Doug Richards has joined the sales team at Redwood RV, Thor Industries Inc.’s new high-end fifth-wheel manufacturer.
“Doug is a key hire for Redwood RV. He brings instant credibility to what we believe will be the best high-end, luxury, sales team in the industry. I love his excitement, experience, and product and market knowledge – not to mention his outstanding dealer relationships are exactly what we need to get Redwood RV moving in the right direction,” Tom Montague, national sales manager, stated in a news release.
Richards brings nearly 23 years of high-end sales experience to Redwood RV. Recently, Richards was a sales leader at Carriage RV Inc., where he excelled despite the challenging environment.
Richards currently resides in the Dallas/Fort Worth area with his wife, Lori, and their two daughters. He graduated from Southern Methodist University with a degree in marketing.
Redwood RV will debut its new products in booth 1101 in the Thor display at the 48th Annual National RV Trade Show, Nov. 30-Dec. 2at the Kentucky Exposition Center, Louisville, Ky.
Headquartered in Syracuse, Ind., Redwood RV products are distributed through dealers throughout the United States and Canada. Redwood RV is a division of Thor Industries Inc.
Komfort Corp. of Clackamas, Ore., will debut the Pacific Ridge line of travel trailers and fifth-wheels this week at the Recreation Vehicle Dealers Association (RVDA) Convention/Expo in Las Vegas, Nev.
Pacific Ridge includes four innovative travel trailer floorplans and four fifth-wheel floorplans that feature a five-way “Aluma-Kage” welded-aluminum laminated superstructure, a aerodynamic high gloss gel coat fiberglass front cap, “Thermal-max” all weather insulation package, Equa-flex suspension as well as a 6-inch radius ceiling, according to a news release.
According to Peter Kinden, vice president of sales for Komfort, “We spent the last few months working with our Komfort dealers to create a product that will stand apart from the cookie cutter products of today. In creating our new products, we are recreating our company and are keenly aware that our new products will be an indicator to Komfort dealers across the West of what our new products will stand for in the marketplace. The Pacific Ridge has been designed with features not in any other product and will be our flagship brand.”
Kinden added, “Pacific Ridge includes innovative features at a terrific value. In addition to our innovative exterior design, Pacific Ridge includes interior features that are usually only found in products at a higher price point. Solid surface countertops, 15,000 BTU AC, halogen lighting, 8- cubic-foot refrigerator, 80-inch island queen bed, Fantastic Fan and a oversized skylight with shade are just a few of the innovative features that will make Pacific Ridge a force in the market.”
Bob Schriever of Curtis RV recently previewed the product at Komfort and said, “We absolutely love the design of the new Pacific Ridge, First impressions are important and I feel that Pacific Ridge hits the wow factor dead on. It’s nice to see a manufacturer try something different and not just copy everybody else out there.” We can’t wait to introduce it to our customers.”
MSRP for travel trailers start at $26,500. MSRP for the largest unit, a 38-foot fifth-wheel still in the prototype stage, is $48,000.
Komfort Corp.was founded in 1967 and has been part of the Thor IndustriesInc. family since 1995. For more information on Komfort and its product lines, visit www.komfort-RV.com or contact Komfort sales at (503) 722-5199.
Sales for Thor Industries Inc. are on the road to recovery after being slammed by high gas prices, scarce credit and recession-racked consumers, Businessweek reported. U.S. consumers are favoring less expensive and more fuel-efficient models, analysts and industry experts say.
Americans’ willingness to spend, if not splurge, on so-called second homes on wheels could in turn provide a clue to positive trends in the broader economy.
“The RV industry is a great leading indicator for the overall health of the economy,” says Kathryn I. Thompson, founder of Thompson Research Group in Nashville, Tenn. Over the last decade, manufacturers have produced an average of 309,000 RVs a year, according to the Recreation Vehicle Industry Association (RVIA).
On Sept. 28, Thor, the largest U.S. maker of recreational vehicles, reported a 51% jump in last quarter’s sales from a year ago. Profit rose 64%, with net income exceeding by 16% the estimates of analysts surveyed by Bloomberg.
