ELKHART, Ind., Sept. 30,
2019 /PRNewswire/ -- Thor Industries, Inc. (NYSE: THO) today
announced results for the fourth quarter and fiscal year ended
July 31, 2019.
"We are encouraged by the improvement in the North American RV
Towables segment in the fourth quarter, as we saw our flexible
business model and the benefits of our variable cost structure
drive improvement in margins for the quarter," said Bob Martin, Thor President and CEO. "Fiscal 2019
was a year of significant accomplishments amid challenging industry
conditions. We completed the largest acquisition in our Company's
and the RV industry's history, while managing through the overhang
of inventory among our independent dealers. As we look ahead to
fiscal 2020, we see many reasons for optimism as we leverage the
global growth opportunities of EHG. Our confidence was reinforced
at the recent Düsseldorf Caravan Salon in late August, the Hershey
RV show in mid-September and our Open House event held last week.
Each of these important events were well attended and reflected the
current optimistic sentiment of our independent dealers and
consumers."
Fourth Quarter Highlights
Fourth-quarter net sales
were $2.31 billion, an increase of
$437.5 million, or 23.3%, from the
fourth quarter of fiscal 2018, as the inclusion of $719.5 million in net sales from the European RV
segment was partially offset by a 17.6% decrease in North American
Towable RV sales and an 8.1% decrease in North American Motorized
RV sales.
Overall gross profit margin was 14.4% in the quarter, compared
to 13.0% in the prior-year period, primarily reflecting favorable
product mix and improvements in material, labor, and warranty cost
percentages in the North American towable segment, the Company's
largest segment.
Net income attributable to Thor and diluted earnings per share
for the fourth quarter were $92.1
million and $1.67,
respectively.
The Company's fourth-quarter financial results were impacted by
certain acquisition-related items as noted below.
- Transaction-related Impacts to Fiscal 2019 Fourth-Quarter
Results:
-
- Acquisition-related Costs: During the fourth
quarter, Thor incurred expenses related to the acquisition of EHG,
primarily related to professional services, of $2.4 million, which impacted EPS by $0.03 per diluted share.
- Ongoing Incremental Costs: During the
quarter, the Company also incurred other ongoing expenses related
to the acquisition of EHG, including EHG intangible asset
amortization expense of $12.8 million
and interest expense on debt incurred to finance the acquisition of
EHG of $30.7 million. Combined, these
two items further impacted EPS by $0.57 per diluted share.
- Tax Restructuring: During the fourth quarter, the
Company incurred a €2.7 million expense for real estate transfer
taxes associated with creating a tax-efficient financing structure
at EHG, which will provide future tax benefits for the
Company.
The North American independent dealer inventory rationalization
continued during the fiscal fourth quarter, as North American
industry wholesale shipments declined at a faster rate than retail
registrations. As a result, Thor's North American independent
dealer inventory levels decreased by 25.3% to approximately 103,400
units as of July 31, 2019, compared
to approximately 138,500 units as of July 31, 2018. Thor's
North American independent dealer inventory at the end of fiscal
2019 was at its lowest point since the first quarter of fiscal
2017, and management believes dealer ordering will start to align
with consumer demand by the end of calendar 2019.
European dealer inventory is also going through a
rationalization, though inventories were not as high as in
North America. We believe
independent dealer inventory levels of EHG products in Europe, while somewhat elevated in certain
locations, are now generally appropriate for seasonal consumer
demand in Europe and are expected
to be at a normalized level in 2020.
Fiscal Year 2019 Highlights
Fiscal year 2019 net sales
of $7.86 billion include the net
sales of EHG since the date of acquisition on February 1,
2019. Net income attributable to Thor and diluted earnings per
share for full-year fiscal 2019 were $133.3
million and $2.47,
respectively.
