Bob Martin, president and COO of Elkhart-based Thor Industries, addressed the 2013 Baird Growth Stock Conference in Chicago on May 8, and his talk covered Thor’s past, present and future, as well as some of the bigger trends in the RV industry in general.
The Elkhart Truth reported that Martin talked in some detail about recreational vehicles and the growth in the motorized RV market, as well as why Thor is in the bus market and why the company just sold its ambulance business.
In his prepared remarks and in answer to audience questions, Martin laid out a look at Thor:
• 96 brands in its subsidiaries (Keystone alone has more than 20 brands)
• Largest RV manufacturer in the industry.
• 36.3% of the RV market.
• 33% of the travel trailer market.
• No. 1 in the fifth-wheel market, with market share greater than 50%.
• No. 2 in motorhomes, but growing this year.
• 8,800 employees overall.
• 96 production facilities across seven states.
• More than 6 million square feet of combined indoor production.
To read the entire Elkhart Truth article click here.
Thor Industries Inc. announced the sale of substantially all of the assets of SJC Industries Corp., a subsidiary that manufactures ambulances, to Wheeled Coach Industries Inc. According to a press release, Wheeled Coach is a subsidiary of Allied Specialty Vehicle Inc. (ASV), a privately held company based in Orlando, Fla., that is parent company to Fleetwood RV Inc.
Bob Martin, Thor president and COO, noted, “The sale provides the opportunity to streamline our bus operations and refocus these assets on our core business in a way that leaves our Goshen Coach operation better positioned to take advantage of future opportunities.”
Peter Guile, Chief Executive Officer of ASV stated, “I am pleased with the addition of the McCoy-Miller and Marque ambulance brands to the Fire & Emergency Segment of Allied Specialty Vehicles, Inc. Both McCoy-Miller and Marque have been respected manufacturers within the ambulance industry for many years. ASV plans to build upon the strong reputation of the McCoy and Marque brands by supporting and enhancing their respective dealer’s and providing an outstanding customer experience.”
Thor Industries Inc. today (May 2) announced record sales as well as an improved backlog for its fiscal third quarter and nine months, ended April 30. The third quarter was the first time in the company’s history in which quarterly sales exceeded $1 billion.
Sales in the third quarter were a record $1.05 billion, up 13.3% from $926.5 million in the third quarter last year. RV sales totaled $929.3 million, a 15.1% increase from $807.2 million a year ago. Towable RV sales grew 9.1% to $742.1 million from $680.5 million while motorized RV sales in the third quarter increased 47.8% to $187.2 million from $126.7 million. Bus sales were flat at $119.2 million compared to $119.3 million the previous year.
For the nine months, Thor posted sales of $2.67 billion, up 21.4% from $2.2 billion last year. RV sales grew 24.6% to $2.33 billion from $1.87 billion last year. Towable RV sales during the period totaled $1.9 billion, up 17.3% from $1.62 billion the year prior while motorized RV sales rose to $423.2 million, up 72 % from $246.1 million. Bus sales were $338.4 million, a 3.6% gain from $326.6 million last year.
Consolidated backlog on April 30 increased 28% to $849.2 million from the previous year. RV backlog was $649.6 million, up 44.9% from the end of the third quarter of fiscal 2012. Towable RV backlog increased 27.1% to $439.6 million and motorized RV backlog more than doubled to $210 million. Bus backlog was $199.6 million, down 7.2% from the end of the third quarter of fiscal 2012.
“Thor achieved record sales for the third quarter of fiscal 2013 based on the strength of the overall RV market and in particular, the growing recovery of the motorized RV market. We have seen improving retail traffic and increased dealer optimism as signs of a healthy market entering the seasonally important spring and summer selling period,” said Peter B. Orthwein, Thor chairman and CEO. “Although we are still in very competitive environments in both RVs and buses, we believe Thor is positioned well to support future growth in both of our businesses. We expect to report our third-quarter operating results on June 6.”
There’s no formal organization that oversees the annual Elkhart RV Open House because that’s not the way things work with this wildcat industry trade show that’s taken the industry by storm ever since September of 2009 when Elkhart, Ind.-based Forest River Inc. President and CEO Pete Liegl called dealers together for new model year product debuts and some morale-boosting social time with the company’s management team and fellow retailers.
The Elkhart RV Open House since then has become an annual must-see trade event, drawing an estimated 4,000 dealer personnel to Elkhart’s RV-building zone from around the U.S. and Canada to see the unveiling of new model year product lines from a wide variety of OEM’s at displays located in various locations around Elkhart and LaGrange counties — particularly along County Road 6 on the northeast side of the Elkhart.
Of course, setting a date for the Open House is typically left to the senior management teams of Forest River and Thor Industries Inc., the world’s largest RV builder, also based in Elkhart. Both companies confirmed with RVBUSINESS.com that this year’s Elkhart RV Open House will be held a bit earlier this time around, slated for Tuesday through Thursday, Sept. 17-19.
