CEO transforms RV maker Winnebago

Posted: November 4, 2017 at 1:50 a.m.

MINNEAPOLIS -- Michael Happe is leading a resurgence of one of the most famous names in the recreation vehicle industry.

When Happe became chief executive officer of Winnebago Industries in January 2016 after a nearly 20-year career at Bloomington-based Toro Co., he said the board was receptive to establishing a new direction for the company.

In short order, Happe orchestrated the largest acquisition in the company's history, increasing Winnebago's stake in the biggest and fastest growing RV segment, towables. He also introduced several new products and built a new leadership team. "Seven of the nine direct reports that I have are either new to the company, or new in their positions," Happe said.

The company, based in Forest City, Iowa, also moved its executive offices to Minnesota, first in a small space in Burnsville and now in Eden Prairie where the company plans to have 100 employees by the end of 2018.

Analyst Craig Kennison of RW Baird said Happe is conducting "a leadership-driven transformation" of one of the most recognized brands in the recreational vehicle industry.

Happe "brings a fresh perspective and has a mandate to rethink what Winnebago can be," Kennison said.

While Winnebago Industries was founded in 1958 to make travel trailers, it has become synonymous with gas- and diesel-powered motor homes.

The company produced its first motor home in 1966, a 19-foot model built on a Ford chassis called the F-19.

Later that year, the company -- and the industry -- was transformed when it introduced the D22, built on a Dodge chassis. The D22 design made RV travel more affordable and was a standard design for years.

The company almost exclusively started concentrating on motor homes. As recently as fiscal 2015, Winnebago's product mix was 89 percent motor homes and 7 percent towables.

Yet the industry had shifted to towables. Towable units now make up 87 percent of RVs sold and 65 to 75 percent of revenue in the industry.

That means that Winnebago has been nearly absent from the largest and fastest-growing segment of the RV industry. So as Happe was coming into the company, Winnebago had less than 1 percent of the towables market share.

A year ago, Winnebago paid $500 million for Grand Design, based in Middlebury, Ind. Grand Design, which was founded only five years ago, had become one of the fastest-growing companies in the RV industry.

The Grand Design acquisition increases the towables portion of Winnebago's portfolio to more than one-third and improves the company's profit margins.

The Grand Design acquisition also put Winnebago in the heart of the RV industry, which revolves around Elkhart, Ind. Manufacturers clustered in and around Elkhart account for nearly 85 percent of the total RV production in the U.S.

Winnebago on Thursday released results for its fourth quarter ended Aug. 26 and its fiscal year.

The company exceeded analysts' sales and earnings expectations, reporting annual revenue of $1.55 billion, a 59 percent increase from the previous fiscal year, and earnings of $71.3 million, or $2.32 per share. Analysts expected the company to report revenue of $1.53 billion, and a 33 percent increase in earnings to $2.23 per share.

Business on 11/04/2017