The recession took its toll on the industry. In March 2009, two of the largest RV makers — Monaco Coach and Fleetwood Enterprises — filed for bankruptcy protection.
LOOSER CREDIT, NOT GREATER DEMAND
On Sept. 24, the RVIA released August data showing that the 177,300 RVs shipped to dealers so far in 2010 had exceeded levels at this point in 2009 by 70%. In 2009, the number of RVs shipped to dealers was 58% below the 390,500 RVs shipped in the peak year of 2006, according to the RVIA.
A key factor in the RV recovery has been credit, says Robert M. “Mac” Bryan, vice president of the RVIA. Because of the credit crisis, neither consumers nor dealers could borrow to buy RVs, which in the case of motorized homes can cost at least $200,000. Much of the improvement in 2010 does not reflect a “change in demand, but an improvement in financing in vehicles,” Bryan says, as the financial crisis has eased and banks have reentered the RV financing market.
So far in 2010, the rebound in actual retail demand has been “fairly modest,” says Bret Jordan, an analyst at Nashville-based investment firm Avondale Partners. “The retail consumer never really came back in a big way,” says Jordan, who is based in the firm’s Boston office.
There are, however, signs that this could be changing. “After a tenuous summer, the season ended well,” Robert W. Baird analyst Craig Kennison wrote on Sept. 29 while unveiling the results of a survey of 104 RV dealers.
Baird’s survey showed that some parts of the RV industry are doing better than others. Sales of motorhomes rose 8% to 10% in the third quarter of 2010. Towable RVs, meanwhile, jumped 16% to 18%.
TRADING DOWN TO TOWABLE RVS
Consumers are deciding on towable RVs partly because of cost, but also because extra features have made them competitive with motorhomes, Jordan says. A “high-end towable vehicle” can cost $60,000 while a high-end motorhome with a diesel engine can be $200,000. Many new towable trailers now feature ”slide-outs” — portions of the trailer that can be expanded when parked to increase living space. “You’re getting comparable living space” to motorhomes, he says, adding: “There is a lot of utility in towables for the cost.”
In 2006, pricier motorhomes made up 14.3% of all recreational vehicles produced. So far in 2010, that share has fallen to less than 10%.
“You are seeing the trade-down effect,” Thompson says. “People aren’t necessarily giving up the RV lifestyle but they’re choosing less-expensive products.” RVs priced below $150,000 are “doing OK,” she says, while “anything below $100,000 is doing the best.”
According to Thompson, such trends could hurt Winnebago Industries Inc., the motorhome maker headquartered in Forest City, Iowa. They could favor Thor, for which towable RVs made up 70% of sales last quarter, she says. A maker of RVs under the Airstream, Dutchmen, Komfort, CrossRoads, and other brand names based in Jackson Center, Ohio, Thor announced on Sept. 17 the acquisition of Heartland Recreational Vehicles LLC, another specialist in towable RVs, for $100 million in cash and 4.3 million shares of Thor stock — or a total value of $247 million based on the recent share price. On Oct. 1, Thor said it would boost its quarterly dividend, from 7¢ to 10¢ per share.
BIG EXTRA: ADDITIONAL FLAT-SCREEN TV
Winnebago shares are down 14% so far in 2010, while Thor shares are up 9%.
To make cheaper RVs more attractive to consumers, manufacturers have piled on extra “bells and whistles,” Jordan says, like including three flat-screen televisions, instead of just two.
In response to the volatility of gas prices in recent years, RV manufacturers have made their products more fuel-efficient. “We’re seeing a great deal of attention [paid] to the greening of the RV,” Bryan says. RVs are being made of lighter materials and the efficiency of furnaces, air conditioners, water heaters, and other appliances has been improved, he says.
There are further recent indications of returning retail demand. The Pennsylvania RV and Camping Show, an annual event held in Hershey, Pa., bills itself as “America’s largest RV show.” The exhibition, from Sept. 13-19, saw record attendance that was up 9% from last year and the number of RV units on display rose 43%.
