The retirement of Brian Brady, CEO of Heartland Recreational Vehicles LLC, continues the shift in senior management that Thor Industries Inc. has been undergoing since July 2011.
Brady, one of original investors who started Heartland in November 2003, retired from the company effective Tuesday (May 1). In April, he told employees that all the founders had left Heartland and “after considerable thought and reflection, I have elected to leave too,” according to a story by RV Business.
To read the entire article in the Elkhart Truth click here.
Heartland Recreational Vehicles LLC President Brian Brady informed employees today (April 25) that he will be retiring from the Elkhart, Ind.-based RV manufacturer, effective May 1.
Brady, along with a group of industry veterans that included Tim Hoffman, Jack Culbertson and John Rhymer, launched Heartland in November 2003.
Brady told employees that during the past year all of the original investors had left Heartland and that “after considerable thought and reflection, I have elected to leave, too.”
Prior to taking the helm at Heartland, Brady made a name for himself in the industry as an executive with Coachmen Industries Inc., Holiday Rambler Corp. and as president and CEO of Damon Corp. – all based in Elkhart County, Ind.
With the launch of Heartland, Brady charged management with placing the towable builder on a rapid growth cycle, as the company entered the market with its Landmark luxury fifth-wheel.
Today, Heartland builds and markets brands across the towable spectrum – from stick-and-tin entry-level travel trailers to high-end, all-season fifth-wheels. At the end of last year, Heartland’s work force had grown to 1,200 while facilities at its Elkhart campus included seven production lines and four support and sub-assembly facilities encompassing 810,000 square feet of manufacturing space.
Heartland’s growth has been marked by two key business moves. In February of 2007, Catterton Partners made a significant equity investment in Heartland. Then in September 2010, Thor Industries Inc. purchased a controlling interest in Heartland for $200 million.
In an interview last November, Brady said the Thor acquisition had proven to be “a true win-win” for both companies. “We have done exactly what we intended to do – and that was to best position Heartland for continued success,” he said. “In a competitive environment, Heartland continues to win. The mission for Heartland remains to provide our dealers the highest possible return on their investment, and that mission will continue to drive this company going forward.”
Upon seeing the news this morning (Sept. 17) of the $200 million acquisition of Heartland Recreational Vehicles LLC by Thor Industries Inc., industry insiders have been speculating as to whether Heartland President and CEO Brian Brady will stick around for the long haul.
You know, they speculate, why should he?
A veteran of Coachmen Industries Inc., Holiday Rambler Corp., Damon Corp. and Heartland, Brady’s been through the business wars – and economic cycles – for years. He’s cashed out well from his latest venture, a company that’s been generating sales of about $400 million a year.
Besides, he’s now being called upon to operate Heartland as a unit of a company with which he and Heartland’s 1,000 employees had intensely competed in the towable RV arena.
But Brian Brady isn’t going anywhere. Nor, for the record, does he mind doing business with a company that until recently was viewed as a formidable rival.
“We have always viewed Keystone as the class of the industry – you know, Thor in general terms and Keystone being the crown jewel in their portfolio,” Brady told RVBUSINESS.com. “We at Heartland have had an immense respect for the Keystone team, and in many respects we admired their significant accomplishments.
“You know, with that said, I think we were able to demonstrate that we could compete effectively with them, and we did. And I would imagine, with the way Thor manages, that we’re going to continue to compete with Keystone. But, you know, for me personally and the other initial investors in Heartland, we’re essentially owners of Thor now. So whether Heartland wins or Dutchmen wins or Keystone wins, we all win.”
As for his own personal career moves, again, Brady says he’s staying put rather than fleeing the day-to-day stress of the business world. “Yes, I am staying for the foreseeable future,” he said. “I have no plans at this point to disengage from Heartland and Thor. And I’ve made that commitment to Ron Fenech and Peter Orthwein.
“To be honest with you,” he added, “I feel really reinvigorated. I’m looking forward to getting this week behind us and going back to work on Monday.”
