Winnebago Industries Inc (WGO) 2010 Q4 法說會逐字稿

Greetings and welcome to the Winnebago Industries fourth-quarter 2010 earnings conference call.

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

A brief question-and-answer session will follow the formal presentation.

(Operator Instructions).

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Sheila Davis, Public Relations and Investor Relations Manager.

Thank you.

Ms.

Davis, you may begin.

Thank you, Rob, good morning.

Welcome to Winnebago Industries conference call to review the Company's results for the fourth quarter and fiscal 2010 ended August 28, 2010.

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 noon today Central time.

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 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'll now turn the call over to Bob Olson.

Bob?

Thank you, Sheila, and good morning, everyone, and welcome to Winnebago Industries fourth-quarter conference call.

I'm extremely pleased we achieved improved profitability in the fourth quarter and fiscal 2010.

This was a result of a lot of hard work from every member of our team and important for us in what has been a long road of recovery for both us and our industry.

Sarah will go through the financial details in a moment, but these earnings were primarily a result of higher motorhome deliveries throughout the quarter.

Our sales order backlog again at the end of the fourth quarter of fiscal 2010 was 818 units, a decrease of 13% from a year ago and also a decrease of 13% sequentially from our third quarter.

This is partially explained by the fact that during our fourth quarter as we transitioned to delivering our new model year product, we worked diligently to reduce our lead times in an attempt to satisfy our customers' expectations of a more timely delivery.

The preliminary reports we're receiving on our 2011 motorhome products from both our dealers and retail customers are excellent.

With 45% of our products new or redesigned for 2011, we have great new floor plans spread throughout our entire product lines, some of which have been shipped throughout the summer months and some that are yet to be shipped.

As testament to the strength of our new 2011 product offerings, retail sales of Winnebago Industries products at the September 2010 Pennsylvania RV and Camping show in Hershey, Pennsylvania were 36% higher than the previous year with sales of our Class A diesel models being particularly strong.

The Hershey show is the largest retail show in the country and as an early fall show, it is a key indicator of the success of our new products early in the new model year.

So we are very encouraged by the success we had at the show.

As you may have noticed in our news release, we do not currently have any sales orders in our backlog for the ERA Class B product.

We've taken a short hiatus in this product line to redesign a new offering utilizing the new Mercedes Sprinter van chassis with 2010 diesel emission standards.

We plan to reintroduce the new 2012 ERA at the upcoming national RV trade show that takes place in Louisville, Kentucky the week after Thanksgiving with plans to ship this new 2012 ERA on the new chassis early next year.

We continue to feel that dealer inventories are in good shape.

They remain relatively flat sequentially and aged inventory remains low.

Our dealers have done a great job of managing their inventory levels to closely match retail demand.

We continue to be an industry leader in retail sales.

According to Statistical Surveys, Inc.

our combined Class A and Class C retail market share for the US was 18.1% for the first eight months of calendar year 2010.

We are particularly pleased with the Class A diesel market segment with 13.6% market share compared to 10.9% for the same period last year.

A greater volume of rental orders within the industry caused some market share loss overall as a result of a decrease in our Class C market share.

Rental activity was particularly noticeable in the Class C market in the first seven months of calendar 2010 and this market segment should normalize throughout the last few months of the year.

We anticipate our market share to improve as the year progresses.

In Canada, Winnebago Industries Class A and Class C combined market share has shown significant growth with 18.2% market share for the first seven months of calendar 2010 which compares to 9% for the same period of calendar 2009.

We understand there continues to be severe economic conditions but we also realize there's been a lot accomplished this past year.

Dealer inventories have been reduced significantly.

We've hired 350 full-time employees.

We are operating all three of our assembly lines and most importantly, we're giving our employees 40-hour paychecks.

In addition to entering our slower fall and winter seasons, we are still faced with extremely low consumer confidence levels, an important midterm election and continued high employment rates which all serve as headwinds to consumer retail activity.

In spite of these issues, we are encouraged by the fact that campgrounds continue to be full, the RV lifestyle is still alive and well and remains one of the most affordable getaway opportunities you will find.

We are poised well to take advantage of any upturn in the business when the economic issues start to improve.

With that, I'll now 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 fourth quarter of fiscal 2010.

Revenues for the fourth quarter were $123.1 million, a 107.1% increase from the fourth quarter of fiscal 2009.

This was primarily a result of an increase in our motorhome deliveries of 559 units or 92.4%.

Our average selling price increased by 12% for the quarter as compared to last year.