Tiffin Motorhomes, a privately held RV company based in Red Bay, Ala., told show organizers that sales were 44% higher than last year.
“People had been holding back on purchases and now they were ready to buy,” says Heather Leach, marketing and education director at the Pennsylvania RV and Camping Association (PRVCA).
RV DEALER: CUSTOMERS REMAIN “LEERY”
Exposure to the U.S. consumer is just one factor that makes the RV industry a good economic barometer, Thompson says. The industry is also affected by important credit trends, including the availability of short-term credit for dealers buying inventory and of long-term credit for customers buying RVs. The industry is also a good window into factors that affect U.S. manufacturing, such as raw material and labor costs.
The economic environment continues to concern the industry. Consumer spending rose 0.4% in August, according to data released Oct. 1 by the U.S. Commerce Dept. According to an unidentified RV dealer quoted in a Sept. 7 survey by Thompson Research Group: “Customers [remain] leery, kind of careful about everything.”
Nonetheless, industry participants say they are confident about the RV’s long-term appeal, especially as Baby Boomers retire and younger Americans seek affordable vacations. “Assuming gas prices remain reasonably affordable, it’s a cheap way to have a vacation,” Jordan says. “It’s cheaper than a second home.”
Park campgrounds are as busy as ever, Bryan says, a fact that underscores the appeal to Americans of the RV lifestyle. According to the National Park Service, the number of RV campers at National Parks rose 6.8% from 2008 to 2009. “Recreational vehicles have a very bright future,” Bryan says.
Thor Industries Inc. announced Friday (Oct. 1) that its board of directors has authorized an increase of its regular quarterly dividend to 10 cents per share. This represents a 43% increase over Thor’s previous regular dividend of 7 cents per share, Wall Street Pit reported.
The new regular dividend will be paid on Oct. 18.
Jackson Center, Ohio-based Thor manufactures and sells a range of recreation vehicles and small and mid-size buses, as well as related parts and accessories in the United States and Canada.
Shares of Thor were higher today by 74 cents, or 2.22%, currently trading at $34.14.
As the dust settles from the first annual Open House Week in and around Elkhart County, Ind., the region’s recreational vehicle manufacturers are beginning to assess the impact of what they experienced this week as at least 15 RV builders followed the lead of Elkhart-based Forest River Inc. in opening their doors to thousands of North American RV dealer personnel.
What makes it so unique and novel is that few of these companies worked together in orchestrating these open houses. No chamber of commerce or economic development agency called industry players to the table and proposed that they all, in concert, host dealers the week of Sept. 27-Oct.1.
This, instead, was more of a spontaneous action by RV builders intent on capturing the attention of North American RV retailers in the fall, even in some cases if it means pre-empting to an extent the industry’s traditional “Louisville Show,” the 48th Annual National RV Trade Show slated for Nov. 30-Dec. 2 in Louisville.
Again, Forest River started it all in 2008 when the economic atmosphere wasn’t all that good and the Berkshire Hathaway unit’s senior management decided to do something to build dealers’ spirits. Their answer was a big product show on the grounds of the company’s corporate headquarters on the west side of Elkhart.
“The recession led us to this because of our financial strength, and, being a strong company, we wanted to show the dealers that we thought that they needed a boost because a lot of the morale was weak that year,” recalls Forest River National Sales Manager Jeff Babcock. “We wanted to build the dealers’ confidence that, of course, Forest River’s going to be here and have them come down here, as we said, and stroll through the acres of product and have a good time on us.
“And I think we’ve got a pretty good reputation for taking care of dealers down here,” Babcock added. “We thought that, hey, it would be a good thank you to the dealers to throw something here. And, you know, we had a good turnout that year, and every year it continues to grow and grow and grow.”
The difference this year is that other manufacturers decided to piggyback on Forest River’s event with their own open houses on the same week, and the dealers came in droves, flooding area hotels, restaurants and bars starting on Monday. The action built up on Tuesday and peaked for the most part on Wednesday evening when hundreds of dealers converged on two sites in particular.
