TRG: ‘Multitude of Factors’ Signal RV Turnaround
Editor’s Note: The Thompson Research Group (TRG) issued this “snapshot” of the RV industry following today’s release of the November wholesale RV shipments by the Recreation Vehicle Industry Association (RVIA).
November 2009 total RV wholesale shipments surged 128.3% to 13,700 units. This is a vast improvement from the October 23.0% YOY increase and marks the fourth positive increase in wholesale shipments since July 2006 (excluding Oct-07 “false bottom”).
- Towable shipments increased 140.4% in November. Travel trailers led the segment with a robust 161.5% increase in shipments to 3,400 units after the 35.5% increase last month.
- Motorhome wholesale shipments surged 50% YOY to 1,200 units, led mostly by the 100% increase in Class C motorhomes.
- TRG opinion. We believe volume is the most important metric going forward. Given November 2008 was a very easy comp, last month’s wholesale gains still show a strong upward trend that we have been acutely focused on for the past quarter. A multitude of factors are signaling a turnaround in the RV space. Last week, WGO (Winnebago Industries Inc.) reported earnings, and backlogs increased an astounding 350%. Industry-wide seasonal/holiday plant shutdowns have been reduced dramatically. The recent national RVIA show confirmed our expectations as financing trends are easing, especially for the larger, more stable companies. Just this week, the nation’s largest RV dealer, Freedom Roads, completed their syndicated floor financing with a $314MM line of credit. Thor Industries Inc. doubled down on their bet by providing an additional $10MM to Freedom Roads in December. We believe we are at an early inflection point in industry fundamentals that will provide meaningful earnings growth for Thor, Drew Industries Inc. and Winnebago. We continue to recommend THO, DW and WGO.