Editor’s Note: The Thompson Research Group issued this investor report last Friday, following the release of the October wholesale RV shipment report by the Recreation Vehicle Industry Association (RVIA).
October 2009 total RV wholesale shipments rose 23% to 16,600 units. This is an improvement from the September 13% YOY (year over year) increase and marks the third positive increase in wholesale shipments since July 2006 (excluding Oct. 2007 “false bottom”).
- Towable shipments increased 26.9% in October. Travel trailers led the segment with a robust 32.4% increase in shipments to 9,800 units after the 31.4% increase last month.
- Motorhome wholesale shipments fell 6.2% YOY but show directional improvement.
- TRG opinion. As a reminder, the national RVIA show starts next week. Strong October shipment numbers foreshadow what we think will be a strong show. While the implosion of finance was the over-riding theme at last year’s show, we expect a greater focus on to what degree higher order trends is a function of low inventories versus improved retail trends. Fall retail shows have pointed to an overall modest recovery in retail trends. Because of improved order outlooks, we are hearing manufacturers are taking only a week or two of production off at the end of December versus three weeks to two months time off last year. Also, manufacturers are re-hiring workers and increasing production. Drew Industries Inc. (DW) and Winnebago Industries Inc. (WGO) both recently reported earning upside surprises, and we expect Thor Industries Inc. (THO) will also beat Street expectations when the company reports final Q1’10 earnings in conjunction with the RVIA show.
We continue to recommend THO, DW and WGO.