Prepared remarks
Welcome to the Winnebago Industries third quarter fiscal 2026 financial results conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference call is being recorded. I would now like to hand the call over to Joan Ondala, Vice President, Treasury and Investor Relations. Ms. Ondala? Please go ahead.
Thank you, operator. Good morning, everyone, and thank you for joining us to discuss our fiscal 2026 third quarter results. This call is being broadcast live on our website at investor.wggo.net, and an audio replay of the call will be available on our website later today. The news release with our third quarter results was issued and posted to our website earlier this morning. Please note that the earnings slide deck, which accompanies our prepared remarks, is also available in the Investors section of our website under Quarterly Results. Turning to Slide 2. Certain statements made during today's conference call regarding Winnebago Industries and its operations may be considered forward-looking statements under securities law. The company cautions you that forward-looking statements involve a number of risks and are inherently uncertain. A number of factors, many of which are beyond the company's control, could cause the actual results to differ materially from these statements.
These factors are identified in our SEC filings, which we encourage you to read. In addition, on today's call, management will refer to GAAP and non-GAAP financial measures. The reconciliation of the non-GAAP measures to the comparable GAAP measures are available in our earnings press release. Please turn to Slide 3. Hosting today's call are Michael J. Happe, President and Chief Executive Officer of Winnebago Industries, and Bryan L. Hughes, Senior Vice President and Chief Financial Officer. Mike will begin with an overview of our third quarter performance as well as the forward view of the market. Bryan will discuss the associated drivers of our financial results and our fiscal year 2026 guidance. Mike will conclude our prepared remarks, and then management will be happy to take your questions. And with that, please turn to Slide 4 as I hand the call over to Mike.
Thank you, Joan, and good morning, everyone. Our fiscal third quarter results reflect a demand environment that remains challenged with limited near-term visibility to stable conditions. Consumers who are drawn to the outdoor lifestyle remain engaged, but continue to navigate affordability pressures from cumulative inflation, elevated interest rates, and the uncertainty and related consequences around geopolitical events which is influencing the timing of discretionary purchases. Macro demand worsened as our fiscal third quarter progressed, particularly from late March onwards, reflecting a more cautious consumer than we had anticipated heading into the spring selling season. Despite this, underlying interest in our brands and products remains intact. We are focused on both responsibly managing the business through this sustained turbulence and positioning the portfolio to profitably capture that demand as conditions recover.
Before I get into the details, let me highlight a few priorities that are shaping our actions across the business. First, we remain disciplined in how we allocate resources across the portfolio, prioritizing investments that strengthen our brands, enhance product differentiation, maintain profitability, and protect the balance sheet. Second, we continue to advance both innovation and price accessibility across our portfolio. Our new product pipeline remains active, with recent offerings designed to strengthen our competitive position while expanding participation across a broader range of consumers and price points. Third, we remain focused on cost and cash discipline. We are actively managing SG&A, improving working capital efficiency, and maintaining a strong focus on cash generation. And finally, we continue to pursue operational efficiencies across the enterprise, including material cost reduction initiatives, manufacturing footprint and capacity optimization, and efforts to reduce complexity where appropriate.
While the timing of an outdoor recreational market recovery remains uncertain, these are actions within our control that strengthen the business today and position us to create value over the long term. Turning to Slide 5. In Motorhome RV, our retail share has increased for the trailing 3-, 6-, and 12-month periods through April. That momentum is being driven by Grand Design Motorized, a strong performance for Newmar, and continued progress in revitalizing the Winnebago Motorhome brand. The actions we have taken across product, quality, and operational execution are gradually translating into improved share and profitability in the segment, as volume mix and operational execution move in the right direction. Turning to Towables, the environment remains price-sensitive and more promotional than what we are seeing in motorized. Volume trends in the quarter reflected both softer retail conditions and continued dealer caution around inventory levels.
