Thor Industries Inc. today (Nov. 29) announced results for the first quarter ended Oct. 31. Sales for the quarter were $606,684,000, up 21% from $502,552,000 last year, according to a news release. After expenses including those related to the acquisition of Heartland RV on Sept. 16, net income for the quarter was $23,688,000, up 1% from $23,429,000 last year. Earnings per share for the quarter were 44 cents versus 42 cents last year.
RV sales in the quarter were $506,563,000, up 30% from $389,929,000 last year. Towable RV sales in the quarter were $422,449,000, up 23% from $342,136,000 last year. Towable RV sales for the quarter ended October 31, 2010 include $50,119,000 of sales from Heartland RV. Motorized RV sales in the quarter were $84,114,000, up 76% from $47,793,000 last year. Bus segment sales in the quarter were $100,121,000, down 11% from $112,623,000 last year.
RV income before tax in the quarter was $34,104,000, up 8% from $31,642,000 last year. Towable RV income before tax in the quarter was $33,100,000 up 5% from $31,540,000 last year. Motorized RV income before tax in the quarter was $1,004,000, up significantly from $102,000 last year. Bus segment income before tax in the quarter was $9,419,000, up 12% from $8,380,000 last year.
Corporate net costs were $9,737,000 in the quarter versus $2,769,000 last year and included legal and professional expenses related to the acquisition of Heartland RV and the company’s ongoing SEC review totaling $3,503,000. In the towable RV segment, margins were adversely impacted by purchase accounting costs related to the Heartland acquisition, including expensing of inventory step-up costs, amortization of Heartland’s backlog, and amortization of certain intangible assets totaling $2,477,000. In the motorized RV segment, the company incurred a trademark impairment charge of $2,036,000 related to the combination of its Thor Motor Coach operations. Bus segment margins were positively impacted by a gain on involuntary conversion related to property and business interruption insurance. Thor’s lower tax rate in the quarter reflects a favorable state tax settlement.
“In the first quarter Thor invested heavily in growth and future profitability through the acquisition of Heartland RV, capital expenditures of approximately $16,500,000, and development of exciting new products which will be shown at this week’s RVIA Expo in Louisville, KY,” said Peter B. Orthwein, Thor chairman. “Beyond the costs related to Thor’s acquisition of Heartland RV, gross margins were impacted by increased discounting as dealers remained cautious entering the slowest season of the year. Thor’s retail RV sales continue to be strong which is encouraging.”
Analysts, on average, expect Thor Industries Inc. to report earnings of 53 cents per share on sales of $583 million on Tuesday (Nov. 30). SmarTrend reported
For the full year, analysts expect the company to post earnings per share of $2.48. In the year-ago period, the company reported EPS of 42 cents on sales of $503 million.
In the previous quarter, the company reported EPS of 71 cents, topping consensus estimates of 63 cents.
SmarTrend currently has shares of Thor Industries in an Uptrend and issued the Uptrend alert on Sept. 17, 2010, at $27.11. The stock has risen 27.5% since the Uptrend alert was issued.
Thor is the world’s largest manufacturer of recreation vehicles, with a U.S. network of approximately 1,200 dealers selling brands such as Airstream, Breckenridge, CrossRoads, Dutchmen, Heartland, Komfort and Keystone RV.
“We benchmarked current options and needs in the industry and will offer a very competitive wholesale financing product for RV dealers,” Tim Russi, Ally Financial executive vice president for North American Operations, stated in a news release. “Our program is tailored to the recreation vehicle business with attractive terms and flexible credit lines that will accommodate the seasonal fluctuations in RV inventory. We view our retail and wholesale financing, along with remarketing tools, as a full-service offering for dealers.”
Thor RV Group President Ron Fenech said, “Dealer wholesale financing is a critical part of the RV business. We are thrilled to have a strong national lender like Ally stepping in to provide Thor dealers with competitive financing for their inventory.”
Qualified dealers may obtain wholesale financing from Ally Financial for all or a portion of their inventory. Ally Financial has a dedicated sales team devoted to the RV business. Representatives will be on hand next week at the 48th Annual National RV Trade Show in Louisville, Ky., to introduce the wholesale financing program.
Ally Financial became the preferred retail finance provider for Thor Industries RVs in April. Ally currently extends retail financing in about 40 states, with plans to expand its RV retail financing nationwide by the end of the year.
Ally Financial is diversifying its business as an independent bank holding company devoted to the broad automotive industry.
About Ally Financial Inc.
Ally Financial Inc. (formerly GMAC Inc.) is one of the world’s largest automotive financial services companies. The company offers a full suite of automotive financing products and services in key markets around the world. Ally’s other business units include mortgage operations and commercial finance, and the company’s subsidiary, Ally Bank, offers online retail banking products. With more than $173 billion in assets as of Sept. 30, 2010, Ally operates as a bank holding company. For more information, visit the Ally media site at http://media.ally.com.
Topeka, Ind.-based CrossRoads RV will be introducing its new Rushmore luxury fifth-wheel at booth 1101 at the Kentucky Exposition Center during the 48th Annual National RV Trade Show Nov. 30-Dec. 2 in Louisville, Ky.
