Thor Announces Record Results for Second Quarter and First Half of Fiscal 2018
•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 Companys 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. (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 Companys 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 Companys 2018 fiscal year ends on
July 31, 2018, the Companys 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 Companys 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 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 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.
"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 worlds largest manufacturer of recreational vehicles. For
more information on the Company and its products, please go to www.thorindustries.com.
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 managements
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.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE 3 AND 6
MONTHS ENDED JANUARY 31, 2018 and 2017
($000s except share and per share data) (Unaudited)
3 MONTHS ENDED JANUARY 31,
6 MONTHS ENDED JANUARY 31,
% Net Sales (1)
% Net Sales (1)
% Net Sales (1)
% Net Sales (1)
Selling, general and administrative expenses
Amortization of intangible assets
Interest expense, net
Other income, net
Income before income taxes
Net income and comprehensive income
Earnings per common share
Weighted avg. common shares outstanding-basic
Weighted avg. common shares outstanding-diluted
SUMMARY CONDENSED CONSOLIDATED BALANCE SHEETS - JANUARY 31,
Cash and equivalents
Accounts receivable, trade and other
Other long-term liabilities
Prepaid expenses and other
Total current assets
Property, plant & equipment, net
Amortizable intangible assets, net
Deferred income taxes and other, net
(1) Percentages may not add due to rounding differences
View source version on businesswire.com: http://www.businesswire.com/news/home/20180307006341/en/
SOURCE: Thor Industries, Inc.
Bruce Byots, Senior Director of Investor Relations