Help RVB Select Industry’s ‘75 Most Influential’

As the Recreation Vehicle Industry Association (RVIA) prepares to roll out a series of events and related activities commemorating the industry’s 2010 Centennial, RVBusiness magazine and RVBUSINESS.com are setting up a special Centennial issue focusing among other things on the “75 Most Influential People” in the history of the U.S. RV industry.

“Talk about a tough job,” says RVB Publisher Sherman Goldenberg, in commenting on the upcoming selection process. “We sat down recently to start making a list of likely nominees and soon realized just how intimidating this process is going to be. I mean, when you get beyond the most obvious individuals like Winnebago’s John K. Hanson and Holiday Rambler’s Richard Klingler and Fleetwood’s John Crean and start looking at who else might be on that list, you begin to realize just how difficult this process can be.”

To help build a pool of names, RVBusiness is adding an application this morning (March 13) to the RVBUSINESS.com homepage, a click-through feature through which website visitors can nominate anyone they think ought to be on RVB’s list of the industry’s “75 Most Influential People.”

That list will be published in a June issue that includes an array of centennial coverage and will be released in sync with RVIA’s 100th Anniversary Party June 7 at the RV/MH Heritage Foundation Inc.’s Hall of Fame and Museum in Elkhart, Ind., during what has been designated as “RV Centennial Celebration Month.”

RVIA’s invitation-only industry party, one of several Centennial projects spearheaded by RVIA designed to lift the industry’s post-recessionary spirits, will feature a “Salute to RV Workers,” a live band, fireworks, centennial salutes from RVing celebrities and other VIPs and the unveiling of an RV-themed time capsule that will remain on display at the RV/MH Hall of Fame and Museum.

“We know there are many possible candidates who would likely qualify as having been among the ‘75 Most Influential’ individuals in the industry’s history, both from the past and including people who are still working in the industry today,” said Goldenberg. “So, we’ve decided to open the doors on this project to the industry at large to make sure we don’t overlook a lot of people who ought to be mentioned on this list.

“In saying that, however, we realize full well that we will inevitably slip up and overlook some people whose contributions were clearly vital to their companies and to the industry at large because the universe of names over a century’s time is simply too large,” he added. “But we’re trying to keep those oversights to a minimum.”

Wall Street Firms Give Opposing RV Messages

Editor’s Note: Two Wall Street firms offered opposing viewpoints this week on elements of the RV industry. Thompson Research Group issued a client advisory following this week’s release of the January retail RV sales from Statistical Surveys Inc., which showed that motorhome sales fell 14% in January compared to January 2009. Ockham Research offered a bearish statement on Thor Industries Inc. Here are excerpts from the TRG advisory, followed by the Ockham report:

Our dealer contacts are suggesting an improved consumer buying sentiment in the industry with dealers reporting good traffic trends both at spring retail shows and dealer lots. With record cold and snowy weather throughout the U.S. in January and February, we believe retail sales may have been somewhat tempered due to adverse weather. That said, testament to a more optimistic dealer base, Thor’s revenue and backlogs released in February exceeded even our high expectations. Recall THO’s RV revenue increased 148% while RV backlogs surged 158%. THO’s motorized margins improved sequentially from 0.2% to 2.4%, the second quarter of positive motorhome margins after five consecutive quarters of negative margins. WGO will release earnings and backlogs next Thursday. We believe margins will remain under pressure in the short term, but backlogs should show substantial improvement. Overall, we are focused on retail trends as we go into the spring/summer selling season. We are encouraged by continued strong wholesale orders but also acknowledge that we need to see a consistent positive retail trend as 2010 progresses.

Thor Industries Inc. was discussed on Closing Bell which was originally produced by CNBC on 3/9/2010

Viewers on 3/9/10 heard about Thor Industries Inc. on Closing Bell with host, Maria Bartiromo. It is always interesting to see how discussions of Thor Industries, Inc. affect the stock going forward.