Fiscal year 2019 results include EHG acquisition-related costs
of $114.9 million and the impact of
the step-up in assigned value of acquired inventory, which was
subsequently sold during the fiscal third quarter and which
increased cost of goods sold by approximately $61.4 million. In aggregate, these
acquisition-related costs reduced EPS by $2.71 per diluted share. In addition, ongoing
amortization expense of $25.6
million, and interest expense of $66.1 million, were incurred as a result of the
EHG acquisition, which also impacted fiscal 2019 results by
$1.22 per diluted share.
Net cash provided by operating activities for fiscal year 2019
was $508.0 million vs. $466.5 million in fiscal 2018, despite a
reduction in sales, as the Company focused on working capital
management.
The Company's overall effective tax rate for fiscal 2019 was
28.3% compared with 32.0% for fiscal 2018. The primary drivers of
the change in the overall effective tax rate between comparable
periods relate to U.S. tax reform and the EHG acquisition.
SEGMENT RESULTS:
North American Towable RVs
- North American Towable RV sales were $1.16 billion for the fourth quarter, compared to
fourth-quarter sales of $1.41 billion
in the prior-year period. This decrease was driven primarily by
lower unit volume compared with the fourth-quarter of last year,
and was partially offset by a shift in product mix toward
higher-priced units. For the full-year fiscal 2019, North American
Towable RV sales were $4.56 billion,
down 24.1% from the record $6.01
billion in the prior year.
- North American Towable RV gross profit margin increased 260
basis points to 16.0% in the fiscal fourth quarter compared to the
prior-year quarter, driven primarily by decreased material, labor
and warranty costs as a percent of sales. For fiscal 2019, North
American Towable RV gross profit margin was 13.5%, a decrease of
120 basis points from fiscal 2018, primarily as a result of an
increased fixed overhead percentage resulting from reduced sales as
well as the impact of higher relative sales discounts and
promotions compared with the unusually low levels in the prior
fiscal year.
- Fourth quarter 2019 North American Towable RV income before tax
was $109.9 million, compared to
$109.2 million in the fourth quarter
last year. North American Towable RV income before tax was
$322.2 million for the full-year
fiscal 2019, down 39.5% from $532.7
million in fiscal 2018.
- North American Towable RV backlog decreased $73.8 million, or 9.6%, to $693.2 million, compared to $767.0 million at the end of fiscal 2018,
reflecting independent dealers continuing to rationalize inventory
levels. The Company believes the current towable RV backlog is more
closely aligned with retail demand and continuing trends toward
smaller, but more frequent, dealer order patterns.
North American Motorized RVs
- North American Motorized RV sales were $387.4 million for the fourth quarter compared to
sales of $421.3 million in the
prior-year period. The decrease in motorized sales was driven
primarily by lower unit sales, as well as a mix shift toward
lower-priced Class C motorhomes. For the full-year fiscal 2019,
North American Motorized RV sales were $1.65
billion, down 23.2% from $2.15
billion in fiscal 2018.
- North American Motorized RV gross profit margin was down by 50
basis points to 9.6% in the fiscal 2019 fourth quarter compared to
the prior-year quarter, primarily due to reduced unit sales levels
and the resulting increased fixed overhead percentage for the
quarter. North American Motorized RV gross profit margin was 10.0%
for fiscal 2019, down 90 basis points from the prior year, due
primarily to the same factors.
- North American Motorized RV income before tax for the fourth
quarter was $16.8 million, compared
to $20.8 million last year, driven
primarily by the lower unit sales levels and the corresponding
decrease in gross profit. North American Motorized RV income before
tax for fiscal 2019 was $80.9
million, down 40.0% from $134.8
million in the prior year, primarily due to lower net sales,
decreased gross profit and higher SG&A costs as a percent of
net sales.
- North American Motorized RV backlog decreased $175.2 million to $458.8
million from $634.1 million a
year earlier, reflecting independent dealers continuing to
rationalize inventory levels. The Company believes the current
motorized RV backlog is reflective of a continuing return to a
normalized level and the shift in dealer order patterns to smaller
and more frequent orders.
