Thor Industries Inc. today (June 5) announced that sales for its fiscal third quarter topped $1 billion, lifted by strong performance in its motorhome segment coupled with an 8% increase in towable sales.
Revenue in the three-month period, ended April 30, grew 13% to $1.05 billion compared with $929.8 million a year ago. Net income from continuing operations for the third quarter was $55.1 million, or $1.03 per share, up 13% from $48.7 million, or 92 cents per share, in the prior-year third quarter. Including the discontinued operations of Thor’s bus business, net income for the third quarter rose 26% to $55.1 million from $43.8 million, or 82 cents per share, the previous year.
The Elkhart, Ind.-based company reported that gross profit margins improved to 13.6% in the third quarter compared to 13.4% in the prior year period.
For the nine months, sales rose 7% to $2.48 billion from $2.33 billion in the prior year. Net income from continuing operations for the nine months was $108.7 million, or $2.04 per share, up 13% compared to $96.5 million, or $1.82 per share, in the first nine months of fiscal 2013. Including discontinued operations, net income for the nine months was $112.4 million, or $2.04 per share, up 19% from $94.6 million, or $1.78 per share, in the first nine months of the prior year.
“As we emerged from the tough conditions of the past winter, we were able to post improvements in sales and bottom-line results for the third quarter,” said Bob Martin, Thor president and CEO. “We are in the process of addressing production capacity challenges as we are in the early stages of ramping up our newest motorized production facility in Elkhart, resulting in some short-term costs and inefficiencies which we expect will result in long-term gains in our operations.
“The industry is also facing tight labor markets in northern Indiana, as well as a shortage of capacity at transport companies, both of which will continue to affect our business in the fourth quarter. Despite these challenges, the continuing strength of our dealers and consumers, as well as the actions we’ve taken to secure the long-term health of our business, give us reason for optimism.”
• Towable RV sales were $800.7 million for the third quarter, up 8% from $742.4 million in the prior year period.
• Motorized RV sales were $246.1 million for the third quarter, up 31% from $187.3 million in the prior year third quarter.
• Consolidated backlog on April 30 was $820.2 million, an increase of 26% from $649.6 million at the end of the third quarter last year. Towable RV backlog increased 25% to $548.5 million, compared to $439.6 million at the end of the third quarter of fiscal 2013 while motorized RV backlog increased 29% to $271.7 million from $210 million a year earlier.
“With the improvement in our sales to record levels in the third quarter, we were able to continue improving our operating efficiencies resulting in further increases in margins beyond the strong gains we achieved in the third quarter last year,” said Peter B. Orthwein, Thor executive chairman. “As we continue into the seasonally stronger months of our fiscal year, we remain focused on gaining operating efficiencies while seeking additional avenues for growth.
“We’ve made a number of acquisitions throughout fiscal 2014 of both companies and production facilities that should pay future dividends. As we begin to see the impact of our acquisition of K-Z in the fourth quarter, Thor will continue to identify opportunities to build on its strong history and position as the acquirer of choice in our industry.”
To view the full report click here.
Thor Industries Inc. today (June 3) announced expansion plans for its Bison Coach subsidiary with the acquisition of a 55,000-square-foot production facility located on approximately nine acres in Milford, Ind. In addition to the facility, the company also agreed to purchase approximately 20 acres of additional land that can be used for future expansion as needed.
Thor reported in a news release that the production facility is located near Bison’s current production facilities and will be used to produce Bison’s equine trailers with living quarters. With Bison’s recent growth, the company’s existing facility in Milford was not large enough to meet current demand. Bison expects to transition production to the new facility in the fiscal fourth quarter ending July 31.
“Bison’s product lines represent a solid growth opportunity beyond our traditional recreational vehicle markets,” said Bob Martin, Thor president and CEO. “With the solid growth Bison has achieved since their acquisition last fall, we found ourselves in a position of identifying opportunities to expand production quickly. This facility came on the market and it fit Bison’s current production needs while providing the flexibility to meet future growth needs as they arise.”