Wall Street analysts can have a huge affect (sic) on stocks, and today Closing Bell talked about an analysts’ opinion in relation to THO.

At the current price, value investors will want to look elsewhere for a buying opportunity as this stock has heated up and is currently Overvalued. A significant sell off of $2.79 is underway right now, so investors in THO should pay close attention to the news. While bearish sentiment on a stock is not always a bad thing, it is something you need to be aware of. The Motley Fool survey of crowd sentiment shows that many investors believe this stock will underperform. We noticed recently that in comparison to all other stocks we analyze in the news; THO has received less coverage from the financial media in business television and blogs.

JACK Antenna: Covers the Full Digital Spectrum

King Controls, Bloomington, Minn., manufacturer of the King-Dome and VuQube mobile satellite systems, introduces the JACK digital, over-the-air HDTV antenna for RVs. Covering the full digital spectrum for both UHF and VHF signals, the JACK offers improved reception of UHF signals where over 80% of the new digital local channels are broadcast. With a wider reception range, the JACK antenna is less directional than traditional RV antennas to simplify finding a signal and scanning for available channels. At just 12 1/2 inches long, 16 1/2 inches wide and 2 inches high, the JACK antenna is up to 70% smaller than competing products and offers less wind resistance when deployed or traveling. The amplified antenna includes an AC to DC power supply and can also be used with an existing wall mount or video switch supplied +12-volt antenna power switch for simple retrofit. Two different mounting brackets allow quick and easy installation on your existing RV antenna lift or a pole in just minutes without any special tools. MSRP: $49.95. The JACK antenna is available in the U.S. and Canada through King Controls’ extensive dealer network. For more information on the JACK antenna, the location of authorized King Controls dealers or to learn more about its entire product line,  call (800) 982-9920 or visit www.kingcontrols.com.

Monaco RV to Export Motorhomes to China

Monaco RV LLC today (March 10) announced its partnership with California-based New Millenium Auto Group Inc, an exporter of vehicles internationally. New Millenium will be exporting the Monaco Montclair Class B-plus style motorhome to China, according to a news release.

The Montclair will be sold at Dite International Auto, headquartered in Dalian, China, with several dealerships throughout China.

This is New Millenium’s first foray into exporting RVs to China. According to Tomas Hu, purchasing manager, “After visiting several RV manufacturers, we chose Monaco to be our very first RV export due to the superior quality of their products. They do things differently and better than the others.”

“There has been an increased demand for RVs right now,” continued Hu. “The RV market in China is relatively untapped. By representing the Monaco brand exclusively, we hope to see the brand thrive in the newly open RV market of China.”

According to Mike Snell, senior vice president of sales and product development for Monaco RV, “Following our parent company Navistar’s vision of global growth, we are pursuing and developing our presence in international markets, as it is crucial to our long-term strategic growth plans. We are extremely pleased New Millenium chose Monaco, based on quality, as their RV of choice to market in China. We look forward to a long and prosperous partnership in China and beyond.”

Dalian, formerly known as Dairen, is a city of 6 million in northeast China. According to Wikipedia, Dalian is a very popular destination among Chinese tourists and foreign visitors, especially from Japan, South Korea and Russia. Its mild climate and multiple beaches as well as its importance in the modern history of China make it an especially nice place to visit.

Heartland RV LLC Outperforms Industry in ‘09

In sharp contrast to an industrywide downturn in 2009 towable sales, Heartland Recreational Vehicles LLC showed pronounced year-over-year gains punctuated by a 43.3% increase in overall market share growth, according to a news release.

According to Statistical Surveys Inc., the Elkhart, Ind.-based builder posted a 6.1% increase in unit sales, while moving to the No. 4 spot among all towable builders for the year. Conversely, towable sales dropped 25.9% industrywide with the majority of builders incurring a decline in unit sales from 2008.

“In partnership with our dealers, we were able to find opportunities in what most people viewed as a stagnant and unstable marketplace,” said Brian Brady, president and CEO of privately-held Heartland, which launched production in 2004. “Instead of merely treading water, Heartland continued to stay on course with product research and development, and a continuation of our long-term strategy for disciplined, incremental growth.”

