Good day, ladies and gentlemen and welcome to the Fourth Quarter 2014 Winnebago Earnings Conference Call. My name is Kim and I will be your operator for today. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions). As a reminder this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today. Ms. Sheila Davis, please proceed.

Thank you, Kim. Good morning and welcome to Winnebago Industries’ conference call to review the company's results for the fourth quarter of fiscal 2014 ended August 30, 2014. Conducting the call today are Randy Potts, Chairman of the Board, Chief Executive Officer and President; and Sarah Nielson, Vice President and Chief Financial Officer. The news release with our fourth quarter results was posted on our website earlier this morning. This call is being broadcast live on our website at www.wgo.net/investor.html and a replay of the call will be available on our website at approximately 1 o' clock PM Central Daylight time today. If you have any questions about accessing any of this information, please give us a call at 641-585-6803 following the conference call. 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 Randy Potts. Randy?

Thanks, Sheila. We had a strong finish to fiscal 2014 with the continuation of the revenue and earnings growth that we saw in the previous three quarters going into the fourth quarter. The result was a fantastic year for the company in which we achieved earnings growth well in excess of our top line growth. Of note fiscal '14 EPS of a $1.64 was the company's best since fiscal '05, up 45% over last year. Several factors contributed to our strong fiscal '14 results. In particular our motorized growth through July of calendar year '14 has significantly outpaced the industry. According to statistical surveys through the first seven months of calendar year '14 Winnebago's motorized retail volume increased 34.2% in North America. That's well above the industry's growth rate of 12.9%. This above average increase has resulted in Winnebago's motorized market share growing to 20.9% through July of 2014 versus 17.6% through July of 2013. Our internal retail reporting system reflects year-over-year increases of 17% in the fourth quarter and 28% on a rolling 12 month basis. The growth was driven by strong consumer demand across most product categories. We continue to see particularly strong demand for our new products built on the Ram ProMaster chassis including the Class C Trend and Viva! and our Class B Travato. These products largely began shipping to our dealers during the second quarter, so they're still new to the retail market. And speaking of new products, the retro-inspired Brave and Tribute Gas As began shipping in the fourth quarter. This is a fun new product that we think will be a real hit across multiple demographics. Winnebago's culture of innovation generated many new products and product introductions this past year. This proved to be a key driver of our success in both motorized…

Thank you, Randy. During the fourth quarter of fiscal 2014 revenues grew nearly 15%, primarily driven by motorized volume growth of approximately 25%. Similar to last quarter approximately 18% of our fourth quarter shipments were of products that were not available at this time last year. Our motorized volume growth was partially offset by lower ASPs of 8.4% due to the growing popularity of our new class B and C products. Additionally, fourth quarter towable revenues increased 8.6% comprised of ASP growth of 9.9% and unit growth of just under 1%. Specifically looking at our fourth quarter ASPs year-over-year here are the key changes. Class A Gas ASP was $93,510, up nearly 2%, Class A, Diesel ASP was $172,841 which is a 9% decline due to an increase in sales of lower priced products such as the Forza and Solei. As a result class A ASP was $111,118 down over 10%. Class C ASP was $70,276 which is 4% lower and influenced by the sales of the Trend and Viva! products. Class B ASP was $71,183 a decrease of nearly 10% as a result of higher Travato sales. Finally all motorized ASP together were $91,924, a decline of over 8%. Moving over to our Towable product, travel trailer ASP was $19,088, down over 4% a result of the greater mini and micro-mini sales. Our fifth wheel ASP was $41,094, an increase of just over 46% and influenced by shipments of our new Winnebago Destination, Voyage and Latitude fifth wheel offerings. Towable ASPs was $23,319, up nearly 10% in aggregate. Given the continued strength in motorized shipments during the fourth quarter, our dealer inventory increased significantly compared to last year and stood at 3,979 units as of August 30, 2014. However on a sequential basis, dealer inventory was up a modest…

(Operator Instructions). Your first question comes from the line of Kathryn Thompson from Thompson Research Group. Please proceed.

Hi, thanks for taking my questions today. Thanks for the clarity on the motorized inventories at the dealer level. And when you discuss the relative increase, are you able to quantify new products versus core demand driving that relative increase because on the motorized side it is a bit higher than we would have expected. And so we're just trying to get a sense of how much is core demand versus new products that you discussed. Thank you.