Preliminary consolidated sales from continuing operations in the third quarter were $1.05 billion, up 13% from $929.8 million last year. Towable RV sales during the period grew 8% to $801.5 million from $742.5 million in the third quarter of fiscal 2013. Motorized RV sales in the third quarter increased 31% to $245.6 million from $187.3 million in the same quarter a year ago.
For the nine months, preliminary consolidated sales from continuing operations were $2.48 billion, up 6% from $2.33 billion last year. Towable RV sales for the nine months were $1.90 billion, which was flat compared to last year. Motorized RV sales rose 38% to $585.5 million from $423.3 million the previous year.
Consolidated backlog as of April 30 was $820.2 million, up 26% from $649.6 million at the end of the third quarter last year. Towable RV backlog increased 25% to $548.6 million, compared to $439.6 million from a year ago while motorized RV backlog increased 29% to $271.6 million from $210 million.
Thor’s operations in the third quarter of fiscal 2014 continued to be adversely impacted by a variety of factors including the harsh winter weather during February and early March, which in turn affected certain costs during the quarter. In addition, the company continued to incur start-up costs associated with new production facilities and experience the effects of the ongoing tight labor market in northern Indiana. The RV industry is also facing logistical challenges in making timely deliveries to dealers given the shortage of drivers at transport companies that is more acute than prior years.
“Although we still faced a number of factors, particularly in the first half of the quarter, that affected our operations and shipments, strong demand for our products resulted in record sales,” said Bob Martin, Thor president and CEO. “As we continue to navigate through some near-term challenges, we remain optimistic about our business and our industry, as strong early retail sales results have boosted the confidence of dealers as we reach the heart of the peak selling season.
“We continued to demonstrate our long-term confidence in the RV industry with our acquisition of KZ Inc., which closed on May 1, and with our recent investment in our newest motorized plant in Elkhart, which is in the process of ramping up for production in the fourth quarter. These moves leave us well positioned for a solid finish to our fiscal year.”
Thor expects to report its third-quarter operating results on June 5.
The continued consolidation of the North American RV industry was underscored by Thursday’s (April 17) announcement that Thor Industries Inc. had reached an agreement to acquire Shipshewana, Ind.-based towable RV builder K-Z Inc. in a $53.4 million transaction set to close May 1.
News that K-Z, led by founder and CEO Daryl Zook, was being purchased by the nation’s largest RV builder came only weeks after No. 3 Jayco Inc. bought Shipshewana’s Open Range RV Co., and a few months after Thor acquired specialty trailer manufacturer Bison Coach and Livin’ Lite Recreational Vehicles LLC.
So, for those keeping score, it stacks up like this: Add Thor’s current 36.7% retail market share to that of tightly competitive No. 2 Forest River Inc.’s 33.4% as well as Jayco’s 11.8% and Winnebago Industries Inc.’s 3.1% and you’ve got 85% of U.S. RV retail sales occupied by the four largest manufacturers, reports Tom Walworth, president of Statistical Surveys Inc., Grand Rapids, Mich.
The rest is spread out among some 60 companies. And while there’s never been a similar scenario in the RV business, even in the ‘80’s and ‘90’s when Fleetwood Enterprises Inc. pretty much ruled the roost with 33% to 35% of retail sales, Thor President & CEO Bob Martin feels the current trend is a good thing – at least for Thor and the other front-line players.
“I think that it’s good for all – for lending institutions and dealers, for them to know that they’re dealing with companies that have solid backgrounds and financials,” says Martin. “We also see this (consolidation) on the dealer side, and we feel that’s healthy as well. You see some of the large dealers who have expanded into other (geographic) markets. You know, for us, we have relationships with them and it’s positive in many areas in just being familiar and having relationships and then growing with them. So, I do (generally view it as a good thing), and I see where there can be more consolidation going on in the future.”