This increase is both a function of a shift in our sales mix to more higher priced products and also a reduction of product discounts offered at the wholesale level due to improved wholesale market conditions.

Another positive impact to revenues was that our retail promotional allowance decreased by 3% as a percentage of net revenues when compared to last year.

Lastly, contributing to the revenue increase was an increase in our non-motorhome revenue areas up 20% or $1.7 million.

Increased motorhome production during the fourth quarter resulted in improved labor efficiencies, reduced labor costs as a percentage of net revenues and increased absorption of fixed costs as compared to the prior year.

As noted in the press release, there was a positive benefit of $750,000 to cost of goods sold from the liquidation of last-in/first-out inventory values.

All of these items had a positive financial impact and resulted in a gross profit margin for the quarter of 9.1% as compared to a gross deficit of 3% last year.

We ended our quarter with dealer inventories of 2044 units which has remained at a consistent level since February of 2010.

Our operating expenses in the quarter were $1.2 million less than last year.

This is primarily related to the $855,000 impairment charge recorded on our [Hanson] fiberglass facility in the fourth quarter of last year due to the announced closure of that facility.

From a tax perspective, no tax expense was recorded related to the operating income earned during the quarter due to operating losses incurred in the first half of the year for which no tax benefits were recorded.

We had minimal tax carryforwards related to fiscal 2010 to utilize in the future.

We ended the fiscal year with $74.7 million in cash.

This sufficient liquidity allowed us to make capital investments without having to alter our capital structure.

Significant inflows of cash during the fourth quarter consisted of auction rate security redemptions of $2.3 million and the receipt of our income tax refund of $1 million.

These positive cash flows were reinvested into working capital during the quarter.

I'll now turn the call over to the operator for the question and answer portion of the call.

(Operator Instructions) Kathryn Thompson, Thompson Research Group.

This is Jamie Baskin on the line for Kathryn.

My first question -- I know you said dealer inventories are at an appropriate level.

Do you expect them to replace retail sales on a one-to-one basis going through the winter?

Well I think that is our intentions.

I read some of your guys' analogies on that and I think you think it might be a little less than that.

I look at that dealer inventories are in really good shape -- now I'm speaking for Winnebago Industries -- and age is in extremely good shape.

So I think the dealers have enough confidence that I think we'll see a replacement at a one-to-one rate.

the.

My next question, on the margin upside especially sequentially, do you think this is primarily a function of a shift towards more Class A's and do you see this trend continuing?

The driver of our mix has really been beneficial from a margin standpoint, a definite significant reason.

I think as you look at our backlog, you can see that's still evident for us on a prospective basis.

The recession we've seen in the marketplace in Class A gas and in Class A diesel has really changed our mix over the past year.

And I think it provides opportunities for us from a margin standpoint.

Also we've been in a year where on the first quarter and even into our second quarter was a transition to increasing our staffing, increasing our capacity.

And so we saw in third and fourth quarter a lot of that benefit really evidenced in running more smoothly as people were trained accordingly.

So I think there's opportunities on that side perspectively as well just maintaining this production.

If we have an opportunity to increase it further, there's even more upside once we have those people trained.

This is my final question.

Have you seen any change in retail and wholesale financing sequentially?

I think it's improved a little bit.

I think there's two issues to that.

One is I think that some of the financial people, they have eased up a little bit some of their criteria.

But I think a bigger portion of it is I think dealers, retail customers are getting used to what the new expectations from the financial institutions really are.

We've kind of gone full circle.

You know, the expectations now are that if you are looking at wholesale that you're going to have rules and regulations, you're going to have to pay curtailments.

The finance companies are going to be looking closer at turns of your inventory.

So on the retail side, I think it's a case where people are now understanding that that expectation is going to be you're going to have a down payment.

You are going to have to prove that you make what you say you make and you may be only able to borrow a portion of what the value of the product really is.

So I think it's a combination of a lot of things.

But we're not back to where the retail and wholesale financing was back in 2004.

And to be honest, I don't know if we'll ever get back to that and probably shouldn't because I think that's part of the reason we got into some of this trouble that we have seen the last three years.

Okay, well that's all for me.

Thanks for taking my questions.

Scott Stember, Sidoti & Co.

Sarah, do you have the usual ASPs that I ask for?

Certainly.

For the fourth quarter Class A gas, our ASP in 2010 was 91,315 as compared to 82,669 last year in our fourth quarter.

Class A diesel was 150,197 as compared to 159,274.

