Thor Industries (THO) Reports Q4 EPS of $1.67, Revenues Beat

September 20, 2018 7:02 AM

Thor Industries (NYSE: THO) reported Q4 EPS of $1.67, versus $2.03 reported last year. Revenue for the quarter came in at $1.87 billion versus the consensus estimate of $1.85 billion.

“Our fourth quarter results reflect the actions taken during the period to balance dealer inventory levels," added Martin. “We believe our reduced production levels, combined with higher promotional costs and solid retail demand, have improved the position of our dealers' inventories as they enter the new model year and prepare for the upcoming Dealer Open House.

“While labor costs began to moderate during the latter part of fiscal 2018, they remained elevated on a year-over-year basis. In addition, we experienced higher warranty and warranty-related costs, as well as inflationary price increases in certain raw material and commodity-based components, due primarily to headwinds created by the announcement and implementation of steel and aluminum tariffs and other regulatory actions. We will continue to manage these input factors through a combination of strategic actions and believe, over time, we will be able to offset these cost increases.

“Also, during the quarter, we incurred incremental expenses from transaction costs associated with the announced acquisition of the Erwin Hymer Group, as well as certain legal settlement costs.

“Our consolidated backlog at July 31, 2018 is reflective of our current, pre-Open House time of the year as our dealers await the introduction of our 2019 models. Overall, we believe that our backlog reflects a more normalized level and will provide us with the ability to realize the benefits associated with a more stable production environment in future quarters."

Outlook

“While we are pleased with our full-year results, fiscal 2018 ended with near-term challenges for both the top line and gross margin," added Martin. “Our entire organization focused throughout the second half of the fiscal year in assisting our dealers in balancing their inventory levels, as well as taking numerous actions to offset our rising costs, however, we have more work to do in fiscal 2019.

“As dealer orders, and our resulting production schedules, return to a more normalized pattern beginning in calendar 2019, we will continue to match production to our dealer needs, protect and seek to grow our space on dealer lots, ensure we provide high-quality, innovative products in all key price points with the features consumers are seeking and act aggressively to offset items pressuring our margins, whether from labor, tariffs, commodity increases or other sources.

“Our outlook for fiscal year 2019 reflects a similar healthy macroeconomic environment consistent with current conditions, as well as the continuation of favorable demographic and lifestyle growth trends, including the ongoing strength of baby boomer customers, in addition to first-time and younger buyers. Dealer optimism remains high and their inventory is fresh.

"However, due to dealer order strength experienced in the first half of fiscal 2018, we are planning for tougher year-over-year comparisons in the first half of fiscal 2019 with more favorable top-line growth rates in the second half of the fiscal year. Similar to the quarterly progression of our top line, we anticipate gross margin pressure to be greater in the first half of the year. During fiscal year 2019, our diluted EPS will benefit from a lower effective tax rate," concluded Martin.

"Although we expect to have some near-term growth challenges, our industry\'s end-market demand trends continue to remain very favorable,” said Peter B. Orthwein, Thor Executive Chairman. "Unlike many of the market expansions we have experienced over the past two decades, the current market strength has been driven largely by new consumers adopting the RV lifestyle with many consumers adopting the lifestyle at a much younger age than we have seen historically. We view such retail growth to be more sustainable over the long term.

"During fiscal 2019, we will remain focused on executing our overall strategic plan, including our capital allocation strategy, which reflects funding our growth initiatives, and returning capital to our shareholders. This week we announced our plan to acquire the Erwin Hymer Group, the leading European RV manufacturer and an important step in our journey to become the world\'s premier RV manufacturing company. Given our proven history of acquiring successful companies with strong management teams and overall strategic fit, we believe this acquisition, combined with the favorable North American and European market fundamentals, enables the Company to continue to be successful in executing its long-term growth strategy and enhancing shareholder value."

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

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