Wall Street Frowning on Thor’s Q1 Financials

December 1, 2010 by · Comments Off on Wall Street Frowning on Thor’s Q1 Financials 

Shares of Thor Industries Inc. moved lower Tuesday (Nov. 30) by 12.22% to $29.53 after posting a first-quarter profit increase that missed estimates. Approximately 2.72 million shares traded with market capitalization of $1.65 billion, EFPR reported.

Net income for the first fiscal quarter climbed 1.3% to $23.7 million or 44 cents per diluted share, compared to $23.4 million or 42 cents per share in the prior-year quarter. The reported net income missed the analysts’ estimate of 54 cents a share driven by heavier discounting.

Sales increased 21% to $606.7 million from $502.6 million in the year-ago quarter. RV sales advanced 30% to $506.56 million from $389.93 million last year, benefiting from the remnants of dealer restocking as well as a significantly easier competitive landscape, with many players going out of business or faltering in recent months, which has led to market share gains for Thor. The recently acquired Heartland RV (late September) added $50 million of towable sales. Bus segment sales of $100.12 million were down from last year’s $112.62 million, with orders related to the 2009 economic stimulus having all but flowed through backlog.

The company’s gross margin declined 130bps year over year to 12.6%. The margin was affected by cautious dealer purchasing during the seasonal slowdown and increased promotional activity as manufacturers appear to be aggressively competing for dealer space.

The company also saw incremental expenses of roughly $8.0 million in the quarter related to its Heartland acquisition, an ongoing SEC investigation, and trademark impairment charges related to the combination of its Thor Motor Coach operations.

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Thor’s Q1 RV Sales Hit $506 Million, Up 30%

November 29, 2010 by · Comments Off on Thor’s Q1 RV Sales Hit $506 Million, Up 30% 

Thor Industries Inc. today (Nov. 29) announced results for the first quarter ended Oct. 31. Sales for the quarter were $606,684,000, up 21% from $502,552,000 last year, according to a news release. After expenses including those related to the acquisition of Heartland RV on Sept. 16, net income for the quarter was $23,688,000, up 1% from $23,429,000 last year. Earnings per share for the quarter were 44 cents versus 42 cents last year.

RV sales in the quarter were $506,563,000, up 30% from $389,929,000 last year. Towable RV sales in the quarter were $422,449,000, up 23% from $342,136,000 last year. Towable RV sales for the quarter ended October 31, 2010 include $50,119,000 of sales from Heartland RV. Motorized RV sales in the quarter were $84,114,000, up 76% from $47,793,000 last year. Bus segment sales in the quarter were $100,121,000, down 11% from $112,623,000 last year.

RV income before tax in the quarter was $34,104,000, up 8% from $31,642,000 last year. Towable RV income before tax in the quarter was $33,100,000 up 5% from $31,540,000 last year. Motorized RV income before tax in the quarter was $1,004,000, up significantly from $102,000 last year. Bus segment income before tax in the quarter was $9,419,000, up 12% from $8,380,000 last year.

Corporate net costs were $9,737,000 in the quarter versus $2,769,000 last year and included legal and professional expenses related to the acquisition of Heartland RV and the company’s ongoing SEC review totaling $3,503,000. In the towable RV segment, margins were adversely impacted by purchase accounting costs related to the Heartland acquisition, including expensing of inventory step-up costs, amortization of Heartland’s backlog, and amortization of certain intangible assets totaling $2,477,000. In the motorized RV segment, the company incurred a trademark impairment charge of $2,036,000 related to the combination of its Thor Motor Coach operations. Bus segment margins were positively impacted by a gain on involuntary conversion related to property and business interruption insurance. Thor’s lower tax rate in the quarter reflects a favorable state tax settlement.

“In the first quarter Thor invested heavily in growth and future profitability through the acquisition of Heartland RV, capital expenditures of approximately $16,500,000, and development of exciting new products which will be shown at this week’s RVIA Expo in Louisville, KY,” said Peter B. Orthwein, Thor chairman. “Beyond the costs related to Thor’s acquisition of Heartland RV, gross margins were impacted by increased discounting as dealers remained cautious entering the slowest season of the year. Thor’s retail RV sales continue to be strong which is encouraging.”

