Thor Industries (THO, Financial), one of the world’s largest manufacturers of recreational vehicles, announced record fiscal 2017 first quarter results. During the first quarter, the company posted record sales and earnings growth. The company benefited in revenues and gross profit through the acquisition of Jayco.
First quarter 2017 performance
The company reported net income of $78.7 million, or $1.49 per diluted share, for the first quarter, up from $50.5 million in the prior year quarter.
Gross profit during the quarter increased by 55.5% and was $236.8 million.
Net income increased 55.9% on sales growth of 65.8% when compared with the first quarter of last year.
Diluted EPS for the quarter increased 55.2% from the previous year. Net sales during the quarter were $1.7 billion.
Cash and equivalents as at Oct. 31, 2016 were $161.7 million.
Towable RVs
Towable RV sales were $1.21 billion for the first quarter, which marked an increase of 62.6% from the prior-year quarter.
Towable RV income before tax was $94.2 million, which was an increase of 49% from $63.2 million in the prior year quarter.
Towable RV backlog increased by $690.4 million, or 97.2%, from the prior year quarter.
Motorized RVs
Motorized RV sales were $461.5 million during the first quarter, which marked an increase of 83.8% from the prior-year first quarter.
Motorized RV income before tax was $28.9 million, up 33.6% from $21.7 million last year, driven primarily by the growth in motorized sales and improved SG&A expense leverage, partially offset by increased amortization expense and purchase accounting costs associated with Jayco.
Motorized RV backlog more than doubled and was $706.4 million.
Dividend
The company declared a quarterly dividend of 33 cents per share.
Focus
- Commitment to high quality products.
- Innovation.
- Tapping the North American market.
- Strategic acquisitions.
- Targeting emerging markets.
Conclusion
Thor Industries operates under two segments: Towable RVs (includes travel trailers, fifth wheels and specialty trailers) and Motorized RVs (includes class A, B and C motorhomes). With 197 operating facilities in the U.S., it sells its products through independent retail distributors primarily in the U.S. and Canada. According to Statistical Surveys Inc., for the six months ended June 30, 2016, Thor’s combined U.S. and Canadian market share excluding Jayco was approximately 35.7% for travel trailers and fifth wheels and approximately 25.3% for motorhomes. New and younger consumers are shifting more towards affordable towable and motorized RVs, thereby creating opportunities for this company.
The company boasts a record of improving profitability. Over the years, it has been able to integrate acquisitions successfully. The acquisition of Jayco by Thor brings in a strong product line up for Thor Industries. 2016 was a record year for the company from a financial point of view. Last year marked record $4.6 billion in total annual revenues. It also achieved record EPS from continuing operations. The recreational vehicle industry is improving and Thor has a lot of opportunities. According to the Recreation Vehicle Industry Association, wholesale shipments of towable and motorized RVs combined posted an 11% gain through July 31, 2016, compared to the same seven-month period the prior year.
The company has a strong cash position that it's using to support and grow the core businesses, both organically and through acquisition. The management is confident that 2017 will be one of its strongest years for wholesale shipments. It is constantly returning value to the shareholders in the form of share repurchases and dividends and reducing debts. I think adding this company will reap shareholder returns.
Disclosure: I do not hold any position in the company.
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