The social hour hot spots were rather predictable, as three Thor Industries Inc. divisions, Keystone RV Co. Inc., Thor Motor Coach and Breckenridge, worked together to host several hundred dealers at a happy hour gathering in a tent outside the RV/MH Hall of Fame on Elkhart’s east side. Some estimated the crowd at 650.
On the opposite side of town, Forest River presided over a blowout party so big – they say it drew in excess of 3,000 dealer personnel – that the company’s caterers were hard pressed to keep up. The party tent, which also featured live music like Thor’s, was positioned amid 500 display units.
From all we can tell, most all of the parties involved this week seemed to come away with a good taste in their mouths for the entire sequence of events. The general consensus was that, whatever occurred here in Elkhart this week, it was all “plus business.” And that goes for some of the smaller companies like Open Range RV, Evergreen Recreational Vehicles, Dynamax Corp. and Carriage Inc. for whom a story was posted earlier this week.
Manufacturers say that Open House Week did a good job of servicing an industry that is still finding its equilibrium on the heels of a global recession.
“It was fantastic,” said Doug Gaeddert, general manager of several Forest River divisions and first vice chairman of the Recreation Vehicle Industry Association (RVIA), sponsor of the annual Louisville Show. “Each year (the open house) gets better, and anybody who’s anybody in the RV business was pretty much in town this week. And, absolutely, it will be a record-breaking deal that will take us right on through into the first part of the year. It’s been fantastic.”
Gaeddert says everyone benefitted from the added participation of other companies. “I think it has benefitted the local community,” he said. “It’s obviously benefitted Forest River greatly and all the companies who have tagged on. I don’t know if there’s anybody left who didn’t do one this year. But if there are, I hope they do one next year.”
Forest River President and CEO Pete Liegl says the towable and motorized manufacturer drew in excess of 800 U.S. and Canadian dealerships and ultimately hosted 400 more people had pre-registered for the event, many of whom were bonafide buyers.
He says it’s all a general reflection of the industry’s surprising strength at this point in time. “Unquestionably,” said Liegl, “things have been good this year, and I think that things are going to be damn good next year. I really do.”
So, plan on Forest River following suit next year. “We’re running out of land,” said Liegl. “In fact, we added 20 acres next door that we didn’t have last year for extra parking. Heck, we can close down the streets next year, but I don’t know if we can outdo the enthusiasm of the dealers this year. I really don’t. Dealers are positive, happy, not only with us, but with everything. They’ve all had a pretty good year. They’ve survived 2009, and they’re operating much more like true businessmen, which is good, and I believe next year’s going to be even better. I really do.”
The general tenor of comments was much the same among the Thor companies that joined forces over at the Hall of Fame.
“It’s a good thing, a great thing for our dealers from all over the continent and overseas, and it’s a great thing for us as manufacturers,” Bill Fenech, president of Thor Motor Coach, told RVBUSINESS.com. “Dealers got to see a bunch of new products in a casual, relaxed environment. I can’t tell you how many dealers are saying ‘this is a great thing you’re doing for the industry.’”
“The venue here brings a whole different atmosphere,” noted Matt Thompson, vice president and general manager of Thor Motor Coach’s diesel brands. “And I think the dealers really appreciate it, and we’ve been able to really relax, sit down, spend a lot more quality time together with individual dealers and really rekindle some old relationships and build some new ones. It’s really unlike anything I’ve seen in the last ten years that I’ve been in this business.”
“For us, it was phenomenal,” Keystone President Bob Martin told RVBUSINESS.com. “It’s our first time doing it, and we’re very excited. We had great attendance.”
In anticipation of Open House Week, Martin said, Keystone moved some 2011 product changes forward on the calendar and had plenty for dealers to see. Fact is, Martin noted, September may be a better time frame for new model introductions rather than November or December when the Louisville Show is held – at least for some dealers and some products.
