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Wall Street Frowning on Thor’s Q1 Financials

December 1, 2010 by · Leave a Comment 

Shares of Thor Industries Inc. moved lower Tuesday (Nov. 30) by 12.22% to $29.53 after posting a first-quarter profit increase that missed estimates. Approximately 2.72 million shares traded with market capitalization of $1.65 billion, EFPR reported.

Net income for the first fiscal quarter climbed 1.3% to $23.7 million or 44 cents per diluted share, compared to $23.4 million or 42 cents per share in the prior-year quarter. The reported net income missed the analysts’ estimate of 54 cents a share driven by heavier discounting.

Sales increased 21% to $606.7 million from $502.6 million in the year-ago quarter. RV sales advanced 30% to $506.56 million from $389.93 million last year, benefiting from the remnants of dealer restocking as well as a significantly easier competitive landscape, with many players going out of business or faltering in recent months, which has led to market share gains for Thor. The recently acquired Heartland RV (late September) added $50 million of towable sales. Bus segment sales of $100.12 million were down from last year’s $112.62 million, with orders related to the 2009 economic stimulus having all but flowed through backlog.

The company’s gross margin declined 130bps year over year to 12.6%. The margin was affected by cautious dealer purchasing during the seasonal slowdown and increased promotional activity as manufacturers appear to be aggressively competing for dealer space.

The company also saw incremental expenses of roughly $8.0 million in the quarter related to its Heartland acquisition, an ongoing SEC investigation, and trademark impairment charges related to the combination of its Thor Motor Coach operations.

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Day 1: Breaking News from Louisville Show

November 30, 2010 by · Leave a Comment 

Tuesday, Nov. 30

Tuesday, Nov. 30

Following are highlights of some of the developments announced at or reported to RVBUSINESS.com during this week’s National RV Trade Show in Louisville, Ky.

RVIA Releases 3 Videos

The Recreation Vehicle Industry Association has released three new videos in conjunction with the 48th Annual National RV Trade Show underway this week in Louisville, Ky. One of the videos new appears on the RVBUSINESS.com homepage.

RVIA Welcomes Chinese Delegation

A delegation sponsored by the Department of Commerce in Beijing, China, is visiting the 48th Annual National RV Trade Show today and Wednesday in Louisville, Ky.flag.GIF

The Recreation Vehicle Industry Association (RVIA) will host a reception for the Chinese delegation tonight at the Kentucky Exposition Center. The Chinese will be meeting with U.S. vehicle manufacturers and suppliers. Tables have been set up and five interpreters have been hired to assist the attendees communicate with each other.

Some members of the delegation will be visiting the RV/MH Hall of Fame on Thursday in Elkhart, Ind., and visiting one or more RV plants.

RVIA President Richard Coon said there is great potential for the RV industry to enter China. Coon said the Chinese consumers have more disposable income and leisure time than ever before and are interested in learning more about the RV lifestyle.

Newmar Adds MCD Innovations Shades

MCD Innovations announced that Newmar Corp. is installing MCD shades in their 2011 Dutch Star and newly redesigned 2011 Ventana models. The windshield and driver/passenger shades in the Ventana replace the visors and curtains that have been installed in the past. The Dutch Star model also includes the cockpit shade system. In addition, American Duo house shades are available for these models.

Also used in both coaches on the driver’s side window is the innovative, patent-pending MCD SwayShade, the unique roller shade configuration that travels forward as it is pulled down so as to cover the lower front corner of the driver’s window, which a normal shade cannot do. Newmar specified this unique shade for both the Ventana and Dutch Star.

“With Newmar’s high standard of craftsmanship and their ability to lead the industry with their innovative products, we are pleased that they have selected the American Duo Shade System for two of their most popular coaches,” said MCD Innovations CEO Dave Townsley. “ We look forward to working with Newmar and providing their customers the best the industry has to offer in solar protection, outward visibility and privacy.”

“Newmar is constantly looking to partner with the best Suppliers in the Industry to provide our discerning customers with the quality products that they deserve in their motorhome. MCD American Duo Shades will be a valued addition to our Dutch Star and Ventana Diesel Brands,” said Kyle McCrary, director of luxury motorhomes and product design at Newmar Corp.

Accidents Hamper Show Traffic

Multiple accidents on Interstate 65 southbound near Eastern Parkway just north of the Kentucky Exposition Center in Louisville, Ky., site of this week’s National RV Trade Show, have closed two lanes this morning, a MetroSafe Communications supervisor told the Louisville Courier-Journal.

There were reports of injuries, but the supervisor did not know the severity or how many people were injured. A Trimarc incident report said six vehicles were involved.

All southbound lanes were closed for about an hour after one accident was reported about 5:40 a.m., but the two left lanes were re-opened just before 7 a.m.

No further details were immediately available.

Morin Named Canadian Dealer of the Year

Daniel Morin

Daniel Morin

Daniel Morin, owner of Roulottes Desjardins, St-Jerome, Quebec, was named Canadian RV Dealer of the Year by the Recreation Vehicle Dealers of Canada (RVDA of Canada).

Morin’s award was announced and presented Monday night (Nov. 29) during the Canada Night Dinner held at the Galt House in Louisville. Morin is a 41-year veteran of the RV industry. He was a founding member of the RVDA of Quebec, past chairman of the RVDA of Canada and past director of Go RVing Canada board.

Thor Falls Short of Analysts’ Forecasts

Thor logo Thor Industries Inc. fell short of profit forecasts provided by Wall Street analysts who follow the giant  RV company.

