Baird: Dealers Conservative Heading Into Winter

October 17, 2011 by · Leave a Comment 

Robert W. Baird & Co. issued a client newsletter to investors following the towable sales report for August by Statistical Surveys Inc. The following offers a summary of the results.

U.S. towable retail up modestly. Dealer towable sales increased 3% in August, according to Statistical Surveys (data is frequently revised upward), generally in line with results from our recent dealer survey. Results improved sequentially, but growth has been slow on weak consumer confidence and an uncertain economy. While retail remains weak, lean dealer inventories and incentives at recent manufacturer open houses could support orders heading into winter.

Towable demand up 3%. U.S. towable sales improved 3% in August, and are up 7% YTD. Travel trailer registrations improved 4% (+8% YTD), offsetting fifth wheel sales down 2% (+3% YTD). Keep in mind, data is frequently revised upward.

Inventory. Dealers restocked units throughout the winter and spring as shipments exceeded retail sales, but dealers in our recent survey confirmed inventory is still relatively lean. We expect dealers to remain conservative heading into winter, but do not expect destocking, despite weaker retail.

Retail U.S. SAAR. We calculate a seasonally adjusted rate of retail registrations. The SAAR of U.S. towable demand (including fifth-wheels and travel trailers) increased to 168K units in August, from 157K units in July. Just over 150K units were sold in the U.S. in 2010.

Important note. The data excludes or is incomplete with respect to Minnesota and Maine. We caution against attaching undue significance to data from a single month. The data tend to fluctuate from month to month, and are frequently revised upward.

This summary of a Baird research report is not intended as investment advice. To participate in Baird surveys and receive research reports, contact Craig R. Kennison, CFA, at

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RVIA’S Pomona Show is West’s Largest Venue

October 17, 2011 by · Leave a Comment 

More than 800 new recreational vehicles built by 40 manufacturers have filled Fairplex in Pomona, Calif., as part of the 59th annual California RV Show.

The show, which opened Friday (Oct. 14) and runs until Oct. 23, gives visitors a chance to see the latest recreational vehicles on the market, said Jeanne Sleeper, spokeswoman for the Pomona event.

“This is the largest RV show in the West and the only RV show put on by the RV manufacturers,” Tom Gaither, director of the Recreation Vehicle Industry Association (RVIA) Western Show, said in a statement.

“It is the one place where consumers can see all the new 2012 models from manufacturers across America and Canada,” Gaither said.

The show offers something for just about everyone, the San Bernardino County Sun reported.

Those thinking about purchasing a new vehicle can drive their RV to the show, have it appraised and then speak with dealers about acquiring a new one, said Sleeper.

Several credit unions and banks that offer RV loans have representatives available to talk and arrange financing for a new vehicle, she said.

“You could literally do the whole deal in one stop,” Sleeper said.

Sixteen local dealers have provided the RVs along with 150 vehicles that are available for test drives.

The tests include driving the vehicles on local streets, Sleeper said.

Those toying with the idea of purchasing a recreational vehicle can visit the show and see what type and size of RV would best meet their needs or attend workshops related to the ins and outs of maintaining them, she said.

Visitors will find RVs ranging in price from $10,000 for a small trailer to vehicles with large living spaces for $625,000, Sleeper said.

But there is also a great deal in between.

“The vast majority (of RVs) are things that are affordable,” Sleeper said.

Interest in recreational vehicles is on the rise after a drop that came at about the same time the economy went south, Sleeper said.

Some of the interest is linked to people finding they can use their RV for a long weekend trip to the beach or the mountains and for longer vacation trips to spots such as the Grand Canyon, she said.

Such family trips can be more economical using an RV and cutting out hotels and air travel, she said.

The 59th annual California RV Show is open daily from 10 a.m. to 6 p.m.

Admission is $10 for adults, which includes a wristband good for free admission for the remainder of this year’s show.

Children and teens under 17 are admitted for free if accompanied by an adult.

Parking for automobiles is $9 but those traveling in their RV can park for free.

Additional information on the event along with information on admission discounts, seminars and other show activities is available by going to




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Cruiser RV’s Expanding into Second Factory

September 9, 2011 by · 1 Comment 

Company will create 140 jobs.

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Cruiser RV LLC, a lightweight travel trailer manufacturer based in Howe, Ind., has announced that it will expand its operations, creating up to 200 new jobs by 2014.

The company will invest more than $850,000 to lease a 140,000-square-foot LaGrange manufacturing facility, add machinery for a new production line and make infrastructure improvements. The new space is located near its existing manufacturing facility and headquarters in Howe.

