Winnebago Industries Inc (WGO) 2010 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome it to the first quarter Winnebago Industries earnings conference call.

My name is Keana and I will be your operator for today.

At this time all participants are in a listen-only mode.

We will conduct a question-and-answer session towards the end of this conference.

(Operator Instructions) I would now like to turn the call over to Ms.

Sheila Davis, Public Relation and Investor Relations Manager.

You may proceed.

Thank you, Keana.

Good morning, and welcome to the Winnebago Industries Incorporated conference call to review the Company's results for the first quarter of fiscal year 2010 ended November 28, 2009.

Conducting the call today are Bob Olson, Winnebago Industries' Chairman of the Board, Chief Executive Officer and President and Sarah Nielsen, Vice President, Chief Financial Officer.

I trust each of you have received a copy of the news release with our earnings results this morning.

This call is being broadcast live on our website at winnebagoind.com.

A replay of the call will be available on our website at approximately 12:00 noon central time today.

If you have any questions about accessing any of this information, please call our Investor Relations Department at 641-585-6803 following the conference call.

Before we start, it's my duty to inform you that this presentation may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Investors are cautioned that forward-looking statements are inherently uncertain.

A number of factors could cause actual results to differ materially from these statements.

These factors are identified in our filings with the Securities and Exchange Commission over the last 12 months, copies of which are available from the SEC or from the Company upon request.

I will now turn the call over to Bob Olson.

Bob?

Thank you, Sheila.

Good morning and welcome to Winnebago Industries' first quarter conference call.

Sarah will go into the results for our first quarter of fiscal year 2010 shortly, but it is evident from our news release that we are extremely pleased to see an improvement in our motor home delivery volumes.

As a result of these increased volumes, we were also able to achieve an increase in revenues and have posted a small gross profit in our first quarter.

Last quarter, I said we were hopeful we were at or near the bottom of the downward cycle and that the worst may soon be over.

I truly believe we have reached the bottom during our first quarter.

While the winter months may still be challenging, I believe we can now look for growth.

The general economy is looking healthier with slightly improved consumer confidence, stable fuel prices, low interest rates, and an improved equity market.

The credit market is still difficult, but improving.

There are fewer lenders now available, and those who remain have more stringent expectations of who they lend to.

Existing lenders are also more cautious but fortunately, they are focused on partnering with strong manufacturers like Winnebago Industries.

Along with these economic improvements, our product lineup for 2010 continues to be very well received by our dealers as well as retail customers.

The latest results from Statistical Surveys Incorporated, the retail reporting service for the RV industry, demonstrates we are gaining market share.

Calendar year to date through October 2009 results were reported earlier this week and illustrated market share growth for Winnebago Industries in the combined class A and C market, as well as substantial improvement in our class A diesel market.

Combined market share results for calendar 2009 year-to-date through October were 19.3% compared to 18.3% for the same period last year.

Our class A diesel market share was 11.3% compared to 8% for the same period last year.

We had an excellent reception to all of our new 2010 products at the Louisville RV show held earlier this month, and we're pleased with the significant improvement in orders placed during the show this year as compared to last.

Many dealers also indicated during the show that they are interested in carrying fewer manufacturers' product lines.

Instead, they intend to partner with manufacturers who are financially stable and able to provide quality product, sales and service support for the long term.

As mentioned earlier, we feel we reached the bottom of the cycle during the first quarter and the replenishment cycle has begun.

This statement is based on our sales order backlog on November 28, 2009 of 1,521 units, or $149.5 million, which has grown by 350% on a unit basis and 440% on a dollar basis compared to a year ago.

In addition, dealer inventories also hit historic low levels during the quarter, with 1,567 motor homes in dealer inventory at the end of the quarter, down 52% from a year ago.

Although retail sales are still depressed, they have outpaced wholesale shipments throughout the past 18 months.

I believe we have a significant opportunity for increased wholesale shipments going forward in order for dealers to restock their inventories to more closely match retail demand.

We announced in our fourth quarter conference call that we are utilizing all three production lines each week starting in mid-October.

We have continued to further increase production since that time.

We are now working overtime and have increased our hourly employee base by approximately 350 since the end of the fiscal year on August 29, 2009.

We will also work through our traditional plant shutdown between Christmas and New Year's which will help mitigate the impact of four holidays and a physical inventory day that are planned in our second quarter.

While we are ramping up our factory to meet the increased demand for our product, however, the one issue that could limit a rapid production increase for us is the ability of our suppliers to meet our raw material needs.