For the second time in less than four months, Indiana’s Elkhart County is scoring another corporate headquarters, according to a report by the South Bend Tribune.
Following on the heels of Thor Industries Inc.’s move from Ohio to Elkhart, Drew Industries Inc. announced it would move its corporate headquarters here from White Plains, N.Y.
Thor, which already is a major employer at its recreational vehicle plants in the region, recently moved into its new headquarters along the St. Joseph River in downtown Elkhart.
Drew, a manufacturer of components for recreational vehicles and manufactured homes, will move into a vacant building at 3501 County Road 6. A ribbon-cutting event is scheduled for sometime in June to mark the move and expansion in the county, said Dorinda Heiden-Guss, president of the Economic Development Corp. of Elkhart County.
All told, the announcement by Drew is expected to result in about 800 new jobs over the next several years. Beyond the move of corporate headquarters, Drew’s subsidiaries, Lippert and Kinro, will undertake industrial expansions at existing plants in Elkhart and Goshen that will result in the lion’s share of the new jobs.
Goshen City Council took the first step Tuesday to approving tax abatement for the industrial expansion that will create nearly 400 new jobs at Drew Industries’ plants in the city. Elkhart City Council is expected to take the first step Monday for its portion of the expansion.
Drew plans to invest $12.75 million to renovate and equip four manufacturing plants it operates in Goshen and Elkhart. The company will install new manufacturing and production lines, which are expected to be operational this year.
“We have experienced significant growth over the past three years,” said Jason D. Lippert, chairman and chief executive officer of Lippert Components and Kinro, in a release from the Indiana Economic Development Corp.
To read the entire article click here.
Thor Industries Inc. Wednesday (March 27) announced that it has completed the planned move of its corporate headquarters to Beardsley Avenue along the St. Joseph River in downtown Elkhart, Ind.
According to a news release, Thor was previously headquartered in Jackson Center, Ohio, and announced the move in January as a strategic decision to be more accessible and active in the community where a large majority of RVs are produced and more than 70% of the company’s operations are located.
The new headquarters building was previously unoccupied and was renovated to include new design features providing a “world-class atmosphere,” according to Thor.
The reuse of this building is a prime example of the recent efforts being made to revitalize the downtown Elkhart area, Thor said in the release. The new office will have the capacity to host a variety of meetings and events with dealers, suppliers, investors and the broader Elkhart community. Thor’s corporate human resources, finance and accounting, legal and information technology departments are now housed at the new facility.
“We are pleased with the smooth transition to our new offices on Beardsley Avenue and are looking forward to working in close proximity to the majority of our production facilities as well as our key suppliers,” said Thor President and COO Bob Martin. “In addition, our new offices provide us with the flexibility to host events that showcase our RV and bus products on-site. We believe the investment in our new headquarters will provide a significant return in the form of more efficient management of Thor’s resources in Elkhart and the surrounding area, as well as even stronger relationships with our customers and suppliers.”
Contact information for Thor’s corporate headquarters is:
601 East Beardsley Avenue
Elkhart, Indiana 46514-3305
Thor Industries Inc. today (March 19) announced a series of organizational changes at its Dutchmen Manufacturing Inc. subsidiary.
Effective immediately, Matt Zimmerman, president of Keystone RV Co., will assume the additional responsibilities of overseeing Dutchmen RV, replacing Cam Boyer. In addition, Aram Koltookian, formerly general manager at Keystone, will become executive vice president of Dutchmen.
According to a new release, the moves are expected to result in improved operating efficiencies, product quality and customer support.
“Matt and Aram have played a major role in Keystone RV’s success over the past 14 years,” said Thor President and COO Bob Martin. “We plan to draw on their ability to lead a well-managed, customer-focused organization as we focus on accelerating Dutchmen’s growth.”
Martin underscored the strength of the Dutchmen dealer network and Dutchmen brands, noting, “Voltage, Coleman, Aspen Trail and Denali are highly regarded names that attract strong consumer interest and dealer commitment. We believe that the entire Dutchmen family will grow and prosper as overall quality and back-end support continue to improve.”
“Dutchmen RV has great momentum right now,” commented Zimmerman. “It is our primary focus to keep that going as we strengthen all areas of the business to handle further growth. Dutchmen RV will remain independent and continue to develop and bring to market exciting new Dutchmen-branded products. In addition, Dutchmen will continue to operate with its own sales force, engineering staff, product development team and production facilities. The only changes the Dutchmen dealer should see are improved quality and customer support.”
Editor’s Note: The following is a blog authored by Robert Hanley of the Motley Fool looking at prospects for the RV industry and some of the major publicly traded companies.