“Cruiser RV continues to find new ways to grow and that is why they are leaders in this industry,” said Gov. Mitch Daniels. “Companies that innovate and expand will find no better home to do so than Indiana. We look forward to the opportunities Cruiser RV is creating for themselves and for Hoosier workers.”

Cruiser RV, which currently has 140 full-time Indiana employees, will begin the hiring process for new manufacturing and administrative positions this month. The company plans on commencing production at the facility by the end of the year.

“We simply were busting at the seams in our current Howe, Ind. facility and faced making a big decision,” said Jeff Fought, president of Cruiser RV. “We’ve been a single plant organization since our inception, but we feel this is the logical next step for us. The LaGrange plant will give us the needed flexibility to expand our current product offering, while reducing our lead time during the peak selling season and improving overall product quality. We’re proud to be expanding in LaGrange County.”

Formed in 2003, Cruiser RV has grown from making five trailers a week to making more than 20 a day. The company currently produces four lightweight brands of towable travel trailers: Fun Finder X, ViewFinder, Shadow Cruiser and Fun Finder XTRA toy haulers.

The Indiana Economic Development Corp. offered Cruiser RV LLC up to $1,750,000 in performance-based tax credits based on the company’s job creation plans. The town of LaGrange will consider additional tax abatement and tax increment financing (TIF) bonds at the request of the LaGrange County Economic Development Corp.

“We are extremely happy to support Cruiser RV as they continue their growth here in LaGrange County,” said Keith Gillenwater, executive director of the LaGrange County Economic Development Corporation. “The town of LaGrange wants to support this growing company any way we can and we are thrilled that they chose our town in which to locate their second facility.”

Cruiser RV’s announcement comes on the heels of several recent RV manufacturer jobs announcements in northern Indiana. In August, Monaco RV announced plans today to relocate all motorcoach manufacturing operations from Coburg, Ore., to Wakarusa, creating up to 400 new jobs by 2012. Also, Spartan Motors announced plans in June to relocate its Utilimaster RV manufacturing operations from Michigan to Wakarusa, creating up to 60 new jobs by 2012.


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FRVTA: Fort Myers RV Show Judged a Success

February 1, 2011 by · Leave a Comment 

frvta-logoThe numbers are in for the 26th Annual Fort Myers RV Show and both dealer and vendor participants came away smiling as the event drew 12,500 patrons over the show’s four days, according to a news release. The show was sponsored by Region 1 of the Florida RV Trade Association (FRVTA).

“Just about everyone I spoke with at the show was very pleased with the buying interest the public had,” said FRVTA Region 1 President Nelda Iacono. “In fact, we had several dealers who achieved double-digit sales. All dealers came away with lots of sales leads they can now follow up over the coming weeks.”

While not an attendance record, Show Manager Jack Carver was gratified the public responded so positively, especially following the economic turmoil the industry suffered over the previous years. “We worked hard to put on a quality show that created a buying situation for all participants, and I guess we did that,” he said.

This year’s annual event featured 16 dealers displaying well over 600 new RV units of all types, styles and price ranges. The show also staged 100 vendors selling everything from lots at RV resorts to engine upgrades and other enhancements for the RV lifestyle.

“Everyone seemed to be selling whatever they brought,” exclaimed Show Chairman Chris Morse, “I’m still busy with traffic and additional sales a week after the show.”

This year’s show success continues the Fort Myers RV Show’s distinction as one of the largest RV events in the Southeast, Iacono pointed out. “We are proud to offer dealers, vendors and patrons the best the RV Industry has to offer and look forward to helping spread consumer interest in the RV lifestyle,” she explained.

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Big Rigs Best Bets Releases 2011 Edition

January 17, 2011 by · Leave a Comment 

2011 edition Big Rigs Best Bets

2011 edition Big Rigs Best Bets

The Family Motor Coach Association (FMCA) Western Motor Home Association rally at the Riverside County Fairgrounds in Indio, Calif., was the backdrop for release of the 11th edition of “Big Rigs Best Bets.”

Both the 498-page spiral bound large print copy and the innovative web-based online version were on display at their booths. According to Ken and Ellie Hamill, co-authors, the 23rd annual Western Area Rally was “the logical choice” because of the heavy concentration of RVs which congregate in the area at this time of year, according to a news release.

As Hamill related, “The rally attendees, coupled with the guests at nearby resorts, are the core of the segment of the RV market which we serve. Not only do these coach owners tend to have the most discretionary income for RV related products, they tend to travel greater distances and for a longer period of time.”