Fact is, Brady still enjoys the game.
“I do, and I enjoy the game because of the people with whom I work. We’ve really got such terrific people at Heartland. You know, Heartland is no different than any other successful enterprise in any industry. At the end of the day, it comes down to the team – the men and women around whom you build your business.”
Publisher’s Note: When you do a head count of the key surviving RV builders coming out of this recession, make sure you include Heartland Recreational Vehicles LLC. Indeed, Heartland President & CEO Brian Brady and his management team have made a lot of market share headway since the 775-employee, Elkhart-based, towable RV manufacturer launched production in 2004 on the north side of Elkhart, Ind. And the industry can look forward to more of the same from Heartland coming out of the current downturn if Brady, a former Damon executive and die-hard Notre Dame fan, has anything to say about it. Here are the highlights of Brady’s interview last week (Oct. 29) with RVBUSINESS.com.
RVBUSINESS.com: How is Heartland doing right now and how do things look for next year?
Brady: We’re doing well. You know, I look at the most current Stat Surveys (Statistical Surveys Inc.) data, and of the top 14 manufacturers in the industry, irrespective of brands and product categories,13 have sold at retail fewer units this year than last year. The one exception to that is Heartland.
So, speaking for Heartland, we are very confident that 2010 is going to be a fabulous year. In fact, our revenue this year versus last year is going to end up being just about the same. Our year-over-year comps (comparisons) became positive in July and, of course, much like everyone else, we’ll have a huge year-over-year increase in Q4 sales.
RVBUSINESS.com: That’s a pretty upbeat outlook coming out of a deep recession.
Brady: Look, our guys (employees) were absolutely grinding it during this whole time in terms of building the organization, in terms of investing in the business, in terms of product development, and I feel very confident that 2010 is going to be an absolutely outstanding year for Heartland and for our dealers.
And with that said, I think it’s important that dealers maintain their discipline. It could be argued that from a dealer perspective part of the dislocation (in the downturn) was the result of dealers losing their discipline, having too much product in inventory, maintaining relationships with companies or product lines that didn’t turn. And at Heartland, we talk to dealers as investors. And it doesn’t make any difference as an investor whether you buy (stock in) Microsoft or you buy (stock in) a new startup software company. You know, they’re in the same space. They’re both software.
But the real question is: Where are you going to get the return on your investment? I think it’s apparent that Heartland provides our dealers with a consistently good return on their investment. Our market share – total RVs – is up 45% this year. Our travel trailer market share is up 185%. Our fifth-wheel market share is up 18%, and that’s in a year that’s experienced considerable distress.
RVBUSINESS.com: So, you’re growing in both dollars and volume?
Brady: We are growing in absolute terms. And again, according to Stat Surveys, we’re growing in absolute retail market share. And 2010, in terms of absolute dollar revenue, will be considerably larger than last year.
RVBUSINESS.com: Characterize, if you would, the market you see next year.
Brady: This market is going to be what it has always been. It’s going to be very competitive. A premium is going to be placed on right product, right dealer, right buyer. And financing, both at the dealer wholesale level and at the consumer retail level, is going to continue to be challenging.
RVBUSINESS.com: There’s a lot of new ideas out in the marketplace right now, as companies look to find their way. Your thoughts on product development trends?
Brady: My view is that there’s no magic elixir. There’s no silver bullet out there. And I think you look at the product categories and you go to the middle of the bell curve. And that’s where you want to be. The middle of the bell curve has been, is and will continue to be dominated by best value products – value defined as the spread between the inherent quality of the product and its price. And so I think the theme of weight and economy and efficiency is not going to go away.
As far as ‘green’ products go, I think as an industry that still needs to be sorted out. When you look at these niche-type products, the main consideration is weight savings, which usually raises questions about usability. At Heartland, we don’t have any insight on this that’s any better than anybody else’s – other than that we’re aware of it and we’re paying very close attention to it. We talk to our dealers about it considerably, but I think dealers as investors are wisely going to be cautious about taking flyers. You know, this isn’t 2005 anymore.