Our suppliers have been faced with the same reductions in demand as we have seen throughout this past year, and we are concerned about their ability to react quickly enough to increase their production to meet our needs as soon as we would like.

But these challenges are much better problems to have than the downsizing challenges we've faced throughout this recession.

With that, I will turn the call over to Sarah for the financial review.

Sarah?

Thank you, Bob.

I will now review the financial performance for the Company's first quarter of fiscal year 2010.

Revenues for the first quarter were $81 million, a 16.7% increase from the first quarter of fiscal 2009.

This is primarily a result of an increase in motor home deliveries of 138 units, or 21%.

Industry wholesale shipments as reported by RVAA for the first two months of our fiscal quarter were down 15.1%.

Our average selling price increased slightly by 0.8% for the quarter as compared to last year, although 52% of our volume of class A product as opposed to 43% last year, much of our class A volume was in the entry level gas and diesel price points due to new product introductions.

However, our average selling price did increase sequentially from the fourth quarter of fiscal 2009 by 8.3%.

Partially offsetting the motor home revenue increase was a decrease in our non-motor home revenue areas of 22.6% or $2.5 million.

Increased motor home production during the first quarter resulted in improved labor efficiency, reduced labor costs and better absorption of fixed costs as compared to the prior year.

These items had a positive financial impact and resulted in a small gross profit margin of 0.6% as compared to a gross deficit of 12.8% in the prior year.

SG&A expenses were $1.5 million less than the same quarter last year.

This was due to reduced legal fees and lower wage related expenses as a result of reduced headcount and salary reductions as compared to last year.

From a tax perspective, we did record a tax benefit of $4.9 million this quarter.

This was due to the fact that in November there was a new tax law signed by the President which expands the carry-back period from two to five years allowing us to carry back all fiscal 2009 net operating losses.

As a result, we recorded the tax benefit related to the portion of the 2009 net operating losses that were previously not able to be carried back and increased our tax receivables.

We filed our carry-back federal tax return last week and anticipate that our federal refund of approximately $22 million will be received during our second fiscal quarter.

Note that we have not yet recorded any associated tax benefit with our first quarter 2009 or 2010 losses of $6.2 million.

As we discussed in our fourth quarter conference call, due to the applicable accounting rules ,all of our deferred tax assets, including net operating loss carry-forward have a full valuation loss established against them.

The economic benefit of these future tax deductions has not been lost.

When we return to profitability, the tax deductions will be taken and the associated tax benefits will be recorded.

If you exclude the one-time tax benefit of $4.9 million we recorded this quarter and assume a 40% effective tax rate on our loss of $6.2 million, our net loss would have been $3.7 million, or $0.13 per diluted share.

Moving to the balance sheet, you can see that our inventories did increase by $4.2 million during the quarter as we ramped up our production and increased weekly shipments to meet demand.

Our finished good inventory increased $5.7 million and work in process inventories increased $2.3 million, partially offset by a reduction in raw materials of $3.6 million as we consumed our chassis inventory at a faster rate.

We ended the first quarter with $29.2 million in cash which has decreased $7.3 from August, primarily due to the increase in our inventory.

In regards to repurchases, there was minimal activity during the first quarter.

We bought back two units and resold two, realizing minimal losses.

Our dealer location count also remained constant since August.

I will now turn the call over to the operator for the question-and-answer portion of the call.

(Operator Instructions) Our first question comes from the line of Scott Stember of Sidoti Company.

You may proceed.

Good morning.

Good morning.

Sarah, as usual, could you give me the ASPs by class this year and last year?

Okay.

When you break out our classes of units, for the first quarter 2010, class A gas was 90,158 as compared to 94,982 last year.

Class A diesel was 149,660 as compared to 168,691 last year.

And then a combined class A total for this quarter is 115,966 as compared to 125,716 a year ago.

Class C was 73,520 as compared to 70,316.

Total A's and C's, 97,584 as compared to 95,562.

And then class B, 63,698 as compared to 69,501.

And all-in is 94,938 as compared to 94,172.

Okay, and could you talk about where you stand right now with capacity utilization, and Sarah, maybe update us on -- I think last quarter you had said in the 1,600 to 1,800 unit for quarter range to break-even for quarter.

Could you talk about those two things?

I'll start out with the capacity utilization.

For the first quarter, we were right at 31% capacity utilization.

That compares to what we reported last quarter with around 22%.

So as you can see, we are starting to fill up a little bit of our capacity, which is a good thing.