Grand Design anchors the category and continues to hold a strong competitive position. Winnebago Towables is beginning to build traction, with newer products such as Thrive and Access showing encouraging early retail signals and contributing to emerging share gains. A key focus for us in this environment is expanding affordability, including the recent launch of the Transcend Lite travel trailer from Grand Design and continued action to broaden our reach to a wider range of buyers while protecting acceptable profitability. While still early, this progress is an important proof point for our dual-brand towable strategy and our ability to expand our reach into broader product segments of the market. In marine, retail conditions remained less volatile than RV, with demand and ordering patterns continuing to be measured across the category. Within that environment, Barletta's performance stands out.
The pontoon brand has continued to take retail share consistently in the aluminum pontoon segment even as overall marine demand has been soft. This is a reflection of the strength of Barletta's dealer network, a product lineup that continues to resonate with pontoon buyers, supported by one of the strongest customer service reputations in the industry. The Sanza is now shipping and retailing in the market, creating a more accessible entry point into the Barletta brand and serving as another example of how we are expanding participation across our portfolio without compromising brand positioning. Chris-Craft maintains its premium luxury positioning, serving a buyer who has shown more resilience through the cycle. Moving to key RV trends on Slide 6. The consumer demand picture through the spring reflected a buyer who is engaged but not yet ready to commit. That hesitancy is showing up in extended purchase timelines, more deliberate dealer ordering, and retail trends that remain below where we would expect them to be at this point in the selling season.
Consumer participation within the outdoor lifestyle remains, but the environment for new RV and boat purchases remains more constrained. Shipment patterns remain measured, as both OEMs and dealers continue to manage the channel with discipline, keeping field inventory in check with true retail demand. We believe the quality of dealer inventory and the pace of retail sell-through matters more than incremental wholesale, and that conviction shapes how we are running the business right now. Field inventory turns were stable quarter-over-quarter. The slower aggregate turn rate is driven in part by recent new product introduction stocking orders, including Grand Design's motorized new vans, Winnebago's Thrive and Access towable platforms, and Barletta's Sanza line, which are still building their retail velocity as dealer teams get up to speed and consumer awareness grows. We view this as an expected and healthy part of the product introduction cycle.
We remain focused on driving motorized and marine turns toward 2x over the coming quarters, while towables will require a more stable retail environment to reach that threshold, particularly as we continue to build out the Winnebago Towable portfolio. As shown on Slide 7, I want to spend a moment on RV market share because it highlights both where we are performing well today and where we are focused on improving. On the motorized side, we continue to grow enterprise motorhome unit share, with gains across key categories on a trailing 12-month basis through April. Importantly, retail results in the quarter showed positive momentum across all three motorized brands, an encouraging signal that the investments we have made in product and complementary brand strategy are translating at the retail level. On the towable side, Grand Design continues to face targeted pressure, particularly in fifth wheels, where the competitive environment remains intense.
At the same time, the Winnebago Towables brand is delivering results, with the Thrive and Access demonstrating encouraging positive early retail momentum. We believe this dual-brand strategy can lift our towable retail share meaningfully over time. I also want to introduce a metric we are sharing for the first time this quarter: retail dollar share, using the SSI data pool. While unit share remains the conventional industry measure, we believe retail dollar share provides additional context of where brands are competing and winning. By that measure, our industry profile is stronger than our unit share would suggest. This reflects the higher average selling prices across our RV portfolio, which results in our dollar share being recently more resilient than our unit share. We believe it is an important indicator of the competitive strength of our portfolio and one that demonstrates resilience in our market position that unit share alone does not capture.
Turning to Slide 8, Barletta continues to perform very well, maintaining consistent and accelerating market share gains, reaching 9.3% on a trailing 12-month basis through April despite softer volumes in the quarter. This performance reflects continued consumer interest in its premium pontoons and an expanding product lineup, including the recent Sanza introduction. Slide 9 reflects our new product highlights. We are excited about the recent introduction of the Arca, an all-new off-grid adventure truck that joins Revel and Echo in the Winnebago brand's Backcountry series. Built to extend our presence in the growing adventure segment, Arca broadens the appeal of the Winnebago motorhome brand with a product that combines purpose-built capability, premium comfort, and off-grid functionality. Arca is an important example of the kind of innovation that can strengthen brand relevance and support future growth.