Good morning. So if we look at the dealer inventory, maybe looking at similar percentage I highlighted, we've consistently in the last few quarters been shipping product in the range of 20% of our overall shipments and that’s entirely new. So it's fair question because the percentage of the new product in our dealer channel is going to really reflect what we've been shipping this last year. And it started in the first quarter with the Forza and the Solei, and then the Trend and Viva! and Travato was more of a second quarter non dynamic new product. So there is a good percentage in that similar range of dealer inventories, that’s new product that wouldn't have been in the channel a year ago.

So it sounds like well over half, just rough ballpark at least would be attributed to the new products?

Yeah, it's actually kind a hard to define what new products would mean in that context Kathryn, I mean. We're always…

[Inaudible] like with the new Ram chassis products and those types of things that are in the Brave and Tribute products.

Okay it’s a brand new series.

Series, correct.

Okay, do you have a quantification of it in that context, Sarah I don't.

Yeah, I will pull that out here, we could maybe continue with another question and I'll circle back to that with you.

Okay, and then if you look at the -- you've done a really nice job of coming up with products in Class C and Class B but when you look at the end market consumer and just look at core demand with your class, different price points, what price points are selling best and how has this changed over the past 12 to 18 months, even beyond just maybe new products but are you seeing any change in other words in consumer sentiment and they are willing to pay a certain price point of RV product? Thank you.

Well, I think the low price point products have been very successful and continue to do so and in part, I mean we brought to market a product that just because of the chassis platform it’s built upon as we discussed this earlier is at a lower price point because of that and so that’s been very successful. From the standpoint of Class A diesel, retail demand and maybe you’re alluding to that, which is really the highest price point product out there, we’ve seen success for our line-up entering in a new lower price point in that category as well.

We’ve talked every quarter about the shift in the last year to maybe two years to lower price point products. I guess it’s something we have to generalize on but I'm going to say I think it’s kind of held pretty steady at where it’s been. I haven’t seen any market shifts in that buyer behavior in the last year or half year, like I did the years leading up to this year. I think it’s kind of stabilized at where it’s at, at least from our perspective.

And then to follow up with the earlier question you posed, if we look at dealer inventory this year versus last year at this time and in the context of what we have in the channel that’s entirely new, which is quite a few different kinds of products across almost every categories, it’s equivalent to 25% of our dealer inventory is new in that regard.

That’s very helpful. And finally this is just really more on consumer financing trends. It’s always been a point that we have focused on both in the downturn and as we’ve seen improvements in the recovery, what type of feedback are you getting from your financing partners about the quality, the pace of consumer financing and particularly if you could focus on if there’s any change in credit quality as the type of consumer that’s dipping their toe back in the market?

I haven’t heard anything specific from, I guess normally when I hear it’s more of a challenge or concern. When we talk to the key lenders that have the retail financing book of business we haven’t heard many dramatic shifts that’s impeding sales at the dealer level. Granted there’s a really a big event going on now this week on Pomona. So there’ll be some new data points available coming out of that show. I hadn’t heard that, that was a challenge from a Hershey perspective which is in September. So I don’t have any new information to share I guess in that regards to that question, Kathryn.

Well sometimes no news is good news.

Yeah, I agree.

Okay, that’s all I have today, thank you.

Thank you.

Your next question comes from the line of Craig Kennison from Robert W. Baird. Please proceed. Craig Kennison - Robert W. Baird & Co.: Good morning. Thanks for taking my questions as well. I’d like to follow-up on some of Kathryn’s questions and start with, I think Sarah you mentioned that dealer count was up 12%. Can you give us a hard number and tell us whether that is dealer points, dealer locations or just total dealerships?

We had 274 physical door locations from a motorized standpoint at the end of the fiscal year compared to 245 last year. So that’s on a year-over-year basis the growth that I mentioned. It’s a very good question as you pose because there is a lot of ways we look at that and looking at it just from the standpoint of one physical location isn’t necessarily telling the full picture because we have dealers that carry a full complement of our product and maintain and stock a lot of inventory and then we have some dealers that might be dedicated to a type or a product class. So then when we look at it from a brand standpoint or points of distribution by all the various products that is much larger number. We are looking at it in that 2,500 to 2,600 range of points of distribution. But it’s a number that we even internally want to ensure that we have a good definition, as to what that relates to and as we finalize our K we will be disclosing a little bit more information in the coming weeks.

Yeah, that’s kind of a new way for us to look at our distribution system and Sarah and I just talked about it before the call. We are going to start defining that more clearly. We just aren’t quite prepared to that but it’s growing proportionately with the number of doors. Craig Kennison - Robert W. Baird & Co.: That’s very helpful context. And then as a follow-up to that if we look at your inventory, just on the surface, the headline metric would be that inventory increased 50%. Clearly your traditional, your core dealers are more capable of sustaining higher inventory levels. What I am interested in is since you added these new dealers, those dealers have to stock up initial levels of inventory. So are you able to look at your inventory and so that you may ask to figure out how much of that 50% increase is really tied to just new dealer wins as opposed to you know elevation and inventory levels relative to demand?

