Despite improved margins during the first quarter of the 2016 fiscal year, Winnebago earnings dropped in the first fiscal quarter of 2016.
The company credited the dip to decreased revenue and increased administrative spending on the company-wide system upgrade, called ERP, or enterprise resource planning.
As Winnebago continues to search for a new CEO, operating income in the quarter dropped to $12.8 million, down from $14.4 million during the same period last year.
During a conference call Thursday, Chief Financial Officer Sarah Nielsen told investors that the she now expects the ERP upgrade to cost about $25 million, up from the original estimate of $12 to $16 million.
Nielsen expects the ERP deployment will have an aggregate cost of $10 million for 2016, and said it is on track for completion by 2017.
The increased estimate was largely due to a recent acquisition of a Junction City, Ore. production facility, where the company will produce Class A products.
Winnebago’s towable revenue grew 24.1 percent, but the motorized segment dropped 5.4 percent as the company continued to take a hit from labor shortages, manufacturing inefficiencies and warranty claims, Nielsen said.
Through a series of moves that include exiting its extrusion and transit bus businesses to free up labor, and transferring its Class A production to the West Coast location, Nielsen said the company hopes to see improvements in the labor and manufacturing inefficiencies that have plagued production in recent quarters.
“In regards to our higher warranty expense, we’ve instituted a back-to-basics approach, which is highly focused on improving quality through improved processes and additional inspection activity,” Nielsen said.