Robert W. Baird & Co. met with Thor Industries Inc. management and dealers during this week’s Elkhart County RV Open House. The following offers excerpts from Baird’s note to investors.
Notes from Elkhart show. We met with management and dealers at the dealer open house in Elkhart, Ind. The meetings showcased important extensions to the product portfolio. Dealers showed substantial interest in a new Class A product. Dealer inventory remains lean (motorhomes) to balanced (towables), according to our checks.
New products and positioning. Thor introduced a host of new products, most notably the new Vegas and Axis Class A models. Class A chassis have been in limited supply, with most manufacturers on allocation through early next year. To work around the supply constraint, and meet an attractive low price point near $70,000, Thor is building these new Class A models on Class C chassis – an apparent first in the industry.
Dealer inventory lean to balanced. Management characterized dealer inventory as lean to balanced, according to Thor – largely consistent with our checks. Expect strong motorhome backlogs as Thor and other manufacturers struggle to keep pace with demand while chassis supply remains limited.
Less discounting than last year. Promotional activity has become the norm in the RV industry, especially in towables, but Thor is discounting less than it did last year. Management indicated the pricing environment has improved substantially versus last year, likely the result of better management incentives and improved discipline under the leadership of new CEO Bob Martin.
Expanding into new markets. We gained a better appreciation for the upside associated with the recent Livin’ Lite RV LLC acquisition. The brand allows Thor to enter two new markets:
• Camping trailers: Thor will enter the high-end portion of the camping trailer segment, a market Thor had not addressed in the past.
• China: Thor is exporting American-made Livin’ Lite RVs to China – a remarkable development. Volume is small, but the opportunity holds promise as the Chinese middle class expands.
Thor Industries Inc. today (Sept. 11) announced it has named Colleen Zuhl as CFO, effective Oct. 1. According to a press release, Zuhl replaces Dominic Romeo, who will continue to work with Thor on a consulting basis for a variety of projects.
“We would like to thank Dom Romeo for coming out of retirement to assist us in taking significant transformative steps in a condensed time frame that set the foundation for our future growth,” said Bob Martin, Thor president and CEO. “Dom’s time with us was marked by significant successes of our company’s management team on which Dom played a key role. I personally appreciated his counsel on our strategic objectives. I also appreciate that we will have the ability to continue to work with him.”
Romeo noted, “I truly enjoyed my time as CFO of Thor and am very pleased with what our management team has accomplished. I leave the position knowing that Colleen will maintain the high standards established at Thor and that the company’s experienced finance team will continue its outstanding performance.”
Zuhl, 47, joined Thor in June 2011 and has served in a variety of roles, including vice president and corporate controller as well as interim CFO from October 2012 through February 2013. The entire finance, accounting and internal audit functions will report to Zuhl.
“We are pleased that Colleen has agreed to become our new CFO, as she has shown that her years of experience in the RV industry, her technical expertise and leadership skills make her the ideal candidate to maintain our positive momentum within the finance function,” Martin said. “I am confident in Colleen’s ability to shape the future of our finance group and provide valuable insights to our board and senior management team.”
Prior to her experience at Thor, Zuhl served as CFO for All American Group Inc. (formerly known as Coachmen Industries Inc.), which was a publicly traded company. Prior to her tenure at All American Group, Zuhl spent more than 15 years at Ernst & Young LLP, most recently as an audit senior manager. Zuhl is a graduate of Hillsdale College with a bachelor’s in accounting and mathematics.
As Thor prepares to file its fiscal 2013 financial statements, Romeo and Zuhl will share responsibility for the filing, and both will certify the report on behalf of the company.
In addition to Zuhl’s appointment as CFO, Thor named Jeff Tryka to the newly created position of director of corporate development and investor relations. In this role, Tryka will be responsible for all interactions with the investment community, including meetings with existing shareholders and potential investors, presentations at investor conferences and incoming inquiries from institutional and individual investors. Tryka will report directly to Martin.
Tryka, 43, has been involved in the RV industry for more than a decade, first as an equity analyst in the late 1990s and later as director of investor relations at Coachmen. He has been serving in the investor relations function at Thor on a consulting basis since October 2012. Tryka holds the Chartered Financial Analyst (CFA) designation and earned an MBA in Finance from the Kelley School of Business at Indiana University and a bachelor’s in accounting from Bucknell University.