Yeah, we definitely have that visibility from the standpoint of monitoring performance and looking at the partnership as we sign new dealers. So much of what happened in this past year is also a story of new product and having existing dealers stock more of the product offering that we provide, if they have the financial ability to do so. So in this past year I would look at it, a very big driver is because of what we have introduced and our strategy is to ensure that that’s incremental and it doesn’t just take up floor space that was previously utilized for a different product. Craig Kennison - Robert W. Baird & Co.: That’s helpful, and with respect to some of the new dealers, some of those, it looks like incremental 29 new dealers. Do you have an idea or can you quantify the inventory that went into that network, is something that’s all incremental?

We wouldn’t specifically break out that data point. Craig Kennison - Robert W. Baird & Co.: Are those, on average are they smaller dealers incrementally or larger dealers?

It covers the whole range, Craig and they are not likely to carry our full line either. So there is a lot of moving pieces to that. Craig Kennison - Robert W. Baird & Co.: Got it, that’s helpful. I am just trying to put that 50% inventory growth metric in some context because I don’t think it’s as large as maybe as it appears on the surface. And then on the rental side can you give us some context for how that flow through the income statement?

Well in the fourth quarter it’s a function of just the operating revenue that we would have recorded, in all of that unit for that particular transaction were delivered inside of the third quarter and so inside of Q4 there was approximately $500,000 of rental income associated with that. As we move into the next fiscal year here in Q1 the focus is on that, the whole process of moving those units back into the marketplace as they come up for the rental side and so we will talk more about that in the next quarter but inside of the fourth quarter there wasn’t a lot really new activity on that front because all units were in all in service and being rented. Craig Kennison - Robert W. Baird & Co.: Got it, thanks very much.

You are welcome.

Your next question comes from the line of Greg Badishkanian from Citi Research. Please proceed.

Good morning, this is [Travis Harbaugh] in for Greg. Congratulations on the quarter. Just a couple of questions from me, specifically what was your capacity utilization for the quarter and then just in general for the environment how would you characterize the promotional environment right in both the towables as well as motorized?

Well, first, we peg our capacity in motorized at approximately 80%. We always, along with stating that, we always make it clear that, that is capacity calculation based on a physical constraint of our factory. There is other factors that do come into that like availability of labor and what not. But we're very busy. As far as the discounting environment I can't really speak for our competitors, you get a lot of anecdotal information about that from competitive shows and hearsay. But as far as our products and I think it shows in our results, they're holding their value, their price quite well. And we are in a very, I'd say we're in a robust market.

Perfect. That's very helpful. And then just going forward when could we expect to hear some new announcements on the rental front?

New relative to incremental business or the status…

Yeah incremental business.

Well. One of the things we will be focusing on in the near term is our new relationship with Apollo. This is our first year in that relationship. So renewing that business going forward will be the biggest thing on our plate assuming that went well for Apollo and that it went well for us we'll be wanting to pursue that. We have another very large account in Alaska that's a partner that's been with us for many years and naturally we want to focus on retaining that business. So the first order will be in retaining the business that that's working for us all now. As far as pursuing additional rental business I think we need to see what the -- what we believe the retail, the open market is going to bring for us because it's likely that we want to prioritize the retail, the wholesale business, the normal wholesale business over certain pieces of rental business just because the price points are so aggressive. Does that help?

That helps a lot. Thank you so much.

You're welcome.

Your next question comes from the line of Morris Ajzenman from Griffin Securities. Please proceed.

Good morning.

Good morning Morris.

Hi. Let’s revisit the backlogs. Clearly Sarah went through very carefully, on the dollar basis down 50% year-over-year, unit basis down slightly less than that but still down meaningfully. And basically the statement was the backlog is very healthy, robust increased production adequate supply of chassis. I guess from all perspective there is always some question, is there some sort of weakness in the landscape as far as orders are coming in, and maybe partly the way you can answer that if last year you had the same ability to get chassis, increased productions, would that backlog hypothetically been very similar to this year if you were at the same position last year as you were this year?

