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Thor Announces Record Results For Fiscal 2018

September 20, 2018 by   Leave a Comment

Thor Industries Inc. today reported record results for the full-year fiscal 2018. The Elkhart, Ind.-based company reported that net sales increased 14.9% to $8.33 billion while net income before taxes increased 13.8% to $633 million.

Net sales increased 17.2% for the towable segment and 8.9% for the motorized segment. Overall gross profit margin decreased to 14.0% from 14.4% in the prior year.

Other highlights:

  • Gross profit increased 11.6% to $1.16 billion.
  • Diluted EPS increased 14.8% to $8.14.
  • Cash flow from operating activities increased 11.3% to $466.5 million.

“Our full-year results reflect another record year of both sales and earnings,” said Bob Martin, Thor President and CEO. “We leveraged the strength in retail demand to drive year-over-year growth in both our top and bottom lines. We experienced a solid increase in gross margins in the first half of the year due to strong sales growth, as well as achieving operating and process improvements, primarily by Jayco.

“During the second half of the year, however, we reduced our production levels, lowered wholesale shipments and increased dealer incentives in order to balance dealer inventories, resulting in modest net revenue growth. Also, during the second half, we lapped the Jayco prior-year process improvements and experienced increased labor, warranty and material costs, resulting in the modest decrease of 40 basis points on our full-year gross margin.”

For the fourth quarter of 2018:

  • Net sales decreased 3.1% to $1.87 billion.
  • Gross profit decreased 18.9% to $244.4 million.
  • Income before taxes decreased 29.3% to $124.3 million.
  • Diluted EPS decreased 26.1% to $1.67.
  • Consolidated RV backlog of $1.40 billion, as of July 31.

Net sales for the fourth quarter were flat for the towable segment and down 13.2% for the motorized segment. Overall gross profit margin decreased to 13% compared to 15.6% in the prior year. Diluted EPS benefited as a result of the Tax Cuts and Jobs Act enacted in December 2017, as the company’s fourth-quarter effective tax rate of 29.1% compared favorably to a tax rate of 32.1% in the prior year.

“Our fourth quarter results reflect the actions taken during the period to balance dealer inventory levels,” added Martin. “We believe our reduced production levels, combined with higher promotional costs and solid retail demand, have improved the position of our dealers’ inventories as they enter the new model year and prepare for the upcoming Elkhart RV Open House.

“While labor costs began to moderate during the latter part of fiscal 2018, they remained elevated on a year-over-year basis,” he added. “In addition, we experienced higher warranty and warranty-related costs, as well as inflationary price increases in certain raw material and commodity-based components, due primarily to headwinds created by the announcement and implementation of steel and aluminum tariffs and other regulatory actions. We will continue to manage these input factors through a combination of strategic actions and believe, over time, we will be able to offset these cost increases.

“Also, during the quarterwe incurred incremental expenses from transaction costs associated with the announced acquisition of the Erwin Hymer Group, as well as certain legal settlement costs.

“Our consolidated backlog at July 31, 2018 is reflective of our current, pre-Open House time of the year as our dealers await the introduction of our 2019 models. Overall, we believe that our backlog reflects a more normalized level and will provide us with the ability to realize the benefits associated with a more stable production environment in future quarters.”

Segment summary for the quarter and full year ended July 31, 2018:

Towable RVs

  • Towable RV sales were $1.41 billion for the fourth quarter, comparable to $1.41 billion in the prior-year period. Towable RV sales were $6.01 billion for the full year, up 17.2% from $5.13 billion in the prior year.
  • Towable RV income before tax was $109.2 million for the fourth quarter, down 28.3% from $152.2 million in the fourth quarter last year. Towable RV income before tax was $532.7 million for the full year, up 16.1% from $458.9 million in the prior year.
  • Towable RV backlog decreased $649.3 million, or 45.8%, to $767.0 million, compared to $1.42 billion at the end of the fourth quarter of fiscal 2017. This decrease is attributable to a number of factors including (1) capacity expansions since the prior year, allowing for increased production and therefore quicker delivery of units to dealers, (2) elevated existing dealer inventory levels in certain locations and (3) a more normalized pre-Open House order pattern compared to the elevated levels in the prior year.

Motorized RVs

  • Motorized RV sales were $421.3 million for the fourth quarter, down 13.2% from $485.2 million in the prior-year period. Motorized RV sales were $2.15 billion for the full year, up 8.9% from $1.97 billion in the prior year.
  • Motorized RV income before tax was $20.8 million for the fourth quarter, down 32.1% from $30.6 million in the fourth quarter last year. Motorized RV income before tax was $134.8 million for the full year, up 7.6% from $125.3 million in the prior year.
  • Motorized RV backlog decreased $281.5 million, or 30.7%, to $634.1 million compared to $915.6 million at the end of the fourth quarter of fiscal 2017. This decrease is attributable to a number of factors including (1) capacity expansions since the prior year, allowing for increased production and therefore quicker delivery of units to dealers, (2) elevated existing dealer inventory levels in certain locations and (3) a more normalized pre-Open House order pattern compared to the elevated levels in the prior year.
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