Investment firm Avondale Partner LLC recently met with management from Jackson Center, Ohio-based Thor Industries Inc.
In a note to investors, Director Kathryn Thompson said that the RV industry is “at the peak of the RV bankruptcy cycle,” and that “cash-cushioned” Thor would be one of the strongest positioned companies when the market returns.
Although that turning point is still a matter of speculation, Thompson said that “investors are looking past the current quarter” and focusing on what companies will be left standing.
Thompson also addressed the need for a looser credit environment, noting, “(Thor) Management said that dealers appear to have demand for new product but are being prevented from ordering by their floorplan financing providers.”
Other observations included:
• Thor recently loaned $20 million to national dealer network FreedomRoads LLC. Thompson said that “it is our understanding” that $10 million was used to pay curtailments on existing product on dealer lots while the remaining $10 million was used to order additional Thor product. Privately held FreedomRoads maintains 10% RV retail market share, and Avondale estimates that Thor could see an additional $150 million to $200 million potential revenue from the deal.
• RV loans being included under the Term Asset-Backed Securities Loan Facility (TALF) could aid both retail and wholesale financing. Thompson said that given the higher FICO scores of RV loans, “RV paper could be included with auto loans to bring up average FICO scores in any sort of TALF transaction.”
• Thor has extended its repurchase terms with both Bank of America and GE. Thompson said that the primary concern at this time for the RV industry would be if GE decided to exit the floor planning business entirely. “If that were to occur, Thor management did indicate that they would be willing to use their balance sheet to address the shortfall,” she said.