The recreational vehicle industry has been in decline for over a year, but there's little evidence of that headwind in Winnebago's (NYSE:WGO) latest earnings results. In fact, the RV giant recently reported surprisingly strong revenue to kick off its fiscal 2020.

The results weren't uniformly positive, since they included a rare profitability decline and weak backorder trends for both towable and motorized RV products. Yet Winnebago appears set to materially outperform rivals like Thor Industries in the year ahead.

Let's take a closer look.

An RV parked by a mountain lake.

Image source: Getty Images.

Revenue checkup

The company's 19% revenue increase was helped by its recent acquisition of the Newmar brand. Yet sales beat most investors' expectations and were robust even after excluding that extra business. Towable RV sales jumped 17% in the first quarter and the motor home business was up 5%. That last result was especially good news for shareholders, given that Thor Industries said in early December that both its towable and motorized sales declined last quarter.

"These businesses are driving significant market share gains in the RV industry," CEO Michael Happe said in a press release. Management added context to those claims by stating that Winnebago's market share rose by nearly 2 full percentage points to reach 10.8% of the industry. Three years ago, executives had established a goal of reaching 10% by 2020, and it appears they will easily achieve that target.

Profits and backlog

The consumer stock's profit picture was mixed. Winnebago's towable segment held steady and continued to generate healthy gross margin. The motor home division, on the other hand, saw a sharp drop in segment margin that management attributed to the financial impact of the Newmar purchase. That acquisition pushed expenses higher and led to a rare decline in operating margin, down to 4% of sales from 7% a year ago. This slump trickled down to the bottom line, where net income fell to $14 million, or 2.4% of sales, from $22 million, or 4.5% of sales, a year earlier.

The Newmar acquisition also clouded up the short-term outlook since Winnebago's backlog was boosted by having the new business under its umbrella. Yet all indications point to continued weak ordering trends. The towable segment, which isn't impacted by Newmar, saw a 22% backlog decrease.

Winnebago said some of that decline can be pinned on changing ordering patterns at dealerships, which are now making smaller, more frequent purchases since RV demand is declining overall. Investors will want to watch unit volume trends over the next few quarters for confirmation of this bullish market share reading.

The good news for shareholders is that Winnebago is outpacing that broader industry result in its core market and, thanks to the recent additions of Grand Designs, Chris Craft, and now Newmar, the company has a wide portfolio that it can lean on to keep expanding its sales footprint in 2020. That happy result seems likely, even as some parts of the outdoor recreation vehicle industry contract this year.

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