Thus, open house week could be playing a role in changing – to an extent – the industry’s habits. “It is,” said Martin. “Dealers are excited. They think it’s a good time of the year to come in and see product – a good time of the year to make buying decisions because they can buy new current product for the fall so they’re ready for spring show season. Everybody’s asked, ‘how does this affect Louisville?’ We don’t know yet. I mean, we’ll still have new products at Louisville and a reason to come to Louisville as well.
“Overall, though, it was very positive. Many dealers came through. They loved the product and the venue. You know, having it at the Hall of Fame is a draw. Many of the dealers actually haven’t been to the Hall of Fame, So, with that, it’s made the complete package with Keystone, Thor Motorized and Breckenridge. It’s been a very good venue for us.”
Indeed, the open house – a low-budget approach to manufacturer-dealer relations that has been used for years by individual companies — was a topic of choice over drinks at more than one local lounge as people began to analyze where all of this might lead.
Many in the industry have long treasured the fact that the recreational vehicle business still has a strong, single-site national show at which an entire spectrum of companies can participate, including component and service suppliers, aftermarket distributors, software vendors, finance companies, etc.
These open houses certainly aren’t cogent supplier venues, although a few suppliers did set up displays at a couple open houses. And their absence, most agree, would be a real problem if open house week ever gained an edge over Louisville.
Other concerns? How about the weather? The elements cooperated this past week; the weather was beautiful. But what if it wasn’t? With so many companies operating with outside venues, with tents in a few cases being the only shelter other than nearby factories and the insides of display units, the entire sequence of events was completely vulnerable to the elements. And everyone knows it.
As for expenses? While this whole phenomenon is sort of a low-budget sales tactic, it’s not all that cheap of an approach for the key manufacturers who covered dealers’ lodging, shuttle service and entertainment while in town.
And what about RVIA, the national trade association that depends so heavily on revenues from the Louisville Show to balance its annual budget? Louisville, loyalists point out, helps fund standards programs, political lobbying, public relations initiatives and so forth. What would become of the association and all of its critical services it if the wheels would ever come off the Louisville Show?
RVIA, for its part, is standing by and observing the whole scenario, cognizant, as RVIA President Richard Coon pointed out in a Monday (Sept. 27) statement, that “there continues to be strong, widespread industry support” for the Louisville Show.
“This year,” wrote Coon, “we will have 71 manufacturers and 230 suppliers displaying the latest RVs and products across more than 760,000 square feet of exhibit space. That is a substantial increase over the 604,000 feet of space used last year. Additionally, my colleagues at the manufacturing companies holding these events in Elkhart have assured me that the National RV Trade Show remains an integral part of their plans this year and moving forward.”
That said, few would argue that this past week’s activities around Elkhart County could be a harbinger of some eventual changes for the industry and, ultimately, for RVIA and the Louisville Show.
How much change remains to be seen.
“Well I think it’s changing the industry’s habits pretty greatly,” said Gaeddert. “As to the fate of the Louisville Show, which I know is a little bit of a question on everybody’s mind, I don’t think it threatens the Louisville Show. (But it’s) probably a little incentive for the Louisville Show to become a little more creative, raise the value of that product even further.
“Obviously,” he added, “I’m involved in RVIA, and I think it’ll push RVIA to increase the value of the Louisville Show and look at some issues – maybe timing – with respect to the value of that product. This is a competitive world, and I don’t care if you’re an association, a manufacturer, a publisher, if you don’t improve the value of your product continuously, somebody else will.”
“Louisville is a great show and it has its place,” noted Fenech. But he said that timing is a key issue because dealers who wait to buy at Louisville usually can’t get product in time for their key early retail shows – often not until February or March. In a perfect world where both the open houses and Louisville prevail, he suggests, dealers can do both – buy in September and December.
“Consider this a sneak peak at the Louisville Show,” adds Thompson, noting that his Thor division will be bringing significant new product to Louisville, including the company’s biggest unveiling of the year — a Class A that will be “one of a kind in the industry.”