Combined Class A for this year, 114,357 versus 119,859.

On Class C, our average for the quarter, 73,158 versus 67,051.

Total A and C 99,226 versus 89,982.

On the Class B it was 63,215 versus 62,020.

So all combined we're at 98,174 versus 87,671.

Okay, thank you so much for that.

And could you talk about where your capacity utilization was in the quarter?

And also heading into the slower winter months with inventory apparently at equilibrium and retail sales still tough to come by, could you talk about your profitability prospects for the first half of the year?

I'll talk about the capacity and going forward.

Right now for the fourth quarter we ran at about 44%.

That compares sequentially to the third quarter of about 40%.

So we are up a little bit.

Much better than I think a year ago, we were looking more in the neighborhood of -- I think the second quarter we're at like 18%, if I remember right.

So we made some pretty good strides in capacity utilization.

You're right, going forward, it typically is a slower period of time.

But we think with our 2011 product lineup that we have got out there which I'm a little biased, but I think the diesel product that we've introduced this year is some of the best that we've ever done and I think you'll see some of the dealers ordering that product through the winter months, maybe a little heavier than what they normally would.

Anyway, that's our hope anyway.

And if that is the case, I think going forward, I'm hoping that we're established where we need to be to meet that production.

I think from a profitability standpoint, as you know, any time that we're into the slower period of our seasonal year, it makes it tougher.

We live in Iowa which we're going to have some pretty cold winters which now utility costs go up.

So there's going to be some extra costs that we don't have during the summertime -- it's going to be a headwind for us during the slower part of our year.

Okay, circling back to your cost structure, I know this topic has come up many times, but have you guys given any further thought about any changes to your setup?

I think right now as you know and as you pointed out several times, you're not in total agreement with our cost structure, but that's us.

We're a very vertically integrated company.

Unless we want to change who we are, we're going to continue to be a vertically integrated company and we do it for several reasons.

One is we are out here in the middle of nowhere, so we don't have the luxury of having suppliers that are right next door that they can deliver.

We do it also to control our destiny from a quality standpoint.

We take great pride in the fact that we have earned the RBDA Quality Circle award for 15 consecutive years which we again won this year.

And the other thing is flexibility.

I think we found that firsthand as we went through this downturn the last three years that when we've got control over our parts and pieces, or a bigger control over them, we are a lot more flexible.

So I guess the long answer to your question is that right now, we're satisfied with who we are as a company and we will continue to stay vertically integrated.

Okay and just the last question.

Can you talk about maybe some of the competitors that have resurfaced in the market out of bankruptcy from a pricing standpoint?

Are you concerned heading into the winter of any irrational pricing that might take place in order to gain market share?

I think we have seen overall that some of the discounting that we saw a year ago has subsided a little bit.

I think any time that you have got -- you go into your slower time of the year and I don't care if it's the companies that are coming out of bankruptcy or if it's normal companies, if you get into a situation where you're trying to keep the doors open and trying to supplement the slow time of the year, you could see some of that going on.

I don't want to limit that to just the company is coming out of bankruptcy.

I think the other issue that we all have to be prepared for and I certainly hope it doesn't happen, but if this economy doesn't start to improve and retail doesn't pick up, you could see some (inaudible) going on there.

But you know, I think we as an industry have done a fairly decent job of scaling back on the incenting that is going on or was going on in this industry.

So I'm hoping we can maintain that as an industry because from an industry standpoint, it's the healthiest thing we can do for all of us.

Greg Badishkanian, Citigroup.

This is Alvin Concepcion in for Greg.

I know you saw some nice retail sales growth from the Hershey show in September.

Overall have you seen a change in retail sales for markets since September in your other channels?

Yes, I think we've had very good success at all the shows that we've gone to.

I think you see the numbers like we do and you see where wholesale has outpaced retail for several months in a row right now.

And I can tell you that we are not seeing that same trend here at Winnebago.

It's a little bit better for us than what the industry is doing right now.

So the bottom line is that every time we have participated in a show with a new 2011 product, we've had pretty good results especially compared to a year ago.

Okay, great.

I know commodities and labor costs were mentioned as an issue kind of in -- going forward.

What are you seeing there and how are you addressing that?

Well from a labor standpoint, the entire Company has not had an increase from a salaried or an hourly perspective in a very long time.

So we have held that in place in light of where the Company results had been.

So that was what we needed to do as we made this long journey back to profitability.

Now when you look at the hiring that happened in the early part of this fiscal year, that helps in regards to our (inaudible) average hourly rates because we're hiring some of the entry level folks.