A sector breakdown from the Statistical Surveys report showed:

• For the full year, Heartland ranked as the No. 3 fifth-wheel manufacturer with 11.3% of the overall market share – buoyed by a 19.2% jump from 2008 – while its luxury BigHorn line ranked No. 3 among all brands with 9.8% market share growth. During December, the company increased fifth-wheel market share from 12.3% to 13.2%. Industrywide, year-over-year sales in the sector dropped 29.9% in 2009.
• After entering the travel trailer sector in May 2008 with its lightweight North Trail Line, Heartland made significant strides last year to move into the upper tier of manufacturers with a 152% gain in market share and a No. 10 ranking. For December, the builder upped travel trailer unit sales by nearly 46% and improved market share from 2.5% to 3.4%. Industrywide, travel trailer sales fell 23.5% for the 12 months.

According to Brady, the company is geared toward making “tremendous impact” in the travel trailer sector in 2010 with the launch of three all-new brands at last year’s National RV Trade Show in Louisville, Ky., coupled with heightened demand for its North Trail brand.

“We are quickly establishing Heartland as a strong player in the some of the fastest-growing pockets of the travel trailer market,” Brady said. “That said, we will continue to grow and expand our offerings in the fifth-wheel market where in just over five years we have established ourselves as an industry leader.”

Brady also emphasized that Heartland’s 2009 performance positioned the company for deeper market penetration this year, and that strategies were in place to meet increased production and shipping demands.

“Our ability to gain ground in a down market has clearly positioned Heartland to make tremendous market share gains and further grow our dealer body in 2010,” he said. “Accordingly, we have acted in a proactive manner in terms of production strategy to make sure we are in step with demand – bolstering our work force, expanding our complex in Elkhart and making sure we will continue to deliver product at industry-best standards. Despite our rapid and remarkable growth, we are not being short-sighted, and are well-prepared for what is shaping up to be the best year in our history.”

Baird Trims Forecast for Thor; Remains Bullish

Editor’s Note: Robert W. Baird & Co. follows the RV industry for its investor clients and routinely issues reports following major corporate announcements. Following are excerpts from its latest client newsletter, after Monday’s release of the second quarter and six-month earnings statement by Thor Industries Inc.

Thor missed expectations as margins were unable to clear the high bar set over the last several quarters. Revenue grew 90%, in line with Thor’s preliminary report, but operating margin fell 140 basis points below our estimate. We are tempering our estimates, and would look for opportunities to accumulate on weakness as the RV recovery unfolds.

Summary

EPS falls short on weaker RV margins. Thor missed expectations, reporting EPS of $0.22 versus our $0.32 estimate (and $0.28 consensus). Recall that Thor had previously reported preliminary sales results – so the downside is all on the cost side. EBIT margin improved to 4.4% from -10% last year, but was 140bp below our model. The downside was in the towable segment while motorhome results exceeded expectations. The bus segment continues to perform well.

Positioned well for recovery. A robust wholesale recovery is underway in the RV segment as dealers replenish depleted inventory ahead of the spring selling season. Thor is well positioned to capitalize on the improving demand and continues to take share – especially with the largest dealer network, FreedomRoads (now 21% of Thor RV revenue). Towable backlog improved 175% to $368 million while motorhome backlog was up 98% to $81 million.

Adjacent markets augment growth. Thor recently announced the acquisition of SJC Industries, an Elkhart, Ind.-based manufacturer of ambulances that generated $45 million in revenue in 2008, according to FactSet. We view this business as complementary to the current bus business and have incorporated a modest revenue tailwind into our model.

Adjusting EPS estimates. We are trimming our EPS estimates to incorporate Q2 results and tempered margin expectations in the RV segment. Better retail demand is needed for the industry recovery to be sustainable – but the near-term dealer restocking and market share growth should support our earnings outlook.