On a break-even standpoint, we are looking at the positive backlog improvement as very helpful perspectively.

It gives us better visibility in regards to scheduling our production.

The range is that we have highlighted have widened as we had a lot of mitigating variables to be considering, and I have nothing new to update at this juncture.

Some of the positives we saw in this first quarter as a result of hiring some hourly employees back have created maybe a little bit of a faster benefit.

Our average wage rate has dropped, and our labor efficiencies are improving as we are busier, and we are becoming more efficient at lower levels than what our history has been.

So those are all positives.

Near term, the second quarter, as Bob highlighted, we do have have four holidays and an inventory, so we have fewer days of production and just a seasonal time frame is going to be increased heating and utility costs.

A lot of the taxes associated with unemployment and other payroll types of items restart in January, so there's an increase in that front.

But we are pretty excited in regards to the fact that we have underproduced at the wholesale level for such a long period of time, and you are looking at a juncture where our backlog reflects that increased demand our dealers have to have restock and that's an exciting point in time to be at as compared to where we were a year ago in previous quarters.

As far as ramping up production, I imagine that you guys want to keep up with your backlog, but at the same time, this is not a normal time of year to be building up so much.

Is it safe to assume that you guys could probably work through your entire backlog within the quarter, or given the fewer days and so forth, probably not quite as busy?

Well, I think one of the things that we've always said is that our backlog is anything within the next six months.

So you've got some that are in this quarter, some that could he be in next quarter.

We've got -- as Sarah said, we've got four holidays, we've got an inventory day that we've got to worry about in this quarter.

We live in north Iowa, so you also have that concern over snow days.

We just had a blizzard here last week, and the weather will impact us.

But with what we've got for a backlog right now, we won't be able to gear up fast enough to satisfy that backlog that we've got.

Okay.

I know you guys don't give guidance, but assuming that you go guys were to fall short of the 1,500 units that you have in backlog right now and the comments are that you made in the past about break even, it seems that it would be difficult to turn a profit this quarter.

You're right that we are going to be deviating from past practice in regards to providing any guidance.

We are at a positive juncture in regards to a lot of things improving on a year-over-year basis.

When you look at where we were in the second quarter of last year, we only had $32 million of revenue, and we only shipped 315 motor homes.

So the comps are very low or very poor in regards to where we think we can be this year, but I guess it's going to be a story of what's the mix and what's the volumes and how all this plays out as we ramp back up.

And I do want to highlight a point that Bob made as well is from a supplier standpoint, they're in a ramp-up situation as well to a certain degree, and if everything doesn't happen just perfectly, we could be experiencing issues on that front, and those are the day by day challenges that we have to work through.

But it's not just completely in our control as well as to what we can accomplish, because a lot of other companies that have cut workforce and production levels, and they have to ramp up as well.

I think in addition to that, we continuously have opportunities with raw material supplies as Sarah mentions.

But the other thing that we can't lose sight of is that we were in such a deep hole in trying to dig out of this thing and on top of that, we are in our historically toughest quarter that we've got, so it's going to be a very difficult quarter.

We feel very optimistic that we are headed in the right direction, but we've still got a lot of headwind in front of us.

That's all I have for now.

I will get back in the queue if I have anything else.

Thank you.

Our next question comes from the line of Craig Kennison of Robert Baird.

You may proceed.

Good morning, everyone.

Good morning.

Sarah, do you see a need to draw on your credit agreement in this quarter as you ramp up production steeply?

In light of the sizable tax receivable that we're looking at, inside the quarter, and -- no, we don't think that we're going to be in the near-term borrowing in that facility in regards to our liquidity levels, but there's typically usually a 45-day time frame in which when you file the return and when they provide the payment from the federal government.

Obviously, they're dealing with a lot of carry-back filers probably as well, so we'll have to see how that plays out.

But we do think that we're going to be in a decent liquidity position for the next three quarters.

Okay, thanks.

And then in the past you have talked about the fixed level of cost of goods sold and then your contribution margin, and my notes would say that the fixed cost of goods sold is about $42 million and that your contribution margins are maybe 15% or 18% depending upon the type of unit.

That still the right ballpark, or have things meaningfully changed with employment levels and discounting and things like that?

Well, we're definitely seeing positives in regards to all the percentages, as to how they play out.

I don't think we're quite there yet from a variable cost perspective on where we historically have been.

But it looks like from a fixed cost standpoint, I think prior to a lot of cost cutting measures, we're more in the range of, just on the cost of goods sold standpoint, excluding SG&A, $40 million plus on an annualized basis.