Well the one distinct difference, I guess I would draw on, at this point last year we were at the beginning stages of filling orders for Forza and the Solei. So you had additional backlog as the interest that the dealers to have that product was -- they had placed the order. And that also the similar dynamic you would have seen in the Travato and Class B category on backlog and then in the C category for the Trend and Viva! So a year ago the backlog did have the kind of those initial orders placed for new products. The production started in throughout the year in various points and we got the product into the marketplace. And so a year later the biggest new introduction really was the Brave and Tribute that we started shipping that product inside of our fourth quarter. So there is dealer inventory associated with that now in the marketplace and at the end of our fiscal year it was really at the tail end of our fourth quarter that, that started. So there is the dynamic of new product introductions that really can move the needle on backlog at certain points in time. And backlog and the order generation that we see can really change inside of a month or a quarter depending on some of our large dealers and when they place their orders but big picture we think we really have we approached the time that we used to see a pretty typical level of backlog prior to the recession and this is going to be a reflection of as I mentioned in my prepared remarks, 70% to 90% of the next quarter shipments and we have the ability to do more than what the backlog indicates in the next quarter.

All right and just switching gears to the receivables in the quarter, I think you mentioned $13 million of that was due to units in transit, so hundred units. Overall your DSOs where they are now and going forward, are they in improved manner, are they staying flattish how does that all play out?

Maybe just I’m sure that the prepared remarks I provided no receivables, a point of confusion our receivables increased $13.4 million sequentially from Q3 and Q4 and are definitely at a high level at the end of the fiscal year in comparison to where we were a year ago. A compounder of that is associated with the change in terms when you look at a year ago, we had a different revenue recognition term change at the end of the August ’13 prior -- or compared to where we are now. So we quantify and this is an item that we’ve disclosed. I mean our Qs and it will be in our K here on a perspective basis, once we file it, the impact of that in transit was $40.8 million at the end of the fiscal year. So on a year-over-year basis you can see that we have a substantial amount of product in the channel on the way to the dealers and it’s reflected in receivables and we typically collect that in approximately two business weeks. You would typically see the cash generation, so inside of fiscal September we would have collected the receivables that were on the books at the end of the fiscal year.

Okay, thank you.

You’re welcome.

Your next question comes from the line of Derrick Johnson from BMO Capital Markets. Please proceed.

Hey good morning. Getting back to inventory I think Kathryn and Greg brought some good points on the inventory and one added wrinkle I think would be good to relate to us would be how much of that inventory is an increase based on gains in floor space and dealer space after all you’ve gained three points of share in A and C and about seven points in B so new products, new dealers and gain of floor space at multi-brand dealers I think will go a long way to explain some of those increases in inventory. So it’s kind of a pseudo question, but the other question I had was on variable expense if you could talk about the components there and how they are trending directionally and maybe a little magnitude of labor materials and chassis? Thank you.

Well, you’re exactly right from a dealer inventory perspective, that’s it multi-faceted on generating the increase year-over-year and you hit exactly on all the points as we discussed in some of the prior questions as well. But we don’t specifically breakout the all the components in regards to what percentage each would have in the grand scheme but similar to the prior the percentage I provided earlier that there is a 25% of our dealer inventory relates to product that we wouldn’t have even have -- that was not in the channel a year ago. An element of that is incremental floor space. So it’s a factor of all those items combined. Moving on to the variable cost question that you posed, from the standpoint of our full fiscal year our variable cost were on the same, on that 83.7% year-over-year and that’s a combination of materials, labor on variable on delivery and warranty and so from an annual standpoint a leverage in the margin basis points increased, that we've seen has been from a fixed perspective. Now specific to our fourth quarter as I highlighted we do have the dynamic that a year ago we had a LIFO income recorded and this year we have LIFO expense. We have had LIFO expense all year ago on a quarterly basis, and we would expect to continue to have that dynamic in fiscal '15. It just -- it did create a little bit of a tough comp for us as we look back to the end of the year a year ago. So excluding that dynamic we did see improvements in our variable cost inside of Q4 specifically really attributed to towables. And that's would have been in materials and in labor on the variable overhead category. So really kind of in most of the variable cost structure at that -- in that piece of the business. Then on the other side of that, from a motorized standpoint the positive movement was on the fixed side still for motorized. So…

Okay. So labor then, that's really what I'm getting at. So labor was something that worked against you in the quarter and is that something we should continue to see going forward?

No, it was the opposite for that for the towables business for us. That would have been one of the positive points, in addition to improvement with materials and on the variable overhead side. So LIFO is the one item that really dragged that all down and on a year-over-year basis not comparable.

Okay, thank you.

You are welcome.

Your next question comes from the line of Mike Swartz from SunTrust. Please proceed.

Hey good morning.

Good morning.