Walworth considers the current spate of acquisitions a byproduct of a growing marketplace that still has plenty of room to grow to reach its pre-recessionary peak. “If you take a look at the market overall,’ said Walworth, “the total market at retail for 2013 was basically 246,700 units. In 2004, prior to the Hurricane Katrina era, the market did 319,000 (units) and 320,000 in 2005. So, I think that this market’s got about 74,000 units more to sell just to get back to where they were.
“Bottom line, there’s more gas in the tank,” says Walworth, who ultimately foresees growth well beyond pre-recessionary highs considering the industry’s merging demographics, including the arrival of “mass numbers” of Baby Boomers possessing “more money than any generation in history” plus Millennials who seem poised to buy into the RV universe at a robust pace.
“All things considered, I think that this market has a lot more growth potential in it, and this growth potential, I think, gives these companies the incentive to go out and buy anything that would be out there that’s available – either for market share or for capacity,” said Walworth, who hasn’t seen this same degree of consolidation in the marine, utility trailer and manufactured housing sectors. “But we still have a lot of growing in this industry just to get back to where we were.”
Citing a shared philosophy on doing business and a longtime reputation for building quality product, Thor Industries Inc. President and CEO Bob Martin termed the company’s acquisition of K-Z Inc. as “a perfect addition” to its growing portfolio of manufacturers. In an announcement this morning (April 17), Thor disclosed it was acquiring the veteran Shipshewana-based towable builder for $53.4 million, effective May 1 (see previous story).
“K-Z is a company that’s always had a strong reputation for impeccable quality and as a morally and ethically strong company that does a good job with customer service,” Martin told RVBUSINESS.com. “Many aspects of K-Z are definitely perfect fits for the way that we want to do business. I’ve been in the industry for over 20 years and I’ve always admired K-Z. It’s always had a very strong brand name recognition.”
Martin noted that the process involved close examination of K-Z’s operations, which include 45-plus acres of real estate housing a corporate office, four production plants, and a service facility on U.S. 20 in Shipshewana. “We were very impressed when we went through their facilities and got to know some of their top managers – just the overall operation of K-Z,” Martin said.
Perhaps even more significant in Thor’s decision was K-Z’s “unbelievable workforce that’s very loyal to the company along with a committed dealer body.” Currently, K-Z’s employee count is around 330 workers.
“When you talk to a K-Z dealer, they are very loyal,” said Martin. “You never hear about problems with K-Z because they just do business the right way and take care of problems before they get any larger. There’s also the opportunity to pick up some dealers that we don’t currently do business with as we look across the dealer body.”
Martin stressed that he didn’t envision any major changes with regard to K-Z’s operations. “They run a great business, and for us I don’t see tremendous changes with our decentralized nature. You know, every company we have is run a little bit differently, and they’ve been very successful for many years.”
Martin left the door open regarding K-Z founder and CEO Daryl Zook’s continued involvement. “Really, I want to keep Daryl involved as long as Daryl wants to be involved,” he said. “For me, this is Daryl’s baby. It’s an unbelievable company that we need to learn about, and we need to learn from Daryl. So, for the immediate future, Daryl’s planning to stay on and help us integrate them into Thor.”
Thor Industries Inc. today (April 17) announced that it has entered into an agreement to acquire the outstanding capital stock of recreational vehicle manufacturer K-Z Inc. in a transaction closing effective May 1. The purchase price, which will be paid in cash, is approximately $53.4 million, subject to adjustment.
“We are pleased to welcome K-Z to the Thor family. With a strong focus on value, service and quality, K-Z brings an exceptional way of doing business that really stands apart in the RV industry,” said Bob Martin, Thor president and CEO. “With an iconic and long-standing brand, K-Z has built a successful business over the past 40 years serving a diversified distribution network of more than 200 dealers that are strong business partners. At Thor, we recognize the success of K-Z and want to see that continue as we support the management team in the next phase of their growth.”