That has moved down because of a lot of the fixed costs that we have really eliminated from our cost structure, and we have to be careful as well.

Note from a hiring standpoint, we've only hired hourly positions.

We're very conscious in regards to not adding back any fixed costs as we are dealing with a ramp-up situation.

But outside of, I just think how soon we can return to some of the percentages on the variable side that you were highlighting there, in our fixed costs at a lower level than maybe the norm had been, that those will be the two things I would highlight as a little bit of a difference.

That's helpful.

But just to clarify, then, your fixed cost of goods sold, excluding SG&A, was north of $40 million, now might be $35 million or $40 million?

Yes, 35 million --

The contribution margin today was historically maybe 15% on a C and 18% on an A, but today might be -- what would be the right expectation?

Well, I'm looking at it from a quarter snapshot, which is probably not in the light that you are looking at, but the variable costs in this quarter were not quite at that level in that 15% range.

You're looking more at a 10% range from a variable cost perspective.

But it would seemingly improve even with volumes coming back?

That's very fair.

Okay, I will get back in the queue.

Thank you.

Next question comes from the line of Kathryn Thompson of Thompson Research Group.

You may proceed.

Thank you.

Could you comment on backlog trends at the Louisville show and also just color on order trends since the quarter end and particularly if could you comment on mix.

Thank you.

Well, I think the mix has been really good for us.

It's kind of across the board that we're seeing order activity, but I will say that we've probably seen stronger than normal on our diesel and on our class A entry coach.

But we're very pleased with what we're seeing overall.

It's been pretty strong order activity on all of our products.

Historically, class A diesel had been a little bit better margin.

Is that still the case?

Yes, it is.

And you commented last quarter a little bit about -- you mentioned a little bit earlier in your prepared comments.

How much time specifically do you anticipate taking off this year, and compare that against last year, putting into perspective how many lines were actually on production last year at the same time versus this year.

Well, during our holiday season last year, and I'm going to have to tap into my memory, but I think we took two weeks off, if I recall right, so we had no assembly lines working during that time.

That was about the time that we were alternating between a couple of our lines, one week, one line would be on, the next week the other line would be on, the other one would be off.

We had started converting our line two, our diesel line, basically from a mechanical line to a stall build operation.

I'm very pleased to say that all three lines now are mechanical lines.

They're all running.

Not up obviously to capacity yet, but as far as what we are working over the holiday season, I think as know, Kathryn, I've been here for a lot of years, and this is the first year that I can ever remember that we're going to be working during the holiday season.

We will take the four holidays that we've got, the Christmas and New Year period, we will take those off, obviously, but the three days prior to Christmas and then the three days after are going to be considered workdays, and that is a first at this company.

And that's been -- how long have you been with Winnebago?

About 40 years.

Okay.

Not to date yourself.

Could you -- also wanted to get your thoughts, talk a little bit about dealers he being more selective.

But could you also talk about wholesale financing trends and how finance are being a little bit choosier in the market, and how is in this current recovery, how are financing trends different now than it was in the previous deep downturn?

Well, I think, and Sarah can chime in here as well, but I think it's one of these situations where the finance companies, and we've said all along that they've got a hand this recovery, we feel, but first of all, they are going to be looking at dealers inventories as far as not only what the levels that are but what the age of that inventory is.

They are going to be looking at the financials of the dealer themselves to make sure that they are healthy.

They are going to be looking at the manufacturers from the standpoint of are they healthy and, of course, we're an open book.

Everybody can see where we're at, as well as four, but we've got several companies now that are privately held.

We've been assured that they are going to be looking deeply into their financials to make sure that the manufacturers are healthy as well.

And obviously, they are going to be wanting repurchase agreements of the manufacturers, and they've put a new emphasis on collecting curtailments, and it's -- I think they're going back to the way it was when they first got into this industry.

And I can say the same thing for retail financing.

They're expecting down payments.

They're not lending money that is in excess of what the value of the product is.

They're demanding that there's proof of income.

All of the same stuff that we did prior to 2004 before we got into some bad habits.

And I personally think it's probably healthy in the long run for our industry.

We really got into some really bad habits in that 2004, 2005 and 2006 time frame, and I think we're paying the piper now.

We often get asked, so do you think we can see a 60, 70, 80,000 unit industry with new expectations on financing?

And I strongly believe we can, because I think we're doing nothing more than going back to our grass roots.

So that's kind of my take on the financing situation right now.