European RVs
- European RV sales were $719.5
million for the fourth quarter of fiscal 2019. European RV
sales were $1.49 billion for fiscal
2019, reflecting six months of results of EHG, which was acquired
on February 1, 2019.
- European RV gross profit was $96.1
million, or 13.4% of segment net sales, in the fiscal fourth
quarter. European RV gross profit for fiscal 2019 was $150.0 million, or 10.1% of segment net sales.
Fiscal 2019 segment gross profit was negatively impacted by
purchase accounting adjustments related to the step-up in the
assigned value of acquired inventory, which was subsequently sold
during the fiscal third quarter, of approximately $61.4 million, or 4.1% of segment net sales for
the fiscal year.
- European RV income before tax was $25.0
million for the fourth quarter of fiscal 2019, including
amortization expense related to acquired intangible assets of
$12.8 million. European RV loss
before tax for fiscal 2019 was $5.9
million, which includes both the impact of $61.4 million related to the step-up in assigned
value of acquired inventory that was subsequently sold during the
fiscal third quarter and amortization expense related to acquired
intangible assets of $25.6
million.
- European RV backlog was $852.7
million as of July 31, 2019,
reflecting current levels of demand within the European
market.
"Consolidated net cash provided by operating activities during
fiscal 2019 has grown to approximately $508
million compared to $467
million for the same period in fiscal 2018. We utilized our
strong cash flow to make considerable progress in reducing the debt
incurred to execute the EHG acquisition and have paid approximately
$480 million on the
acquisition-related debt to date. For fiscal 2020, our focus will
remain on working capital management, improving net cash provided
by operating activities and reducing our net debt level," said
Colleen Zuhl, Thor's Senior Vice
President and Chief Financial Officer.
EHG Integration Update
Bob
Martin commented, "Our expansion into the European RV market
represents a first step in our long-term goal of growing our
business beyond North America and
capitalizing on global growth opportunities. Our integration plan
is proceeding, and we have made measurable progress in a number of
areas. We are developing a culture of collaboration among our
companies at the same time as we integrate EHG into the Thor family
of companies. This collaboration will focus on near-term
opportunities to adopt global best practices in purchasing to
capture cost efficiencies, and sharing best practices in R&D
and product development among our companies. As Colleen
noted, working capital management has already led to an increase in
net cash provided by operating activities, which totaled more than
$500 million in fiscal 2019, which we
have used to fund payments on the acquisition-related debt.
Additionally, we have created an international product transfer
team that is responsible for the planning and implementation of the
manufacturing, sales and distribution of EHG products in
North America. We showed a select
number of European-model EHG products at our Open House event held
last week, and the response was overwhelmingly positive."
The top priority for Thor's management team during fiscal 2020
is the continued integration of EHG, and the further improvement of
the Company's balance sheet. In the coming years, the integration
efforts will also focus on applying some of the advanced production
technology in use at EHG to more of Thor's U.S. subsidiary
operations in order to improve product quality and drive down
warranty costs.
Bob Martin noted, "Looking ahead,
we see many opportunities to capture value from the EHG acquisition
through effective integration, prudent cost management and the
introduction of EHG products to the North American market. We
believe we are nearing the conclusion of the North American
independent dealer inventory rationalization process, resulting in
normalized dealer inventory levels by the end of this calendar
year. We see positive factors supporting our outlook for fiscal
year 2020. North American dealer inventory levels are 25% lower
than the unusually high levels at the end of last year, and nearly
6% lower than they were two years ago. Dealers remain confident,
and many of the dealers I speak with continue to invest in growing
their businesses for the long term. We have great opportunities to
grow our global business with the acquisition of EHG. For fiscal
2020, we expect to see strong top-line growth with the addition of
a full year of net sales from EHG, but since the dealer inventory
adjustment may continue through the first half of our fiscal year,
our outlook is for a flat to modest decline in the North American
markets in the near-term, barring a significant macroeconomic
change. We look forward to updating our investors in December on
our fiscal first-quarter financial results, and on the progress and
milestones of the integration of EHG."