They were particularly delighted to discover the online version is compatible with all computers, tablets and smart phone mobile devices as Hamill demonstrated the easy navigation of the book on the Apple I-Pad, he stated.

“Real time changes in the content of the online version throughout the course of the year is a real bonus for our reader base,” stated Hamill.  “An added benefit to our advertisers is they now have a resource to reach out to our online membership base with improvements and changes to their facility throughout the course of the year rather than waiting for the next annual print copy.”

Features include:

  • A blend of 1,200 upscale resorts, overnight stays along the interstate, destination parks and suitable public parks.
  • Each park listing includes specific site numbers and the various lengths of these preferred sites along with other park details, including Wi-Fi.
  • Detailed ” dead on ” directions from an RVer’s point of view. Physical addresses for GPS users are also noted.
  • 532 paved and maneuverable fuel stops. For your convenience the online version has links to
  • 244 notable restaurant tips.

Big Rigs Best Bets has been serving the RV community since 2001.

Learn more at

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Montana LLCs Have Served 20K RV Owners

November 11, 2010 by · 1 Comment 

The number of out-of-state RV owners who chose to license their RVs in Montana has reached 20,000 and is growing daily.

Out-of-state residents have been saving tens of thousands of dollars on taxes by registering their high-priced vehicles in Montana for years and the loophole is also bringing in big bucks for the state, KLXF-TV, Butte, Mont., reported.

Thousands of non-residents legally slap Montana plates on their vehicles, even if they live in Florida or California, It’s a practice that Missoula attorney John Bennett calls tax planning and while others may call it cheating, it’s a perfectly legal practice.

“If you’re a non-resident of Montana and you desire to register a vehicle here, of course tax-free, a route you can go is to establish a Montana business entity … and that entity can legally register a vehicle in Montana,” Bennett said.

Since the RVs or cars are technically owned by Montana limited liability companies (LLCs), the driver avoids paying sales tax. Creating the dummy companies also allows the out-of-state residents to save upward of 10%, or up to $30,000 to $40,000, depending on the price of the vehicle.

“Recently, a client purchased a vehicle and the purchased price was reportedly between $30 million and $40 million. The vehicle is going to end up in California, and the vehicle had to comply with the exemption from California’s laws on the date of purchase. I believe the car was stored in Montana for the test year. So, if it was 40 million, the client saved around $4 million. That was a good hit,” he said.

Lawyers are making money, dealerships are gaining out-of-state business and the state earns more registration revenue. But, the bulk of the work is being done at the courthouse by county employees.

The Missoula County Treasurer’s Office has daily standing appointments with three separate law firms in Missoula to deal with all the paperwork. It’s a process that Missoula County Deputy Kim Seeberger says her staff has adapted to.

“I think, in the beginning, until we were able to work through the workload change, and it is growing more and more, we had to do some adjustments. But as I said, the law offices that are involved with this heavily have been great working with us and know the impact it has on our office,” Seeberger said.

Critics argue Montana and its county employees should not be helping out-of-state residents avoid paying taxes, but Bennett says in the end the state makes more than it spends paying staff.

“A lot of people don’t like the idea that non-Montanans are making use of a Montana law to minimize their taxes. My argument is a fiscal one … in my estimation, this brings in $10 million to Montana that we otherwise wouldn’t have,” Bennett said.

Bennett also estimates that around 20,000 LLCs have been set up over the years in Montana.

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RVIA’s Coon to Look Ahead at Outlook: 2011

November 10, 2010 by · Leave a Comment 

Outlook 2011

Outlook 2011

Attendees at “Outlook 2011: A New Era Begins” on Tuesday, Nov. 30, in Louisville, Ky., will hear Recreation Vehicle Industry Association (RVIA)  President Richard Coon’s thoughts on important trends that will impact the RV industry as it continues to rebound from one of the most difficult periods in its history.

In a presentation titled “Forging Our Future,” Coon will touch on emerging factors that will affect the RV marketplace and provide a forecast for wholesale RV shipments in 2011, according to a news release.

Coon’s talk is one of several informative, forward-looking presentations at “Outlook 2011: A New Era Begins,” the kickoff event to RVIA’s 48th Annual National RV Trade Show. The free event will begin at 7 a.m. with a complimentary sit-down breakfast in the KEC South Wing Mezzanine Ballroom. Attendees are encouraged to come early as lines form well before the doors open.