I don't know, Sarah, if you want to add anything to that, or -- That.

I think the one thing that will be very different on a prospective basis than maybe what we've seen in the past, because of the added discipline or renewed discipline on this wholesale side, if the retail doesn't support the ordering, that's going to limit what dealers can do.

The October retail stats came out recently, and every month is going to be looked at in regards to what is our trend, and on an annual basis, it's definitely still lower, much lower on the decrease for retail than it is for wholesale.

I think parity there is reasonable to expect or assume, but if the retail trends don't support the ordering, dealers won't, and I think that's a dynamic that's very different.

Turns are the focus, two plus, and we're very encouraged in regards to the positive improvement we've seen because we haven't had significant repurchase issues in the last six months, and our dealer count has remained fairly constant or flat since May, but we're still at the slowest time frame now in the year, and I think there's risk that some dealers are going to not make it through until March, but not nearly to the degree or the risk we had a year ago at this point.

So those are, I guess, a few of my thoughts.

I guess overall the overriding theme that we have been hearing is that, different from the cycle is that finance contacts increasingly are gravitating towards the stronger manufacturers and in previous recoveries, you had stronger start-ups start up, and finance contracts are really going to -- they're gravitating to the better, more financially strong players, and I assume that you may also be giving that type of feedback from the B of A's of the world.

we're hearing the same thing, and we feel that that's in our favor.

Okay.

Finally, with dealer inventories down 52%, do you anticipate a one to one ratio retail sales going forward?

Well, as Sarah said, right now, wholesale has been running well below retail for many, many months right now.

And I think once the wholesale catches up, I think you are going to be looking at a one to one ratio.

But I think we've got the opportunity that we could see possibly more wholesale as the dealer inventories get stocked back up to what that he retail level is dictating.

Okay.

Great.

Thank you very much.

Thank you.

Our next question comes from the line of Greg Badishkanian of Citigroup.

You may proceed.

Hey, this is actually Alvin Concepcion in for Greg.

Just wanted to go back to the financing on the retail side.

I think you mentioned last time that a couple of the major lenders wanted to increase their RV business.

Have they started to do that since the end of the quarter?

Have you seen any changes?

Well, from a retail standpoint, I think you have a lot more -- B of A is still on the industry, Bank of the West has a very sizable position.

I think a lot of the regional and the local choices are becoming more of an opportunity for the retail customer, but we haven't seen any significant player reenter the business on the retail side, or really on the wholesale side.

I think there's improvement and a year ago, we were essential frozen for sure on the wholesale side for a period of time.

So very different dynamic 12 months later, but the retail players, I don't know if they have really dramatically changed here in the last three months.

But I think with that being said, we certainly appreciate the fact that the ones -- the lending institutions that have stayed in this industry during these extremely difficult times, I still think that once the recovery is well on its way and there's other lenders out there that see that there is profit opportunities here, I think you are going to see some of them probably trying to get back into this industry.

That's just the American way.

Okay, great.

And then you mentioned the supply, the raw materials may be an issue.

Is that referring to chassis, or is it more broadly -- is that more broad?

Well, right now, I think our biggest opportunities that we see is in chassis, and it's also in some of our fabrics.

But that's primarily -- there's a couple reasons for it.

One is, their lead times are much longer than what the majority of our suppliers are.

And obviously, you know how big Ford is, and they've got other things that they have to take into consideration when they're scheduling their plant other than just the RV business that they've got.

So they have to kind of marry that together to set their schedules.

But with that being said, I still think that we've got several manufacturers out there that are standing in the shadows of the chassis manufacturers that if magically these chassis manufacturers could wave a magic wand and say chassis supply is unlimited, I think we would have other suppliers that would come to the forefront that would say we've cut so deep and we're trying to ramp up our production capacities and we're just not there yet, I think we're going to be fighting material shortages for several months to come, to be quite honest.

Okay.

And then I guess switching over to your ability to meet your production, there's obviously shortages.

Will that give you any ability to get the pricing, especially since, I don't know if your suppliers are going to be able to do that on their end to you.

Any ability there?

Well, I think it will help the discounting issue that we've created in this industry over the course of this recession.

You look at it, and you're in a sold-out position.

You've got long lead times to get the product to your customer.

You've got to ask yourself, why would we discount?

So I think that part of it will help somewhat.

We're still going to have a very competitive environment in this industry until things start to stabilize, because you still can't lose sight of the fact that we've lost quite a few motorized manufacturers.

