- Fiscal 2018 financial results continue
to demonstrate strong growth in both revenue and profitability,
reflecting all-time records for a second quarter and first half in
the Company’s history:
- Second quarter net sales of $1.97
billion, up 24.1%
- Second quarter income before taxes of
$141.1 million, up 43.4%
- Second quarter diluted EPS of $1.51, up
22.8%
- As a result of the Tax Cuts and Jobs
Act (the “Tax Act”) enacted in December 2017, the Company’s
effective tax rate for the quarter was 43.5%, driven primarily by
an income tax charge related to the revaluation of its net deferred
tax assets, partially offset by the year-to-date benefit of the
lower federal tax rate provided under the Tax Act
- First half net sales of $4.20 billion,
up 27.5%
- First half income before taxes of
$328.2 million, up 53.2%
- Consolidated RV backlog up 33.9% to
$2.80 billion, versus 2017 second quarter, driven by continued
strong consumer demand for affordably-priced travel trailers and
motorhomes
- Attendance and sales at early spring
retail trade shows support dealers’ optimism for calendar 2018
consumer demand levels
- Economic conditions remain favorable
for continued industry growth
Thor Industries, Inc. (NYSE:THO) today announced record second
quarter results with income before taxes of $141.1 million, on
revenues of $1.97 billion. Gross profit for the second quarter
ended January 31, 2018, increased 27.7% to $270.3 million. As a
result of the strength of revenues and production during the
quarter, as well as operating efficiencies and process improvements
attained in the past year, primarily by Jayco, gross profit margins
increased to 13.7% in the second quarter compared to 13.3% in the
prior-year period.
Net income and diluted earnings per share for the second quarter
of fiscal 2018 were $79.8 million and $1.51, respectively. This
compares to net income and diluted earnings per share in the
prior-year second quarter of $64.8 million and $1.23,
respectively.
In the second quarter of the Company’s fiscal 2018, the Tax Act
was enacted which provided significant changes to the U.S. tax
code, including reducing the federal corporate income tax rate to
21%, effective January 1, 2018. As the Company’s 2018 fiscal year
ends on July 31, 2018, the Company’s estimated federal corporate
income tax rate for fiscal 2018 will be prorated to a blended 26.9%
rate. In addition to the benefit of the lower blended federal tax
rate of 26.9% in the second quarter, an income tax benefit of $12.5
million was recognized to reflect the impact of applying the lower
tax rate to the results of the first quarter of fiscal 2018. The
Company also recognized a non-recurring, non-cash income tax charge
of $34.0 million due to the revaluation of its net deferred tax
assets as a result of the lower federal tax rate under the Tax
Act.
“Our second quarter results reflect another period of
exceptional growth of both sales and earnings,” said Bob Martin,
Thor President and CEO. “In what has historically been our lowest
volume quarter, we achieved our third highest sales level of any
quarter in the Company’s history.”
“Our innovative products and the breadth of products we offer at
all price points along the spectrum, particularly within the
entry-level and mid-price point categories, combined with our
outstanding dealer network, resulted in market share gains during
calendar 2017. We leveraged the combined strength in industry
demand and share gains to drive increased profitability across both
segments of our business through a combination of increased output
from recently added production capacity, enhanced scheduling and
optimization of production runs at our existing facilities, as well
as various initiatives implemented across the Company over the last
year to improve operating efficiencies. During the quarter, we
continued to experience a tight labor market in Northern Indiana
and began to experience some inflationary price increases in
certain raw material and commodity-based components. We continue to
manage these challenges through a combination of actions,” Martin
added.
Towable RVs
- Towable RV sales were $1.37 billion for
the second quarter, up 26.9% from $1.08 billion in the prior-year
period, driven primarily by continued strong demand for our more
affordably-priced travel trailers and fifth wheels.
- Towable RV income before tax was $116.7
million, up 49.7% from $78.0 million in the second quarter last
year. This increase was driven primarily by the increase in sales;
improved gross margins due to improved operating efficiencies and
process improvements, primarily by Jayco; decreased Selling,
General and Administrative (SG&A) expense as a percent of
revenues; and slightly lower amortization expense.
- Towable RV backlog increased $493.1
million, or 37.3%, to $1.82 billion, compared to $1.32 billion at
the end of the second quarter of fiscal 2017, reflecting the
continued momentum and demand for our travel trailers in advance of
the spring selling season.
Motorized RVs
- Motorized RV sales were $559.9 million
for the second quarter, up 17.9% from $475.0 million in the
prior-year second quarter. The increase in motorized RV sales was a
result of the ongoing growth in our more moderately-priced gas
Class A and Class C motorhomes, both of which continue to be in
high demand by our dealers and end consumers.
- Motorized RV income before tax was
$37.5 million, up 31.8% from $28.5 million last year, driven
primarily by the growth in motorized sales and improved gross
margins due to improved operating efficiencies, primarily by
Jayco.
- Motorized RV backlog increased $214.9
million, or 28.0%, to $981.8 million from $766.9 million a year
earlier, reflecting the continued strong demand for our smaller,
affordably- priced gas Class A and Class C motorhomes.
“Our balance sheet remains very strong. As of January 31, 2018,
we held $109.8 million of cash. During the first half of fiscal
2018, we invested over $63.0 million on various capital projects
that support our existing businesses and will further increase
capacity across our product lines, while working capital increased
$118.0 million to support our seasonal needs,” said Colleen Zuhl,
Thor Senior Vice President and CFO. “We also continued to reduce
the outstanding balance under our credit facility, paying down
$65.0 million during the first half of the year to exit with $80.0
million outstanding as of January 31, 2018, compared to $145.0
million outstanding at July 31, 2017.”