The great American pastime of hitting the open road with family and friends hit a speed bump during the financial crisis, as discretionary incomes fell sharply. The leading manufacturers of RVs, like Winnebago Industries Inc. and Thor Industries Inc., were also hit hard and many of their smaller competitors made the lonely trip to bankruptcy court. Fortunately, the federal government’s stimulus programs have helped the industry prosper again and post a 14% increase in unit sales during 2012, according to the Recreational Vehicle Industry Association (RVIA). So, which players are now worth a look from investors?
The pride of Forest City, Iowa
Founded in 1958, Winnebago sells its iconic recreational vehicles through a network of over 460 dealers throughout the U.S. and Canada. Winnebago controls approximately 20% of the traditional motor coach market and it moved into the towable coach segment with its 2010 purchase of competitor Sunnybrook. The company’s very conservative balance sheet enabled it to survive the industry’s deep recession relatively unscathed, while allowing it to continue investing in new product development.
In its latest fiscal year, Winnebago posted mixed results, with a 17% increase in revenues and a 16% decline in operating income. The company’s sales benefited from a sharp increase in unit volume, as well as improved pricing as its customers opted for more expensive models. However, Winnebago’s razor-thin operating margin, 1.6% in FY2012, was negatively impacted by higher commodity costs and aggressive discounting of its products in the first half of the year.
Looking ahead, Winnebago’s prospects are strong as the industry currently expects an 8% unit sales increase in 2013. In addition, the company has improved its competitive position by expanding into the lower-priced, towable coach market. With a year-over-year doubling in the value of its backlog as of August 2012, Winnebago should be able to earn solid future gains in profitability as it leverages its manufacturing operations.
The pride of Jackson Center, Ohio
Founded in 1980, Thor has become the country’s largest manufacturer of recreational vehicles primarily due to a long string of acquisitions, including purchases of competitors Dutchmen in 1991 and Keystone in 2001. The company has also become the leading manufacturer of small and mid-sized buses for the municipal market, a segment that accounted for roughly 16% of Thor’s total sales in 2012. Similar to Winnebago, Thor maintained a conservative balance sheet through the financial crisis, allowing it to acquire weaker competitors and gain market share.
In FY2013, Thor has reported solid financial results, with increases in revenues and operating income of 27.3% and 31.0%, respectively, compared to the prior-year period. The company’s operating margin gained slightly, as it was able to offset rising commodity costs with operating efficiencies in its manufacturing network. Despite a weak operating margin in its bus segment, due to difficult funding challenges for its municipal customers, Thor sees the segment as a growth market as people continue to gravitate toward public transit.
Looking ahead, Thor should also benefit from the improved industry sales environment in 2013 and beyond. In addition, its shareholder-friendly management team has continued to look for complementary segments to add to Thor’s core recreational vehicle business. With a strong current sales backlog, the company should post solid increases in income this year as it adds acquired brands to its overall manufacturing base.
Investors looking for an investment in the recreational vehicle space might also want to consider leading suppliers to the industry, like Patrick Industries Inc. Founded in 1959 as a distributor of paneling to motor coach manufacturers, Patrick Industries now manufactures a range of products that includes hardwood doors, cabinets, and wall panels through a network of 12 U.S. plants. The company has successfully used the acquisition channel to diversify its product offerings, including purchases of lighting and hardwood door manufacturers in 2012.
In FY2012, Patrick Industries reported strong financial results, with increases in revenues and operating income of 42.1% and 100.7%, respectively, versus the prior year. The company’s sales growth benefited from four acquisitions in 2012, as well as a 20% organic increase in its legacy business. In addition, Patrick Industries’ operating margin increased due to an improved price environment for its product portfolio. Looking ahead, the company should be able to ride the industry’s sales momentum and continue to pick up market share in the fragmented RV supplier industry.
The bottom line
Despite high prices for its products, the RV industry is well positioned for future sales growth with large expected increases in its retirement-age, core customer base. The industry is also trying to reduce its cyclical nature by offering lower-priced products that would appeal to younger seasonal users. While these companies aren’t for the buy-and-hold crowd, the industry’s current upswing could lead to gains for investors willing to take the volatility.
Editor’s Note: The investment firm of Robert W. Baird & Co. issued a client newsletter on March 8 following release of the second-quarter financials by Thor Industries Inc., the nation’s leading RV manufacturer. Excerpts from the Baird newsletter follow.
Maintain Neutral rating. Earnings per share (EPS) fell short despite a low tax rate as Thor offered incentives to defend (market) share. We are cutting our estimates to reflect weaker retail demand, higher dealer inventory and further margin pressure. More broadly, we remain optimistic that demand will recover as negative equity evaporates, but remain selective on valuation – especially as inventory grows and market share erodes. We continue to see a recovery in the consumer discretionary sector but believe there are better opportunities outside the RV space.