“I think that dealers are taking more time in choosing the brands and the companies they do business with,” said Don Clark, president of Dutchmen Manufacturing Inc., a Thor division that set up separately on the north side of Elkhart in a vacant boat manufacturing plant. “And having an Elkhart open house will give them an opportunity to meet with the manufacturer and find out not only if the product is a good fit, but if the company and the people are a good fit for their businesses.”
Dealers with whom RVBUSINESS.com chatted in Elkhart generally viewed the open houses as a plus. “You can see product in a relaxed atmosphere,” said Doug O’Banion, president of Motor Home Specialist, Alvarado, Texas, a key Monaco dealer and one of Texas’s largest RV retailers. “It’s a great idea for the manufacturers and the dealers to come and see what they have to offer. If we see something we don’t have, we’ll order it.”
O’Banion, on the other hand, doesn’t see the open houses as a viable replacement for the Louisville Show. “As a dealer,” he said, “you will see at Louisville what the other manufacturers have. You have to go to Louisville.”
Jeannie Haught, co-owner of Northtown Motor Home in Rockford, Mich., also sees a lot of value in Louisville and suspects that the open house impact will be minimal. “This is a product show,” she said of this past week’s events. “Louisville is where you go to see what your competitors are carrying. This should not hurt the Louisville Show.”
But Roger Smith, owner of Smith Trailer Sales in Monroe, Ind., thinks this latest open house twist could make the Louisville Show obsolete. “I think we can do away with Louisville,” he said. “I saw more here than in Louisville. That’s the disappointment (vs. the National RV Trade Show).”
Based on what they saw and experienced this past week in Elkhart, meanwhile, Robb Cusack, Rod Roy and David Epp of Fraserway RV’s seven-store Canadian operations feel they may have seen a glimpse of the future. The trio, who visited Gulf Stream Coach Inc., R-Vision, Starcraft RV, Evergreen and Thor events, among others, think this whole open house concept is going to get legs in the future.
“I feel this is the new Louisville,” said Cusack, who runs the company’s Halifax store. “This is where dealers are going to come and see what’s new for the following year for product. I mean, it’s very exciting to be here. The weather’s awesome. And I’ll tell you what: The manufacturers have gone way over the top. There’s entertainment, food – I mean we didn’t buy one meal in four days. It’s amazing.”
Thor Industries Inc. stock soared 13.70% to $32.95 on over 1.92 million shares traded on Wednesday (Sept. 29), triple its normal daily trading volume, Newsworthy Stocks reported.
The stock was one of the top 10 percentage gainers for that day.
The company late Tuesday reported earnings of $40.6 million, or 78 cents a share, up from $24.8 million, or 45 cents a share, a year ago.
Analysts polled by FactSet Research had been looking for the Jackson Center, Ohio-based company to post a profit, on average, of 62 cents a share.
Quarterly sales also toppled Wall Street targets, coming in at $663.8 million, up 51% from $440.9 million, a year earlier.
Editor’s Note: Robert Baird & Co. issued a client newsletter following Tuesday’s year-end earnings report by Thor Industries Inc. Excerpts of the Baird newsletter follow.
Raising estimates and price target to $36. EPS topped expectations on robust margins. Meanwhile, our dealer checks indicate retail demand is better than feared. In the short run, we expect recent momentum to persist as macro catalysts unfold (election cycle and tax policy) and estimates trend higher (better retail and higher margin). Longer term, we maintain a guarded consumer outlook in light of stalled confidence, persistent unemployment, unfavorable tax policy and consumer deleveraging.
EPS top expectations. Thor beat expectations ($0.78 v $0.65) on margin upside (+$0.07) and a one-time gain (+$0.06). The consensus EPS estimate was $0.63. Recall that Thor previously had reported robust Q4 sales, which increased 51%. RV sales jumped 67%, including strong momentum in towables (+61%) and motorhomes (+99%). Bus sales fell 3%.