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Discover Canada RV Holds First Product Show

November 4, 2010 by · Comments Off on Discover Canada RV Holds First Product Show 

Dealers view some of the product displayed at the first Discover Canada RV Ltd. show Oct. 28 in Granby, Quebec.

Dealers view some of the product displayed at the first Discover Canada RV Ltd. show Oct. 28 in Granby, Quebec.

Discover Canada RV Ltd., an Oshawa, Ontario-based marketing distributor of U.S.-made RVs sold exclusively through Canadian retailers, hosted a successful inaugural RV show Oct. 28 at Le Castel Hotel & Spa in Granby, Quebec, according to Vice President Jory McDonald.

At that show, Discover Canada displayed 30 specially branded towable models built to Canadian specs by several U.S. companies.

McDonald says he and his partners, Joe Jandrisch, Benoit Riberdy, identified a void in the Canadian marketplace in 2007 with regard to value-priced RVs that have a distinct Canadian appeal.

“We’ve negotiated repurchase agreements with all major Canadian wholesale lenders including GECDF, BMO and National Bank of Canada,” he reports. “Indiana RV manufacturers Heartland RV, Crossroads RV, Hyline Enterprises, Kaddy Kruiser and Monaco RV LLC build products for Discover Canada RV, based on our Canadian specifications.”

The firm currently does business with 53 dealers from across Canada and approximately half of them participated in the late October show, McDonald said.

Canadian dealers normally place their orders with U.S. OEMs in January after the Louisville Show, says McDonald, but in some cases have now opted instead to place those orders earlier due to his firm’s efforts.

“We felt it was appropriate to move us forward ahead of the Louisville Show to enable our dealers to buy to avoid backlog and avoid freight issues,” McDonald said. “We wanted our dealers to get ahead of the wave of orders. They experienced delays in getting 2010 product, and we couldn’t afford to let that happen again.”

“We plan to do this again next year, but it might be a bit earlier,” he added.

Some of the product displayed at Discover Canada RV show.

Some of the product displayed at Discover Canada RV show.

Quebec was chosen as the site for the first show because Discover Canada has a strong following there, McDonald noted.

“Our success comes from offering our dealers a number of unique but strong advantages that they cannot receive directly from a U.S. manufacturer,” said McDonald.

Among them, he adds, is the fact that the company deals in products built to specifications and tastes of Canadian consumer and offers larger territories for greater dealer profits. Other selling points: Aggressive marketing material and an effective website, a Canadian parts and warranty department and Canadian territory representatives who understand each unique Canadian market area.

For more information, go to

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Baird on Thor: ‘Confident in Profit Outlook’

November 3, 2010 by · Comments Off on Baird on Thor: ‘Confident in Profit Outlook’ 

Baird logoEditor’s Note: Robert W. Baird & Co. issued a client newsletter on Tuesday following release of the first quarter financial results of Thor Industries Inc. Excerpts of that newsletter folllow.


Raising estimates and maintaining $36 target price. Preliminary sales topped expectations, leaving us confident in our profit outlook. We see good value in Thor under 12x EPS (excluding nearly $3/share in cash) as macro catalysts unfold (election cycle and tax policy) and estimates trend higher (better retail and higher margin).


RV sales exceed expectations. Thor reported preliminary sales for the October quarter after the close, following its customary process. Sales of $607 million (+21%) exceeded our $591 million estimate and consensus of $586 million. RV sales increased 30% to $507 million, above our $472 million estimate. We estimate that Heartland RV added $45 million to revenue, implying organic RV growth near 19%. Bus sales fell 11% to $100 million, below our $119 million estimate.

Backlog down. The backlog declined modestly, down 22% YOY to $467 million. RV backlog fell to $254 million, down 19% from last year and down 3% sequentially. Without Heartland RV, the backlog would have been down more, of course. Bus backlog fell 25% YOY to $213 million, and fell 6% sequentially. Management noted that right-sized dealer inventory levels led to lower and more reasonable RV backlog, while bus backlog slowed due to the expiration of federal stimulus funding and tighter government budgets. We are raising our revenue estimate slightly, but maintaining our outlook for EPS of $2.50 in F2011.

