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.”
Thor Industries Inc. today (Feb. 18) announced an expansion of production capacity for its motorhomes through an agreement to purchase a 220,000-square-foot facility located in Elkhart, Ind., formerly used to produce Monaco towable recreational vehicles and owned by Allied Specialty Vehicles Inc.
According to a press release, the additional production capacity will be used to meet continued strong demand for products produced by the company’s Thor Motor Coach (TMC) subsidiary.
TMC will operate the plant with plans to begin production in the new facility during the second half of the Thor’s fiscal year. On Feb. 4, Thor announced that sales of motorized RVs increased by 43.8% to $339.3 million for the first six months ended Jan. 31.
“We are pleased to once again have the opportunity to expand our motorized operations in Elkhart County,” said Bob Martin, Thor president and CEO. “With the recovery of the motorized RV market gaining strength over the past year, we have pursued opportunistic expansion of our motorized production capacity, first with the acquisition of the Wakarusa complex and now with this plant on the south side of Elkhart. We view this expansion as an important step to meet both our immediate production needs and long-term strategic goals for our motorized business.”
Jeff Kime, president of Thor Motor Coach, noted, “This facility presents us with the ability to expand our capacity while maintaining the flexibility to meet emerging demands for our products in the market. In addition, the increased capacity will allow us to reduce overtime and the current stress on our existing plants and better align our production volumes with higher demand for our products. We have begun operations on two production lines at our Wakarusa plant purchased last year, but that additional capacity isn’t sufficient to meet the growth of our markets. As a result, when the opportunity to set up operations in this facility presented itself, we jumped at the chance to expand production for what is shaping up to be another strong year of growth.”
Thor Industries Inc. today (Feb. 4) announced preliminary sales as well as continued growth in the company’s backlog for the second quarter and six months, ended Jan. 31.
Preliminary consolidated sales from continuing operations in the second quarter were $636.3 million, down slightly from $636.6 million in the second quarter last year. Towable RV sales for the second quarter totaled $474.1 million, representing a 9.3% decline from $522.8 million in the second quarter of fiscal 2013. Motorized RV sales in the second quarter increased 42.5% to $162.2 million from $113.8 million in the same quarter a year ago.
For the six months, preliminary consolidated sales from continuing operations were $1.44 billion, up 2.9% from $1.40 billion last year. Towable RV sales for the six months were $1.1 billion, down 5.2% from $1.16 billion last year while motorized RV sales rose 43.8% to $339.3 million from $236 million last year.
Consolidated backlog on Jan. 31 was $845.2 million, up 37.1% from $616.6 million at the end of the second quarter last year. Towable RV backlog increased 33.7% to $501.9 million, compared to $375.4 million at the end of the second quarter of fiscal 2013. Motorized RV backlog increased 42.3% to $343.3 million from $241.2 million a year earlier.
“Thor’s sales for the second quarter were adversely affected by the severe winter weather that has plagued the Midwest this year. In January, our operations in Indiana lost several days of production due to severe cold temperatures and heavy snow,” said Bob Martin, Thor president and CEO. “The severe weather affected our ability to receive materials, run production and ship units amid the frigid temperatures and hazardous road conditions. The second quarter sales total also reflects the impact of certain operational moves we’ve made over the past few months. Ultimately, these factors have resulted in a shift in the timing of deliveries and revenues from the second quarter to later in the year as indicated by our backlog growth. The RV markets remain strong as reflected by the higher traffic and increased sales activity we’ve seen in the early retail shows,” he added.
Thor expects to report its second-quarter operating results on March 6.
Editor’s Note: The following column, authored by Nickey Friedman for The Motley Fool, offers a different perspective on Thor Industries Inc.’s recent earnings statement that analysts said fell short of expectations.
When Thor Industries reported its most recent results, the market let out a yawn. But investors who only look at the overall numbers are missing out on a fantastic growth story. While it’s true that this is the off-season for RV sales, one segment of Thor Industries’ business is nonetheless taking off like a rocket.
Thor Industries reported its fiscal first-quarter results on Dec. 2. Overall revenue inched up 5% to $800 million while net income from continuing operations shot up 27% to $36.4 million, or 68 cents per share.
Of the $800 million in revenue, the towable RV segment saw sales slip 3% to $662.9 million. While that’s certainly uninspiring, the motorized RV segment saw sales explode 45% to $177.1 million.
