Elkhart, Ind.-based Thor Industries Inc. Monday (March 6) announced record net income and revenue for its fiscal second quarter, ended Jan. 31.
Earnings during the period rose 45% to $64.8 million, or $1.23 per diluted share, while sales increased 62.9% to $1.59 billion. Gross profit increased 42.3% to $211.7 million, though gross profit margins decreased to 13.3% in the second quarter compared to 15.3% in the prior-year period, due primarily to acquisition-related dilution.
The strong growth was a combination of organic growth as well as the inclusion of results from Jayco Inc., acquired by Thor on July 1 of 2016. Diluted earnings per share for the fiscal 2017 second quarter increased 44.7% from the previous year.
“The second quarter marked another period of growth for Thor, as we experienced a positive start to the spring retail show season around the country,” said Thor President and CEO Bob Martin. “Growing demand from new consumers broadening our market has continued, with younger families increasingly buying more affordably priced travel trailers and smaller motorhomes.
“These positive trends give us confidence that Thor and the industry will outpace volumes achieved in 2016, which was the best year of wholesale RV shipments since the 1970s. We remain convinced that these trends will continue to drive industry growth in future periods, as we provide new consumers with positive experiences that prompt them to become lifelong RVers.”
Martin added, “We increased production in the first half of fiscal 2017, which is typically a slower seasonal period, to respond to the high demand. We continue to make progress in expanding our production capacity, including expansion projects announced at Keystone, Jayco and Heartland, which should begin to ramp up over the remainder of fiscal 2017 and into fiscal 2018. The investments we are making in expanding our production facilities will position us well for long-term growth, which is a consistent focus of our strategic plan.”
Towable RV sales were $1.08 billion for the second quarter, up 55% from $698.3 million in the prior-year period. Jayco contributed $294.1 million to towable sales, while the towable growth excluding the acquisition was 12.9%, driven primarily by strength in smaller, more affordably priced travel trailers.
Towable RV income before tax was $78 million, up 47% from $53.1 million in the second quarter last year. This increase was driven primarily by the increase in sales and modestly improved Selling General and Administrative (SG&A) expense as a percent of revenues, partially offset by increased amortization expense and lower gross margins associated with Jayco.
Towable RV backlog increased $615 million, or 86.8%, to $1.32 billion, compared to $708.4 million at the end of the second quarter of fiscal 2016, reflecting the inclusion of Jayco’s $414.9 million backlog as well as continued momentum in travel trailers.
Motorized RV sales were $475 million for the second quarter, up 95.6% from $242.9 million in the prior-year second quarter. The increase in motorized RV sales was a result of continued strong growth in the more moderately priced gas Class A and Class C motorhomes, which have been well received by dealers and consumers. Motorized revenues also benefited from the inclusion of Jayco’s motorized revenues of $137.2 million.
Motorized RV income before tax was $28.5 million, up 38.8% from $20.5 million last year, driven primarily by the growth in motorized sales and improved SG&A expense as a percent of revenues, partially offset by increased amortization expense and lower gross margins associated with Jayco.
Motorized RV backlog nearly doubled to $766.9 million from $396.8 million a year earlier, reflecting the inclusion of Jayco’s $138.1 million motorized backlog as well as strong, continued demand for smaller gas Class A and Class C motorhomes.
“With the strong operating performance during the quarter, we saw an increase in working capital which was driven by two main components. First, inventory levels have increased with most of our production facilities operating near capacity and with the recent capacity expansions made at a number of our subsidiaries,” said Colleen Zuhl, Thor senior vice president and CFO. “Second, accounts receivable, which turn very quickly, grew with the increase in sales and the timing of sales near the end of the quarter.
“As expected, we also invested approximately $25 million in capital projects and reduced the balance on our revolving credit facility by $15 million during the second quarter. At Jan. 31, we held $134.7 million of cash and $325 million was outstanding under the debt agreement. For the second half of the fiscal year, we expect to continue investing in additional production capacity to meet the robust demand for our products. Total capital investments for the fiscal year are forecast to be approximately $130 million as we expect to invest approximately $80 million in additional capital projects during the remainder of the fiscal year.”
For the second quarter, Jayco contributed approximately $431.3 million in sales and $38.1 million in gross profit.
Interest expense and amortization of debt issuance costs for the quarter were approximately $2.2 million.
Results for the quarter were also affected by the increase in amortization of intangibles. Total amortization for the quarter attributable to the Jayco acquisition amounted to $10 million.
“We remain very optimistic regarding Thor’s prospects as we see healthy demand for our products among dealers and consumers, including a growing segment of consumers that are just starting to experience the RV lifestyle,” said Peter B. Orthwein, Thor executive chairman. “With record attendance at many of the largest consumer RV shows in the early part of calendar 2017, many in our industry are optimistic about the prospects for continued growth. For Thor, our team will continue to focus on the factors that have made us successful over the long term – providing the innovative products and service that dealers and consumers value, while maintaining a long-term, strategic focus on investing for the future.”
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