With the 2027 model year Newmar lineup, we are bringing to market a portfolio of coaches that reinforces that brand's leadership in the luxury segment. These new offerings reflect Newmar's craftsmanship, premium design, and ongoing focus on innovation and continue to support the premium positioning of our motorized portfolio. On the technology innovation front, Grand Design recently expanded its worry-free roof to the Momentum and Momentum G Class lineups, building on its earlier introduction across Solitude, Influence, and the foundation product lines. Engineered as a single seamless piece using marine-grade fiberglass and automotive-grade gaskets, the worry-free roof eliminates seams and exposed sealants that are common failure points in traditional roof designs. This helps reduce long-term maintenance and reinforces Grand Design's reputation for building products that enhance the ownership experience. I will now turn the call over to Bryan L. Hughes for the financial review.
Thank you, Mike, and good morning, everyone. Starting with our consolidated results on Slide 11: Our third quarter performance reflects a continued focus on disciplined execution across RV and marine. As Mike described, a consumer who is engaged but cautious, dealer discipline on both the quantity and quality of inventory, and demand that softened as the quarter progressed are key factors that shaped our financial results this quarter. Consolidated net revenues were $698.7 million, representing a decrease of 9.9% compared to $775.1 million in the third quarter of last year, driven by lower unit volume partially offset by selective price adjustments and product mix. As in prior quarters, segment mix mattered, with improved performance in motorhome RV helping to moderate continued pressure in towable RV and marine. Gross profit was $94.9 million, a decrease of 10.5% compared to $106.0 million in the prior year period, with gross margin of 13.6% reflecting higher input costs and deleverage partially offset by selective price adjustments.
Maintaining relative gross margin in this environment is a meaningful accomplishment, reflecting disciplined pricing, mix management, and cost control. We are deliberately prioritizing profitable market share to position the business to scale as the cycle improves. Selling, general, and administrative expenses were $66.5 million, a decrease of 5.4% compared to $70.3 million last year. This reflects continued SG&A efficiency and cost discipline even as we absorb incremental investment to support the growing Grand Design Motorhome business. In addition, we are advancing broader operational efficiency actions including vertical rationalization and footprint consolidation within Motorhome RV. This year, we are finalizing plans to further reduce excess capacity across both RV segments heading into fiscal 2027. Operating income was $23.0 million, a decrease of 23.9% compared to $30.2 million in the third quarter of fiscal 2025.
Net income was $14.5 million compared to $17.6 million in the prior year period. Reported earnings per diluted share were $0.51 compared to $0.62, and adjusted earnings per diluted share were $0.66, a decrease of 18.5% compared to $0.81 last year. Consolidated adjusted EBITDA was $37.8 million, a decrease of 18.7% compared to $46.5 million in the third quarter of fiscal 2025. Turning to our Towable RV segment on Slide 12: Net revenues were $274.7 million compared to $371.7 million in the third quarter of last year, reflecting lower unit volume and a shift in product mix toward lower price point models partially offset by selective price actions. Operating income was $16.0 million compared to $29.7 million in the prior year, with operating income margin of 5.8% compared to 8% last year. Towable segment performance was driven by higher input costs, volume deleverage, and product mix, partially offset by selective price actions and cost containment.
As shown on Slide 13, Motorhome RV net revenues were $320.7 million compared to $291.2 million in the third quarter of last year, driven primarily by higher unit volume and selective price adjustments. Operating income was $9.6 million compared to negative $3.2 million in the prior year, with operating income margin of 3% compared to negative 1.1% last year. Motorhome segment performance reflects higher unit volume driven by mix from new products and selective price adjustments partially offset by higher input costs. On Slide 14, Marine segment net revenues were $92.4 million compared to $100.7 million in the third quarter of last year, driven by lower unit volume and product mix partially offset by selective price actions. Marine operating income was $5.3 million compared to $9.4 million last year, with operating income margin of 5.8% compared to 9.3% in the prior year period. Performance in this segment primarily reflects higher input costs and volume deleverage, partially offset by selective price adjustments.
