Thor Industries (NYSE: THO) reported Q1 EPS of $2.05, $0.49 better than the analyst estimate of $1.56. Revenue for the quarter came in at $2.54 billion versus the consensus estimate of $2.37 billion.

• Net sales for the first quarter were $2.54 billion, an increase of 17.5%. First-quarter results include $1.89 billion in North American RV net sales and $602.5 million in European RV net sales.
• Consolidated gross profit margin for the first quarter was 14.9%, a 60 basis point improvement over the prior-year period.
• Net income attributable to THOR for the first quarter increased 122.8% to $113.8 million, or $2.05 per diluted share.
• Consolidated RV backlog as of October 31, 2020 was $8.92 billion, an increase of 194.5% over October 31, 2019.

"We are pleased to report a solid start to our fiscal year with strong year-over-year growth across all of our major metrics, including net sales, gross margin and net income attributable to THOR. Our backlog continued to increase in the first quarter, setting a record, while dealer inventories continued to decline as many of our product shipments are going directly to fill existing end-customer orders. To address the increase in demand, we have increased production levels. Even with our higher production output and deliveries, demand and backlog for our RV products continue to grow," said Bob Martin, President and CEO of THOR Industries.

"We are working hard to manage through temporary supply chain issues, which are currently common across the entire RV industry. We are confident that once these temporary supply chain constraints are mitigated, our shipments will increase further. We also believe it will take a number of months of production to first fill dealer presold orders before we will begin a restocking cycle to help our dealers get their inventory back to a more historically normal level," added Martin.

"Each of our business segments delivered stronger operating results in the first quarter as compared to the prior-year first quarter. Our improved financial performance demonstrates our ability to successfully ramp up production volumes in response to surging demand while managing our expenses to achieve improved margins and net income in an unusually complex operating environment," said Colleen Zuhl, THOR's Senior Vice President and Chief Financial Officer.

"Historically, our cash flow tends to be seasonal as we build inventory during our first and second fiscal quarters in preparation for the typical demand cycle for our products. This is true again this year, with the added complexity of carrying additional chassis and inventory due to increased production and higher work-in-process levels as a result of temporary supply chain constraints. We expect overall working capital levels to remain elevated given strong market demand but expect our work-in-process to normalize to appropriate levels during the fiscal year as the supply chain stabilizes and we ship completed work-in-process units. We continue to have strong liquidity with $337.4 million of cash and cash equivalents as of October 31, 2020, and approximately $720 million currently available for borrowing under our ABL. Our cash utilization priorities remain consistent with our historical priorities, namely, we will invest in our businesses, grow our dividend over time, further reduce our acquisition-related debt obligations, and support opportunistic strategic investments, including acquisitions, to enhance long-term shareholder value," concluded Zuhl.

Outlook

"Our financial results were very strong for the first quarter, despite the continued challenges we faced as a result of the pandemic. Our teams have done a great job of managing through what continues to be an uncertain operating environment. We view the current chain constraints to be temporary in nature, and expect to achieve continued growth in fiscal 2021 supported by our October 31st backlog of $8.92 billion," said Bob Martin, President and CEO of THOR Industries.

"We believe the long-term growth potential for the RV industry remains very positive. While it is certainly true that the impact of COVID-19 has brought new buyers into our industry, both THOR, specifically, and the industry, generally, were attracting new buyers and saw strong demand independent of the pandemic. People have shown that they appreciate the long-term value proposition RVs offer – affordability, a vacation in a controlled environment, freedom, and outdoor fun. We also believe that the desire by consumers to 'control their own destiny' and have safer, socially distanced vacation activities has been a key factor in driving recent RV demand and will continue to be a factor for the foreseeable future.

"On December 1, 2020, the RVIA updated their most-likely forecast and now expects an increase of 18.7% in calendar 2021 shipments over their most-likely estimate for calendar 2020 shipments. We support their forecast and believe there is potential for upside to this forecast based on current industry conditions," concluded Martin.

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