“Outlook 2011″ will be hosted by RVIA Chairman of the Board Gregg Fore and will feature:

  • Go RVing: “Inspiration for a New Era” with Go RVing co-chairs Bob Olson and Tom Stinnett joining RVIA Vice President and Chief Marketing Officer Gary LaBella to introduce the new Go RVing Leads Plus program, report on the impact of the Ambassadors of Affordability campaign, and unveil new plans for 2011.
  • RVIA Public Relations: “A New Era of Possibilities” with RVIA Public Relations Committee Chairman B.J. Thompson and LaBella discussing tools and strategies to maximize the exposure of RVing in a changing media landscape and sharing some of the resulting high-impact publicity that’s helping stoke demand for RVs.
  • A lineup of special guests that includes NFL great Terry Bradshaw, performance artists Quick Change and the inspiring musical prodigy Patrick Henry Hughes.

The “Outlook 2011: A New Era Begins” program and breakfast are free for attendees on a first-come, first-served basis. All National RV Trade Show attendees are welcome, and no reservations are necessary.

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Baird on Thor: ‘Confident in Profit Outlook’

November 3, 2010 by · Leave a Comment 

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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RV Industry Ponders the Size of the Rebound

October 25, 2010 by · Leave a Comment 

Armed with spreadsheets and sales projections, Derald Bontrager and key executives at Jayco Inc. huddled in the fall of 2008 to figure out how their recreational vehicle manufacturing company could reduce costs enough to survive the depths of the recession.

Again and again, they met during the next several months, each time realizing more jobs held by local workers had to be eliminated. And in a family-owned business such as Jayco, which is based in the Northern Indiana town of Middlebury, laying off people is personal, the South Bend Tribune reported.

“That was the most difficult and challenging part of the downturn,” said Bontrager, president and COO at Jayco, which laid off more than half of its work force, or about 1,300 people, between late 2008 and mid-2009.

Like Jayco, RV manufacturers across the country dramatically slowed production after consumers, many of whom lost their jobs or access to credit, stopped buying.

At least seven manufacturers closed Indiana production facilities or closed completely, pushing unemployment last year in Elkhart County to nearly 19%.

Indiana’s RV industry was among the first economic sectors to tumble into recession, experts agree. Whether it can be the first to emerge from the economic depths remains to be seen.

Industry leaders say time will tell whether higher shipment figures in recent months are actually the result of more consumer purchases or dealers replenishing their inventories.

Most plants in Elkhart County and across the country had been running at near capacity in 2006 and 2007 as recreational vehicles and customers filled retail lots.

Dealers reported brisk sales until banks and lending institutions stopped lending money to consumers and dealers that year, which consequently halted purchases, as well as RV orders.

After years of shipment growth that culminated with a high of 390,500 shipments in 2006, inventory levels dropped to historic lows in 2009, according to statistics from the Recreation Vehicle Industry Association (RVIA).

That year, RV shipments plummeted to 165,700 vehicles. Indiana RV manufacturers produce about 75% of all RVs made in the U.S. The state ranks eighth or ninth in overall RV retail sales, with about 6% of all RV dealers based in Indiana.

“When the credit markets locked up and froze in the last half of 2008, industry shipments really dropped because consumers weren’t able to get credit,” said Kevin Broom, RVIA director of media relations. “Even consumers who were well qualified with cash and high credit scores could not get loans. People got nervous, and they postponed large discretionary purchases like RVs.”

Dealers decided to replace the few RVs that were selling off their lots much more slowly, which also affected suppliers and their work forces, and the lack of activity dropped inventory levels to historic industry lows for most of 2009.

Broom said the slowdown forced most — if not all — RV manufacturers to lay off workers.

About 15 U.S. companies filed for bankruptcy in 2008 or 2009, including Monaco Coach Corp., Fleetwood Enterprises Inc., Country Coach, Travel Supreme and Rexhall RV.

The slowdown also negatively affected RV dealers. About 10% of total dealerships nationwide — an estimated 180 — closed during this period, said Phil Ingrassia, a spokesman for the national Recreation Vehicle Dealers Association (RVDA).

It was not until mid-2009 that the credit market loosened a little, which lured some consumers back to dealers’ lots. The industry has started feeling a level of normalcy again as people adjust to new financial situations, Broom said.

Total shipments are expected to reach 239,000 units in 2010, slowing during the second half of the year, according to Richard Curtin, an RV industry analyst and director of consumer surveys at the University of Michigan.

Shipments are expected to rise moderately to 259,600 units in 2011, and job and industry growth should remain subdued as the industry feels the lingering effects of the economic downturn, Curtin said in a September news release from the RVIA.

“Consumers are reconsidering their spending and saving habits,” Curtin recently told the RVIA.

Several headwinds face the RV industry in an overall economic rebound: unemployment, consumer confidence, the financial markets, housing and credit.