We've got others that are still reorganizing and restructuring, and there's still some depressed inventory out on the dealers' lots.

So that's all got to shake out before I think we can really say that we're back to normal when it comes to discounting programs.

Thank you.

(Operator Instructions) Our next question comes from the line of Eddie Sharp of Sharp Associates.

You may proceed.

Yes, could you indicate whether the discounting and incentives has lessened versus what you had a year ago and certainly a quarter or so ago?

There definitely has been sequential improvement from the fourth quarter to the first quarter.

Note that the promotional wholesale level and at the retail level.

But when you compare to a year ago, it is a bit higher than where we would have been a year ago.

However, a year ago, on top of the incentive side of the picture, we were facing a substantial losses on the repurchase side, which we don't have this year.

So if you factor all three of those, then you are looking at even year-over-year --

A better situation, yes.

Yes.

Okay.

Are these stat numbers, do they stack up relatively well, at least for trend, versus your own registration data?

Yes, we provide -- or we do a check out of our data to theirs every month to ensure everything is tracking appropriately.

So we're very much in tune in regards to what's being reported.

It seems like that you gave those market shares of 19.3 versus 18.3.

In October --, which is a one percentage point higher.

October month itself was about 2.7 percentage higher.

Would you guess that the November quarter, which I guess won't be out for several weeks, will be more closer to the October number than the 10 months number of market share?

Well, we've definitely seen in the last four months that our market share in the company has trended up.

So it's been a positive trend.

So that's our plan in regards to having that continue.

But I guess we'll see what November stats are when that's reported.

That's a very difficult one to predict.

I know they often have delays in certain states reporting.

Yes, they do.

And I think they mentioned that this last time.

I don't know if it was Alabama or what.

Okay.

So it seems like that the main thing for your volume, though, is due to restoring the inventory of the dealers rather than their sales, because they're down year to year.

And our wholesale shipments, if you look at the rolling 12 months basis, it's still far under what retail registrations are.

So we have a ways to go if we just want to ship at the wholesale level and meet retail demand, so there's positive up side there.

And we saw the same thing back in 2004 when it took off so fast.

Not only were you building to keep up with retail demand, but you were building to keep up with dealers building their inventories.

A little different this time, because I think dealers are looking at it saying, I do need to build my inventories, but they're still going to have to be very conscious of what that's going to give them for turns.

So it still goes back to what we talked about earlier, is that I think once we get the wholesale rates up to where the retail rates are, I think you'll see a one for one ratio there.

What is your opinion of Dr.

Curtain's estimate there?

Very bullish for shipments are concerned.

Of course, I don't think he does retail, but I assume he has to have some feel for that to determine, but he's got double-digit increases coming forth.

Seems very optimistic to me, but they're fantastic numbers.

I think if you look at that, I think it depends on the perspective that you're looking at.

But I agree with you, the percentage increase looks pretty phenomenal.

It is double digit.

But if you look at where we started from and look at the volume, it's pretty small.

Small base.

We're used to --

But you can say that's the same thing for your revenues, that your base was fairly small a year ago.

Absolutely.

So to have a 16%, 17% revenue gain is pretty damn good.

He may have 20% for units.

So of course, I think you're -- I didn't quite catch all your average sales, but it looks like they're down for the most part.

Which is really strange.

The one comment I would make on the RVAA shipment projections for 2010 for motor homes, the number that is current published is still less than what retail demand is on an annualized basis.

So I guess that would be an important point, in my view.

Okay.

Thank you.

Well, you're doing well.

Thank you.

With no further questions in the queue, I would like to turn the call back over to Mr.

Bob Olsen for closing remarks.

You may proceed.

Thank you.

Again, we are pleased with the increased demand for our motor homes.

We are expanding our production to meet this increased demand, but we are doing so with caution until we see continued positive signs of economic recovery in the US.

I continue to believe we have hit a home run with our new 2010 products as they are the right products for the marketplace today.

We maintain -- we remain very optimistic about the long term outlook for the RV industry, and as the leading motor home manufacturer in the industry, we are ready and able to continue to grow with the increased demand for our product as the market recovers.

I would like to thank everyone for joining Winnebago Industries conference call today, and I look forward to talking with you again in March when we report our second quarter results for fiscal 2010.

I would like to extend a happy holidays on behalf of Sarah and Sheila and all of the Winnebago Industries employees as we look forward to a new year.

Thank you.

Thank you for your participation in today's conference.

This concludes the presentation.

You may now disconnect, and have a great day.