Thor Industries’ earnings doubled in the first quarter ended October 31 as sales jumped 56.0 percent, again crushing Wall Street targets. Bob Martin, president and CEO said, “It seems the market focuses on the supply chain and labor challenges that our industry is facing right now more than it does our performance in the face of those challenges, but our performance has been consistent despite those challenges.”

The performance marked Thor’s third consecutive quarter of record net sales and EPS.

In the quarter, sales reached $3.96 billion, up from Wall Street’s consensus estimate of $3.45 billion.

The increase in consolidated net sales is primarily due to the continuing demand for RVs and recent acquisitions. The addition of the Tiffin Group acquired December 2020 accounted for $228.3 million of the increase in sales for the quarter, while Airxcel, acquired September 2021, accounted for $88.8 million of the overall increase, net of intercompany sales. Excluding the contribution from those two transactions, sales were ahead 43.6 percent.

Consolidated RV backlog as of October 31 was $18.07 billion, an increase of over 100 percent as compared to RV backlog as of October 31, 2020.

“Independent dealer sentiment remains positive, and consumer demand for our RV products remains strong,” said Martin. “In the first quarter, our global order backlog increased to more than $18 billion, reaffirming our view that the dealer restocking process will still take a number of quarters to complete and could possibly extend into calendar 2023.”

Net income surged 113 percent to $242.2 million, or $4.34 a share, from $113.8 million, or $2.05, a year ago. EPS was 40 percent ahead of Wall Street’s consensus estimate of $3.10.

Gross margins improved 170 basis points to 16.6 percent. The increase was primarily driven by the increase in sales, a reduction in sales discounts since the prior-year period and selective net selling price increases to cover known and anticipated material cost increases.

Colleen Zuhl, Thor’s SVP and CFO, “This increase in consolidated gross profit margin reflects our operating excellence initiatives, an increased mix of higher-margin North American sales versus European sales this quarter and our decision to take price adjustments ahead of anticipated increases in our material costs. We do expect our consolidated gross margins to see some downward pressure as global revenue mix normalizes and cost increases continue to occur in future quarters of fiscal 2022,”

By segment, sales in the quarter in the North American Towable RV segment rose 61.0 percent $2.24 billion. The gains were due to an increase in unit shipments, changes in product mix and selective net selling price increases to offset known and anticipated material cost increases.

Gross margin increased 240 basis points* driven by improved labor, overhead and freight costs as a percentage of net sales, partially offset by an increase in the material cost percentage. Income before taxes rose 86.6 percent to $266.3 million. The order backlog in the North American Towable RV segment was ahead 137.5 percent to $10.44 billion

Sales million for the North American Motorized RV segment was $925.0 million, ahead 87.3 percent. The gains were driven primarily by an increase in unit shipments, changes in product mix, selective net selling price increases and the addition of $201.2 million of net sales, or 40.7 percent of the 87.3 percent increase, from the Tiffin Group.

Gross margin increased 130 basis points* driven primarily by a reduction in sales discounts, selective net selling price increases to cover known and anticipated material cost increases and product mix changes, partially offset by modest increases in the labor and warranty cost percentages. Income before income taxes was $88.9 million, up 113.9 percent. Order backlog was up 93.1 percent to $4.28 billion, including $705 million of additional motorized backlog from the Tiffin Group.

In the European RV segment, sales advanced 5.1 percent to 633.0 million. The gains were driven primarily by changes in product mix and selective net selling price increases.

Gross margins decreased by 130 basis points primarily due to additional labor and overhead costs incurred to support planned production levels, which were negatively impacted by chassis shortages in the current-year quarter. The segment widened its loss to $18.0 million against a loss of $5.5 million a year ago. European RV backlog increased 45 percent to $3.35 billion.

Thor, during the quarter, issued $500 million of senior unsecured notes and expanded its ABL borrowing capacity to $1 billion.

Zuhl said the transactions not only enhanced its liquidity and extended its debt maturities but also secured access to long-term financing at attractive rates and provided funding for its acquisition of Airxcel. At the end of the first fiscal quarter, liquidity was over $1 billion, including $336 million in cash on hand and approximately $810 million available under its ABL.

Martin said the acquisition of Airxcel in the quarter reflects its bullish outlook for the industry and for Thor in particular. He said, “This acquisition is a key piece to our strategic positioning of the company as we seek to strengthen our supply chain. The Airxcel integration has gone exceedingly well, and we continue to see a great opportunity for growth through innovation, additional product offerings and the aftermarket business.”

Looking ahead, Martin said Thor expects continued supply chain constraints, logistical challenges and cost pressures but expects to continue to overcome much of the challenges.

Through continued strategic, operational execution, the integration of our recent acquisitions, our positive outlook for the RV industry and with record backlog levels providing visibility beyond this fiscal year, we are confident that fiscal year 2022 will be another year of meaningful growth for Thor,” said Martin.

He said, “Additionally, RVIA has recently increased its wholesale shipment forecast for the calendar year 2021 to more than 602,000 units, and to over 613,000 for the calendar year 2022, a projected increase of approximately 2 percent for next year. We agree with this outlook and expect Thor to continue to outperform the market and to grow at a higher rate than RVIA projects for the industry as a whole.”

Photo courtesy Thor Industries