Thor Industries Inc. today (Aug. 28) announced that Crossroads RV, a wholly-owned subsidiary, has named Andy Cripe as president, effective Aug. 26.
“We are pleased to have Andy take a strong leadership role at Crossroads RV,” said Bob Martin, Thor president and CEO, in a press release. “Andy has a strong track record of performance at Keystone RV that should enable him to make an immediate impact on the operations of Crossroads. The ability to fill such an important position internally illustrates the strength and depth of Thor’s management bench.”
Cripe has been with Keystone RV for 10 years in a variety of roles including district manager and product manager of the Raptor brand as well as being the general manager responsible for brands including Hideout/Retreat, Passport and Cougar. Prior to his experience in the RV industry, Cripe spent time in the financial management program at General Electric, followed by a position with the accounting and consulting firm Ernst & Young. Cripe is a graduate of Indiana University with a bachelor’s in accounting, finance and marketing.
In addition to the appointment of Cripe as president, Crossroads RV named Matt Thompson to the newly created position of vice president of sales for Crossroads. The entire sales function at the subsidiary will report to Thompson in his new role.
Thompson is a 20-year veteran of the RV industry and has been with the Thor family of companies for more than a decade. He was previously a general manager at Crossroads RV, following several vice president positions at Thor Motor Coach, including two years as vice president of sales for the diesel business at Thor Motor Coach.
Scott Tuttle needed a partner. The founder of Livin’ Lite Recreational Vehicles LLC had always anticipated expansion, but Tuttle’s business plan didn’t account for the type of “explosive growth” that the Wakarusa, Ind.-based company has experienced since its founding in 2002.
“We were to the point where we had grown so quickly that taking that next step was going to be a challenge,” said Tuttle, also a former co-founder of Heartland Recreational Vehicles LLC. “I was going to have to personally finance that next growth stage, so I started thinking about a partner that could help us.”
Tuesday (Aug. 27), Tuttle’s “next step” took shape as Thor Industries Inc. announced the acquisition of Livin’ Lite, adding the company to its stable of towable manufacturers (see previous story by clicking here).
“It’s really a perfect fit,” Tuttle told RVBUSINESS.com. “I considered private equity firms, but that’s just a cash infusion. With Thor, we gain a huge dealer network, plus all their experience, expertise and resources. It made perfect sense. It’s one thing to grow, it’s another to grow right.”
Livin’ Lite also fits into Thor’s growth plan. Offering a product mix featuring a unique aluminum-and-composite construction that Tuttle said “has created a new weight class,” Livin’ Lite fills a gap in Thor’s portfolio.
“Adding such a creative RV maker to Thor’s strong stable of brands will enable us to expand our industry-leading position in new product development into camping trailers and truck campers,” said Thor President and CEO Bob Martin in Tuesday’s press release, adding that Livin’ Lite is expected to generate sales of approximately $24 million for calendar year 2013. “We see many opportunities for expanding Livin’ Lite’s market presence through the Thor dealer network, and the ability to leverage their lightweight aluminum and composite construction technology in other Thor products. This transaction represents a solid example of executing our strategic plan to grow our RV presence through the acquisition of brands and technologies that complement our existing business.”
Also a factor was Thor’s recent acquisition of the former Navistar Inc. facilities in Wakarusa. The vast complex was left vacant when Allied Specialty Vehicles purchased Navistar’s RV assets then moved operations to its campus in Decatur, Ind.
“Livin’ Lite has four buildings in Wakarusa – two that are just four years old – and we’re not going to abandon those facilities,” said Tuttle, noting the company employs around 120 workers. “But we are looking forward to possibly expanding our production into some of Thor’s buildings.”
Particularly with the pending launch of several new product lines. Adding to its lineup of travel trailers, toy haulers, camping trailers and truck campers, Livin’ Lite will be introducing a new fifth-wheel at next month’s Elkhart County RV Open House along with the Bearcat brand of off-road campers.