Robust margins imply further upside. With the RV industry barely off the cyclical bottom, Thor posted near-record operating margins as cost cuts and efficiency gains bear fruit. Excluding the one-time gain, pretax margin easily exceeded our estimate (8.6% v 7.9%) including upside in towables (11.2% v 9.5%) and motorhomes (5.7% v 3.2%). The upside implies better profitability in 2011 and beyond. We are raising our F2011 EPS estimate to $2.50 from $2.31.
Checks confirm demand is better than feared. We recently contacted 104 RV dealers and published the results in a separate research note. As sun sets on the summer selling season, retail demand is better than feared. Dealers report healthy demand for towables (+16-18%) and motorhomes (+8-10%), slightly ahead of the pace we had modeled.
Outlook. We maintain a cautious consumer outlook as confidence stalls, unemployment festers, consumers reduce debt, and tax policy targets discretionary wealth. However, our checks take the most dire predictions off the table for now – and Thor is executing well. With the election cycle and the potential for a change in tax policy, we believe recent momentum could persist in the short term.
Estimates. We raised our F2011 EPS estimate to $2.50 from $2.31 primarily to incorporate higher margin assumptions. We are also introducing our F2012 EPS estimate of $2.80.
To subscribe to this or other Baird newsletters, contact Craig R. Kennison, CFA, at email@example.com or (414) 765-3870.
Thor Industries Inc. shares rallied 14% today (Sept. 29) after the world’s biggest recreational vehicle maker bucked “tenuous market conditions” to report a surging fourth-quarter profit, MarketWatch reported.
At last check, Thor (THO 32.95, +3.97, +13.70%) stock was up $4.07 to $33.05 and is now in the black for the year, up more than 5%.
The shares flirted with the $10 level during the depths of the downturn early last year.
Late Tuesday, the company reported earnings of $40.6 million, or 78 cents a share, for the three months ended July 31, up from $24.8 million, or 45 cents, earned in the fourth quarter of fiscal 2009.
Analysts polled by FactSet Research had been looking for the Jackson Center, Ohio-based company to post a profit, on average, of 62 cents a share.
Quarterly sales also toppled Wall Street targets, coming in at $663.8 million, up 51% from $440.9 million, a year earlier.
Chairman Peter Orthwein said Thor’s purchase of Heartland RV, coupled with a “strong” cash position and no outstanding debt, “will help fuel additional growth … in 2011 and beyond.”
He added that he’s “particularly proud of our improved margins, which reflect Thor’s cost-cutting and process efficiency efforts.”
Citigroup analyst Greg Badishkanian maintained his buy rating and raised his price target on Thor shares by $2, to $38.
“Our recent checks indicate that RV retail sales likely slowed down from July to August buy may have picked up in September, though trends are volatile month to month given volatility in the stock market and consumer concerns about the economy,” he said.
Badishkanian said he sees Thor continuing to add market share in the category.
Meanwhile, Thor has filed its 10-K with the Securities and Exchange Commission describing in detail its business over the past year. Click here to read that lengthy report.
Editor’s Note: Robert W. Baird & Co. has released its quarterly survey of RV dealers. Excerpts from that report follow.
Better than feared. We contacted 104 RV dealers to assess recent trends. After a tenuous summer, the season ended well. Dealers reported better demand, implying potential upside to our models. We see a short-term opportunity ahead of the election and potential changes to tax policy – especially given our checks. Longer term, we remain concerned as consumers reduce debt, unemployment festers and budget deficits drive higher interest rates, slower growth and higher taxes on discretionary wealth.
Retail. Dealers report better retail results than we assume in our models. Motorhome sales perked up 8-10% while towable sales jumped 16-18%, according to dealers. For perspective, the trend suggests Winnebago Industries Inc. dealers may have sold 50-100 RVs more than we had modeled on a base of over 4,200 annually – helpful, but not enough to declare victory. Dealers expect Thor Industries Inc. and Winnebago to take share, implying above-trend results.
Traffic. Consumer traffic on dealer lots improved in July and August after a sluggish June, then slowed again in September (seasonally less relevant). For our money, it is hard to see a trend in the YTD traffic pattern – but with RV buying interest tied to the wealth effect (home prices and stock values) and consumer sentiment (unemployment and political uncertainty) – the choppy results make sense. Like everything else – it’s the macro, stupid.