Details

Estimates. We lowered our F2010 EPS estimate to $1.85 from $2.00 to incorporate the Q2 downside and slightly lower margin assumptions. We also lowered our F2011 EPS estimate to $2.40 from $2.50.

Wholesale and Retail. Towable and motorhome shipments have increased significantly the past few months, while retail has moderated. As conditions improve and comps remain easy, we expect to see the trend continue.

Windsor RV Show Drawing Lots of Non-RVers

With hardwood cabinets, a full refrigerator, an attached motorcycle garage and a $73,000 price tag, the Heartland Cyclone recreational vehicle is like a rolling house, according to the Windsor (Ontario) Star.

The 40-foot-long grey trailer was one of the prize rigs at the Windsor RV Show this weekend. It was among about 100 vehicles from nine local dealers on display at the Windsor Expo Center.

A staffer for Tilbury Auto Sales, the merchant displaying the Cyclone, said the goliath RV came fully loaded, with no option spared. Its motorcycle lift can even carry a Smart car. But for some Windsorites the vehicle’s size and price tag proved prohibitive.

“We need something you can get through the mountains,” said John Hinton, an Amherstburg man who was checking out the Cyclone. Hinton, 58, said he was looking for something smaller and easier to move around in.

Todd Reeb, 38, of Amherstburg said the Cyclone was out of his price range, but he’d want one “if I had that kind of cash.”

He’s never owned an RV. But if a fully loaded trailer landed in his driveway tomorrow? “I’d probably go up north, North Bay area,” he said, with his wife and two daughters.

Hinton and his wife Gwen have never owned an RV either, but they’ve been talking about it on and off through 25 years of marriage. They’ve been going to RV shows for about five years.

Gwen has traveled across the country before, and she wants to take her husband with her now that they’re approaching retirement.

“We still love just being outdoors,” said John. “You can take (an RV) places where there’s no hotels.”

Lorie Giusti of Merlin, was looking for her first RV, too.

“We go camping with friends who have them and it’s just so much fun,” she said.

“You don’t need to go far. You can just go down the road to a nice little trailer park.”

Giusti, who says she loves camping, had her eye on a smaller RV than the Cyclone. She wanted one with a big bathroom and a small price tag, as well as leg room and space to move around.

Show organizer Larry Boyd said people are still buying RVs despite a struggling economy. Friday, the first of three days of the show, saw sales jump 34% from last year’s first day, close to an upward trend he’s seen in other RV shows this year.

“People are not willing to give up their vacation time,” he said. “People are travelling not as far and becoming more family-oriented.”

Part of the appeal of an RV, he said, is freedom. “You can decide Friday morning, ‘We’re going out for the weekend. Weather looks good, so let’s go.’”

The popular fifth-wheel RVs like the Cyclone and Heartland Landmark, which attach to the bed of a truck, weighed in at close to $80,000. But a smaller R-Pod trailer, which could be towed by a small car like a Dodge Caliber, was being sold for $16,000.

Boyd said recreational park trailers were popular. Essentially portable minicottages, they can be dropped in a park for three months of the year, but they can be moved only by tractor-trailer.

It’s Boyd’s second year organizing the expo after taking over from a previous organizer.

“The public has been a very strong RV crowd,” he said. And they don’t just come to look, either. “People come here and have an RV in mind.”

Thor Reports Profits Rose on Sales Turnaround

Thor Industries Inc., Jackson Center, Ohio, reported Monday (March 8) increased sales, net income and earnings per share (EPS) for the second quarter and six months ended Jan. 31.

Net income for the second quarter was $11.92 million versus a loss of $14.86 million last year. EPS were 22 cents versus a loss of 27 cents last year, according to a news release.

Sales for the second quarter were $430 million, up 90% from $226.7 million last year. Net income for the six months was $35.35 million, compared to a loss of $9.74 million last year. EPS for the six months were 65 cents versus a loss of 18 cents last year. Sales for the six months were $932.6 million, up 40% from $665.5 million last year.