EPS fall short. EPS fell short of our estimate (37 cents vs. 38 cents) despite a lower tax rate that added approximately $0.06. Consensus was 39 cents. Recall that Thor previously reported strong revenue growth (+24%) and a healthy backlog (+27%).
Discounting to defend share. Management continues to make the strategic decision to offer incentives to protect dealer lot space and market share. Consequently, margin fell short. RV earnings before taxes (EBT) margin improved 30bp, but fell short of our forecast (4.9% vs. 5.2%). Bus margin also came up short. Management indicated that second-half operating margins would be similar to the second half of 2012 – implying downside to expectations.
Inventory up 18%. RV dealer inventory increased 18% to 61,209 units (towables and motorhomes), consistent with our expectation for a 17% increase. Big picture, we believe dealers are in the early stages of a modest re-stocking cycle after a long de-stocking cycle – and consider inventory balanced in anticipation for a retail recovery. We note that dealer confidence measured by the Baird RV Dealer Sentiment Index is near an all-time high, fueling an appetite for more inventory.
Retail improving, but share eroding. Combined with the 17% increase in shipments, the data imply retail demand improved 3% in the January quarter. In 2012, Thor’s combined share of the towable market (travel trailers and fifth-wheels) fell to 38.1% from 38.6%, according to Statistical Surveys Inc. Motorhome share was flat in 2012 at 20.0%.
Cutting estimates. We cut our F2013 EPS forecast to $2.70 from $2.80 ($2.92 consensus). We model RV retail volume up 8%, with shipments outpacing retail by 9,400 units as Thor offers discounts (margin pressure) to defend lot space. We consider inventory balanced, but should retail fail to meet expectations, dealers may opt to cut orders, putting further pressure on revenue and profits.
Thor Industries Inc. announced double-digit gains in revenue and earnings for its fiscal second quarter, ended Jan. 31.
Sales for the second quarter totaled $741.6 million, up 24% from $597 million in the second quarter last year, while net income was $19.9 million, up 45% from $13.7 million in the prior-year second quarter. Diluted earnings per share (EPS) for the second quarter were 37 cents, up 48% from 25 cents in the second quarter last year.
For the six months, sales totaled $1.617 billion, up 27% from $1.270 billion in the prior-year period. Net income during the period was $50.9 million, up 41% compared to $36 million in the first six months of fiscal 2012. Diluted EPS were 96 cents versus 66 cents in the prior-year period.
The overall effective tax rate for the second quarter of fiscal 2013 was 22.1% compared to 36.4% for the second quarter last year and was favorably impacted by the settlement of certain state uncertain tax benefits and the retroactive reinstatement of various tax credits.
“We are pleased with the continued growth in revenues we were able to achieve in the second quarter,” said Bob Martin, Thor president and COO. “As we have said in our recent press releases, the RV and bus markets remain very competitive, with elevated levels of discounting on certain products. In the first and second quarters, we made the decision to defend our RV shelf space on dealer lots and maintain momentum with our dealers. Similarly, in our bus business we decided to strategically pursue and win certain bus contracts which required more aggressive pricing, including contracts for entry into new markets.”
Highlights from the report included:
• Total RV segment sales were $636.6 million, up 27% from $501.0 million in the second quarter last year. RV segment income before tax was $31 million, up 35% from $22.9 million in the prior-year period. As a percent of revenues, total RV income before tax rose to 4.9% from 4.6% in the prior year as an increase in sales of higher priced units was partially offset by increased discounts and incentives.
• Towable RV sales were $522.8 million, up 18% from $444.2 million in the prior-year period. Income before tax was $24.1 million, up 14% from $21.2 million in the second quarter last year. Towable RV income before tax fell to 4.6% of revenues from 4.8% a year ago, as increasing unit volumes were more than offset by increased discounts and incentives.
• Motorized RV sales were $113.8 million, more than double the $56.8 million in the prior-year second quarter. Income before tax was $6.9 million, up from $1.7 million last year. As a percent of revenues, motorized RV income before tax rose to 6.1% of revenues from 3.1% a year ago, as increased unit volumes resulted in improved operating leverage.
• Bus segment sales were $105.0 million, up 9% from $96.0 million in the second quarter last year. Income before tax was $1.3 million, compared to $2.6 million in the second quarter last year. Bus segment income before tax fell to 1.3% of revenues from 2.7% a year ago as a result of more aggressive pricing on certain contracts.
“Thor generated strong gains in both revenues and net income during the second quarter, driven primarily by continued strength in the RV market,” said Peter B. Orthwein, Thor chairman and CEO. “Our results for the second quarter reflect the dealer optimism that has been building over the past several months, which is now supported by improving retail traffic and sales at the early spring shows. Based on current market trends, we expect continued sales growth and second half operating margins consistent with the second half of fiscal 2012.”
To view the entire report click here.