Just real quickly around, the diesel Class A market there is, that's really been I guess kind of slow this year. And I did see that your unit volume was down 15% in the fourth quarter. Could you just talk about that number in context maybe what you're seeing in the broader market? Have you may be seen that higher end class A product pickup in the last couple of months?

And Sarah might have more details, but on a broader sense I guess a perspective I'd like to share is that coming out of the recession really two years ago, early in the recovery of the RV market diesel became extraordinarily strong, unusually strong. And we've really couldn't explain why at the time. So I'm not sure the comp is real good, real -- I think it's still trying to find it's place. Yes, it is softer, I think across the board for us in the market then it was a year or two ago. But it probably was unusually strong before too. So it's kind of hard to use those two kind of data points to predict where it's going, what is the new normal going to be. But we're struggling with that a little bit too. I think it is fair to say that it is softer than it was but whether it's softer than normal is really the question we're trying to answer.

Great, thanks for the color Randy. And then just on the -- and Sarah I think you made some comments around just directionally the gross margin for fiscal year '15, how you're thinking about that. Maybe you can give us a little more granularity with some of the puts and takes in terms of maybe pricing or mix or just, I guess your underlying cost structure and how you think about it over the next 12 months?

Certainly. We saw on an annual basis margins expand from 10.5% to 11% and looking into the future we're still working towards continued margin expansion, but as I highlighted in my prepared remarks it could come at a little bit of the slower pace. In part it's a function of the investments we're making because we do have a lot more investments from a CapEx standpoint to improve or expand upon our equipments and our facilities which creates some additional fixed cost associated with that. But we've had a tremendous amount of improvement over the last few years, some of that flowing through at the variable cost level in this past year really was a story of fixed leverage at the GP line item and we think that in 2015 there are still further opportunity but it’s planned or we anticipate it might be at a little bit slower pace.

Okay and then I guess what’s the implications even for product mix and do you continue to or expect to continue to see this kind of ASP progression or run-rate that we’re seeing right now over the next couple of quarters or should that begin to stabilize as we lap some of the newer introductions from fiscal year ’14?

Well, when you look at our ASP for the year on the motorized side it was approximately $96,000. But as I highlighted in our backlog based on where we were at the end of August it was slightly lower, but in that range. I think that’s a reasonable and a fair ASP to think about on a perspective basis. So it is a little bit lower than where we had seen our ASPs to be in 2013 at a $105,000 and it’s really, it contributed to the new product.

Yeah, and that was again unusually high, we had those rich diesel mix at some points. And it kind of overlaps with Kathryn’s earlier question about do we see -- what do we see in the market trends and Sarah’s comment about a pretty steady ASP really, I think, parallels my perception that it seems pretty stable. But we’re just not seeing any dramatic movements in the market recently. So…

Okay, great. Well I appreciate the color. Thank you.

You are welcome.

Your next question comes from the line David Whiston from Morningstar. Please proceed.

Good morning.

Good morning.

Question on the dividend coming back. In the past when I would ask about that returning it always seemed that the priority was going to be M&A and so you wanted to save some capital for that, but now that the dividend’s returned are you thinking that you don’t really have to choose anymore or is M&A a lower priority?

No, I think it’s a sign that we are, we believe we will be generating enough cash going forward that we can do both.

Okay, and continuing with the cash CapEx spending in absolute dollar terms relative to historical terms it’s certainly getting a lot higher now. I know you can’t give any guidance for specific items for fiscal ’16 and onward, but should we be sort of thinking about a much higher absolute dollar spend in the longer term or do you think it will be in few years more of an anomaly?

2015 is probably a little bit outside of what will be typical, again using the history we had prior to the recession we had annual CapEx and depreciation more in that $8 million to $10 million range. So 2015 is a bit elevated in light of some specific projects planned for.

Yeah, some of this is just the result of us not really having any capital spending during the recession and just putting those expenditures off, the ecopaint system which is a big expense, was something that was in tough shape even back in the recession. We just couldn’t take on that expense then. So I don’t think it should be perceived as the new normal.

Okay, that’s helpful and just finally Sarah, did you say there is $10.2 million left on the buyback plan, and the tax rate was 32% to 33%?

Yes, I did.

Okay, thanks so much.

Oh, you are welcome.

Welcome.

Ladies and gentlemen, that concludes today’s question-and-answer session. I will now turn the conference over to Randy Potts for closing remarks.

Well thank you everybody for joining our call today. We think we had a very good year and we look forward to visiting with you when we have our first quarterly conference call in December. Thank you.

Ladies and gentlemen, that concludes today’s conference. Thank you for your participation. You may now disconnect and have a great day.