Founded in 1972, Shipshewana, Ind.-based K-Z’s portfolio includes strong brands such as Sportsmen, Spree and Durango offering a comprehensive selection of travel trailers, fifth-wheels and toy haulers with retail price points as low as $10,000 for entry-level products. The company produces its RVs at a complex consisting of 396,000 square feet of office and production space spread among six primary facilities operated by a team of approximately 320 employees. K-Z generated sales of nearly $150 million for its fiscal year ended December 31, 2013, and Thor expects the acquisition to be accretive to earnings.
“Becoming a part of Thor allows us to continue to operate K-Z with the core values and relationships that have made us successful since our founding,” said Daryl Zook, founder and CEO of K-Z. “We understand the importance of partnering with a local company that has strong roots in the RV industry and in our communities of northern Indiana. We share a strong commitment to product quality and excellent customer and dealer relationships that make Thor an ideal partner for K-Z.”
A large crowd is expected for Thor Industries Inc.’s auction Tuesday (March 25) of remaining towable inventory, work-in-progress units and assorted componentry at a former Monaco RV towable manufacturing plant in Elkhart, Ind.
Hahn Auctioneers Inc., which is overseeing the liquidation, told RVBUSINESS.com they expect as many as 500 people. The auction is scheduled to begin at 8 a.m. while a preview of inventory is running today from 9 a.m. to 5 p.m.
Thor has designs to expand production of its Thor Motor Coach Inc. division at the 220,000-square-foot plant on the south side of Elkhart. Thor acquired the facility in February from Allied Specialty Vehicles Inc., which took ownership when it purchased the RV assets of Navistar Inc.
According to a sales flier, the auction will include “enough inventory to run production for weeks,” including three completed RVs, several partially finished vehicles and a lengthy list of supplies.
Phil Hahn told The Elkhart Truth that it’s not unusual for his company to auction off the remnants of a shuttered RV plant, but he doesn’t usually see this much needing liquidation.
To read the entire Truth story click here.
Thor Industries Inc. today (March 6) reported a decrease in net income for its fiscal second quarter, ended Jan. 31, as severe weather impacted production and slowed sales.
Net income from continuing operations in the second quarter totaled $17.2 million, down 9% from $19 million in the prior-year second quarter. Including the discontinued operations of Thor’s bus business, net income for the second quarter was $16.2 million, representing a 19% decrease from $19.9 million in the second quarter of fiscal 2013.
Second-quarter sales from continuing operations were $635.3 million, down slightly from $636.6 million in the second quarter last year, due in large part to severe winter weather which adversely affected operations during the quarter.
Net income from continuing operations for the six months rose 12% to $53.6 million compared to $47.8 million in the first six months of fiscal 2013. Including discontinued operations, net income for the six months was $57.3 million, up 13% from $50.9 million in the first six months of the prior year. Sales from continuing operations grew 3% to $1.44 billion from $1.4 billion in the prior year.
“Despite the impact of the severe winter weather on our results in the quarter, we remain optimistic about our markets, our long-term strategic goals and our expectations for a year of continued growth in fiscal 2014,” said Bob Martin, Thor president and CEO. “As we work through our backlog in both towables and motorized we expect to make up for the second-quarter weather delays throughout the remainder of our fiscal year.
“We are making considerable progress in establishing an appropriate footprint to meet the growing demand for our products, including the recently announced addition of another prime production facility to support our motorized growth. Given the success of early retail shows and the strength of our dealer base, our expanded production infrastructure will be helpful as we work to meet peak seasonal demand over the next two quarters.”
Highlights from the second quarter included:
• Towable RV sales were $472.5 million for the second quarter, down 10% from $522.8 million in the prior year period. Towable RV income before tax was $18.9 million, down 21% from $24.1 million in the second quarter last year, primarily as a result of the decrease in sales.