Inventory/Orders. As the inventory replenishment rate returns to parity, dealers plan to order 19% more motorhomes and 23% more towables in the next six months – better growth than we include in our models. Dealers are comfortable with inventory levels today. Big picture, it appears the inventory bubble and the corrective bullwhip effect are behind us.
Credit markets. Access to wholesale and retail credit improved. Last quarter, dealers complained that wholesale credit was too tight.
Thor acquisition of Heartland. As expected, dealers were mixed on the Thor acquisition of Heartland RV. Dealers expect both to gain share and some see opportunity to upgrade Heartland parts and service, but some saw parallels to the Fleetwood that dominated the market in the past.
Outlook. We maintain a cautious consumer outlook as confidence stalls, unemployment festers, consumers reduce debt and tax policy targets discretionary wealth. However, our checks seem to take the most dire predictions off the table for now. With the election cycle and the potential for a change in tax policy, we believe recent momentum could persist, providing a better exit point for cautious investors.
To subscribe to this and other Baird newsletters, contact Craig R. Kennison, CFA, firstname.lastname@example.org or (414) 765-3870.
Thor Industries, Inc. announced on Tuesday (Sept. 28) better-than-expected results for the fourth quarter and year ended July 31, 2010.
According to a news release, sales for the quarter were $663,788,000, up 51% from $440,924,000 last year. Net income for the quarter was $40,600,000, up 64% from $24,781,000 last year. Basic earnings per share (E.P.S.) for the quarter were 78 cents versus 45 cents last year.
Sales for the year were $2,276,557,000 up 50% from $1,521,896,000 last year. Net income for the year was $110,064,000, more than six times the $17,143,000 of net income last year. Basic E.P.S. for the year were $2.08 versus 31 cents last year.
Total RV segment sales for the quarter were $563,658,000, up 67% from $337,990,000 last year. Towable RV sales for the quarter were $465,749,000, up 61% from $288,762,000 last year. Motorized RV sales for the quarter were $97,909,000, up 99% from $49,228,000 last year. Total RV segment sales for the year were $1,848,549,000, up 66% from $1,115,006,000 last year. Towable RV sales for the year were $1,556,591,000, up 63% from $953,279,000 last year. Motorized RV sales for the year were $291,958,000, up 81% from $161,727,000 last year. Bus segment sales for the quarter, including buses and ambulances, were $100,130,000, compared with $102,934,000 last year. Bus segment sales for the year were a record $428,008,000, up 5% from $406,890,000 last year.
Total RV segment income before tax for the fourth quarter was $57,779,000, more than double $24,827,000 last year. Towable RV income before tax for the quarter was $52,207,000, double the $26,150,000 of income before tax last year. Motorized RV income before tax for the quarter was $5,572,000, compared with a loss of $1,323,000 last year. Total RV segment income before tax for the year was $156,232,000, up dramatically from $17,619,000 last year. Towable RV income before tax for the year was $145,604,000, more than triple the $47,347,000 of income before tax last year. Motorized RV income before tax for the year was $10,628,000, versus a loss of $29,728,000 last year. Bus segment income before tax for the quarter was $6,149,000, compared with $7,159,000 last year and was $29,904,000 for the year, up 72% from $17,422,000 last year.
“I am particularly proud of our improved margins which reflect Thor’s cost-cutting and process efficiency efforts and have resulted in our quarterly and annual earnings being well in excess of analyst consensus estimates,” said Peter B. Orthwein, Thor chairman. “Our bus segment continues to be performing well amidst tenuous market conditions. Thor’s September 2010 acquisition of Heartland RV, coupled with our strong cash position and no outstanding debt, will help fuel additional growth and shareholder value in 2011 and beyond.”
Shares of Thor, which gained 18% in the past month, were up 1% at $29.50 in trading after the closing bell on the New York Stock Exchange.