Good day, ladies and gentlemen. Welcome to the Third Quarter 2014 Winnebago Earnings Conference Call. My name is Denise, 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 call is being recorded for replay purposes. I would now turn the call over to Sheila Davis, Public Relations and Investor Relations Manager. Please proceed.

Thank you, Denise. Good morning, and welcome to Winnebago Industries' conference call to review the company's results for the third quarter of fiscal 2014 ended May 31, 2014. Conducting the call today are Randy Potts, Chairman of the Board, Chief Executive Officer and President; and Sarah Nielsen, Vice President and Chief Financial Officer. The news release with our third earnings results was posted to 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 p.m. Central Daylight 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. This presentation may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that forward-looking statements are inherently uncertain. A number of factors could cause actual results to differ materially from these statements. These factors are identified in our filings with the Securities and Exchange Commission over the last 12 months, copies of which are available from the SEC or from the company upon request. I will now turn the call over to Randy Potts. Randy?

Thanks, Sheila. Good morning, everybody. We are very pleased to report a strong quarter for both, revenues and earnings and we are happy that the weather related challenges which we encountered in the second quarter are behind us. During the third quarter, we shipped a much larger than historical level of rental units, driven by Apollo Motorhome Holidays order for 520 units, which we discussed on last quarter's call. Notably, this rental order coupled with demand for our other products resulted in the highest quarterly revenues since 2005. This occurred despite the exclusion from revenue of 343 units or $18 million worth of rental units that were delivered to Apollo. As you may recall from last quarter's call, we contractually agreed to repurchase up to 343 of these units at a specified price after one season of rental. Also in the third quarter, we conducted our annual dealer gathering, which we call Dealer Days. There, we unveiled several exciting 2015 models, including the all-new Brave and Tribute motor homes. These models are very unique and draw upon our iconic styling, including Winnebago's distinctive eyebrow design and the flying W logo. These models are loaded with cutting-edge styling and unique features not found anywhere else. Also at Dealer Days, we debuted the new Grand Tour, which is Winnebago's flagship Class A diesel pusher product and its counterpart, the Ellipse Ultra. Both of these motor homes take luxury to the next level and represent our highest price point products. For our towable dealers, we debut the new Micro Minnie trailer and two new fifth wheel products, the Voyage and Latitude. These new products will expand on the success we are experiencing in the towable market. To sum up the Dealer Days' event, we believe our new products were well received by the…

Thanks, Randy. During the third quarter of fiscal 2014 revenues grew nearly 14%, primarily driven by motorized volume growth of nearly 18%. Interestingly, approximately 18% of our third-quarter shipments were products not available at this time last year. Our motorized volume growth was partially offset by lower ASPs of 4.1% due to greater rental sales and the growing popularity of our new Class B and C products as Randy pointed out. Additionally, third quarter total unit deliveries grew 2%, while ASP increased 11.5% contributing to total revenue growth of 11.9% compared to last year. Specifically, looking at our third quarter ASPs year-over-year, here are the key changes. Class A GAAP ASP was $97,625; up over 8% a result of greater sales of our Adventure and Suncruiser product lines. Class A diesel ASP was $206,394 which is over 4% higher. As a result, gas and diesel Class A combined ASP was 126,195, up 0.5%. Class C ASP was $65,847, which is just over 6% lower and influenced by the sales of the new Trend and Viva products. Total A and C ASP average was $96,379, about 1% lower. Class B ASP was $70,485, a decrease of nearly 10% as a result of new Travato sales. Finally, our all motorized ASPs combined together were $97,891, a decline of just over 4%. Moving over to our towable product, travel trailer ASP was $20,224, up 1%. Our fifth wheel ASP was $41,195, an increase of 46% and influenced by shipments of our new Winnebago Destination, Voyage and Latitude fifth wheel offerings. Total combined towable ASP was $23,945, up nearly 12%. Given the continued strength in motorized shipments during the third quarter, our dealer inventory increased significantly compared to last year and stood at 3,798 as of May 31, 2014. Notably however, on a sequential…

(Operator Instructions) Our first question comes from Kathryn Thompson with Thompson Research Group. Please proceed.