RV income before tax in the quarter was $18.06 million compared to a loss of $19.84 million last year. Bus income before tax in the quarter was $6.23 million, up 67% from $3.72 million last year. RV sales in the quarter were $335.8 million, up 150% from $134.6 million last year. Bus sales in the quarter were $94.2 million, up 2% from $92.1 million last year. Net corporate costs in the quarter were $5 million vs. $6.8 million last year.

RV income before tax for the six months ended Jan. 31 was $49.7 million compared to a loss of $14.07 million last year, a $64 million turnaround. Bus income before tax for the six months was $14.61 million, up 62% from $9.02 million last year.

RV sales for the six months ended Jan. 31 were $725.7 million, up 56% from $465 million last year. Bus sales for the six months were $206.9 million, up 3% from $200.5 million last year. Net corporate costs for the six months were $7.8 million versus $9.7 million last year.

“Thor’s results continue to progress, propelled by improving RV market conditions and strong bus efficiencies. We continue to be profitable in all segments of our businesses, including motorhomes, reflecting the permanent cost reductions we have made,” said Peter B. Orthwein, Thor chairman.

RV Transporters Cope with Driver Shortage

A rather sudden upturn in the towable RV market – on the heels of the production cutbacks of the recent recession – have left the U.S. recreational vehicle industry with somewhat of a dilemma: There’s simply not enough people available to deliver RVs to dealerships around the country.

Classic Transport, Elkhart, Ind., is backlogged six weeks on deliveries, according to CEO Bill Garvey. “We are working to build our fleet back up,” said Garvey. “This backlog is the highest it’s been since (the mass shipment of emergency housing units in 2005 to the Gulf Coast for) FEMA.”

Garvey said the age range of drivers (typically 50-70 year-olds semi-retired or retired), freight revenues, the expense of operating one-ton trucks, mounting regulations and the retail upswing are all factors contributing to the current transportation situation.

Classic Transport cut its company in half or more during the recession, and now there has been more than a 200% upturn in RV market shipments, says Garvey. “When these manufacturers break loose and start to ship in quantities, they create a backlog in the transportation industry,” Garvey said. “This has not come as a shock; we have all foreseen this.”

Garvey said almost none of his drivers are from the Elkhart area, contrary to popular belief, but live in other parts of the country.

“Since they don’t live in Elkhart, laid off drivers are harder to bring back,” he said. “Their trucks are very expensive, often with over $2,000 extra in equipment. We recruit part-time drivers, 50-70 year-olds. We are not able to recruit full-time drivers because when you sit down and do the math it doesn’t work out to full-time income.”

All of these factors add to the complex issue of transportation in a busy market. “We’ve been advertising (for drivers) and we’ve had a good response,”said Garvey, a former RV manufacturing executive. “But in terms of actually coming to work, they are not real thrilled with the snow. As the weather breaks, so will the dam on new drivers. How rapidly we will be able to get into the backlog is yet to be seen. There are a lot of variables to consider.”

Last week Classic Transport’s backlog nearly doubled in just one day.

“It’s a very large battle,” Garvey said. “We might not catch our breath until July when companies shut down for two weeks.”

Wave Express, Goshen, Ind., is having better luck contracting drivers, but is still backlogged three weeks, according to Anita Carpenter, part-owner of the company.

In August 2008, Wave Express had but three customers, and then the recession hit. Carpenter applied a little salesmanship and went directly to the dealers. Today Wave Express works directly with 25 dealers. It was to these dealers that Carpenter turned when the market picked up, prompting somewhat of a transportation bottleneck.

Carpenter last year needed maybe 20 drivers; she now has 52. “In Elkhart County there aren’t any drivers because of the recession,” she said. “So I went to my dealers to find drivers and placed ads in a few other states. We have 52 drivers right now and I could take on 100 more, but I don’t want to overpromise or underdeliver.”

Americans Once Again Rolling with Their RVs

Elkhart, Ind., is the groundhog of the recovery, according to U.S. News & World Report.

