Thor Industries (THO) Tops Q3 EPS by 14c, Revenues Beat; 4Q Outlook 'Improves'

Thor Industries (NYSE: THO) reported Q3 EPS of $0.43, $0.14 better than the analyst estimate of $0.29. Revenue for the quarter came in at $1.68 billion versus the consensus estimate of $1.67 billion.

• Net sales for the third quarter were $1.68 billion. Third-quarter results include $1.04 billion in North American RV sales and $615.3 million in European RV net sales.
• Gross profit margin for the third quarter was 12.2%.
• Net income attributable to Thor for the third quarter was $24.1 million.
• Net cash from operations for the year-to-date period was $237.3 million.
• Diluted earnings per share were $0.43.
• The Company continued to make progress paying down its acquisition-related debt during the quarter and, life-to-date, has paid approximately $543 million on this debt.
• Outlook improves for the Company's fiscal fourth quarter. Sales and backlog for May, the first month of the Company's fiscal fourth quarter, improved on a weekly basis as dealers began to reopen their dealerships and consumer demand increased.

"Despite this being one of the most unusual quarters I have ever experienced, I am pleased to report that we were profitable and generated positive net cash from operations. Our financial position has remained strong as a result of numerous management-led actions that were executed quickly in conjunction with our temporary plant shut-downs in mid-March. Our results are the product of both the highly variable cost structure we have created and our ability to quickly align our production and cost structure to meet fast-changing market conditions," said Bob Martin, President and CEO of Thor Industries. "I would like to thank the team members at Thor Industries and all of our subsidiaries for their incredible dedication and commitment to Thor and for their contributions to our results during this highly uncertain period," added Martin.

"Our business was built with the ability to manage through cyclicality, and our management actions, combined with our highly variable cost model, allowed us to remain profitable and generate positive net cash from operations for the third quarter," said Colleen Zuhl, Thor's Senior Vice President and Chief Financial Officer.

"In the third quarter, as we focused on maximizing liquidity, we borrowed $250 million from our ABL. Given the current strength of the RV market, particularly in North America, and the reopening of many of our independent dealers as well as many campground facilities, the current outlook is much clearer than it was at the end of March and early April. As a result, we have repaid the $250 million draw, and the available balance on our ABL was $396 million as of June 5, 2020.

"Additionally, during the quarter prior to the pandemic affecting our operations, we continued to pay down our acquisition-related Term Loan B ("TLB") debt. In March, we made payments of $45 million on our TLB. Life-to-date, payments on our acquisition-related debt of $2.2 billion totals approximately $543 million.

"We are confident our current liquidity and financial position will allow us to manage through near-term uncertainties that may arise within the RV market or the broader economy," added Zuhl.

Outlook

Bob Martin said, "To be certain, the events of this quarter were unexpected and difficult, but our experienced team members and our highly variable cost model once again proved our ability to quickly navigate through uncertainty and generate positive financial results.

"Today, market indicators in North America are increasingly positive. Every North American dealer I have spoken to in the last few weeks has been very excited about the pace at which sales are picking up. Many of our dealers are reporting a significant improvement in sales from April to May and are excited about the sales potential for June and beyond. Because of this improved outlook and the relaxation of many stay-at-home restrictions, we began to restart production in the first week of May in North America. We have been successful in safely bringing our people back to work, and we are ramping-up production in a measured way in order to keep our team members safe and product quality high, while also fulfilling dealer orders as quickly as possible.

"In Europe, with over 1,200 dealer-partners in Germany and across the continent, our brands have one of the strongest dealer and service networks, and our long-term outlook for future growth in retail sales remains positive. More and more people are discovering RVs as a way to support their lifestyle of independence and individuality, as well as using the RV as a multi-purpose vehicle to escape urban life and explore outdoor activities and nature. While we are optimistic about the long-term growth of the RV market in Europe, the outlook for European RV retail sales for the remainder of the calendar year depends upon the economic conditions in the countries in which we do business.

"Since the end of our third fiscal quarter, our outlook for the balance of our fiscal year and the calendar year has markedly improved. We're seeing an influx of first-time buyers, which bodes well for the long-term health of the RV industry. When the COVID-19 pandemic started, we saw many people start to work at home. One new trend we are seeing is an evolution from 'work at home' to 'work from anywhere' as RV buyers use their new RVs as their office wherever they are, or wherever they want to be. Our channel checks tell us that many of our independent RV dealers are seeing a significant resurgence in their sales, and their inventory levels, which were already down 20% year-over-year, are further declining. Demand for our products is very strong. Our flexible business model gives us the ability to quickly ramp production in a focused way, and we will ramp production with three primary objectives: the safety of our team members, the quality of our products, and the speed of our production, in that order. We remain steadfast in our confidence in the long-term outlook for not only our business, but the entire RV industry, and we continue to look forward to a bright future." said Martin.

For earnings history and earnings-related data on Thor Industries (THO) click here.

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