So that is helpful and can be helpful for us on a prospective basis.

Commodity pressures, the metals are the ones that we probably are most affected by especially from the standpoint of what we do for our own manufacturing.

Steel and billet and there's the fluctuation going on there, but we still approach each model year incorporating an assumption on inflation.

And then from a chassis standpoint, the timing of that happens at very different points in the year.

And so we pass those on when those occur.

But at this juncture, we haven't had any significant pressures that are out of line with what we thought would be the case.

I think just one thing to add to that is the fact that we are starting to see the price of oil, the price per barrel go up a little bit, and we do use some petroleum-based products and whether that be polyethylene or ABS plastics, paints obviously.

So we want to keep a watchful eye on that and hopefully it doesn't get carried away like it did here a few years ago.

Okay, great.

That's all for me.

Thank you.

Bret Jordan, Avondale Partners.

This is Anand in for Bret.

Just a few quick questions this morning.

How many employees did you end the quarter with?

Right at 2000.

As far as the non-motorhome revenue goes, it's been going at a good clip for the past few quarters.

Just wondering what your outlook is towards that contribution going forward.

We definitely had some improvements inside our third and fourth quarter.

For the whole fiscal year, we are only up 4%.

So the first two quarters are more challenging.

The outlook going forward, a lot of that really ties to the overall economy.

We have some customers that are automotive suppliers, some of the housing kind of suppliers.

So if they see improvements, so do we.

But we definitely have seen better comps in the last half of our fiscal year as when you look at the first part of 2011, the comps will probably be a little bit easier when you look at where we were a year ago.

But it's really going to be a driver as to what's going on in the general economy and some of the industries really unrelated to RV.

Last question, real quick.

Can you share what your Canadian market share improvement was year over year?

Yes, we definitely can.

Bob had started that in his opening remarks.

The two drivers we really look at that growth to be first is the fact that in 2009, we believe there was a significant amount of product in Canada retail that related to the bankruptcy related companies.

So that really had an impact and it increased their penetration of those legacy products and we suffered as a result.

Now that has worked its way through, we see our share definitely improving similar -- greater than where we were even on the 2008 and 2007 range, but I think that's one catalyst.

And secondly, the rental market there has been stronger this year and I think that has been contributing overall to the growth in retail sales in Canada and definitely on the part of our success there.

Yes, I don't know if you did get the numbers.

We've improved from last year, a 9% market share penetration up to 18.2% this year.

So we're extremely happy with what we've done so far in Canada.

Craig Kennison, Robert W.

Baird.

Question on the retail, we're just getting so many mixed signals, if I could just quote a few facts here.

In August according to Statistical Survey, motorhome retail was down 8%.

According to your math, Winnebago retail was down about 2%.

Our dealer survey has units up about 8 to 10% in the quarter and then we've got the Hershey show up 36%.

Where is reality here?

It seems like you could drive a Class A Winnebago motorhome right through that gap.

Isn't this forecasting fun right now?

It sure is.

That continues to be one of the concerns that we have got.

It was in my script, it was in the press release that we feel that retail is going to be one of the big issues.

I think just what you laid out there, Craig, I think speaks volumes.

I think there's buyers out there, if you get them to a show, I think they get caught up into the festivities of the show and they end up buying.

Every show we've gone to this year, we've had really good retail activity.

And it's the doom and gloom out there that the media -- that they talk about all of the things that are so bad with this economy and this country and even the world now that I think until you get them into that environment, you see a little bit of a downward trend.

You can't lose sight and your point is well taken, you can't lose sight of the fact that -- when you look at wholesale versus retail, we've gone several months now where wholesale has outpaced retail and to quote you, that's unsustainable.

I guess if there is a bright side at least from a Winnebago Industries standpoint, we are not seeing that disparity as large as what we feel the entire industry is.

So you've got a good question.

I still think that Dr.

Curtin's forecast in that 21,000, 22,000 range for 2010 I think is legitimate.

I think there's going to be a point here in the not-too-distant future where the dealers are going to have to say my inventory is -- I can't keep ordering more than I'm retailing.

But I really don't think it's going to take a lot for improvement in this economy to see retail pick back up.

And I base that simply on the fact that this thing has been -- this recession has been over twice as long as what a normal recession has been for our industry in the past.

You have still got campgrounds that are full.

You've still got the lifestyle that people embrace.

Our best commercial for our industry is the airlines.