As home to much of what’s left of the recreational vehicle industry, Elkhart has been the poster child of the Great Recession. It is regularly cited as an example of what’s not working with the economy. So, when we say that signs of a recovery are appearing in the RV industry, let’s hope Elkhart doesn’t get frightened by its shadow and disappear for another six months. Like other early indicators of the recovery, this one is not as robust as we may like.

RVs got hammered by soaring oil prices, the credit crunch and the recession. People were turned off by the industry’s gas-guzzling image. If they did have the resources to buy, they found credit had dried up and attractive purchase terms were hard to find. As 2008 dragged into 2009, of course, fewer and fewer people had the resources to even think about buying an RV. Industry shipments of all RVs — from small towable campers to motorhome luxury liners — cratered at fewer than 6,000 units a month as 2008 ended.

For all of 2008, shipments totaled only 237,000 units, off by nearly a third from 2007, according to the Recreation Vehicle Industry Association (RVIA). And 2007 itself fell 10% short of 2006 glory days, when close to 400,000 new RVs were shipped. But sales started to pick up slowly later in 2009. And though annual shipments for the year were only 165,000 units — off another 30% from 2008 — year-over-year monthly comparisons turned consistently positive. Forecasts for 2010 shipments exceed 200,000, according to the RVIA.

“We’ve just gone through a pretty trying time the last couple of years, both as a company and as an industry,” Robert J. Olson, head of Winnebago Industries Inc., says in an interview. While Winnebago continues to be the largest motorhome producer, it was precisely those high-end units that took the biggest hit. Winnebago laid off roughly 2,500 of its 4,200 employees, says Olson, who began working at Winnebago more than 40 years ago as an hourly production employee.

In many respects, he notes, RV sales had their own bubble economy, just as stationary housing did. “We were no different than some of the housing loans out there. You didn’t need a down payment. You didn’t have to make what you said you made” on income disclosure statements. People were offered 20-year loans.

With many manufacturers and dealers forced out of business, a gradual recovery began last fall. Dealers had been forced to deplete their inventories, both to survive and because financing dried up for the purchase of showroom models. Today, Olson says, “we are back to working 40-plus hours a week for our employees. We have hired 340 workers back and dealers are starting to replenish inventories.”

Still, it is a difficult market environment, and the recovery has been slowed by continuing tightness in credit markets. Sid Johnson is director of marketing for Jayco Inc., a large maker of towable RVs. By numbers, he notes, towables dominate the RV industry, and they were less affected than expensive motorhomes during the downturn. Still, Jayco sales were hurt, and it, too, laid off many employees, cutting payrolls from 2,200 to 1,200. “Starting last fall, the business started to pick up again, and that has continued ever since.”

However, many loans that would have been approved before the recession are being rejected today. “We’re currently in the retail show season throughout the country,” Johnson says. At a show in Detroit on a recent weekend, the Jayco dealer reported brisk sales. “One of our dealers sold almost 70 units,” he recalls. “But only 40 of those 70 cleared credit.” Several years ago, nearly all those sales would have received financing.

As consumers slowly rediscover RV dealer showrooms, they will notice models with substantial fuel economy gains, a slew of environmentally friendly features such as lighting with light-emitting diodes (LEDs), and lots and lots of big, flat-screen TVs and other electronics. Jayco is making a fuel-cell prototype, and hybrids have started appearing as well. As often happens during a steep downturn, a number of new companies started up last year, with lower-cost business models and new approaches. One of them, EverGreen Recreational Vehicles in Middlebury, Ind., was the first company to receive a special “green” certification late last year for using lightweight composites that can be recycled and following environmentally friendly manufacturing practices.

“There are many times that this industry has been written off as dead,” Winnebago’s Olson says. “But the RV lifestyle reflects a type of culture you’re not going to take away from the American people. This is a way of life. And what we’re finding is that a lot of people, when they were kids, their folks took them on camping trips.” Now, they want to give those kinds of memories to their children and grandchildren.

“We’re memory makers.”

Next Page »