WINNEBAGO INDUSTRIES INC (WGO)

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

The terms "Winnebago," "we," "us," and "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 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 30, 2025 (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 are in millions, except share and per share data, unless otherwise noted.

Overview

Winnebago Industries, Inc. is a leading North American manufacturer of outdoor lifestyle products under the Winnebago, Grand Design, Chris-Craft, Newmar and Barletta brands, which are used primarily in leisure travel and outdoor recreation activities. We also design and manufacture advanced battery solutions that deliver “house power,” supporting internal electrical features and appliances for a variety of outdoor products including RVs, boats, specialty and other low-speed vehicles, as well as other industrial applications. Other products manufactured by us consist primarily of original equipment manufacturing parts for other manufacturers and commercial vehicles. We produce our motorhome RV units in Iowa and Indiana; our towable RV units in Indiana; our marine units in Indiana and Florida; and our battery solutions in 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. Our battery solutions are primarily sold to customers in the U.S.

Known Trends and Uncertainties

Recently, conflicts among the United States, Israel, and Iran intensified, contributing to higher global energy prices due to supply disruptions in the Middle East. Sustained increases in energy costs may further pressure consumer discretionary spending and demand for RV and marine products. Further, these conditions may contribute to broader inflationary pressures and delay expected interest rate reductions, which could result in higher borrowing costs for consumers.

Our business also continues to be challenged by additional macroeconomic conditions impacting retail consumers and our dealers, such as inflation, elevated interest rates, and lower consumer confidence. These factors have contributed to lower consumer spending and reduced short-term demand for large discretionary products such as RVs and marine products. In response, our dealers continue to exercise caution when managing stocking levels. Competitive market pressures continue to be observed across our portfolio.

We expect that as consumer demand stabilizes, dealers will return to more stable ordering patterns across our portfolio of businesses. We continue to produce and ship in accordance with dealer demand as evidenced and requested by dealer orders. Despite the current economic uncertainty, we believe in the long-term health of consumer demand for RV and marine products.

On February 20, 2026, the United States Supreme Court issued a decision concluding that the International Emergency Economic Powers Act (IEEPA) does not authorize the imposition of tariffs. The financial impact of this decision cannot be reasonably estimated at this time; however, this decision did not have a material impact on our financial statements for the nine months ended May 30, 2026. We will continue to monitor developments and will assess the effect of the ruling or of impending refund of tariffs directly associated with IEEPA on future reporting periods as additional information becomes available.

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Results of Operations - Three Months Ended May 30, 2026 Compared to Three Months Ended May 31, 2025

Consolidated Performance Summary

The following is an analysis of changes in key items included in the Consolidated Statements of Income for the three months ended May 30, 2026 compared to the three months ended May 31, 2025:

(1)    Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided. In addition, percentages may not add in total due to rounding.

Net revenues decreased primarily due to lower unit volume, partially offset by selective price adjustments and product mix.

Gross profit as a percentage of revenue was consistent with prior year as higher input costs and deleverage were largely offset by selective price adjustments.

Operating expenses decreased primarily due to cost reduction initiatives.

The change in our effective tax rate is primarily attributable to an increase in R&D tax credits.

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Reportable Segment Performance Summary

Towable RV

The following is an analysis of key changes in our Towable RV segment for the three months ended May 30, 2026 compared to the three months ended May 31, 2025:

(1)    Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.

(2)    ASP excludes off-invoice dealer incentives.

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

Net revenues decreased primarily due to lower unit volume and a shift in product mix toward lower price-point models, partially offset by selective price adjustments.

Operating income margin decreased primarily due to higher input costs, volume deleverage, and product mix, partially offset by selective price adjustments and cost containment initiatives.

Motorhome RV

The following is an analysis of key changes in our Motorhome RV segment for the three months ended May 30, 2026 compared to the three months ended May 31, 2025:

(1)    Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.

(2)    ASP excludes off-invoice dealer incentives.

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

NM:    Not meaningful.

Net revenues increased primarily due to higher unit volume and selective price adjustments.

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Operating income margin increased primarily due to higher unit volume driven by new products and selective price adjustments, partially offset by higher input costs.

Marine

The following is an analysis of key changes in our Marine segment for the three months ended May 30, 2026 compared to the three months ended May 31, 2025:

(1)    Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.

(2)    ASP excludes off-invoice dealer incentives.

(3)    Due to the nature of the Marine industry, this amount includes a higher proportion of retail sold units than our other segments.

Net revenues decr

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

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 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 is presented in five sections:

•Overview

•Results of Operations

•Analysis of Financial Condition, Liquidity, and Capital Resources

•Critical Accounting Policies and Estimates

•New Accounting Pronouncements

Our MD&A should be read in conjunction with the Consolidated Financial Statements and related Notes included in Item 8 of Part II in this Annual Report on Form 10-K.