If you haven't gone to an airline lately, it's a real hassle.

The momentum is there, it's just that we need a little bit of help with the economy to get people to feel good about spending money, especially for discretionary items right now.

But you bring up a very valid point, it's a very difficult one to forecast right now.

Just in terms of the near term, the last couple of months, do you think -- should we take a lot of away from that Hershey number or should we be thinking that's specific to Hershey to a show but the broader market is not nearly as robust?

This is all opinion, I think that the whole market isn't quite as robust, but I'll go back to what I said before.

I think if you get into the show environment, or at least that's what we're seeing so far, I think the Hershey show was a good indicator of what the rest of the shows are doing.

We had a very good Grand National rally, we had FMCA shows that we sold more this year than last year, the rally down in Louisville, we sold more than we did last year.

So you get two different entities here, but I think the shows are doing much better than what the normal going to a dealership and buying is.

But like I say, I'm still confident that it's not going to take much for improvement in this economy to turn that around.

Thanks, and then just shifting gears to the recent M&A activity, we saw one of your competitors acquire a large towable company.

Have you guys given any thought to M&A activity, whether you are a buyer or a seller, or have you explored the towable market in a different way or even some of your competitors are a little more global today than you are.

Any update on the strategic alternatives?

Well, we continue to look at that and we're not ready to announce anything.

But I can tell you, we are looking at some things really seriously right now and I'm hoping within a short period of time, there might be something we can discuss.

Okay and then lastly, just from a market share perspective, are you guys getting your fair share of the rental market?

I know that tends to be lumpy both in timing and the size of orders.

But how do you feel about what you're getting in that market?

Not happy.

You know, I think we've got some work ahead of us.

I think we've had some competitors come in with some really down and dirty inexpensive product and my hat's off to them.

They've done a very good job on that and we've got to figure out how we can get a bigger piece of that pie.

Because as you can see -- and I think this year was probably a bigger piece of the market than what it normally is because I think last year, you saw rental operators holding off on replacing their fleets.

So they ran them an extra year.

So now this year is more of a catch-up year.

So I think rental had a bigger impact on the overall industry this year than what it normally would.

But with that being said, we didn't get our fair share and --

But I wouldn't say that is US specific, from a Canadian standpoint (multiple speakers)

Yes, I would agree with that.

We've been stronger but these aren't -- the timing of these are not necessarily on an annual basis.

They normally have alternated maybe year over year to the number of units they'll purchase.

I also say from a profitability standpoint, that is a very significant factor in the whole process of pricing it out and having it be a lucrative piece of business on both sides of the partnership.

There is always a challenge on that regard.

We were at the table having serious discussions with the major players.

Some of the decisions were made by us in regards to it wasn't going to be a profitable venture.

Barry Vogel, Barry Vogel & Associates.

Sarah, can you give us an update on where we stand on the auction rate securities issue?

Yes, in regards to our auction rate securities, you'll see in our balance sheet, we have a little bit under $18 million left of auction rates.

We only have the RBC securities remaining.

We did liquidate at par, we deem at par all our UBS securities.

And during the quarter, of the $2.3 million of redemption, a portion of that was RBC.

We continue to see consistent activity on that front.

So the remaining portion, what we have, there isn't any guaranteed timeframe.

But I expect we're going to continue to see momentum there in the coming year.

Do you expect that to go down by the end of this fiscal year?

Yes, we're going to continue to see redemptions.

How much, that's the question.

But every six months, we have had routine redemptions on the portfolio that's remaining with us.

Could you -- on the average unit prices, could you give us the average for the year on those categories?

Yes I can.

For the fiscal year, our A gas was 91,574.

155,479 is what we had for diesel.

Class A total was 116,828.

Class C was 70,000.

A and Cs combined was 97,362.

Our Class B was 62,759 and all of our units combined was 95,519.

Okay and on capital expenditures for the new fiscal year and depreciation and amortization, what's your best guess?

We estimate that CapEx for 2011 will be in that $3 million range and depreciation will probably be around $5.5 million.

Okay and what was the all-in operating rate for fiscal '10?

Our total operating rates for '10.

From a gross profit standpoint, we did 5.8% for the year.

Bear with me as I look to a different page here, take a look (multiple speakers)

Just the operating rate.

For the operating -- the total year we had operating income of 520,000 or 0.1%.

No, the operating rate of running the factory, I'm sorry.

Oh, okay.

You are talking about what we are running on a weekly basis?

No, I know what you did in the third quarter because you answered the question and the fourth quarter.