Retail positive, likely hinges on tax policy. Retail improved in late summer and early fall. CEO Peter Orthwein noted, “Thor’s internal retail sales results through October continue to demonstrate solid year-over-year increases.” We see an extension of current tax policy as a potential near-term catalyst for retail demand.

To subscribe to this or other Baird newsletters, contact Craig R. Kennison CFA, or call (414) 765-3870.

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Heartland 2011 Prowler Brand Still in Infancy

October 21, 2010 by · 3 Comments 

Heartland's 2011 Prowler

Heartland's 2011 Prowler

Heartland’s new Prowler towables, a brand name that harkens back for decades as one of Fleetwood Enterprises Inc.’s towable mainstays, will consist of a wood-and-aluminum travel trailers and laminated travel trailers and mid-profile fifth-wheels when the line is up and running.

The new Prowler brand is still in its infancy after a brief cameo trade appearance in early October at the Recreation Vehicle Dealers Association International Con/Expo. “We haven’t shipped one Prowler yet,” said Prowler General Manager Nick Eppert. “We’re really going to take the month of November to hand-select some key dealers. We are taking a long-term approach to this brand and do not intend on flooding the market with dealers.”

”This strategy should help to ensure our dealers’ and the Prowler brands’ success in the marketplace.”

Eppert says the Prowler, one of several Fleetwood brands purchased out of the former Fleetwood’s Chapter 11 bankruptcy, will be the only ex-Fleetwood line at Louisville.

“It’s an all-encompassing brand from mid-profile fifth-wheels down to ‘stick-and-tin-trailers,’ which makes it unique,” Eppert added. “And it gives us a totally different look. It’s going to have new wood grain interiors and certain select features that you won’t find in any of our other brands.”

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Baird Forsees 10%-15% 2010 Towable Growth

October 19, 2010 by · Comments Off on Baird Forsees 10%-15% 2010 Towable Growth 

Baird logoEditor’s Note: Robert W. Baird & Co. issued a client newsletter after this week’s release of the August towable sales figures by Statistical Surveys Inc. (SSI). Excerpts from the Baird Newsletter follow.


U.S. towable registrations increased 11% in August. Dealer sales of towable units increased for the sixth consecutive month in August. Total U.S. towable retail increased 11% (travel trailers up 11%; fifth-wheels up 11%) compared to an 8% drop in motorhomes. Looking to the remainder of 2010, we expect approximately 10-15% retail growth in towables, with Thor taking share.


Towable retail up 11%. Towable demand improved in August. Travel trailer registrations grew 11% while fifth-wheel demand also increased 11%. Towable sales outpaced motorhome sales which fell 8% in August.

Leaders gaining share. Thor continues to take share with retail registrations up 16% in the month. We also note that Heartland RV (No.4 market share and recently acquired by Thor [THO-$31.52-Outperform]) saw registrations increase 41%. Altogether the top five manufacturers have seen retail grow 20% YTD versus 8% YTD industry growth.

Inventory. Dealers have increased towable inventory in 2010 as towable shipments have exceeded retail sales. We believe that dealer inventory is fairly balanced at current levels and future shipments should track in line with retail demand.

Retail SAAR. We calculate a seasonally adjusted rate of retail (SAAR) registrations. The SAAR of towable demand increased to 159.K units in August from 153.6K units in July.

Recent news. Winnebago (WGO-$9.74-Outperform) indicated today (Oct. 18) that it is looking to acquire SunnyBrook RV, the No. 13 player in towables with 1% share.

To subscribe to this or other Baird publications, contact Craig R. Kennison, CFA, at or (414) 765-3870.

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Baird: ‘The (RV) Inventory Bubble is Behind Us’

September 29, 2010 by · 2 Comments 

Baird logoEditor’s Note: Robert W. Baird & Co. has released its quarterly survey of RV dealers. Excerpts from that report follow.


Better than feared. We contacted 104 RV dealers to assess recent trends. After a tenuous summer, the season ended well. Dealers reported better demand, implying potential upside to our models. We see a short-term opportunity ahead of the election and potential changes to tax policy – especially given our checks. Longer term, we remain concerned as consumers reduce debt, unemployment festers and budget deficits drive higher interest rates, slower growth and higher taxes on discretionary wealth.