“Subsequent to the end of the second quarter, Thor made a $46.9
million investment in a newly created joint venture, named TH2. TH2
was formed to own, improve and sell innovative and comprehensive
digital platforms throughout the RV marketplace. This investment
was funded by cash on hand at the closing, in early March 2018,”
concluded Zuhl.
Outlook
“Our healthy backlog is confirmation of the overall strength of
the RV lifestyle and confirmation that our products are hitting the
target of price and design for consumers,” added Martin. “The
overall health of the RV industry remains strong and is supported
by solid growth of retail shipments, with our dealer inventories at
appropriate levels for seasonal consumer demand. Demand continues
to be driven by favorable economic conditions and demographic
trends that are reflecting the growth of first-time and younger
buyers. Dealer optimism remains high based on strong attendance and
sales performance at the early spring retail trade shows.”
“As we look forward to the remainder of fiscal 2018, we will be
facing tougher year-over-year comparatives during the second half
of the fiscal year as the significant operating efficiencies and
process improvements achieved at Jayco began to materialize in the
third quarter of fiscal 2017. We are confident, however, that
fiscal 2018 will be another year of meaningful growth,” concluded
Martin.
Peter B. Orthwein, Thor Executive Chairman, added, “Looking
ahead, we will continue executing the components of our strategic
plan - investing in prudent capacity expansions to capitalize on
demand, providing market-leading, innovative and high quality
products that exceed customer expectations and maintaining our
focus on operational efficiency improvements and cost management
disciplines. In addition to our historically strong operating cash
flow, the positive impact provided by the U.S. tax reform
legislation on our cash flow will allow us to focus on funding
growth, both organically and through acquisition, paying down our
debt and increasing returns to our shareholders over time,”
Orthwein concluded.
Supplemental Earnings Release Materials
Thor announced that it 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 from our expectations. Factors which could cause materially
different results include, among others, raw material and commodity
price fluctuations, raw material or chassis supply restrictions,
the level of warranty claims incurred, legislative, regulatory and
tax law and/or policy developments including their potential impact
on our dealers and their retail customers, the costs of compliance
with governmental regulation, legal and compliance issues including
those that may arise in conjunction with recent 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 pace of obtaining and producing
at new production facilities, the pace of acquisitions and the
successful closing and financial impact thereof, the potential loss
of existing customers of acquisitions, the integration of new
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, the
availability of delivery personnel, asset impairment charges, cost
structure changes, competition, the impact of potential losses
under repurchase agreements, the potential impact of the strength
of the U.S. dollar on international demand, general economic,
market and political conditions, changes to investment and capital
allocation strategies or other facets of our strategic plan, and
other risks and uncertainties including those discussed more fully
in ITEM 1A of our Annual Report on Form 10-K for the year ended
July 31, 2017 and Part II, Item 1A of our quarterly report on Form
10-Q for the period ended January 31, 2018.
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 of this release 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 3 AND 6 MONTHS ENDED JANUARY 31, 2018
and 2017 ($000's except share and per share data)
(Unaudited)
3 MONTHS ENDED JANUARY 31, 6
MONTHS ENDED JANUARY 31, 2018 % Net Sales
(1) 2017 % Net Sales (1)
2018 % Net Sales (1) 2017
% Net Sales (1)
Net sales
$ 1,971,560 $ 1,588,525 $ 4,203,228 $
3,297,056 Gross profit $ 270,328 13.7% $ 211,702
13.3% $ 603,513 14.4% $ 448,454 13.6% Selling, general and
administrative expenses 117,088 5.9% 96,969 6.1% 251,351 6.0%
199,279 6.0% Amortization of intangible assets 13,796 0.7%
15,279 1.0% 27,354 0.7% 33,494 1.0% Interest expense, net
(953 ) (0.0%) (2,309 ) (0.1%) (1,984 ) (0.0%) (4,716 ) (0.1%)
Other income, net 2,574 0.1% 1,220
0.1% 5,332 0.1% 3,200 0.1%
Income before income
taxes
141,065 7.2% 98,365 6.2% 328,156 7.8% 214,165 6.5% Income
taxes 61,313 3.1% 33,583 2.1%
119,998 2.9% 70,638 2.1%
Net income and
comprehensive income
$ 79,752 4.0% $ 64,782 4.1% $ 208,158 5.0% $
143,527 4.4%
Earnings per common
share
Basic
$ 1.51 $ 1.23 $ 3.95 $ 2.73
Diluted
$ 1.51 $ 1.23 $ 3.94 $ 2.72 Weighted avg. common shares
outstanding-basic 52,694,680 52,582,134 52,653,303 52,543,050
Weighted avg. common shares outstanding-diluted 52,861,140
52,740,959 52,839,752 52,723,450
SUMMARY CONDENSED CONSOLIDATED BALANCE
SHEETS - JANUARY 31, ($000) (Unaudited)
2018 2017 2018
2017 Cash and equivalents $ 109,775 $ 134,655 Current
liabilities $ 817,117 $ 680,732 Accounts receivable, trade and
other 624,085 489,851 Long-term debt 80,000 325,000 Inventories
590,363 477,598 Other long-term liabilities 63,913 51,129 Prepaid
expenses and other 9,979 13,505
Stockholders' equity 1,747,929 1,375,564 Total current assets
1,334,202 1,115,609 Property, plant & equipment, net 466,215
375,354 Goodwill 377,693 377,693 Amortizable intangible assets, net
416,112 473,897 Deferred income taxes and other, net 114,737
89,872 Total $
2,708,959 $ 2,432,425 $ 2,708,959
$ 2,432,425 (1) Percentages may not add
due to rounding differences
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180307006341/en/
Thor Industries, Inc.Investor Relations:Bruce Byots, Senior
Director of Investor Relations(574) 970-7912
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