• Motorized RV sales were $162.8 million for the second quarter, up 43% from $113.8 million in the prior year second quarter. Motorized RV income before tax was $11.2 million, up 63% from $6.9 million last year, which was driven primarily by increased sales volumes.
• Consolidated backlog on Jan. 31 was $845.2 million, up 37% from $616.6 million at the end of the second quarter last year. Towable RV backlog increased 34% to $501.9 million, compared to $375.4 million at the end of the second quarter of fiscal 2013. Motorized RV backlog increased 42% to $343.3 million from $241.2 million a year earlier.
“Although second quarter sales were somewhat lower than a year ago, Thor’s gross margins expanded during the quarter even in the face of the disruption associated with the harsh winter weather, reflecting our ongoing efforts to improve profitability,” said Peter B. Orthwein, Thor executive chairman. ”We remain committed to driving our top-line growth while balancing the need to control costs and improve operating efficiency as keys to our success. With strong demographics supporting growth in our markets, innovative new products to meet consumer demand, enhanced infrastructure to drive production and a robust dealer base, we are optimistic about our prospects for the remainder of the fiscal year.”
To view the entire report click here.
Thor Industries is scheduled to post its second-quarter earnings results on Thursday (March 6). Analysts expect Thor to post earnings of 36 cents per share and revenue of $636.3 million for the quarter.
Thor opened at $57.55 on Wednesday. Thor Industries has a 52 week low of $34.51 and a 52 week high of $59.94. The stock has a 50-day moving average of $53.64 and a 200-day moving average of $54.26. The company has a market cap of $3.067 billion and a price-to-earnings ratio of 18.16.
Several analysts have recently commented on the stock. Analysts at Ned Davis Research upgraded shares of Thor from a “neutral” rating to a “buy” rating in a research note on Feb. 10. Seven research analysts have rated the stock with a buy rating, The stock presently has a consensus rating of “Buy” and an average target price of $53.25.
Thor manufactures and sells a range of recreation vehicles and small and mid-size buses in the United States and Canada.
Along with the former Allied Specialty Vehicles Inc. (ASV) towable RV-manufacturing plant that it just purchased on Indiana 19 on the south side of Elkhart, Ind., Thor Industries Inc. also acquired a host of towable brand names once marketed by ASV and its predecessor, Monaco RV, from whom they were purchased last year.
Included are a host of legendary nameplates like Presidential, Aluma-Lite, Alumascape, Trail-Lite, R-Vision, Trail Cruiser and Trail Sport, Thor President and CEO Bob Martin confirms.
“We didn’t put it all in a press release because it was more than a mouthful and at the end of the day, right now, our biggest priority was that we needed production for motorized,” Martin said of Tuesday’s (Feb. 18) announcement that Elkhart-based Thor had acquired ASV’s 220,000-square-foot towable plant which served for a number of years prior to that as Monaco Coach Corp.’s motorized chassis plant.
And while Martin indicated that the newly acquired ASV plant will facilitate the continued expansion of his company’s Thor Motor Coach division, plans for those towable brands are still quite preliminary.
“I have a long list of brands that we now have at our disposal and basically I’ve opened them up to Keystone and to all of our companies (Thor divisions) that might have an interest in them,” said Martin. “You know, some of these are iconic brand names that we just don’t yet know how they’re going to be used, but we did get the names.”
Meanwhile, as part of the agreement to purchase the Indiana 19 plant, Thor is working with a variety of dealers – including its own Thor retailers – to unload some of the finished inventory on hand at the former ASV plant.
“So, we’re taking on that burden,” said Martin. “Dealers will be contacted by some people working for us through ASV and I’m trying to make sure that the dealers that need inventory are the ones that are getting it. You know, we’ve had dealers that weren’t even Monaco dealers call and say, ‘I’ll buy them all,’ just trying to get a deal. And we’re trying to do the right thing and make sure that retails are taken care of first and foremost and also dealers that need inventory, dealers that don’t have a line right away, So, I’m kind of behind the scenes helping with that.”