But I was wondering what the fiscal '10 operating rate was for the year.

You are talking capacity utilization?

Yes, that's what I meant by operating rate.

We had that calculated essentially on a quarterly basis based on the mix of what we produced each quarter.

So we don't have an annual tally.

It would be underneath the number that Bob had shared from the fourth due to -- it's primarily our first quarter where we were ramping up.

We didn't start operating all three assembly lines on a weekly basis until the middle of October.

And then the second quarter when we did have all three assembly lines running, we were impacted by the shutdown over the holidays and a lot of snow days.

So those two, first two quarters are going to really reduce our overall rate.

We have got that in a spreadsheet, we just don't have it here with us.

So if you need it, we can get back with you after the conference call.

One more question, Sarah.

You made a comment that you had minimum tax carryforwards going forward and so I was wondering, what is -- let's assume you're profitable this year, what would be your guess as to an all-in tax rate?

The size of the income is really a huge factor to estimating what our tax rate will be because with our permanent items, primarily our permanent tax reductions that we have that are items that are not considered income for tax purposes really can skew what the rate it.

So it's not going to be an easy one to model for 2011 depending on what you assume for profitability because a small amount of profit will give us a very unusual rate but the larger the profit is, it will normalize out and be in that 36, 37% rate.

Okay, now as far as the reversal or the potential reversal of your deferred tax assets, how is that going to work this year in your estimation?

Well, when we follow generally accepted accounting principles on that regard, we have to look at recent operating performance.

It's not a hard-and-fast rule but three years is a typical time parameter you would look at.

And so from a three-year cumulative perspective, we still do have sizable taxable losses, an amount that's fairly small in 2008 but very sizable in 2009.

So, until we have some consistent profitability that can offset that negative evidence, we don't have an accounting position to write these assets back on the books which are sizable.

We're talking over $40 million.

Now since we're in a very small carryforward situation, we are going to be -- assuming profitability in 2011, we would be a taxpayer and it's going to be how quickly do we return to very strong profitability that will dictate when we can write these assets back on the books.

But it could be out quite a ways if it's a slower recovery.

Okay and one more question on this non-manufacturing -- non-motorhome revenues.

Did I catch you right when you say there was $1.7 million for the quarter?

No, it was up $1.7 million.

So what was the -- can you give us a total for the year versus the year before?

Yes, we break out these categories into two buckets, motorhome parts and services which are RV related but they're not specifically part of the motorhome production process.

That was $13.7 million this year versus $12.6 million last year.

And then our other manufactured products was $20.6 million versus $20.3 million last year.

Thank you very much, and I guess the worst is over, I would like to think.

But you've got a very competitive -- you have got very competitive competitors, to say the least.

And so you've got your work cut out for you to maintain your market share.

But I congratulate you on the tremendous job, you and the entire Company, bearing through that depression that you had.

Thank you very much, Barry.

Thanks.

Kathryn Thompson, Thompson Research Group.

Just a quick follow-up question.

When you were talking about your acquisition strategy, would you look at expanding motorhome lines or look into the towable division?

Can you provide us with that?

We're looking at just about anything that makes sense that would fit into our corporate structure right now.

Like I say, we're looking at some things very seriously but a little bit too early to make any comments right now, but hopefully soon.

And then one last question.

The Canadian sales, can you provide how much -- what percentage of sales came out of Canada last fiscal year?

Yes, I can, if you bear with me until I turn to that page.

What we disclosed is our revenue by geographic area and so our international sales which is primarily Canada is approximately 8.1% of our total revenues this year versus 5.6% last year.

So that's $36.3 million versus $11.9 million last year.

Thank you.

There are no further questions at this time.

I would like to turn the floor back to Mr.

Olson for closing comments.

Thank you, Rob, and thank everybody else for joining us today.

Again we are extremely pleased with our results for the fourth quarter and fiscal 2010.

While we view these results as very positive, we also need to see an increase in retail sales as we go forward for our continued growth.

I want to repeat what I stated earlier and that is the long-term outlook for our industry remains positive.

The RV lifestyle is embraced by many Americans, campgrounds are full and the RV lifestyle is a very viable alternative for consumers as they contemplate their other vacation and retirement choices.

As the economy improves, we are prepared to capitalize on the market growth through our exciting line of new products.

I would like to thank everyone for joining Winnebago Industries conference call today and I look forward to talking to you again in December when we report our results for first quarter of fiscal 2011.

Thank you very much.

This concludes today's teleconference.

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