Homing In...

(RTTNews) - Recreational vehicles maker Thor Industries Inc. (THO) has focused on strategically growing its business over the past two years through investments in acquisitions, new capacity and product innovation. However, the company anticipates that the next two quarters will pose tougher comparisons given the significant growth it achieved last year.

Catalysts

- Primary Focus On Assembly

- Meaningful Increases In Production Capacity During FY14 And FY15

- Diversified Lineup Of Innovative Product Offerings

- Solid Balance Sheet

- Consistent Focus On Shareholder Value

Company Profile

Thor Industries manufactures a wide range of recreational vehicles or RVs in the United States and sells those vehicles primarily in the United States and Canada.

The company's principal recreational vehicle and other operating subsidiaries are Airstream Inc., CrossRoads RV, Thor Motor Coach Inc., Keystone RV Company, Heartland Recreational Vehicles LLC, Livin' Lite RV Inc. , Bison Coach, K.Z. Inc., and Postle Operating LLC.

Thor has two reportable segments: Towable recreational vehicles and Motorized recreational vehicles. The towable RVs include travel trailers, fifth wheels and specialty trailers. The motorized RVs comprises Class A, B, and C motorhomes.

The operations of the company's Postle subsidiary, which was acquired May 1, 2015, are included in Other, which is a non-reportable segment.

One of the company's dealers, FreedomRoads LLC, accounted for 17% of continuing consolidated net sales in fiscal 2015, 2014 and 2013. This dealer also accounted for 22% of the company's consolidated trade accounts receivable at July 31, 2015 and 21% at July 31, 2014.

Annual earnings rose at a CAGR level of 17.2% to $202.0 million in fiscal 2015 from $91.2 million in fiscal 2010.

Latest Q1 Performance

The company's just bygone first-quarter saw sales and backlogs both exceeding $1 billion, improved margins, and strong earnings growth, helped by its continued focus upon execution of its strategic plan.

First-quarter net income from continuing operations was $50.7 million or $0.97 per share compared to $38.9 million or $0.73 per share in the prior year period.

Net sales totaled $1.03 billion, 12% higher than the previous year's sales of $922.0 million, as sales of towable and motorized RVs posted combined growth of 8%, including revenue from acquisitions, which was supplemented by revenues from the acquisition of Postle Aluminum.

Gross profit margins increased to 14.8% in the first quarter compared to 12.8% in the prior-year period, due in large part to changes in product mix and improvements in material, labor and warranty costs relative to the higher levels of labor and warranty costs in early fiscal 2015.

Consolidated RV backlog on October 31, 2015 was $1.05 billion, up 16% from $909.7 million at October 31, 2014.

Towable RV backlog rose 9% to $710.0 million, compared to $653.4 million at the end of the first quarter of fiscal 2015. Motorized RV backlog increased 33% to $341.0 million from $256.2 million a year earlier, reflecting the strong reception to the new products introduced at the Dealer Open House in September.

Bob Martin, Thor President and CEO, said, "This record performance would not have been possible without the strength of our dealer base and all of our team members who work hard to make what we think are the best RVs in the business. We are optimistic about our prospects for continued growth in fiscal 2016 as we build on the momentum of our September Dealer Open House at our largest industry trade show in Louisville this week."

Growth Through Acquisitions

January 5, 2015, Thor's Heartland RV unit acquired towable RV maker Cruiser RV or CRV and luxury fifth wheel maker DRV Luxury Suites for total net cash consideration of $47.5 million. CRV and DRV generated about $135 million in combined sales for calendar 2014.

May 1, 2015, Thor acquired Postle Aluminum, a producer of aluminum extrusions, specialized components and powder coating and painting services. for about $144 million in cash, net of cash acquired. The transaction is expected to be accretive to Thor earnings.

Postle generated sales of about $220 million in 2014. About 30% of total sales are to Thor subsidiaries and about 75% of total sales were to the RV industry. The remaining sales are to the specialty truck and trailer, cargo, marine and fencing industries.

Beyond acquisitions, the company continued to invest in the organic growth of its RV business with a number of meaningful capital investments in its towable business.

The company Thor had cash and cash equivalents of $179.3 million as of October 31, 2015, down from $313.6 million as of October 31, 2014. Thor continues to be a solid dividend company as it maintained its quarterly dividend at $0.27 per share throughout fiscal 2015, and has increased dividend to $0.30 per share recently.