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Leading RV maker Thor Industries reported better than expected fourth quarter earnings on Tuesday before the bell. $THO soared 10% premarket after earnings recieved a boost from the easing of travel restrictions lockdown inspired off-the-grid living

Thor Palazzo

Thor Industries, Inc. NYSE: THO: Reported Earnings Before Open Tuesday

$4.12 Beat $2.90 EPS Forecast and $3.59 Beat $3.31 Billion Forecast in Revenue

Earnings

Thor Industries earnings for the quarter ended July 31 of $231.3 million, or $4.12 a share, up 93% from $119.7 million, or $2.14 a share, in the year-earlier quarter. Revenue climbed 55% to $3.59 billion from $2.32 billion. A survey of analysts by FactSet produced consensus estimates of earnings of $2.90 a share on revenue of $3.31 billion.

"Demand for our RV products remains very robust, continuing to exceed production output," President and Chief Executive Bob Martin said in a statement.

Market Reaction: Thor Industries Inc NYSE: THO PreMarket $123.60 ▲ 10.80 (+9.57%)

Highlights

The company speeded up production during the fiscal year to meet "surging market demand while continuing to maintain quality, navigating continuing supply chain challenges, managing labor constraints and ensuring the safety of our workforce," added Martin.

  • In North America, towable-RV sales rose 46% to $1.73 billion and motorized-RV sales more than doubled to $823.1 million.
  • European sales were 31% higher at $969.9 million, the company said.
  • For the full fiscal year, Thor Industries sold more than 300,000 recreational vehicles.
  • North American order backlog grew 215.5% yr/yr to $13.3 bln;
  • European backlog, meanwhile, grew slightly less but more than doubled at 133.2% yr/yr to $1.53 bln.

The growing backlog indicates elevated demand, and THO expects this trend to continue even after dealers start to maintain inventory in CY23. The pandemic ignited a desire to get off the grid which bodes well for the RV industry even after normalcy resumes. As people begin to camp in their RVs for the first time, many may embrace the lifestyle. This creates a larger pool of RV owners who could eventually become seekers of upgrades, helping to bolster the used RV market.

With interest rates remaining at historically low levels RVs are more affordable to more people.

The pandemic paved the way for more remote work.

Harvest Hosts, a membership program that provides access to thousands of wineries, farms, breweries, etc. for self-contained RVers, found in its survey of 10,000 campers that 23% of them worked remotely in their RV in 2021.  Remote work is here to stay even if COVID-19 goes away. 

Supply still remains an issue.

The problems that plagued THO's supply chain in Q3 remained present in Q4, such as raw material inflation, labor shortages, semiconductor shortages, and increased transportation costs. THO doesn't expect these issues to help supply catch up to demand in FY22.

The supply constraints played a part in THO's $750 mln Airxcel acquisition in early September, since Airxcel is a large RV parts supplier. THO did not give any additional details in Q4 regarding the acquisition and maintained that it expects Airxcel to contribute meaningfully to its operating results in FY22.

 

Earnings preview

Thor Industries Q4 2021 Before the bell

  • Projected EPS: $2.98
  • Projected revenue: $3.31 billion

Nine analysts are estimating earnings of $2.98 per share as opposed to earnings of $2.14 per share in the same quarter of the previous year. Wall Street is expecting sales to increase 42.28% compared to the prior year quarter. The company is expected to report $3.31 billion.

For the current fiscal year analysts expect a profit per share of $10.65, whereas in the previous year $4.02 had been reported. On the revenue side analysts estimate that the company will bring in $12.03 billion in the current fiscal year.

Thor’s quarterly revenues are expected to have been buoyed by the TiffinHomes buyout and the acquisition of Erwin Hymer Group, which strengthened Thor’s position in Europe is set to have aided revenues of the European RVs unit.

The concern is sales are discretionary and the demand for RVs continued its momentum by safe travel enthusiasts and millennials’ zeal for off-the-grid living. While these factors will positively impact Thor’s results for the quarter to be reported what are the expectations going forwars?

Another headwind is supply constraints and the shortage of various RV components in Europe and North America. A tight labor market, and high commodity and SG&A costs are also likely to have hurt its fiscal fourth-quarter 2021 margins.

Most of the acquisition-related costs  of the purchase of Erwin Hymer Group have already hit the bottom line. The company has aid it expects to face challenging conditions in the near term despite remaining optimistic for the long term.

 

 

About Thor

Thor Industries, Inc. was founded on August 29, 1980, when Wade F. B. Thompson and Peter B. Orthwein acquired Airstream, the most recognized name in the industry. Despite its venerable image, Airstream had not fared well during the economic downturn of the late 1970s. By focusing on improving quality while reducing costs, Airstream returned to profitability in its very first year under the new Thor management.

Thor Brands

Together, the Thor Industries family of RV companies makes up one of the world’s largest RV manufacturers.

  • Airstream
  • Bison
  • CrossRoads
  • Cruiser RV
  • DRV
  • Dutchmen
  • Entegra Coach
  • Erwin Hymer Group
  • Heartland RV
  • Highland Ridge
  • Jayco
  • Keystone RV
  • K-Z Redwood RV
  • Starcraft RV
  • Thor Motor Coach (TMC) is the #1 motorhome brand in North America, and produces nearly one out of every four motorhomes sold each year. TMC’s diverse product lineup includes many of the world’s most recognized Class A and Class C motorhomes.
  • Venture RV

Source: Thor

From The TradersCommunity Research Desk

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