“We will be bringing to market fifth-wheels that hit three different segments,” Tuttle said. “At Open House we will show fifth-wheels in our Camplite ultralight series and our Quicksilver VRV line, which will be a bigger unit. Then, at Louisville, we’ll debut a ‘micro’ fifth-wheel” – a super light fifth-wheel that nobody else is making.”
Tuttle said the Bearcat would extend its camper lines, offering more rugged, durable construction.
“We have always had off-road packages for our campers,” he said. “But the Bearcat will be built to haul ATVs and motorcycles that people normally tow with a trailer. They’ll have all-terrain tires and come in all shapes and sizes while still hitting an affordable price point.”
Beyond that, Tuttle said Livin’ Lite is poised to accommodate the new trend toward lighter-weight trucks and even all-electric vehicles that are in the planning stages.
“Because of new emission regulations, truck manufacturers, and the auto industry in general, are building units with better gas mileage,” he said. “But that means they will have less power, especially an all-electric truck. When that hits the market, we will have a vehicle that will work.”
Elkhart, Ind.-based Thor Industries Inc. has named Debi Reigsecker to head its corporate travel operations as it seeks to source travel services internally to improve speed and efficiency while controlling costs.
“We are pleased to welcome Debi to Thor as our corporate travel manager,” said Bob Martin, Thor president and CEO. “Debi has worked with Thor and its subsidiaries extensively in managing our travel and accommodations and will help to make travel planning more efficient and cost effective for all of Thor.”
Riegsecker is a Certified Travel Consultant (CTC) and has spent more than 30 years as a corporate travel agent, most recently with Menno Travel in Goshen, Ind. She is a native of Elkhart County and a graduate of Northridge High School in Middlebury. She also holds a bachelor’s degree in speech communication and telecommunication from Indiana University in Bloomington.
Thor Industries Inc. today (Aug. 27) announced that it acquired the assets of innovative recreational vehicle maker Livin’ Lite Recreational Vehicles LLC through a wholly-owned subsidiary. According to a press release, the purchase is subject to customary closing conditions and is expected to be completed by Aug. 30.
“We are pleased to welcome Livin’ Lite to the Thor family of RV brands. Adding such a creative RV maker to Thor’s strong stable of brands will enable us to expand our industry-leading position in new product development into camping trailers and truck campers,” said Bob Martin, president and CEO for Elkhart, Ind.-based Thor. “We see many opportunities for expanding Livin’ Lite’s market presence through the Thor dealer network, and the ability to leverage their lightweight aluminum and composite construction technology in other Thor products. This transaction represents a solid example of executing our strategic plan to grow our RV presence through the acquisition of brands and technologies that complement our existing business.”
Founded by former Heartland RV LLC co-founder and executive Scott Tuttle, Wakarusa, Ind.-based Livin’ Lite is known for its advanced lightweight aluminum construction applied to a variety of smaller RVs, including travel trailers, toy haulers, camping trailers and truck campers. Livin’ Lite also markets its products in partnership with a number of leading consumer brands including Jeep. Having recently been named to Inc. Magazine’s list of fastest growing companies for the third consecutive year, Livin’ Lite is expected to generate sales of approximately $24 million for calendar year 2013.
“We are excited to join forces with Thor, the leading company in the RV industry, and we are looking forward to the new growth opportunities we should see as a result,” said Tuttle, president, CEO and founder of Livin’ Lite. “We have worked diligently to grow Livin’ Lite over the past five years and expect to extend that growth as we bring the distribution, operational and financial strengths of Thor to bear on our business. As the newest company to join Thor, we also expect to add to our combined development efforts as we apply our proprietary technology to a broader array of existing product lines and bring our combined market strength to camping trailers and truck campers.”
Thor expects to offer Livin’ Lite’s current 35 models to its current dealer network upon closing of the transaction. The company also expects Livin’ Lite will continue to operate out of its existing Wakarusa facilities with minimal disruption to its current business resulting from the acquisition.
For the first time in memory, the industry’s two RV-building volume leaders, Thor Industries Inc. and Forest River Inc., are in a dead heat for retail market share in both towable and motorized RVs, according to Statistical Surveys Inc., Grand Rapids, Mich.