The year-over-year comparisons in this MD&A are as of and for the fiscal years ended August 30, 2025 and August 31, 2024, unless stated otherwise. The discussion of Fiscal 2023 results and related year-over-year comparisons as of and for the fiscal years ended August 31, 2024 and August 26, 2023 are found in Item 7 of Part II of our Form 10-K for the fiscal year ended August 31, 2024.

Overview

Winnebago Industries, Inc. is a leading North American manufacturer of outdoor lifestyle products under the Winnebago, Grand

Design, Chris-Craft, Newmar and Barletta brands, which are used primarily in leisure travel and outdoor recreation activities. We also design and manufacture advanced battery solutions that deliver “house power,” supporting internal electrical features and appliances for a variety of outdoor products including RVs, boats, specialty and other low-speed vehicles, as well as other industrial applications. Other products manufactured by us consist primarily of original equipment manufacturing parts for other manufacturers and commercial vehicles. We produce our motorhome RV units in Iowa and Indiana; our towable RV units in Indiana; our marine units in Indiana and Florida; and our battery solutions in Florida. We distribute our RV and marine products primarily through independent dealers across 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. Our battery solutions are primarily sold to customers in the U.S.

Known Trends and Uncertainties

Our business continues to be challenged by macroeconomic conditions impacting retail consumers and our dealers, such as inflation, elevated interest rates, and lower consumer confidence. These factors have contributed to lower consumer spending and reduced short-term demand for large discretionary products such as RVs and marine products. In response, our dealers continue to exercise caution when managing stocking levels. In Fiscal 2025, these trends resulted in decreased sales due to declines in unit volume. While market pressures have been observed across our portfolio, they have been most acute in our Winnebago motorhome business. As part of our transformation of this business, we have recently taken significant steps to lower field inventory, improve working capital, align our production schedule to market demand, and accelerate stronger product value for our consumers in the future.

We expect that as consumer demand stabilizes, dealers will return to more stable ordering patterns across our portfolio of

businesses. We continue to produce and ship in accordance with dealer demand as evidenced and requested by dealer orders. In

addition, we are closely monitoring the potential impact of new or additional U.S. tariffs and retaliatory measures from other

countries, which may affect material costs or supply.

Despite the current economic uncertainty, we believe in the long-term health of consumer demand for RV and marine products.

Segment Update

In conjunction with the Grand Design RV entrance into the motorized RV category, we established a Grand Design motorhomes operating segment in the first quarter of Fiscal 2025. This newly created operating segment is included in the Motorhome RV reportable segment. Prior period amounts have not been reclassified as the impact was not significant.

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Results of Operations - Fiscal 2025 Compared to Fiscal 2024

Consolidated Performance Summary

The following is an analysis of changes in key items included in the statements of operations for the fiscal year ended August 30, 2025 compared to the fiscal year ended August 31, 2024:

(1)    Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided. In addition, percentages may not add in total due to rounding.

NM: Not meaningful.

Net revenues decreased primarily due to a reduction in average selling price per unit related to product mix and lower unit volume, partially offset by targeted price increases.

Gross profit as a percentage of revenue decreased primarily due to deleverage and slightly higher warranty experience.

Operating expenses decreased primarily due to prior year goodwill impairment and cost reduction initiatives in the current year, partially offset by investments to support the growth of the Grand Design motorhome and Barletta marine businesses.

The loss on note repurchase recorded in Fiscal 2024 is related to the refinancing of the 2025 Convertible Notes. The loss on note repurchase recorded in Fiscal 2025 is related to the tender offer of the Senior Secured Notes. Refer to Note 9 in the Notes to Consolidated Financial Statements, included in Item 8 of Part II in this Annual Report on Form 10-K for further information.

Our effective tax rate decreased primarily due to the prior year's non-deductible debt inducement loss and non-deductible goodwill impairment and, in Fiscal 2025, increased favorable return to provision adjustments and reduced change in the valuation allowance over lower pre-tax income.

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Reportable Segment Performance Summary

Towable RV

The following is an analysis of key changes in our Towable RV segment for Fiscal 2025 and 2024:

(1)    Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.

(2)    ASP excludes off-invoice dealer incentives.

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

(4)    Data is based on the latest information available from our dealer partners and is subject to timing of reporting and other limitations.

Net revenues decreased primarily due to a shift in product mix toward lower price-point models and lower unit volume, partially offset by targeted price increases.

Operating income margin decreased primarily due to deleverage, including that associated with product mix, and higher warranty experience.

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Motorhome RV

The following is an analysis of key changes in our Motorhome RV segment for Fiscal 2025 and 2024:

(1)    Amounts are calculated based on unrounded numbers and therefore may not recalculate using the rounded numbers provided.

(2)    ASP excludes off-invoice dealer incentives.

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

(4)    Data is based on the latest information available from our dealer partners and is subject to timing of reporting and other limitations.

NM: Not meaningful.

Net revenues decreased primarily due to lower unit volume and higher discounts and allowances related to the Winnebago motorhome business, partially offset by the introduction of the Grand Design motorhome business and product mix.

Operating income margin dec

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