trg-logo2Editor’s Note: Staff members of Thompson Research Group  recently traveled with Thor Industries Inc. management in the Northeast and visited key Thor Industries and Drew Industries Inc. manufacturing facilities in the Midwest. The following are takeaways from those meetings that were shared in a recent newsletter to investors.

Key Points:

  • Towable backlog improvement, not just restocking.
  • Motorhome segment still quite tough.
  • Floorplan lending environment modestly better.
  • Efficiency cuts continue.

Estimate Changes

“To date we had not yet adjusted our model to reflect Thor’s preliminary Q4’09 revenues released the first week of August. Taking this into account, we are raising our Q4’09 earnings per share (EPS) from 23 cents to 28 cents. We are also raising our FY’10 EPS estimate from 70 cents to $1.10. Our FY’09 and  FY’10 Drew estimates remain unchanged.”

TRG Opinion

“Consensus is that Thor and Drew will continue to operate manufacturing plants at current levels, if not higher, through September. At that time, the RV industry will know what volumes will look like over the next six months and whether or not to cut back or continue. Early indications point to a towable recovery before a motorhome recovery. Of the towable-focused RV and RV related manufacturers, we are more positively inclined to Thor because of its growing bus business versus Drew’s manufactured housing business that has experienced a death spiral for the better part of the last decade. Motorhome producer Winnebago Industries Inc. will be a solid survivor, but we think that the motorized segment is at least 6-12 months behind any towable segment recovery.”