Here’s where it gets interesting
Thor Executive Chairman Peter Orthwein pointed out that this past quarter and the next are “characterized by a more seasonally competitive environment.” Of course, purchasing and using RVs tend to be more popular activities in the warmer months than the colder ones. Yet despite this, motorized RV sales actually increased sequentially by 5.3% in this fall quarter when compared to the previous summer quarter, even given an unusually cold October.
This suggests that demand for the motorized RV segment is accelerating very fast, and could be much more pronounced beginning in the spring selling season. Motorized RV sales still only made up 22% of revenue this quarter, but that’s up from 15% a year ago. As motorized RV sales continue to grow as a percentage of overall sales, the impact of its contribution might increase further.
The backlog story
Backlog further paints a picture of growing demand for motorized RVs. While backlog was up significantly for both segments, the motorized RV portion is frankly going bananas. Towable RV backlog was up 13.5%, or $49.9 million, to $419.8 million. Motorized RV backlog was up a jaw-dropping 113.6%, or $166.6 million, to $313.4 million.
Motorized RV backlog is now at 42.7% of the overall total backlog. In terms of absolute dollars, the motorized backlog grew 234% higher than the towable RV backlog. At this pace, motorized RV demand could overtake towable RV demand.
To read the entire article on Dailyfinance.com click here.
Elkhart, Ind.-based Thor Industries Inc. today (Dec. 2) announced a 33% increase in net income for its fiscal first quarter, ended Oct. 31, on a 5% increase in sales.
Sales from continuing operations for the first quarter of fiscal 2014 were $800 million compared to $761.4 million in the first quarter last year, driven by continued strong growth in motorized sales, which was partially offset by a small decrease in towable RV sales.
Net income from continuing operations rose 27% to $36.4 million, or 68 cents per share, versus $28.7 million, or 54 cents per share, in the prior-year first quarter. Including the discontinued operations of Thor’s bus business, net income for the first quarter was $41.1 million, up 33% from $31 million in the first quarter of fiscal 2013. Results of discontinued operations included a gain on the sale of the bus business of approximately $7.8 million.
Gross profit margins improved to 13.1% in the first quarter compared to 12.1% in the prior year period. Thor noted that it completed acquisitions of Livin’ Lite Recreational Vehicles LLC and Bison Coach, expanding its “breadth of products in complementary towable RV markets.”
“Thor made significant progress toward achieving our strategic goals over the past year and that is evidenced by our improved financial results,” said Bob Martin, Thor president and CEO. “Despite these improvements, we faced a number of short-term challenges as we transitioned the first motorized production line to Wakarusa, Ind., near the end of the first quarter, which created some start-up costs that may continue as we open a second line this quarter. We also closed two smaller production facilities on the West Coast and are in the process of consolidating their production into our larger complex in Oregon. In addition to these events, we completed two acquisitions and built on our strategic foundation leaving us confident in our ability to meet the expectations of our dealers and customers while delivering improved results for our shareholders.”
First-quarter highlights included:
• Towable RV sales were $622.9 million for the first quarter, down 3% from $639.2 million in the prior year period. Income before tax was $45.6 million, up 7% from $42.7 million in the first quarter last year, primarily as a result of ongoing efforts to improve operating margins and efficiencies.
• Motorized RV sales were $177.1 million for the first quarter, up 45% from $122.2 million in the prior year first quarter. Income before tax was $13.4 million, up 60% from $8.4 million last year, which was driven primarily by increased sales volumes.
• Consolidated backlog on Oct. 31 was $733.2 million, up 41.9% from $516.7 million at the end of the first quarter last year. Towable RV backlog increased 13.5% to $419.8 million, compared to $369.9 million at the end of the first quarter of fiscal 2013. Motorized RV backlog increased 113.6% to $313.4 million from $146.8 million a year earlier.
“Although our first and second quarters are generally characterized by a more seasonally competitive environment, Thor generated improved operating results for the first quarter of fiscal 2014,” said Peter B. Orthwein, Thor executive chairman. “As we look ahead to the largest RV trade show of the year being held in Louisville this week, we have reason for optimism given the strength of our products and continued improvement in industry retail demand heading into the early retail show season in January.”
To view the full report click here.