Turning to the balance sheet and cash flow on Slide 15: At quarter end, cash and cash equivalents totaled $57.1 million. Total outstanding debt was $450.0 million, or $442.9 million net of issuance costs, and working capital was $411.6 million. Cash flow provided by operations was $25.6 million during the quarter. Net leverage increased modestly from 2.9x in the second quarter to 3.0x at this quarter end, primarily reflecting lower EBITDA and temporary working capital investment. We remain focused on preserving financial flexibility, managing working capital responsibly, and continuing to strengthen the balance sheet as market conditions evolve. Turning to our outlook on Slide 17: Based on current market conditions and performance through the first nine months of the fiscal year, we are updating our full-year guidance ranges as follows: consolidated net revenues of $2.65 billion to $2.75 billion; reported earnings per diluted share of $1.05 to $1.40; adjusted earnings per diluted share of $1.65 to $2.00.
Our updated outlook reflects a more cautious demand environment than we had anticipated, shaped by ongoing affordability pressures, elevated competitive intensity and increased promotional activity in towables, measured dealer ordering patterns, and broader macroeconomic and geopolitical uncertainty. With that, please turn to Slide 19 as I hand the call back to Mike for closing remarks. Mike, back to you.
Thanks, Bryan. As we currently move through the fourth quarter of fiscal 2026, the external environment remains challenging. Macro volatility, affordability pressure, and consumer hesitancy are real headwinds. Yet our ability to navigate them with operational agility is what continues to differentiate us. What gives us confidence is our ability to execute on factors within our control. We are protecting margins, building share in key areas, and continuing to strengthen our brand positioning, even in a challenging demand environment. Our new product pipeline is active and gaining traction in the market. Our retail dollar share profile reflects the premium positioning of our brands and demonstrates resilience in our competitive standing, and the discipline we have maintained through the cycle has kept the foundation of this company strong. We have a number of cost and operational efficiency projects in flight to continue rightsizing our model to this current landscape. As external conditions become more constructive, we are ready to scale. We remain focused on the controllables and confident in the long-term health and vitality of Winnebago Industries. Now Bryan and I are happy to answer your questions at this time. Operator, please open the line for the Q&A session.
Questions and answers
Thank you. At this time, if you would like to ask a question, please press 1-1 on your telephone. You will be handed an automated message advising your hand is raised. We also ask that you please wait for your name and company to be announced before proceeding with your question. One moment while we compile the Q&A roster. The first question is coming from the line of Craig Kennison of Baird. Please go ahead.
Hey. Good morning. Thanks for taking my question. Bryan, I think in your comments you mentioned some upcoming adjustments to your footprint to address excess capacity. Could you shed more light on that and maybe just comment on industry capacity and whether there is just too much given the level of production we anticipate?
Craig, to be clear, we are looking at both motorhome and towable RV segments and making sure that we have the appropriate capacity given where the industry is while keeping in mind our long-term expectations as well. We are executing some projects here in the near term that will address that. That is currently what is underway in both segments.
Got it. Thank you. Maybe just to follow up, Bryan, with you looking at your guidance, could you give us a feel for free cash flow expectations for the year? I know you have tried to manage working capital tightly this year, but based on the revised guidance, what would your free cash flow look like for fiscal 2026?
Yeah. We should have some further improvements to working capital here in Q4 that will drive some of the favorability that we are expecting. I will provide a little more context on Q4 as well. We are expecting Q4 sales to be down from Q3 sequentially and also down double digits from the prior year as we work with our dealer partners to improve dealer turns in this soft retail environment, most notably to improve turns in the towable RV segment. Gross margins and EBITDA margins are expected to be down slightly on a sequential basis due largely to the deleveraging impact of the lower sales, but gross margins and EBITDA margins are expected to be flattish to last year, with several of the cost savings initiatives we have implemented over the past 12 months serving to offset that deleverage. That includes the improvements to the motorhome RV segment that we have already demonstrated throughout this year. So a lot going on to defend and lift our gross margins in the face of declining top line. We feel good about the progress in that regard. We have more work to do on working capital specifically in the fourth quarter, as we closed Q3 at slightly elevated levels versus our longer-term opportunity. So a lot of work going on around cash generation, both on the earnings side and on the working capital front.