Supplemental Earnings Release Materials
Thor has
provided a comprehensive question and answer document, as well as a
PowerPoint presentation, relating to its quarterly results and
other topics. To view these materials, go to
http://ir.thorindustries.com.
About Thor Industries, Inc.
Thor is the sole owner of
operating subsidiaries that, combined, represent the world's
largest manufacturer of recreational vehicles. For more information
on the Company and its products, please go to
www.thorindustries.com.
Forward Looking Statements
This release includes
certain statements that are "forward looking" statements within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995, Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward looking statements are made based on
management's current expectations and beliefs regarding future and
anticipated developments and their effects upon Thor, and
inherently involve uncertainties and risks. These forward looking
statements are not a guarantee of future performance. We cannot
assure you that actual results will not differ materially from our
expectations. Factors which could cause materially different
results include, among others, raw material and commodity price
fluctuations; raw material, commodity or chassis supply
restrictions; the impact of tariffs on material or other input
costs; the level and magnitude of warranty claims incurred;
legislative, regulatory and tax law and/or policy developments
including their potential impact on our dealers and their retail
customers or on our suppliers; the costs of compliance with
governmental regulation; legal and compliance issues including
those that may arise in conjunction with recently completed
transactions; lower consumer confidence and the level of
discretionary consumer spending; interest rate fluctuations; the
potential impact of interest rate fluctuations on the general
economy and specifically on our dealers and consumers; restrictive
lending practices; management changes; the success of new and
existing products and services; consumer preferences; the ability
to efficiently utilize production facilities; the pace of
acquisitions and the successful closing, integration and financial
impact thereof; the potential loss of existing customers of
acquisitions; our ability to retain key management personnel of
acquired companies; a shortage of necessary personnel for
production; the loss or reduction of sales to key dealers;
disruption of the delivery of units to dealers; increasing costs
for freight and transportation; asset impairment charges; cost
structure changes; competition; the impact of potential losses
under repurchase or financed receivable agreements; the potential
impact of the strength of the U.S. dollar on international demand
for products priced in U.S. dollars; general economic, market and
political conditions; the impact of changing emissions standards in
the various jurisdictions in which our products are sold; and
changes to investment and capital allocation strategies or other
facets of our strategic plan. Additional risks and uncertainties
surrounding the acquisition of EHG include risks regarding the
potential benefits of the acquisition and the anticipated operating
value creation, the integration of the business, the impact of
exchange rate fluctuations and unknown or understated liabilities
related to the acquisition and EHG's business. These and other
risks and uncertainties are discussed more fully in Item 1A of our
Annual Report on Form 10-K for the year ended July 31, 2019.
We disclaim any obligation or undertaking to disseminate any
updates or revisions to any forward looking statements contained in
this release or to reflect any change in our expectations after the
date hereof or any change in events, conditions or circumstances on
which any statement is based, except as required by law.or to
reflect any change in our expectations after the date hereof or any
change in events, conditions or circumstances on which any
statement is based, except as required by law.