At least they were at mid-year, with the two Elkhart, Ind.-based manufacturers each occupying exactly 35.4% of the “all towable” market. In fact, they were only nine units apart through June – Thor at 39,803 units vs. Forest River at 39,794. At the same time, Thor’s towable RV unit sales were up 8.8% and its market share was down slightly to 1.7%, while Forest River’s unit sales were up 19.5% and its market share grew 8% for the six-month period.
The picture is much the same on the motorized side of the ledger because Forest River through June was accounting for 25.2% of the retail market based on sales of 3,769 units vs. Thor with a 25% market share on 3,747 retails — a margin of only 22 units.
The rather respectable — yet heated — competition between these two hard-hitting industry leaders, occupying together more than 70% of the U.S. towable marketplace, has been going on for a good while. But the numbers haven’t been quite this close, keeping in mind that, as Stat Surveys President Tom Walworth points out, “you still have to take into account the fact that Forest River’s towable RV product lines include some lower-priced folding camping trailers, a market in which Thor isn’t involved.”
But the real news here is to what extent Forest River is pressing its case in both towable and motorized RVs, even while both companies continue to post impressive growth during the current economic recovery. Thor, for its part, recently posted its first $2 billion quarter, and revenues for Forest River, a Berkshire Hathaway Inc. subsidiary, were running at least 22% ahead of last year through June, Forest River President and CEO Pete Liegl confirms.
“I think that Forest River has been narrowing the gap,” said Walworth. “Both Forest River and Thor have aggressively gone after the market and they’ve put out a bunch of new product that has allowed them both to maintain their leadership in the market.”
Behind Forest River and Thor on the motorized side is Winnebago Industries Inc., with an 18.1% share of the market. In third place in tow-type RV retail sales is Middlebury, Ind.-based Jayco Inc., which occupied 11.2% of the market through June.
“Think about that,” said Walworth. “The top two (towable builders) are 70% of the market. Jayco brings it up to 81% of the market and the next five players take it up to 90% of the market. I mean, it’s a very top-heavy industry and more so all the time. The two big players have gained market share in an up market. The only thing to consider is that if the market becomes really hot, that usually opens the doors for the smaller startups to come in.
He added, “You know, through this, we’ll probably introduce one or two new manufacturers here who could someday end up being major ones. That’s usually because the majors and the other competitors can’t meet the dealers’ supply times, opening the door for some of the startups to get involved.”
It’s official. As of Wednesday (Aug. 14) morning Thor Industries Inc. is centered in the heart of Elkhart, Ind.
“We’re proud to be part of the downtown area,” said Bob Martin, Thor president and CEO standing next to company co-founder and chairman Peter Orthwein. According to a report by The Elkhart Truth, the company and the Greater Elkhart Chamber of Commerce held a ribbon cutting to officially open the headquarters of one of the top players in the recreational vehicle industry.
“The building had been empty for six years,” Martin said of the site at 601 E. Beardsley Ave., a spot with a view of the St. Joseph River and Island Park. “A lot of people in the community had noticed that it was empty here. People have known it as the Coachmen building or something like that from many years ago, so we wanted to put our own touches on it. We’re very proud of all this.”
Kyle Hannon, president of the chamber, called the building “a monument to corporate headquarters in Elkhart, it’s a monument to the RV industry.”
Dick Moore, Elkhart’s mayor, welcomed Orthwein, and said, “We recognize Thor, of course, as a leader in the RV industry and how important it is to stimulating our economy with all of the jobs that you do.”
Moore also said, “We’re just so very pleased that you’re here.”
“We’re proud to be part of Elkhart, we’re proud to be part of the community and we’re proud to have our corporate offices in downtown Elkhart,” said Martin, who grew up in Elkhart and Bristol.
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Thor Industries Inc. announced that Don Emahiser has resigned as president of CrossRoads RV to pursue other interests, effective Aug. 9. CrossRoads RV is a Thor subsidiary that produces travel trailers and fifth-wheel RVs in Topeka, Ind.
“We appreciate Don’s service to our company and wish him well on his future endeavors. Fortunately, we have a strong bench of management talent at Thor and CrossRoads that should help ensure this management transition is smooth,” said Bob Martin, Thor president and CEO, in a press release. “We will begin the process of hiring a new president for CrossRoads immediately and we hope to have the search completed within our fiscal first quarter.