Although shipments have been up since mid-2009, Mark Bowersox, executive director for the Indiana Manufactured Housing Association/Recreation Vehicle Indiana Council (IMHA/RVIC), said that does not mean the industry is leading the country out of the recession.

Many Indiana manufacturers still do not have enough RV orders to keep their plants going all day, every day, Bowersox said, which means their fall shutdowns between product lines might be longer than usual.

“There are a lot of dealers wrestling with how much inventory to have on their lot for the spring selling season — five or 500,” he said about future vehicle orders that must be placed this fall in time for spring sales.

RVIA leaders cannot be certain about the length of time it will take the sector to rebound to record shipment levels seen in 2006.

“The industry is recovering, but we’re not to our destination yet,” Broom said. “It has given the RV maker an opportunity to go back and redesign and to refocus on the product, on where consumers will be in the future.”

He said smaller, lighter, more environmentally friendly and fuel-efficient recreational vehicles are ways the industry is moving.

Jayco, which is being cautious as it adds personnel and other overhead costs back into its Elkhart County manufacturing plant, is focused on “greening” its vehicles, Bontrager said.

“We need to figure out a way as a company and industry to provide a high-quality product with all the features the consumer has come to expect at a lower price point,” Bontrager said.

Most of the 500 employees who have been called back to work are in production. In other parts of the company, processes are becoming more efficient with a smaller work force, he said.

Bontrager thinks the RV industry and the economy have reached recovery mode but said he cannot be sure the recession is over. Not yet.

“I certainly would say that we’ve reached the bottom of the recession. Now we’re talking about how we can meet the demand rather than cutting costs,” he said.

“At the same time, we’re very cautious. This has been a prolonged recession compared to others. And consumers are spending less but expecting the same.”

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Nexus RVs to Use Factory-Direct Biz Model

October 20, 2010 by · 2 Comments 

Claude Donati and Dave Middleton played Little League together, attended Penn High School together, and this summer co-founded an RV manufacturing company together.

The company, called Nexus RVs LLC, on Tuesday (Oct. 19) announced plans to invest more than $2.8 million to lease and equip the former Prodesign plant complex on Reedy Drive at Elkhart County Road 13 on the north side of Elkhart, Ind., for their motorhome production venture, the South Bend Tribune reported.

For the past few months, Donati and Middleton have been operating their company headquarters from the University of Notre Dame’s Innovation Park in South Bend. They may retain offices at Innovation Park, even after production commences in Elkhart.

Nexus RVs initially expects to hire about 25 employees by late January, and another 25 people by summer 2011 to produce and sell Class B-plus-style and Class C motorhomes. These employees will work in separate 86,000-square-foot manufacturing and 22,000-square-foot buildings located adjacent to the Indiana Toll Road.

By 2013, Nexus expects to employ up to 90 people. Donati anticipates his company could be producing Class A motorhomes over time as well, using a factory-direct business model that the founders believe will distinguish their company from many of its competitors.

“As opposed to visiting a local dealership where five or six companies might display their products, we’re cutting out the second tier of the process. It will be like buying your car directly from Ford or Toyota,” said Donati, Nexus RVs president.

“Only we’re a house on wheels, so it’s actually more like meeting directly with your homebuilder, and we also have the ability to customize,” he said. “Over the last few years as the recession hit and the economy ground to a halt, it opened an opportunity for us to change the business paradigm.”

Nexus RVs will produce 23- to 32-foot motorhomes that will cost around $55,000 to $60,000. Donati expects the first prototypes to be ready for some RV shows at the end of January 2011, and the price point to resonate with consumers as the national economy rebounds from the recession.

“Banks are still not loaning money and consumers are still not able to afford to spend $150,000 on a Class A motorhome,” said Donati, a more than 15-year veteran of the RV industry. He most recently served as vice president of the motorized division at Gulf Stream Coach Inc. in Nappanee.

Middleton, Nexus RVs vice president, served in various management positions in the Gulfstream motorized division.

Startups like this are a sign of the industry’s strength and resilience, said Kevin Broom, director of media relations for the Recreation Vehicle Industry Association (RVIA).

“The industry is bouncing back because the desire for the RV lifestyle remains strong. Consumer demand for RVs never dropped during the recession. What changed was the ability of consumers to purchase RVs,” Broom said.

“As credit markets have normalized, that pent-up demand for RVs is being released,” he added.

Nexus RVs recently received a property tax abatement from the city of Elkhart, as well as up to $725,000 in performance-based tax credits and up to $50,000 in training grants based on job creation plans from the Indiana Economic Development Corp.

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