“Rushmore has been under development for the better part of a year and after extensive research with retail customers and dealerships alike, we feel we have built the highest valued fifth wheel in its price point,” Matt Popovic, national sales/product manager, stated in a news release. “The sole purpose of designing Rushmore was to create high volume retail turns. Unshoppable standard features such as specific dinner plate storage, spacious bedrooms with true walk-around beds (both king and queen), dual pantries, Champagne full-body exterior and luxurious interiors complimented with 100% natural cherry cabinetry will make selling the Rushmore very simple and fun.”
Popovic claims the Rushmore “has all the necessary components to make an immediate impact in the market” with its two-year bumper-to-hitch and five-year structural warranty, online direct link parts ordering and CrossRoads’ rapid reimbursement plan that CrossRoads has put into place to promote dealer/manufacturer relations.
“The ability our dealers have to make good grosses, capture additional market share and meet the needs of the most discriminating retail customer is and will continue to be our No. 1 focus in product development.,” he said. “In today’s highly competitive market, dealerships must have the ability to hold sensible profits on both the front and back end. Rushmore is here to ensure this.” MSRP starting at $49,999.
Popovic can be reached at (260) 593-3850 ext. 233.
CrossRoads RV manufactures a wide variety of travel trailers, fifth-wheels and park models at five plant locations. Its products are distributed by dealers throughout the United States, Canada, France, Japan, China and Australia. CrossRoads RV is a division of Thor Industries Inc. More information on the company can be obtained online at www.crossroadsrv.com or by calling (888) 226-7496.
Goshen, Ind.-based Dutchmen RV, a division of Thor Industries, will unveil its all-new Aerolite “SS” Super Slide Series of travel trailers at the 48th Annual RV Trade Show Nov. 30-Dec. 2 at the Kentucky Exposition Center in Louisville, Ky.
“This new series incorporates an exciting new exterior look and interior that is second to none” said Steve Paul, vice president/general manager of Dutchmen’s Aerolite group. “Not only did we upgrade the exterior with an all-new platinum grey finish and exciting graphics package and front cap, but we completely updated the interior — including a new cherry wood color and an exclusive ‘dual arched aerospace’ ceiling design.”
According to Paul, the new line goes directly after the Ultralite segment of the market. “We continue to see the Ultralite segment of the market as offering tremendous growth as consumers look to pull larger trailers with smaller tow vehicles,” he added. The Super Slide series is currently available in six great floor plans,
The Aerolite “SS” Series as well as the rest of the Aerolite line can be seen at the Dutchmen Display, South Wing Booth 1101 at RVIA.
For more information, visit www.dutchmen.com or call (574) 537-0600.
Kampgrounds of America (KOA) has pledged an increased total contribution of $100,000 to the 2010- 2012 “Go the Extra Mile” voluntary fundraising program for Go RVing, once again achieving “Champion” status as a supporter of the effort.
KOA rejoins Thor Industries Inc. and Winnebago Industries Inc. in the top-ranked Champion donor tier, according to a news release.
The “Go the Extra Mile” Program sponsored by the Recreation Vehicle Industry Association (RVIA) has raised more than $500,000 in voluntary contributions for 2010-2012 from 19 RV industry companies and organizations. The voluntary funding program has helped boost the Go RVing advertising campaign by supplementing income from new unit assessments.
Participation in the “Go the Extra Mile” program for the remainder of the current 2010-2012 pledge drive is still open and encouraged because, although the RV market forecast looks favorable for the upcoming year, new unit assessment collections still trail behind pre-recession levels.
Contributions to the program pledged this year will allow companies to be recognized at RVIA-sponsored industry events in 2011 and 2012. For those companies already participating in the 2010-2012 “Go the Extra Mile” program, an increase to their contribution level will result in recognition at the higher contribution level for the remainder of the pledge drive.
“Go the Extra Mile” donors qualify for various levels of industry-wide recognition and other benefits depending on the amount of their contribution. The minimum pledge to quality for recognition benefits is $2,000 over the pledge-drive period. Companies who pledge to contribute at the highest level of $100,000 or more are designated as “Go the Extra Mile” Champions and recognized with special publicity events. Donating companies can have RVIA invoice their contributions quarterly.
For more details on the “Go the Extra Mile” program or to become a participating company, contact RVIA Advertising Manager Margie Spence at (800) 336-0154 ext. 357 or via email at Mspence@RVIA.org.
Tom Montague has a big responsibility and a tiny office in Syracuse, Ind. The two situations seem to be a good fit.
Montague, the national sales manager for the newly formed Redwood RV, only needs a desk, a cell phone, a chair and two wall-sized whiteboards to do his job. Anything more right now would be a waste as he is rarely in his office, The Goshen News reported.
This past week Montague returned from a two-week tour of the country to sell Redwood’s new residential fifth-wheel unit. Much of that time was spent in Florida, where he visited seven of the top 10 RV dealers.
“When they saw the product, they could not believe the look and feel of the product,” Montague said.