“In the interim, I will be working closely with the management team at CrossRoads to ensure that our operations continue running effectively and we continue to provide our dealers with the service and products they expect.”
Thor Industries Inc., headquartered in Elkhart, Ind., has been named to this year’s 50 Best U.S. Manufacturers list compiled by Industry Week magazine. The builder was ranked No. 37 in the listing.
The publication bases the rankings on key areas over a three-year period, including profit margin and revenue growth.
Thor, which has several local subsidiaries in Elkhart, Goshen and Nappanee, announced July 31 its decision to sell its bus business, which had annual sales of $448.8 million over the previous year, to Allied Specialty Vehicles for $100 million in cash.
Thor Industries Inc. today (July 31) announced that it has entered into a definitive agreement to sell its bus business to Allied Specialty Vehicles Inc. (ASV) for $100 million in cash, subject to closing adjustments. The sale is subject to customary closing conditions and is expected to be completed by Nov. 1.
“Although the bus business has been a valuable part of Thor, this transaction allows us to focus on maintaining and growing our leadership position in our core recreation vehicle business,” said Peter B. Orthwein, chairman of Elkhart, Ind.-based Thor. “From an investor perspective, divesting the bus business will simplify our overall operations and solidify Thor’s position as the leading company in the RV industry which is recovering strongly. Pursuing the strategic development of our RV business enables us to drive growth in sales and earnings, ultimately delivering improved value for our shareholders.”
Thor’s bus business includes Champion Bus Inc., General Coach America Inc., Goshen Coach Inc., El Dorado National California Inc., and El Dorado National Kansas Inc., which combined represent one of the largest producers of transit and shuttle buses in North America with bus segment sales of approximately $450 million for the fiscal year ended July 31. In addition to its bus interests, ASV is parent to Fleetwood RV Inc. and recently acquired the RV assets of Navistar Inc., including the Monaco Coach and Holiday Rambler brands.
“We are excited to add the Thor bus business to our diverse line up of specialty vehicles,” said Peter Guile, president and CEO of Allied Specialty Vehicles. “We view the opportunity to expand our business into the transit and shuttle bus markets as a key initiative in broadening our markets and providing products that meet the needs of our dealers and end consumers. We are eager to welcome these new bus brands to the ASV family.”
Thor will continue to own and operate the bus business until the closing date of the sale. As a result of the decision to pursue a divestment of the bus business, Thor will report the financial results of the bus business as discontinued operations in its upcoming annual report filed on Form 10-K with the Securities and Exchange Commission (SEC), which the company expects to file in late September. Thor does not anticipate any impairment to goodwill or intangible assets of the bus business as a result of the sale.
Thor expects to report preliminary sales for its fiscal fourth quarter and full year ended July 31 on Aug. 5.
Thor Industries Inc. today (June 10) announced that current President and COO Bob Martin has been appointed CEO and was also selected to serve on the Elkhart, Ind.-based company’s board. Both moves are effective Aug. 1.
According to a news release, Martin, 43, is succeeding Peter B. Orthwein, who will remain executive chairman of the board.
A 19-year industry executive, Martin has served in a variety of leadership roles at Thor, including president of Keystone RV Co., Thor’s largest subsidiary, as well as RV senior group president and most recently as president and COO. All RV presidents and the Bus Group president will continue reporting directly to Martin in his new role.
“I am pleased to pass on the leadership of Thor to Bob Martin, someone who has a proven track record with both our company and the RV industry,” said Orthwein. “This transition marks a significant, positive step in our succession plan and I have confidence in the solid management team we have developed over the past several years. We now have excellent depth of talent across our senior management, and I am convinced that Bob’s strong relationships with dealers and demonstrated ability make him the right person to lead Thor to the next level of growth, performance and profitability.”
A look at the latest financial report from Thor Industries Inc. underscores the need for motorhome manufacturing ability that President and COO Bob Martin cited as a major reason the company announced this week that it will take over the former Monaco Coach/Navistar RV production facilities in Wakarusa, Ind.
