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Thor Industries Inc. has a market cap of $1.73 billion; its shares were traded at around $33.64 with a P/E ratio of 16.4 and P/S ratio of 0.8. The dividend yield of Thor Industries Inc. stocks is 1.2%. Thor Industries Inc. had an annual average earning growth of 3.6% over the past 10 years.THO is in the portfolios of Chuck Royce of Royce& Associates, Columbia Wanger of Columbia Wanger Asset Management, Ken Heebner of CAPITAL GROWTH MANAGEMENT LP, Bruce Kovner of Caxton Associates, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Mario Gabelli of GAMCO Investors, Jeremy Grantham of GMO LLC.
Highlight of Business Operations:We rely on internally generated cash flows from operations to finance our growth although we may borrow to make an acquisition if we believe the incremental cash flows will provide for rapid payback. Capital expenditures of approximately $16,500 for the three months ended October 31, 2010 were made primarily for building and building improvements and to replace machinery and equipment used in the ordinary course of business. These capital expenditures include $4,300 for the construction of the new Champion bus plant, $4,100 for the purchase of recreation vehicle plants which were previously leased and $4,800 for the expansion of our recreation vehicle operations.
Industry conditions in the RV market have improved dramatically through 2010, with RV wholesale shipments up 59.4% through September 2010, according to the Recreation Vehicle Industry Association. This large increase in shipments has been attributable to two forces in the market: RV dealers’ restocking of depleted lot inventories and improving retail sales to consumers. We measure our recreation vehicle dealers’ inventory on a daily basis and believe dealer restocking was largely completed as of mid-summer, 2010. As of October 31, 2010, our RV dealers had 35,457 of our RV units in inventory, down 36% from recent peak inventory of 55,300 units in March of 2008. With our substantial increases in retail market share, this level of dealer inventory is at appropriate levels for seasonal consumer demand. Also, wholesale RV shipments in the month of September, 2010 were down compared with September 2009, following thirteen consecutive monthly increases compared to the prior year. Thor’s RV backlog as of October 31, 2010 was down 19% to approximately $254,000 from $315,000 as of October 31, 2009. The reduction in backlog reinforces our belief that dealers have completed their restocking needs. Given our belief that dealer restocking has largely been completed and inventory levels are appropriate, we believe that RV industry wholesale shipments may be lower for a few months going forward.
effect on demand for our bus products. Municipal budgets have been reduced and transit agencies’ operating costs have increased. As a result, we have experienced a softening of order input at some of our bus operations and we have reduced staffing levels in certain locations. As of October 31, 2010, buses reportable segment backlog is down by approximately 25% to $212,000 from $284,000 as of October 31, 2009. Longer term, we expect positive trends in our bus segment, which we believe will be supported by increased federal funding for transit, the replacement cycle for buses among public and private bus customers, and the introduction of new bus products.
Consolidated net sales and consolidated gross profit for the three months ended October 31, 2010 increased $104,132 or 20.7% and $6,807 or 9.8%, respectively, compared to the three months ended October 31, 2009. Recently acquired Heartland accounted for $50,119 of the $104,132 increase in consolidated net sales. Consolidated gross profit was 12.6% of consolidated net sales for the three months ended October 31, 2010 compared to 13.9% of consolidated net sales for the three months ended October 31, 2009. This 1.3% decrease in gross profit percentage was driven primarily by increased discounting within the recreation vehicle segments in the current period, as dealer inventories have been restocked to appropriate levels, and as a result dealer and competitor pressures have necessitated greater discounting to secure sales. Selling, general and administrative expenses for the three months ended October 31, 2010 increased 29.1% compared to the three months ended October 31, 2009. Income before income taxes for the three months ended October 31, 2010 was $33,786 as compared to the three months ended October 31, 2009 of $37,253, a decrease of 9.3%. The specifics on changes in net sales, gross profit, selling, general and administrative expenses and income before income taxes are addressed in the segment reporting below.
Corporate costs included in selling, general and administrative expenses increased $6,542 to $11,677 for the three months ended October 31, 2010 compared to $5,135 for the three months ended October 31, 2009. The increase is primarily attributable to legal and professional fees in connection with the Heartland acquisition and the on-going SEC review totaling $3,503. Additionally, salary and bonus costs increased $482, stock option compensation expense increased $647, deferred compensation plan expense increased $509 and group insurance expense increased $202. The remainder of the increase is primarily due to increased on-going professional fees.
Corporate interest income and other income was $1,940 for the three months ended October 31, 2010 compared to $2,366 for the three months ended October 31, 2009. The decrease of $426 is primarily due to a decrease in interest income due to lower invested balances and lower interest rates.
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