Hi. Thanks for taking my questions today. I appreciate the color you had on higher dealer inventory and how much that is with new dealers, but what we are trying to get our arms around from a modeling standpoint is the larger drop in backlogs and how do we balance through core increases in inventory relative to your decline in backlogs? Thank you.

Kathryn, we naturally ask the same questions internally because those are both important metrics. On the backlog piece, my perspective would be that the backlog level that we were previously at was really inflated as a result of the early recovery of the industry. There just was a real shortage of the product out there and there was I think some catch-up really being played. We couldn't sustain those kinds of backlog levels. It wasn't good for our business or our dealers' business. It just put the production too far out. Really the current backlog level is I think more typical for us of where it would be in a normal growth and sustained growth pattern. As far as dealer inventories, sooner or later that really just comes down to rational turn rates. As long as the business keeps - as long as the industry continues to grow and supports those turn rates, those inventories are appropriate but naturally the retail customer has to come to support those turn rates and that inventory level. Does that help?

Somewhat, so I guess. I mean, it would be reasonable to see a decline in unit volumes once you go into Q4 just to reflect that decline in backlogs.

Say that again, Kathryn. Please?

It would be reasonable to see a decline in unit volumes in Q4 to reflect.

No.

…the just reported lower backlogs.

Not necessarily. You know, our production rates have actually gone up as the backlog has gone down. Basically, what we have done is we are working that backlog down with the increased production rates. As long as the orders continue to come in at our current rate of production, the backlog rate would just really remain static.

Are you able to turn out products faster now?

Yes.

Those backlogs are at or productions at a different level now?

Yes. Production rates have steadily increased as the year has gone on and that's a big part of why the backlog rates are down. We have really just worked that pile of backlogged orders down and really brought the whole piece of business a little closer in.

To give you maybe some color from a production rate comparison, sequentially for quarter three or quarter two to quarter three, we have increased weekly production approximately 13%, and I am not factoring in any holidays or weather-related items. I am just looking at it on a 13-week basis in both time parameters, so sequentially we moved up production. Then on a year-over-year basis it's more dramatic. Our production rate in this quarter compared to last year up 27%, so it's been an ongoing journey and process to constantly move up that production rate. There are obviously quarters where that's impacted by production starts and we have had an elevated backlog through the end of the last quarter in the Class A category because of a chassis constraint, so there is other factors that can push backlog up or down, but prior to the recession, we would even see backlog more in the range of 75% of the next quarter shipments, when things have been normalized. I don't know if we will quite reach that same ratio on a prospective basis, but if we can’t timely deliver product to our dealers, we are going to miss out on retail registration opportunities both, for our dealers and us so we are looking more at how quickly can we satisfy the demand, and as opposed to a backlog number at the end of each quarter.

Okay. That helps. Thank you.

You are welcome.

Our next question comes from David Whiston with Morningstar. Please proceed.

Good morning. I guess following up on the production, I didn't hear a capacity utilization number for the quarter. Do you have that handy?

Yes. We would put the calculated capacity utilization at about 75%. I guess we would qualify that once again by really saying that that is a calculated number based on the physical constraints of our factory. There are other things to consider there to really take that to 100% utilization. A lot of things have to line up, you would have to run a very steady production rate through the whole year. You would also have to find as many employees as you would need to do that and I am not throwing caution out there to say we can't do that, but the unemployment rate in North Iowa is starting to put a little pressure on that, so we will just have to stay close to that going forward.

Okay. It sounds like chassis availability issues are not an issue anymore.

No. As Sarah mentioned a year ago, you know, the talk of the industry was the shortage of Ford, F53 gas frame rail chassis and they did increase production rates on that product and along with that there has been some normalizing of the demand, so at this point I don't think we are going to see any supply constraints for the industry this year.

