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.
To read the full article click here.
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.
To read the entire article click here.
Officials in Wakarusa, Ind., got some very exciting news Monday (June 3). As reported by the Elkhart Truth, Thor Industries Inc. announced it is taking over the beleaguered campus that used to house Monaco Coach, and more recently motorhome operations for Navistar RV, on the town’s south side.
“This is awesome. I’m ecstatic. It couldn’t be better for us,” said Jeff Troxel, Wakarusa Town Manager. “It adds stability to the town. We haven’t had stability on that side of town for years.”
Bob Martin, president and COO of Thor, said it’s too early to know how many jobs will be created as the company plans to move part of its Thor Motor Coach subsidiary along with painting operations for Keystone RV Co. into the Wakarusa site.
“We’ll have a clearer picture of what our plans are,” Martin said. “I know people always want to know how it’s going to affect people in jobs, but long term it should be good for the county and the community and we’d like to see it come back to production numbers it was at years ago.”
The move will mean new production for Thor Motor Coach and won’t reduce any of those jobs in Elkhart, he said. “It will be in addition to our plant in Elkhart. The Elkhart work force will stay the same,” Martin said.
To read the entire article click here.
Wakarusa, Ind., Town Manager Jeff Troxel and others had sounded curiously upbeat over the past two weeks that a company would step up and acquire the 150-acre campus that formerly housed motorhome operations for Navistar RV.
The property was placed on the market when Allied Specialty Vehicles Inc. (ASV), parent to motorhome builder Fleetwood RV Inc. and a subsidiary of American Industrial Partners (AIP), purchased rights to Navistar Inc.’s RV assets on May 16. In the wake of the acquisition news, ASV announced that it would be relocating operations from Wakarusa to Fleetwood’s headquarters in Decatur, Ind., impacting some 520 workers involved in the production of Holiday Rambler and Monaco motorhomes.
Now Troxel’s confidence appears to have been well founded with Monday’s (June 3) announcement that Elkhart-based Thor Industries Inc. was purchasing the facility from ASV with initial plans to move at least part of the company’s Thor Motor Coach into the plant as well as paint operations to be overseen by Thor’s Goshen, Ind.-based Keystone RV Co. division.
“This purchase marks an important step forward in the growth of our RV business,” stated Thor President and COO Bob Martin in a press release, noting that the facilities comprise nearly 1 million square feet of total production space. “With this new production complex, we will be better positioned to achieve our long-term strategic growth initiatives. Even more compelling, this purchase will allow us to expand capacity faster and at a lower cost than other options. We are excited about the future prospects of reinvigorating the Wakarusa facilities.”
John Draheim, president and CEO of Fleetwood RV, noted that the company’s plan to consolidate motorhome production hinged on logistics.
“Our plan all along wasn’t necessarily to sell to Thor,” he said, noting that Fleetwood has around 1,000 employees in Decatur. “But our plan all along was that we didn’t need the production capacity. We didn’t want to run two buildings. We felt that the Decatur campus has plenty of upside and we have a work force there that is a known entity to us. And we also have a management team in place that is also a known entity to us. So, it made sense to get the brands relocated to the Decatur campus, and put the facility on the market.”
A key factor fueling hopes that a buyer would step forward was the overall health of the RV industry, as growing sales have pushed companies into expansion mode.
“We believe through our studies that the RV business is in a growth mode, and that there are capacity constraints, especially on the trailer side of the business,” Draheim said.
Wakarusa also represented a prime manufacturing location, offering room to expand along with 35 paint booths designed specifically for recreational vehicles.
“This is a massive manufacturing complex in Wakarusa, and the real sweet spot of that whole production facility is the paint facility,” Draheim said. “A lot of the manufacturers are going outside and having third parties do their paint work, which is expensive. It increases your working capital because you have excess WIP (work in process) in your operations. So, we felt that somebody out there would see the attraction because of the paint facility and also because we could expedite the sale because we’re a cash buyer.
“You know, we didn’t have to sell it fast, but we could. And AIP has made several other acquisitions where we’ve gone in and acquired a company, relocated the product to one of our facilities and then sold the real estate. So, they have a good track record of being able to do that.”
Draheim added that ASV will retain a very limited presence in Elkhart County, running towable operations out of a former Roadmaster chassis plant in Elkhart while also maintaining some offices at an unstated location in Wakarusa for engineering and product development.
“We will operate those offices for an extended period of time – for months if not years,” he said. “Employees include Monaco people plus some additional hires that have occurred since the acquisition of Navistar RV.”
Thor Industries Inc. announced that Bob Martin, Thor president and chief operating officer, will present at the Citi 2013 Global Consumer Conference to be held at the Hilton New York Hotel in New York City on Wednesday (May 30).
The management presentation, which will include information on Thor’s operations, is scheduled to begin at 2:30 p.m. EDT, and will be available via live webcast at the company’s website, www.thorindustries.com. Click on “Investors,” then click on “Presentations.” Replays of the presentation will also be available at www.thorindustries.com for 90 days following the presentation.
Bob Martin, president and COO of Elkhart-based Thor Industries, addressed the 2013 Baird Growth Stock Conference in Chicago on May 8, and his talk covered Thor’s past, present and future, as well as some of the bigger trends in the RV industry in general.
The Elkhart Truth reported that Martin talked in some detail about recreational vehicles and the growth in the motorized RV market, as well as why Thor is in the bus market and why the company just sold its ambulance business.
In his prepared remarks and in answer to audience questions, Martin laid out a look at Thor:
• 96 brands in its subsidiaries (Keystone alone has more than 20 brands)
• Largest RV manufacturer in the industry.
• 36.3% of the RV market.
• 33% of the travel trailer market.
• No. 1 in the fifth-wheel market, with market share greater than 50%.
• No. 2 in motorhomes, but growing this year.
• 8,800 employees overall.
• 96 production facilities across seven states.
• More than 6 million square feet of combined indoor production.
To read the entire Elkhart Truth article click here.
Thor Industries Inc. announced the sale of substantially all of the assets of SJC Industries Corp., a subsidiary that manufactures ambulances, to Wheeled Coach Industries Inc. According to a press release, Wheeled Coach is a subsidiary of Allied Specialty Vehicle Inc. (ASV), a privately held company based in Orlando, Fla., that is parent company to Fleetwood RV Inc.
Bob Martin, Thor president and COO, noted, “The sale provides the opportunity to streamline our bus operations and refocus these assets on our core business in a way that leaves our Goshen Coach operation better positioned to take advantage of future opportunities.”
Peter Guile, Chief Executive Officer of ASV stated, “I am pleased with the addition of the McCoy-Miller and Marque ambulance brands to the Fire & Emergency Segment of Allied Specialty Vehicles, Inc. Both McCoy-Miller and Marque have been respected manufacturers within the ambulance industry for many years. ASV plans to build upon the strong reputation of the McCoy and Marque brands by supporting and enhancing their respective dealer’s and providing an outstanding customer experience.”