Thank you. One moment for the next question. The next question is coming from the line of Tristan Thomas-Martin of BMO Capital Markets. Please go ahead.
Hey. Good morning. You called a couple times selective price adjustments. What were those tied to or what caused them?
Good morning, Tristan. Q3 is usually the period where we begin to take some early pricing actions related to the next model year. In several of the businesses, we began to take several of those actions, particularly in the month of May. So those comments specifically relate to that.
Okay. And then just maybe sticking with kind of model year 2027: How are you thinking about pricing given some of the general cost inflation we are seeing?
It really varies by brand, particularly the cost input pressure that may be present in that particular business and the competitive position we have in that particular brand as well. So the price adjustments for model year 2027 will vary meaningfully across our portfolio. In some cases, they will be in the low single digits, partly because we are managing cost inputs and believe we have to remain competitive in the retail environment. However, there are a couple businesses where cost input pressures, particularly around raw material costs, are significantly higher and we have had to take more aggressive price actions around the model year 2027 period. So it varies across all three segments and each of the brands. We are working very hard to balance the profitability of our portfolio, the retail market share that we compete for every day with consumers, and also partnering with our dealers on appropriate field inventory turns in this environment. Pricing is just one of several levers we use to maintain that balance.
Thank you. One moment for the next question, please. The next question is coming from the line of Bret Jordan of Jefferies. Your line is open.
Good morning. Could you talk about the dealer channel, I guess, you know, sort of health and enthusiasm for incremental inventory in this environment? Are you seeing any consolidation or any areas of particular strength or weakness?
Well, health and enthusiasm are probably two different terms. I'll try to speak to both. The dealers are working hard, whether they are a large consolidated regional or national dealer or a single-store independent dealer. All the dealers are working very hard to drive revenue through diversified sources within their business, including used products, service, and in some cases storage or parts and accessories. They are also very focused on their own working capital and any costs related to their inventory, whether it is carrying costs or the ultimate discounting of product in the market. By and large, the financial health of the dealer communities within the RV and marine segments we play in appears to be stable. That does not mean it is not a tough environment for the dealers; it is. They are very conscious about their own cash flow, and that spills into their appetite for new product.
Dealers are being very disciplined and intentional with their ordering from OEMs. This model year 2027 has been one of the slower uptakes of new model year product that we have seen in the last couple years, primarily because dealers are focused on selling model year 2026 product during this summer retail season. We are trying to be a good OEM partner and be disciplined and responsible on the wholesale shipment side. We want to chase retail opportunities where possible but also work with dealers to stabilize and ideally improve turns as we approach calendar year 2027.
Okay, great. And then more of an economic question: Looking at Christopher Craft, obviously probably the highest socioeconomic customer in your base. Are you seeing any change in behavior in that buyer? Are they stable or stepping back also in this environment?
We are fortunate to have two premium brands in the marine space. Christopher Craft is targeted at a more affluent customer, similar in some ways to the Newmar brand on the RV side. We are seeing Christopher Craft retail be quite stable year over year. Their retail results have been stable to sometimes slightly higher. It's not dramatically different from the Barletta business in terms of retail comps year over year. So we see both sides of the shaped economy often referenced: Christopher Craft retail being solid and stable, and Barletta continuing to outperform the pontoon market and doing quite well. It's probably the middle of our lineups where we see the most pressure in our retail results currently.
One moment for the next question. Our next question is coming from the line of Scott Stember of Roth. Please go ahead.
Good morning, and thanks for taking my questions.
Good morning, Scott.
Question on 2027 pricing. You talked about some materials and inputs that will drive pricing higher. Can you give us an indication of the size of the price increases we are looking at for 2027 versus 2026? I asked because in 2026 there were difficulties passing through some tariff costs. What is the ability to offset that in 2027 while keeping affordability in mind?