Retail. Dealers report better retail results than we assume in our models. Motorhome sales perked up 8-10% while towable sales jumped 16-18%, according to dealers. For perspective, the trend suggests Winnebago Industries Inc. dealers may have sold 50-100 RVs more than we had modeled on a base of over 4,200 annually – helpful, but not enough to declare victory. Dealers expect Thor Industries Inc. and Winnebago to take share, implying above-trend results.

Traffic. Consumer traffic on dealer lots improved in July and August after a sluggish June, then slowed again in September (seasonally less relevant). For our money, it is hard to see a trend in the YTD traffic pattern – but with RV buying interest tied to the wealth effect (home prices and stock values) and consumer sentiment (unemployment and political uncertainty) – the choppy results make sense. Like everything else – it’s the macro, stupid.

Inventory/Orders. As the inventory replenishment rate returns to parity, dealers plan to order 19% more motorhomes and 23% more towables in the next six months – better growth than we include in our models. Dealers are comfortable with inventory levels today. Big picture, it appears the inventory bubble and the corrective bullwhip effect are behind us.

Credit markets. Access to wholesale and retail credit improved. Last quarter, dealers complained that wholesale credit was too tight.

Thor acquisition of Heartland. As expected, dealers were mixed on the Thor acquisition of Heartland RV. Dealers expect both to gain share and some see opportunity to upgrade Heartland parts and service, but some saw parallels to the Fleetwood that dominated the market in the past.

Outlook. We maintain a cautious consumer outlook as confidence stalls, unemployment festers, consumers reduce debt and tax policy targets discretionary wealth. However, our checks seem to take the most dire predictions off the table for now. With the election cycle and the potential for a change in tax policy, we believe recent momentum could persist, providing a better exit point for cautious investors.

To subscribe to this and other Baird newsletters, contact Craig R. Kennison, CFA, or (414) 765-3870.

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Stat Surveys: Canada June RV Sales Strong

August 23, 2010 by · Comments Off on Stat Surveys: Canada June RV Sales Strong 

Canada Report

Canada Report

Retail sales of RVs in Canada in June continued their strong, year-long rebound.

Statistical Surveys Inc. has reported that towable sales rose 29.1% in June, while motorized sales rose 35.4%.

Year-to-date, towable sales are up 27.8% while all motorhome sales are up 40.1%, Grand Rapids, Mich.based SSI reported.

By segment with comparisons to June 2009, the results were as follows:

  • Travel trailers increased 34.5%.
  • Fifth-wheels rose 26.9%.
  • Folding camping trailers were up 1.3%.
  • Park Models increased 21.9%.

Thor Industries Inc. was the towable leader in June with a 26.6% market share, followed by Forest River Inc. with a 20.2% share.

Year-to-date, Thor led with a 27.1%. Forest River was next with 20%.

Thor was No. 1 in travel trailer sales with a 28.4% share in June. Forest River had a 19.3% share and Jayco Inc. with 17.3%.

Thor was the fifth-wheel leader with a 30.4% share, Forest River was No. 2 with a 20.1% share and Heartland RV with 14% share.

Forest River was the folding camping trailer leader in June with a 29.2% share, followed by Jayco with a 28.1% share.

Thor was the park model leader in June with a 44.9% share.  Skyline Corp. was No. 2 with a 24.4% share.

Year-to-date, Thor led in travel trailers (28.3%), fifth-wheels (33.6%) and park models (53.9%).

Forest River led in folding camping trailer sales with a 30.5% share.

Meanwhile, in the motorized area, Class A sales were up 10.6% in June and 20.1% year-to-date.

Class C sales were up 54.3% in June and 57% year-to-date.

Thor was the clear leader in all motorhome sales in June with a 40.7% market share. Forest River Inc. was a distant second with an 18.7% share.

Year-to-date, the competition is much closer with Thor leading with 26% and Forest River with 20.1% shares.

The June towables report was incomplete, as the province of Quebec, Canada’s second largest province, was experiencing delays in reporting data to SSI.

To subscribe to this or other SSI RV reports, contact Scott Stropkai, national RV sales manager, at (616) 281-9898 ext. 128, or (61) 446-8179 (cell).

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