Thor Industries Inc., the maker of motorhomes and campers, reported sales were up 54.6 percent in the fourth quarter ended July 31 with earnings per share surging 92.5 percent.
“We are pleased to report that in a year of unprecedented challenges, Thor posted record net sales and net income for the fourth fiscal quarter and the full fiscal year, making it the most profitable year in Thor’s history. For the fiscal year, we sold over 300,000 units, eclipsed $12 billion in net sales and generated net income attributable to Thor of $11.85 per diluted share, which far exceeds the former record for diluted earnings per share of $8.14 set in fiscal year 2018. These outstanding results are a testament to our team’s ability to successfully accelerate production over the course of 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,” said Bob Martin, President and CEO, Thor Industries.
“Demand for our RV products remains very robust, continuing to exceed production output. This sustained level of strong demand has led to a continuation of historically low dealer inventory levels and resulted in a new record-high backlog value of $16.86 billion as of July 31, 2021,” said Martin.
Fourth-Quarter Financial Results
Net sales were $3.59 billion in the fourth quarter of fiscal 2021, compared to $2.32 billion in the fourth quarter of fiscal 2020. This year’s fourth-quarter net sales include $1.73 billion for the North American Towable RV segment, $823.1 million for the North American Motorized RV segment and $969.9 million for the European RV segment. Consolidated gross profit margin increased 170 basis points to 16.6 percent for the fourth quarter of fiscal 2021 compared to 14.9 percent in the corresponding period a year ago. The increase in the consolidated gross profit percentage was primarily due to the increase in sales and a reduction in sales discounts compared to the prior year period.
Net income attributable to Thor Industries and diluted earnings per share for the fourth quarter of fiscal 2021 were $230.3 million and $4.12, respectively, compared to $119.2 million and $2.14, respectively, in the prior year period.
Fiscal Year 2021 Financial Results
Net sales for fiscal year 2021 were $12.32 billion compared to $8.17 billion for fiscal year 2020. The increase in consolidated net sales is due to both the increase in consumer demand and the negative impact of the onset of the pandemic in the prior year, which resulted in six to eight weeks of production shutdowns at most of our facilities. The addition of the Tiffin Group, acquired on December 18, 2020, accounted for $421.4 million of the $4.15 billion increase in net sales, or 5.2 percent of the 50.8 percent increase.
Net income attributable to Thor in fiscal year 2021 was $659.9 million, or $11.85 per diluted share, compared to net income attributable to Thor of $223.0 million, or $4.02 per diluted share, in fiscal year 2020.
The company’s annual effective income tax rate for fiscal 2021 was 21.8 percent compared with 18.9 percent for fiscal 2020. The primary reason for the increase relates to the jurisdictional mix of foreign and domestic pretax income between the comparable periods. Based on existing tax regulations, the company estimates its overall effective income tax rate for fiscal 2022 will be between 22 percent and 24 percent before consideration of any discrete tax items. The actual effective income tax rate will be dependent upon tax regulations and the company’s mix of foreign and domestic pretax earnings.
Net cash provided by operating activities for fiscal 2021 was $526.5 million compared to $540.9 million in fiscal 2020. Net cash provided by operating activities for fiscal 2021 was impacted by higher working capital levels, primarily increased inventory levels for production needs to meet the increased consumer demand.
Management Commentary
“Our fiscal 2021 financial performance reflects the strong demand for RV products and demonstrates our ability to manage through a challenging operating environment. Our team did an exceptional job of proactively managing ongoing supply chain constraints, logistical bottlenecks and labor shortages throughout the year to meet this strong market demand and drive strong year-over-year margin improvement and record annual income before income taxes across each of our business segments,” said Colleen Zuhl, Thor Industries’ senior vice president and chief financial officer.
“Despite higher working capital levels, which are primarily due to increases in inventory and accounts receivable, our strong operating results generated cash flow from operations of $526.5 million in fiscal 2021. As planned, in the fiscal fourth quarter, we fully repaid the ABL borrowings incurred during the second quarter of fiscal 2021 in connection with the Tiffin Group acquisition. As of July 31, 2021, we had cash and cash equivalents totaling $445.9 million and approximately $720 million available for borrowing under the then-existing $750 million ABL.
“Subsequent to fiscal 2021 and effective September 1, 2021, Thor acquired AirX Intermediate, Inc. (“Airxcel”), a leading supplier of OEM and aftermarket RV parts and accessories, for $750 million, funded through a combination of available cash and $625 million from Thor’s expanded ABL facility. Concurrent with the Airxcel acquisition, we increased our ABL agreement to $1 billion which provides us with excellent liquidity and significant financial flexibility moving forward.
“Looking ahead, our cash utilization priorities remain consistent with our stated capital allocation priorities, namely, investing in our businesses, reducing our debt obligations, paying and, over time, growing our dividends, funding strategic opportunities, repurchasing shares on a strategic and opportunistic basis and paying special dividends as determined by our Board of Directors,” concluded Zuhl.
Outlook For Fiscal Year 2022
“Thor is carrying great momentum into fiscal year 2022, supported by a number of positive factors. Interest from new RV buyers and order activity continues to be robust across each of our business segments. We have record backlogs supported by North American dealer inventory levels that are 9 percent lower than the already historically low levels from a year ago and 44 percent lower than they were two years ago. Dealers remain confident in the long-term outlook for the RV industry and continue to invest in growing their businesses as the industry sees continued buying interest from both the first-time and repeat RV buyers,” said Martin.
“Also, within the last several months, we have had two businesses, the Tiffin Group and Airxcel, join the Thor team, and we expect them to contribute meaningfully to our operating results in fiscal 2022 and going forward. Airxcel, which is an additional investment in the supplier space, complements our existing Postle Aluminum subsidiary and is intended to preserve and grow the RV supply chain for the betterment of Thor and the RV industry alike.
“Entering our 2022 fiscal year, we continue to operate in an uncertain time. The rise, fall and rise again of reported COVID-19 cases around the world, supply chain shortages which change almost weekly and a very tight labor market across the country, especially in northern Indiana where most of our production facilities are located, all demand that we continue to focus on managing through these challenges to produce and deliver the innovative and high-quality RVs for which we are known. Our team has performed exceedingly well through these challenges, and we remain confident in their ability to continue to do so.
“While we expect these factors will continue to present challenges in fiscal 2022, our positive long-term outlook for the RV industry and Thor Industries remains unchanged. We believe the recent RVIA most likely estimate of approximately 577,200 unit wholesale shipments in calendar 2021 and its forecast of a 4.0% increase in calendar 2022 wholesale shipments over calendar 2021 shipments are reasonable,” concluded Martin.
Photo courtesy Thor Industries