Thank you, Scott. The first step our teams take is doing everything possible to mitigate cost pressure. Our teams are working with supply chains, on design, and on manufacturing to drive cost input pressures lower. Then when we understand the results of those efforts we make pricing decisions that factor in retail competitiveness and profit targets for each business. As I mentioned earlier, pricing adjustments for model year 2027 vary by business. In some cases, it's 0% to low single digits, and in other businesses it can be high single digits to even touch low double digits. It varies dramatically by business and brand, and we will not be releasing specific numbers for each segment this morning. That said, we are also working aggressively on improving accessibility and affordability across product lineups. A recent example is the Transcend Lite announced and introduced in early June by Grand Design Towables.
This is a single-axle lightweight travel trailer with an MSRP in the low $20 thousands range and a street retail closer to the $15,000 to $16,000 range. It sleeps two and provides an excellent opportunity for customers to transition from tent camping into a more comfortable RV. Barletta introduced the Sanza around the roughly $50,000 price point in the pontoon market. So while we are taking some price increases, the average selling price from a mix standpoint is being influenced positively by product work to advance affordability and accessibility.
Got it. And then last question on dealers: What should we be looking for in terms of target turns? How low or how high are dealers aiming, and how much of the weakness in orders will continue with the '27s?
Scott, our dealers share many of the same turns ambitions as we do. They would like to see turns in the 2-plus range. Healthier dealers often target even higher numbers, sometimes 3x or higher. It varies greatly across the thousands of dealers we work with. As we indicated this morning, we are targeting 2 turns on motorized and marine products over the next several quarters. We think the towables market will require retail stabilization and healthier retail conditions for the industry and our line to move toward that 2-turn range. We are generally aligned with dealers: they want higher turns, we want higher turns, and we are adjusting our product and production plans accordingly to serve the market with discipline.
One moment for the next question. Our next question is coming from the line of Noah Zatzkin of KeyBanc Capital Markets. Please go ahead.
Hi. Thanks for taking my questions. This is a high-level one and dovetails off some of Bret's questions. When you think about the divergence we've seen in RV retail versus marine trends this year, from your perspective and industry perspective, what do you think is driving that dynamic? Is it purely the K-shaped economy effect? And as we look into next year, what factors could get moving in the right direction for each end market?
Good morning, Noah. Given our footprint in both the RV and marine markets, we've contemplated the differences. In marine, particularly pontoon and high-end runabout spaces, there's a K-shaped element: premium brands and products move better while some affordable products also move. The RV market may have a more robust used equipment market, which keeps consumer engagement strong but can borrow from new unit sales as consumers seek more affordable solutions. Dealers and consumers are engaged in the used market during difficult times. For 2027 to be an inflection point, we would welcome tempering of geopolitical conflicts, which could help oil and gasoline prices. Ultimately, we need several macro elements to settle down: more certainty for consumers and businesses and less market noise that causes hesitation. Bryan, any additional thoughts on conditions favorable for our industries going forward?
I would echo Mike's points. The primary items are consumer confidence and consumer sentiment, which would benefit from lower fuel prices. It's positive to see WTI and Brent back near the $70 range. Interest rates are also a factor; broad expectations now are that we will not see reductions to the Fed funds rate during the calendar year, though we will look for those in the future. How fuel impacts future CPI, PPI, and PCE readings will also be important. We'll be keeping a close eye on these items over the coming months.
Really helpful. And then maybe just one on cost containment initiatives on the towable side during the quarter. Could you expand on what those were and how much runway there is? It sounds like capacity is part of that looking forward. Also on the motorhome side, could you give an update on margin recapture initiatives and how those are going? Thanks.
On the towable side, it's across all elements of the chain. We are focused on right-sizing the manufacturing environment not just to the current cycle but also with mid-cycle expectations in mind. We work closely with suppliers to mitigate cost input pressure, and our engineers and product managers are reformulating value propositions regularly to optimize bill of materials, feature sets, and wholesale and retail price offerings. We are also focusing heavily on SG&A management: being prudent and responsible with SG&A dollars while still supporting the business. Bryan, would you speak to motorized activity?