RVBUSINESS.com: What do you mean by that?
Brady: I think you had a totally different consumer and credit environment in 2005, when dealers could afford to take chances. I think dealers now have cleaned up their operations, have tightened up costs — particularly fixed operating costs – and they’re going to partner up with fewer manufacturers and more robust relationships. And I don’t see the major guys doing a lot of niche work.
RVBUSINESS.com: What are your strongest selling product lines?
Brady: We’ve built our foundation on fifth-wheels. And so Heartland produces the Bighorn, with about a 5% share of total fifth-wheels – the No. 4 best-selling fifth-wheel in the industry. We also produce Sundance, a mid-profile fifth-wheel, which is No. 6 in the industry. So, our pedigree, going back 5 1/2 years, has been fifth-wheels.
We flip back and forth between No. 3 and No. 4 in terms of total fifth-wheel market share. And at this point, in terms of travel trailer share, Heartland ranks No. 11. There’s a disconnect between No. 11 in travel trailers and No. 3 or 4 in fifth-wheels. And so a big theme for Heartland is to close that disconnect.
RVBUSINESS.com: Your strongest travel trailer brands?
Brady: We produce really exciting, fresh and creative travel trailers, and if you look at our travel trailer market share, you know, we’re up 185% this year. We have a North Trail, a light-weight line of aluminum-frame, laminate-wall travel trailers, and then North Country, an exceptional line of traditional wood-framed, aluminum-skinned travel trailers. We’re also launching a very competitively priced line of travel trailers that will really have their debut at Louisville (the 47th National RV Trade Show in Louisville, Ky.) – Trail Runner. And we are going to be relentless in terms of growing our travel trailers. There’s no question about that. That is a key theme for Heartland.
RVBUSINESS.com: In closing, Brian, the Heartland story is not one that we’ve read a heck of a lot about lately, and we appreciate the time you’ve taken to speak to us.
Brady: It’s a great story, Sherm. I mean, you know, in 5 1/2 years we’ve gone from one unit a week to No. 4 in the industry, and we’re not done yet.
Heartland Recreationa How To Get Ur Girl Back l Vehicle LLC recently obtained a 150% increase in its floorplan allotment from GE Capital, the Elkhart, Ind.-based towable manufacturers told dealers in an e-mail last week.
”That is a very significant increase,” said Brian Brady, Heartland president and CEO, who declined to release financial details. ”With the exit of KeyBank and Textron it was important to have.”
Brady said Heartland’s increased lending limit will have a substantial impact when recovery occurs. ”This market is going to turn around,” Brady said. ”Credit is going to loosen up. When it does, that’s when this increase will have a profound impact on our business.”
In another positive note, Heartland also recently entered a floorplan agreement with Bank of the West, Brady reported.
The GE Capital increase followed a routine credit review and will allow more Heartland travel trailers and fifth-wheels to be sold wholesale to credit-worthy dealers, according to Brady.
Brady’s e-mail to Heartland dealers also disclosed that the privately owned company’s revenue increased 20% in 2008 compared to 2007 and that the Elkhart, Ind.-based towable manufacturer was within 2% of its revenue forecast for the first quarter of 2009.
”It’s very difficult out there, but our guys did a very good job managing the business,” Brady told RVBusiness. ”Our first quarter is going to be very, very solid.”
Brady said that floorplan lenders are being particularly attentive right now to an OEM’s ability to buy back units under terms of existing agreements with dealers and lenders. ”The big concern for the national floorplan providers is the capacity to honor repurchase obligations,” Brady said. ”The second issue is the credit-worthiness of the dealer. But we can’t really control that.”
Generally, manufacturers and dealers have cited tight credit at the wholesale and retail levels as a key reason why RV sales plummeted last year. The Recreation Vehicle Industry Association (RVIA) has made freeing up credit at both levels a top priority.