You guys are sounding a lot more optimistic on towables. Now, does that make you more inclined to be more aggressive on seeking another acquisition soon or you want to keep working on getting towables up to speed?

We definitely are happy with the progress inside the last two quarters from a financial standpoint, very much so and that creates the confidence to really to expand and better utilize facility that we currently are located in and obviously plan for the future, but we want to have a consistent trend longer than the timeframe that we reported thus far to prove that this is on the right path for rolling quarter basis that great progress have been made and been exciting out there in regards to what they have accomplished.

Just last question, consumer confidence recently hit its highest since January of '08. What's the state of the RV consumer confidence in consumer world?

Well, the predictions by the RVIA and the people in the industry that trend look forward, are predicting continued moderate growth. We try to correlate of our motorized industry with things like consumer confidence and other indicators. While I think they all matter, it's sometimes hard to really create that tie and we find ourselves going back to housing indicators being closely aligned with the motor home, with the motorized RV market and I think it's probably fair to say that. At least our opinion would be that if housing stays on the right track and there will be bumps along the road. I am sure, but if housing generally stays on the right track, if the health of the housing market stays on the right track, then the motorized RV market will too. That will be our opinion.

Okay. Thanks very much.

You are welcome.

Thank you.

(Operator Instructions) Our next question comes from Morris Ajzenman with Griffin Securities. Please proceed.

Hi. Thanks. This is Zack Ajzenman calling in for Morris. First question, I may have missed this one. What percentage of Q2 backlog was shipped in the most recent quarter?

As we reported last quarter, we had a backlog at the end of February of 2,900 units on a motorized side, and 206 units on the towable side, so we had a backlog larger than what our deliveries were inside our Q3 in the motorized side, but on the towable side, we shipped more than what that reported backlog metric would be. If you look at the detail of our release, it does break some of our deliveries out and our backlog out by product series, so you can look at that product-by-product as well. I guess, big picture, we didn't ship 100% of our backlog on the motorized side in Q3. We define our backlog to reflect orders that we expect to ship in the next six months.

Okay. How should we think about points of distribution in fiscal '15? I think you mentioned that dealer locations are up about 10% distributors versus last. How should we think about that picture going into next year?

We're going to continue to work very hard to identify any retail points that we are not properly represented in and act on that. We think there is growth opportunity within that perspective. We are working hard to quantify what we think that opportunity is just based on points that are under serviced with respect to our brand, so I don't have any real details that we can share about that other than that, a substantial part of the growth in dealer points that we saw this fiscal year are the result of really taking a harder look at where pieces of our product line are not properly represented and acting on it. We just need to do a lot more of that. I think there are opportunities yet to be capitalized on there.

Okay. Great. Lastly, any more color on expectations or trends that you may see in some more potential rental business down the road?

Yes. That's a really good question. I have seen a few questions prior to today's call asking, you know, why are we going after the rental business now where we didn't before, and really we did go after the rental business before. It's just we didn't have competitive product to really get a big piece of that. We have done a lot of work on our product in the last few years and making that class of product that typically sells into the rental market more competitive was a big focus of ours. What you saw this year, I think, could be taken as a result of really proving that we have got a product that's more marketable to the rental market. With that said, there may be more opportunities for us than there would have been before, simply because we have got a more competitive product for the rental market. Additionally, this arrangement that we entered into with Apollo, you know, I'm sure both parties need to really see how this works for us as it plays out through the year with the repurchase agreement and how successful we both are with that venture. Assuming it works well for both of us, I have reason to believe that that will be another ongoing opportunity for us, but we will have to see how it works out.

Thank you. You are welcome.

We have no further questions. I would now turn the call back over to Mr. Randy Potts for closing remarks. Please proceed.

Thank you. That concludes our call for today. Thank you for joining. We are very pleased with the performance in the third quarter and we look forward to sharing the results of our fourth quarter fiscal '14 call with you on Thursday, October 16, 2014. Thanks again.

This concludes today's conference. You may now disconnect. Have a great day.