The Elkhart Truth reported that in Thor’s quarterly report filed Thursday (June 7), company personnel detail the growth of Thor’s motorhome sales. During its third fiscal quarter — which set a sales record of $1.05 billion companywide — Thor shipped 34.2% more motorhomes. During that same period of February through April, the overall market increase in wholesale motorhome shipments was 29.8%.
The average price for motorhomes rose 13.6% over the same quarter in 2012, with the top-end Class A motorhomes seeing a 17% jump in sales price. “The increase in the overall net price per unit within the Class A product line of 17% is primarily due to increased sales of the generally larger and more expensive diesel units rather than the more moderately priced gas units when compared to a year ago,” according to the quarterly report.
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The investment firm of Robert W. Baird & Co. issued a client newsletter following Thursday’s release of Thor Industries Inc.’s third quarter report. Portions of the Baird newsletter follow.
Raising price target. Earnings per share (EPS) exceeded expectations on significantly better margin. The margin trend is encouraging as it appears sustainable. We raised our F2013 and F2014 outlook and see potential to earn near $4.50/share in a robust recovery scenario, supporting our revised $48 price target. Fundamentally, we continue to expect demand to recover as negative equity evaporates. Meanwhile, dealer inventory increased 14% to support retail growth but appears fresh. The weak margin overhang has begun to clear, supporting a brighter outlook.
EPS upside. Adjusted EPS significantly exceeded consensus expectations (97 cents vs. 88 cents), driven by solid margin upside. A lower tax rated added 4 cents. Adjusted EPS excludes a 15 cent loss related the sale of the ambulance business. Management previously had expected second-half operating margin to be “consistent with” the second half of last year – but with adjusted EBIT margin 50bp better in Q3, trends clearly have improved. Recall that Thor previously reported strong revenue growth (+13%) and a healthy backlog (+24%) in May.
Encouraging margin recovery. After a period of excessive discounting, promotional pricing has “stabilized.” Thor discounted to defend lot space early in the season, betting that strong retail would support follow-on orders at better margins. With retail up 12% and margin improving, the plan worked. Meanwhile, actions to drive a 200bp margin recovery over three years are gaining traction, supporting a more optimistic profit scenario.
Big picture. We are warming to Thor as margin pressure abates. As the leading RV manufacturer, Thor is particularly well positioned to capitalize on a robust cyclical recovery. We believe the negative equity overhang that has delayed the replacement cycle has begun to clear, supporting a more optimistic outlook. We raised our price target to $48 and would look to add, especially on a pullback.
The recent acceleration in car sales is impressive, but there’s an even better sign the U.S. economy is getting back on track: surging sales of recreational vehicles. Bloomberg Business Week reported that makers of RVs shipped 32,054 machines in the U.S. in April, a 19% increase from a year earlier, according to data compiled by the Recreational Vehicle Industry Association (RVIA).
RVs are a notable niche because it takes no small amount of consumer confidence to buy a gas-guzzling home on wheels. Between 2007 and 2009, more than half of the RV market disappeared. Light-vehicle sales, by contrast, dropped by 36%. “No one needs an RV,” said Jeff Tryka, a spokesman for Thor Industries Inc., one of the biggest U.S. RV makers. “It’s a purely discretionary purchase, while there’s always going to be a base-level demand for cars.”
The motorhome and towable RV business, a $14 billion market in the U.S., is on track for its best performance since 2007. For the year to date, shipments are up 13% and RVIA expects more than 307,000 vehicles to roll by January. The sales boost doesn’t matter much to Detroit, but it’s big news about 200 miles away in Indiana, where roughly half of the country’s RVs are made. It’s also great for companies like privately held Jayco Inc., the Forest River Inc. unit of Warren Buffett’s Berkshire Hathaway, and Thor, which cranks out some of the most popular RV brands.
When the RV market bottomed out in 2009, Thor’s payroll dropped to 5,400 workers; today it employs 8,800. And in anticipation of higher demand, it just bought a factory in Wakarusa, Ind., equipped with 35 booths for painting giant campers. The company will give a progress report when it announces earnings later today. Last quarter, Thor posted income of $19.9 million—a 45% increase from a year earlier.
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