Outdoor lifestyle product manufacturer Winnebago Industries Inc ( WGO ) reported a second-quarter FY24 sales decline of 18.8% year-on-year to $703.60 million, missing the analyst consensus estimate of $706.45 million.

The decrease in revenue was driven by lower unit sales related to market conditions and unfavorable product mix.

Towable RV segment revenue fell 16.9% Y/Y to $284.7 million, driven by a decline in unit volume. Motorhome RV revenue of $338.4 million decreased 16.2% Y/Y. Marine segment revenue plunged 38.2% to $69.8 million.

Gross profit decreased 28.3% Y/Y to $105.3 million, and gross profit margin contracted 190 basis points Y/Y to 15%. Adjusted EPS of $0.93 beat the analyst consensus of $0.85.

The operating margin contracted 390 basis points to 5%, and operating income for the quarter fell 53.8% to $35.4 million. Consolidated Adjusted EBITDA was $49.8 million, a decrease of 43.7% Y/Y.

Winnebago’s cash and equivalents totaled $265.7 million as of Feb. 24, 2024. It generated $3.8 million in operating cash flow during the six months. As of Feb. 24, 2024, the company had a total outstanding debt of $694.8 million.

President and Chief Executive Officer Michael Happe commented, “Winnebago Industries performed in line with our expectations for the quarter, navigating the effects of ongoing softness in the RV and marine markets.”

Winnebago Industries ( WGO ) announced future mid-cycle organic growth targets. The company expects net revenues of $4.5 billion to $5.0 billion, gross margin of 18.0% to 18.5%, and North American RV market share of more than 13%.

“As we enter the second half of fiscal 2024, we are encouraged by data indicating that RV inventory levels are returning to an equilibrium stage, though we remain aggressive in managing production output and overall costs in a targeted manner,” Happe added.

Price Action: WGO shares are trading higher by 6.26% at $69.57 on the last check Thursday.