Thor said Monday its fiscal first-quarter profit edged higher amid a 21% jump in revenue, Businessweek reported.

The company reported net income of $23.7 million, or 44 cents a share, for the three months ended Oct. 31. That compares with net income of $23.4 million, or 42 cents a share, in the prior-year quarter.

Analysts surveyed by Thomson Reuters expected earnings of 54 cents a share, on average.

Revenue increased to $606.7 million from $502.6 million a year earlier.

Thor said RV sales rose 30 percent versus the same quarter last year, while bus segment sales declined 11 percent.

Peter Orthwein, Thor’s chairman, said gross margins were affected by increased discounting as dealers remained cautious entering the slowest season of the year.

Shares in Thor Industries rose 14 cents to $33.78 in aftermarket trading after falling 91 cents, or 2.6 percent, to $33.64 during the regular session.

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Baird: Discounts Cut into Thor’s Bottom Line

November 30, 2010 by · Leave a Comment 

Baird logoEditor’s Note: Robert W. Baird & Co. issued a client newsletter following Monday’s release of the first quarter results of Thor Industries Inc. Excerpts from the Baird newsletter follow.

Action

Discounting squeezes margin. Thor reported disappointing profits on more aggressive discounting and a variety of accounting charges. Thor previously had reported preliminary sales. As we noted following an October dealer meeting, many dealers are reluctant to carry inventory over the off-season – driving Thor to discount to take share. Big picture, we are lowering our estimates but see value near $30 as demand improves and macro catalysts (tax policy, consumer confidence) potentially support discretionary spending.

Summary

Q1 results fall short. Thor reported Q1 (Oct) results after the close yesterday. Adjusted EPS was $0.48 versus our $0.57 estimate (and $0.54 consensus) with the downside driven by heavier discounting. Sales of $607 million (+21%) were in line with preliminary results.

Noisy EPS. EPS was more complex than normal and we made several adjustments to exclude legal expenses (-$0.04), acquisition-related accounting items (-$0.03), a trademark impairment ($-0.02), and an extraordinary gain (+$0.06). Net of the adjustments, EPS fell $0.09 short of our estimate as a lower tax rate (+$0.04) and lower share count (+0.02) were more than offset by weaker margins.

More discounting. Big picture, Thor is offering steeper discounts than we modeled – particularly in towables. Based on our conversations, we believe the company is discounting aggressively to get units into the channel as dealers are reluctant to order into the off season. Retail continues to improve and discounts position Thor to take share.

RV Field Trip. We are hosting a field trip at the RVIA in Louisville and will have a chance to meet with Thor and other RV industry leaders. We hope to have more insight later.

Lowering estimates. We are lowering our 2011 EPS estimate to $2.15 to incorporate Q1 results and expectations for additional impairment charges and off season discounting. We see good value in Thor near 12x EPS (excluding $3/share in cash) and would be more aggressive near $30.

Details

Estimates.

Lowering estimates. We are lowering our 2011 EPS estimate to $2.10 to incorporate Q1 results and expectations for additional impairment charges and off season discounting. We see good value in Thor near 11x EPS (excluding $3/share in cash) and would be more aggressive near $30.

Details

UPDATE: Thor filed its 10-Q this morning. We have adjusted our estimates after refining several assumptions based on new data. Specifically, we incorporated higher amortization expense, a higher share count, and slightly higher expectations for Heartland revenue. Net, our new F2011 EPS estimate is $2.10 vs. $2.15 and our F2012 EPS estimate is $2.65 vs. $2.75.

Estimates. We lowered our F2011 EPS estimate to $2.10 from our original $2.50 after incorporating Q1 results and expectations for further impairment charges and discounting. We also lowered our F2012 EPS estimate to $2.65 from our original $2.80.

To subscribe to this or other Baird publications, contact Craig R. Kennison, CFA, at ckennison@rwbaird.com or call (414) 765-3870.

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Thor’s Q1 RV Sales Hit $506 Million, Up 30%

November 29, 2010 by · Leave a Comment 

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.”

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Wall Street Expecting Upbeat Thor Q1 Report

November 29, 2010 by · Leave a Comment 

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.

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Ally Extends Thor ‘Preferred Provider’ Status

November 23, 2010 by · Leave a Comment 

Ally Financial today (Nov. 23) announced the company will offer a national program for wholesale financing of RV dealer inventory, expanding upon its preferred provider relationship with Thor Industries Inc.

Thor logoThor 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.

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CrossRoads RV Debuts Rushmore Fifth-Wheel

November 19, 2010 by · 3 Comments 

CrossRoads Rushmore fifth-wheel

CrossRoads RV Rushmore fifth-wheel

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.

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Dutchmen Unveiling Aerolite SS Super Slide

November 17, 2010 by · 1 Comment 

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.

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KOA Named Champion in Go the Extra Mile

November 12, 2010 by · Leave a Comment 

KOA logoKampgrounds 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.

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Montague Outlines Thor’s Redwood RV Plan

November 8, 2010 by · Leave a Comment 

Tom Montague

Tom Montague

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.

Tom Montague, left, watches as Keith Ballard and Daryle Bontrager

Tom Montague, (left) watches construction of a Redwood RV fifth-wheel. Photo courtesy of The Goshen News.

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.

Furnished like home

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.

Photo courtesy of The Goshen News

Photo courtesy of The Goshen News

“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.

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