THOR INDUSTRIES,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
FOR THE THREE
MONTHS AND FISCAL YEARS ENDED JULY 31, 2019 AND 2018
|
($000's except
share and per share data)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
July 31, (Unaudited)
|
|
Fiscal Years Ended
July 31,
|
|
|
2019
|
% Net
Sales (1)
|
|
2018
|
% Net
Sales (1)
|
|
2019
|
% Net
Sales (1)
|
|
2018
|
% Net
Sales (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
2,311,623
|
|
|
$
|
1,874,111
|
|
|
$
|
7,864,758
|
|
|
$
|
8,328,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
$
|
331,812
|
14.4%
|
|
$
|
244,408
|
13.0%
|
|
$
|
973,094
|
12.4%
|
|
$
|
1,164,666
|
14.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
171,299
|
7.4%
|
|
106,644
|
5.7%
|
|
536,044
|
6.8%
|
|
477,444
|
5.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets
|
|
25,262
|
1.1%
|
|
13,882
|
0.7%
|
|
75,638
|
1.0%
|
|
55,118
|
0.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
costs
|
|
2,355
|
0.1%
|
|
—
|
—%
|
|
114,866
|
1.5%
|
|
—
|
—%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
(expense), net
|
|
(28,232)
|
(1.2)%
|
|
(132)
|
—%
|
|
(60,032)
|
(0.8)%
|
|
(3,039)
|
—%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense), net
|
|
5,089
|
0.2%
|
|
598
|
—%
|
|
(1,848)
|
—%
|
|
3,964
|
—%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
109,753
|
4.7%
|
|
124,348
|
6.6%
|
|
184,666
|
2.3%
|
|
633,029
|
7.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
17,262
|
0.7%
|
|
36,143
|
1.9%
|
|
52,201
|
0.7%
|
|
202,878
|
2.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
92,491
|
4.0%
|
|
88,205
|
4.7%
|
|
132,465
|
1.7%
|
|
430,151
|
5.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: net income
(loss) attributable to non-controlling interests
|
|
436
|
—%
|
|
—
|
—%
|
|
(810)
|
—%
|
|
—
|
—%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Thor Industries, Inc.
|
|
$
|
92,055
|
4.0%
|
|
$
|
88,205
|
4.7%
|
|
$
|
133,275
|
1.7%
|
|
$
|
430,151
|
5.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.67
|
|
|
$
|
1.67
|
|
|
$
|
2.47
|
|
|
$
|
8.17
|
|
Diluted
|
|
$
|
1.67
|
|
|
$
|
1.67
|
|
|
$
|
2.47
|
|
|
$
|
8.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-avg. common
shares outstanding - basic
|
|
55,063,473
|
|
|
52,695,365
|
|
|
53,905,667
|
|
|
52,674,161
|
|
Weighted-avg. common
shares outstanding - diluted
|
|
55,211,141
|
|
|
52,881,088
|
|
|
54,026,686
|
|
|
52,853,360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Percentages may not add due to
rounding differences
|
|
|
|
|
|
|
SUMMARY CONDENSED
CONSOLIDATED BALANCE SHEETS ($000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 31,
2019
|
|
July 31,
2018
|
|
|
|
July 31,
2019
|
|
July 31,
2018
|
Cash and
equivalents
|
|
$
|
451,262
|
|
$
|
275,249
|
|
Current
liabilities
|
|
$
|
1,448,325
|
|
$
|
769,330
|
Accounts receivable,
net
|
|
716,227
|
|
487,235
|
|
Long-term
debt
|
|
1,885,253
|
|
—
|
Inventories,
net
|
|
827,988
|
|
537,909
|
|
Other long-term
liabilities
|
|
231,640
|
|
71,594
|
Prepaid expenses and
other
|
|
41,880
|
|
11,281
|
|
Stockholders'
equity
|
|
2,095,228
|
|
1,937,741
|
Total
current assets
|
|
2,037,357
|
|
1,311,674
|
|
|
|
|
|
|
Property, plant &
equipment, net
|
|
1,092,471
|
|
522,054
|
|
|
|
|
|
|
Goodwill
|
|
1,358,032
|
|
377,693
|
|
|
|
|
|
|
Amortizable
intangible assets, net
|
|
970,811
|
|
388,348
|
|
|
|
|
|
|
Deferred income taxes
and other, net
|
|
201,775
|
|
178,896
|
|
|
|
|
|
|
Total
|
|
$
|
5,660,446
|
|
$
|
2,778,665
|
|
|
|
$
|
5,660,446
|
|
$
|
2,778,665
|
Contact
Investor Relations:
Mark Trinske, Vice President of
Investor Relations
mtrinske@thorindustries.com
(574) 970-7912
View original
content:http://www.prnewswire.com/news-releases/thor-announces-financial-results-for-fourth-quarter-and-fiscal-year-2019-300927314.html
SOURCE Thor Industries, Inc.