Fifteen of the 17 dealers Montague and his crew visited, ordered the new fifth-wheel from Thor Industries Inc.’s newest company.
Creating a new company
Thor is an ever-growing force in the RV industry, but usually expands by acquiring existing companies. But that did not happen for the residential fifth-wheel niche, so Redwood was formed.
Thor made Redwood a division of Crossroads RV in Topeka, Ind., and has attracted experienced talent from across established RV manufacturers. Redwood’s president, Don Emahiser, moved over from leading Carriage Inc. Montague came over from another Thor company, Keystone RV co. Since then they, and other managers of the company, have been assembling a team to build Thor’s first residential fifth-wheel and market it to dealers.
The unit will be made in lengths from 35 feet to 39 feet long and be priced from $65,000 and up. There are three current floorplans. Five floorplans will be available in January. By spring, Montague plans to have eight floorplans in the Redwood stable.
So, why is Thor starting a new fifth-wheel company? To fill a segment of the RV market the company has not entered previously.
“Thor has spent millions of dollars to gain and then retain customers from the ‘stick and tin’ all the way up to the Montana (a Keystone RV fifth-wheel). And they do a phenomenal job of that. One in every four coaches, I think, is a Thor product, maybe even more. At the end of that cycle we let that customer go to buy something like a DRV.”
But with Redwood coming online this fall, Thor loyalists will be able to step up to a residential fifth-wheel about $10,000 more than the top line towable.
With the whine of screwguns and hand drills in the background, Montague walked through a Redwood prototype on the factory floor. He pointed out the unit’s residential furniture. He picked up the mattress in the bedroom to show off the European-style slatted box springs beneath it. And he pointed out that the closet’s clothes rack extends the full width of the trailer.
These finishing touches have been worked out over the past few months. The details are listed on those white boards in his office. On those wall-covering boards are categories for appliances, carpeting, lighting, etc. Options for each are neatly printed in black marker ink.
But there are hundreds of RV models in the marketplace and even more floorplans for each. So how does a sales director decide what to go with in an initial offering? Feelings.
“When you go in, you want it to feel like home. Our goal was, when you walk in we wanted it to be warm,” Montague said.
That’s why the residential furniture was chosen, so the comfort and tactile feel is the same found in a residence. After all, it’s likely someone will sell their home to take to the road long-term in an RV like the Redwood.
The chassis and interior will sit on Lippert Components’ top-of-the-line Falcon Integrated Technology frame system. Redwood RVs will have a two-year bumper to bumper protection plan and a five-year structural warranty.
Montague has a goal for Redwood — it’s to sell 1,100 of the fifth-wheels during the company’s first year. Last week there were 11 units under construction in the 105,000-square-foot plant. Fourteen more are on order and in line for production. If the expected growth occurs, then up to 80 people will be making Redwood fifth-wheels within a year.
About that sales goal for the first year, Montague said, “That would be a phenomenal start.”
The first public showing of Redwood’s products will be made at the National RV Trade Show for dealers in Louisville, Ky. beginning Nov. 30.
The 2010 Annual Meeting of Stockholders of Thor Industries Inc. will be held at the Cornell Club, 6 East 44 th St., New York, N.Y., on Dec. 7 at 1 p.m. EST.
According to the company’s proxy statement, the meeting will be held for the purpose of considering and voting upon the following:
- The election of one director.
- The adoption of the Thor Industries Inc. 2010 Equity and Incentive Plan.
- Such other business as may properly come before the meeting or any adjournment of the meeting.
Thor co-founder Peter Orthwein, 65, chairman, CEO and director since the company’s founding in 1980, is the lone candidate for the director’s spot and has the endorsement of the board for re-election.
Stockholders of record at the close of business on Oct. 15 will be entitled to receive notice of the meeting and to vote at the meeting.
To read a copy of the Thor proxy statement click here.
Editor’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, email@example.com or call (414) 765-3870.
Thor Industries Inc. announced today (Nov. 2) preliminary sales and backlog for the quarter and three months ended Oct. 31.
Preliminary consolidated sales in the quarter were $607.17 million, up 21% from $502.55 million last year. RV sales were $506.79 million, up 30% from $389.93 million last year. Both consolidated and RV sales in the first quarter of Thor’s 2011 fiscal year include Heartland RV, acquired Sept. 16. Bus sales were $100.38 million, versus $112,.62 million last year.
Q1 results exceeded analysts’ expectations, the Wall Street Journal reported
Cash, cash equivalents and investments on Oct. 31 were $137 million. Consolidated backlog on Oct. 31 was $467 million, compared to $599 million last year. RV backlog was $254 million, versus $315 million last year. Bus backlog was $213 million versus $284 million last year.
“RV backlog is at a more reasonable level now that RV dealer inventory has been right-sized for current demand. Bus backlog is lower due to the expiration of federal stimulus funding and tight state and municipal budgets,” said Peter B. Orthwein, Thor Chairman, CEO and president. “Thor’s internal RV retail sales results through October continue to demonstrate solid year-over-year increases,” he added.