Sure. Motorhome profits continue to improve versus the prior year, in line with expectations we conveyed at the start of the fiscal year. We expect more improvements in the coming quarters as our initiatives, particularly in Winnebago Motorhome, continue to take hold. These include a refreshed product lineup—Arca is a good proof point—more new product forthcoming across brands, improvements from a more efficient footprint, cost structure evaluation, and further make-or-buy decisions related to verticals that will reduce fixed cost structure in the Winnebago motorhome business in particular. Grand Design Motorhome continues to expand the product lineup and drive growth in top line and bottom line, and Newmar continues to execute well from a margin perspective. Motorhome is progressing in line with our expectations, and we see more opportunity going forward.
Thank you. One moment for our next question. Our next question is coming from the line of Brandon Rolet of Loop Capital. Please go ahead.
Good morning. Thank you for taking my question. On the affordability topic, in prior years you diversified your supplier base to get prices lower or create more affordable product lineups. Have you entertained doing that recently given retail is not responding well to the price increases coming through?
Good morning, Brandon. Yes, we are constantly seeking strategic supply chain partners that match the environment and our future needs. We have very strong, reliable partners we've worked with for a long time, and we engage them on innovation, quality, and affordability. We have turned up the dial on a material cost savings initiative across the company, expecting teams to work with strategic sourcing to find improved buying conditions. Our organizational model is a hybrid where brands are empowered to face the market while enterprise centers of excellence support the businesses. Our strategic sourcing is one of the best in the outdoor recreation industry and works closely with businesses to leverage scale, harmonize component SKUs, and pursue common master supply agreements and favorable pricing. So strategic sourcing remains a strong focus. We are not afraid to change suppliers if we need lower cost, higher quality, or more differentiation. There's a lot of active work to address affordability but also agility and resiliency of the business.
One moment for our next question. Our next question is coming from the line of Gerrick Johnson of Seaport Research Partners. Please go ahead.
Great. Thank you. Good morning. You mentioned that Grand Design Towables is facing targeted competition. Can you talk about that? I thought the use of the word targeted was interesting.
Good morning, Gerrick. Grand Design has moved from being viewed as the hunter to sometimes being viewed as the hunted due to its success over the last 14 years. It still holds the mantle of the fastest-growing towables business in the history of the RV industry. We've seen very good competition emerge in recent years, including businesses with similar models to Grand Design. It's an 'iron sharpens iron' competitive environment. The Grand Design team remains vigilant: they focus on channel relationships, product strategies, customer service, and marketing. We acknowledge the competitive intensity, particularly around fifth wheels, but we're pleased with how the Grand Design team is competing. Also, the Grand Design business is even healthier when you include the motorized launch in the last 18 months. We haven't talked a lot about that, but we're pleased with the launch of Grand Design Motorized—another point of leverage in dealer relationships and consumer reach. The collective Grand Design business is very strong given it is now a full-line RV business.
Okay, understood. And one more question more high-level about the Winnebago brand. Can you talk about brand positioning and what it means? Historically, Winnebago was many people's second or third RV. Now it seems more affordable and reaching new customers. Is there any confusion there?
Thanks, Gerrick. The Winnebago brand remains a flagship brand within Winnebago Industries and our RV story breaks into two parts. The Winnebago Towables element targets affordability and accessibility. We're investing capital and resources into that business to increase towable market share. We've seen strong progress with Winnebago Towables retail recently and advanced retail share in the trailing three months. On the Winnebago motorized side, we consider it a differentiation business focused on quality, innovation, and reliability while targeting growing segments of the market. The Arca is one example of innovation in that space. The Winnebago motorhome business has been challenged in the past and required work; it's not where we want it to be yet, but it's making solid progress with new products and operational improvements. We are bullish on the future of the Winnebago brand because the hard work is underway and we're beginning to see results.
The only thing I'd add is that we're early in reinvigorating the Winnebago Towables line. The Thrive has been a big hit toward lower price points, but there's a broader product lineup Donald and the team have in mind. There's a lot of excitement yet to come.
Okay, great. Thank you. I appreciate the detail.
Thank you. And this does conclude today's Q&A session. I would like to turn the call back over to Ms. Ondala for closing remarks. Please go ahead.
Thank you all for joining us this morning. We look forward to keeping you all updated on our progress. Enjoy the summer.
This concludes today's program. Thank you all for joining. You may now disconnect.