy:

/s/ Bryan L. Hughes

Bryan L. Hughes

Chief Financial Officer and Senior Vice President

(Principal Financial and Accounting Officer)

3637


PART I.	FINANCIAL ~~INFORMATION.~~INFORMATION	3
Item 1.	~~Condensed~~ Consolidated Financial ~~Statements.~~Statements	3
	~~Condensed~~ Consolidated Statements of Income and Comprehensive Income	3
	~~Condensed~~ Consolidated Balance Sheets	4
	~~Condensed~~ Consolidated Statements of Cash Flows	5
	~~Condensed~~ Consolidated Statements of Changes in ~~Stockholders'~~Shareholders' Equity	7
	Notes to ~~Condensed~~ Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	2223
Item 3.	Quantitative and Qualitative Disclosures About Market ~~Risk.~~Risk	33
Item 4.	Controls and Procedures.	33

PART II.	OTHER ~~INFORMATION.~~INFORMATION	3435
Item 1.	Legal Proceedings.	3435
Item 1A.	Risk ~~Factors.~~Factors	3435
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	3435
Item 6.	~~Exhibits.~~Exhibits	3536

SIGNATURES		3637


	Six Months Ended February 29, 2020
(in thousands, except per share data)	Common Shares			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock			Total Stockholders' Equity
	Number	Amount								Number	Amount
Balances at August 31, 2019	51,776	$	25,888	$	91,185	$	866,886	$	(491)	(20,262)	$	(351,256)	$	632,212
Stock-based compensation, net of forfeitures	—	—		3,624		—		—		—	17		3,641
Issuance of stock, net	—	—		(2,031)		—		—		153	2,649		618
Issuance of stock for acquisition	—	—		57,811		—		—		2,000	34,761		92,572
Repurchase of common stock	—	—		—		—		—		(44)	(1,737)		(1,737)
Common stock dividends; $0.22 per share	—	—		—		(7,228)		—		—	—		(7,228)
Actuarial loss, net of tax	—	—		—		—		16		—	—		16
Interest rate swap activity, net of tax	—	—		—		—		(68)		—	—		(68)
Equity component of convertible senior notes and offering costs, net of tax of $20,840	—	—		61,335		—		—		—	—		61,335
Convertible note hedge purchase, net of tax of $17,417	—	—		(53,383)		—		—		—	—		(53,383)
Warrant transactions	—	—		42,210		—		—		—	—		42,210
Net income	—	—		—		31,336		—		—	—		31,336
Balances at February 29, 2020	51,776	$	25,888	$	200,751	$	890,994	$	(543)	(18,153)	$	(315,566)	$	801,524


		February 27, 2021					August 29, 2020
($ in thousands)	Weighted Average Life-Years	Cost		Accumulated Amortization		Weighted Average Life-Years	Cost		Accumulated Amortization
Trade names	Indefinite	$	275,250			Indefinite	$	275,250
Dealer networks	12.1	159,581		$	39,070	12.2	159,581		$	32,487
Backlog	0.5	28,327		28,327		0.5	28,327		28,327
Non-compete agreements	4.3	6,647		4,821		4.1	6,647		4,223
Other intangible assets, gross		469,805		72,218			469,805		65,037
Less accumulated amortization		72,218					65,037
Other intangible assets, net		$	397,587				$	404,768


	US and Canada Industry
	Wholesale Unit Shipments per RVIA					Retail Unit Registrations per Stat Surveys
	Rolling 12 Months through January					Rolling 12 Months through January
	2021	2020	Unit Change	% Change		2021	2020	Unit Change	% Change
Towable(1)	391,747	357,358	34,389	9.6	%	455,723	395,134	60,589	15.3	%
Motorhome(2)	41,651	46,280	(4,629)	(10.0)	%	53,093	52,135	958	1.8	%
Combined	433,398	403,638	29,760	7.4	%	508,816	447,269	61,547	13.8	%


	Calendar Year
Wholesale Unit Shipment Forecast per RVIA(1)	2021 Forecast	2020 Actual	Unit Change	% Change
Aggressive	543,600	430,400	113,200	26.3	%
Most likely	533,400	430,400	103,000	23.9	%
Conservative	523,100	430,400	92,700	21.5	%


	Rolling 12 Months through January				Calendar Year
US and Canada	2021		2020(1)		2020		2019(1)		2018
Travel trailer and fifth wheels	10.4	%	9.4	%	10.4	%	9.3	%	7.8	%
Motorhome A, B, C	20.7	%	19.9	%	20.8	%	16.1	%	15.5	%
Total market share	11.5	%	10.6	%	11.5	%	10.1	%	8.7	%


	Six Months Ended		Fiscal Year				Cumulative Investment
(in thousands)	February 27, 2021		2020		2019		Fiscal 2015-2020
Capitalized	$	2,171	$	3,891	$	3,875	$	28,848	59.3	%
Expensed	1,166		1,788		3,709		19,829		40.7	%
Total	$	3,337	$	5,679	$	7,584	$	48,677	100.0	%


	Three Months Ended
(in thousands, except percent and per share data)	February 27, 2021		% of Revenues(1)		February 29, 2020		% of Revenues(1)		$ Change		% Change
Net revenues	$	839,886	100.0	%	$	626,810	100.0	%	$	213,076	34.0	%
Cost of goods sold	683,304		81.4	%	547,028		87.3	%	136,276		24.9	%
Gross profit	156,582		18.6	%	79,782		12.7	%	76,800		96.3	%
Selling, general, and administrative expenses	53,016		6.3	%	42,164		6.7	%	10,852		25.7	%
Amortization of intangible assets	3,591		0.4	%	7,974		1.3	%	(4,383)		(55.0)	%
Total operating expenses	56,607		6.7	%	50,138		8.0	%	6,469		12.9	%
Operating income	99,975		11.9	%	29,644		4.7	%	70,331		237.3	%
Interest expense	10,052		1.2	%	8,651		1.4	%	1,401		16.2	%
Non-operating income	(311)		—	%	(270)		—	%	41		15.2	%
Income before income taxes	90,234		10.7	%	21,263		3.4	%	68,971		324.4	%
Provision for income taxes	21,166		2.5	%	3,995		0.6	%	17,171		429.8	%
Net income	$	69,068	8.2	%	$	17,268	2.8	%	$	51,800	300.0	%

Diluted income per share	$	2.04			$	0.51			$	1.53	300.0	%
Diluted average shares outstanding	33,910				33,918				(8)		—	%


Period	Total Number of Shares Purchased(1)	Average Price Paid per Share		Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(2)
11/29/20 - 01/02/21	7,219	$	58.53	—	$	58,761,000
01/03/21 - 01/30/21	1,227	61.25		—	58,761,000
01/31/21 - 02/27/21	72	71.46		—	58,761,000
Total	8,518	$	59.03	—	$	58,761,000