ELKHART, Ind., Sept. 28,
2020 /PRNewswire/ -- Thor Industries, Inc. (NYSE: THO) today
announced results for the fourth quarter and full year of fiscal
2020, which ended July 31, 2020.
"I am pleased to report that Thor's net sales increased
significantly with each passing month in the fourth quarter of
fiscal 2020 as we emerged from the COVID-19 induced production
furlough that started in our third fiscal quarter. Our fourth
quarter results prove that our employees and management teams
around the world are experienced and agile, and that our
highly variable business model facilitated a rebound from a virtual
production standstill in May to full production by July," said
Bob Martin, President and CEO of
Thor Industries.
"We saw increasing retail demand over the course of the quarter,
driving dealer inventories to historically low levels by year end
and our year-end backlog to a record high. As I have noted before,
the long-term outlook for our business remains excellent. Now, with
the increasing interest in the RV lifestyle from a new group of
consumers, the short-to-medium-term outlook is also robust. This
current demand for RVs, coupled with the need to replenish dealer
inventories that are at all-time lows, positions us for continued
success well into calendar 2021. We also believe that the influx of
new RV buyers will lead to many becoming long-term RV enthusiasts
down the road. Historically, long-term RVers trade in and trade up
for a new RV every 3 to 5 years, which further positions us for
success well into the future," added Martin.
Fourth-Quarter Financial Results
Fourth-quarter net sales were $2.32
billion, compared to $2.31
billion in the fourth quarter of fiscal 2019. This year's
fourth quarter net sales figure includes $1.18 billion from the North American Towable RV
segment, $366.5 million from the
North American Motorized RV segment, and $739.9 million from the European RV segment.
Consolidated gross profit margin was 14.9% for the fourth
quarter of fiscal 2020, compared to 14.4% in the corresponding
period a year ago. The improved gross profit margin is primarily
due to decreased warranty costs as a percent of sales in addition
to overhead savings from management-led cost reduction measures in
response to COVID-19, partially offset by an increase in the
material cost percentage primarily due to product mix.
Net income attributable to Thor and diluted earnings per share
for the fourth quarter of fiscal 2020 were $119.2 million and $2.14, respectively, compared to net income
attributable to Thor and diluted earnings per share of $92.1 million and $1.67, respectively, in the prior-year
period.
Fiscal Year 2020 Financial Results
Net sales for fiscal year 2020 were $8.17
billion compared to $7.86 billion for fiscal year 2019. The
increase in net sales is primarily attributable to incremental
European net sales of $998.4 million,
as the current fiscal year includes twelve months of operations as
compared to the prior fiscal year including the six months of
operations from the date of acquisition of the Erwin Hymer Group
("EHG") on February 1, 2019. This
increase was largely offset by a decrease in North American net
sales, due to the impact of the COVID-19 pandemic and the resulting
six-to-eight-week production shutdowns that started in our fiscal
third quarter during our historically most profitable and highest
sales months.
Net income attributable to Thor in fiscal year 2020 was
$223.0 million, or $4.02 per diluted share, compared to net income
attributable to Thor of $133.3
million, or $2.47 per diluted
share, in fiscal year 2019. Fiscal year 2019 results include EHG
acquisition-related costs of $114.9
million and the negative impact of $61.4 million related to the fair value step-up
in purchase accounting of acquired EHG inventory that was
subsequently sold during the first three months following the
acquisition.
The Company's overall annual effective income tax rate for
fiscal 2020 was 18.9% compared with 28.3% for fiscal 2019. The
primary drivers of the change in the overall effective tax rate
between comparable periods are certain foreign tax rate differences
from the U.S. federal corporate tax rate of 21% and the change in
annual mix of foreign and domestic earnings. In addition, the
fiscal 2019 effective income tax rate was impacted by an
unfavorable, non-deductible foreign currency forward contract loss
and certain non-deductible transaction costs resulting from the EHG
acquisition. The Company estimates its overall effective income tax
rate for fiscal 2021 will be between 19% and 22% before
consideration of any discrete tax items. The actual effective
income tax rate will be dependent upon the mix of foreign and
domestic pretax earnings and subject to the impact of foreign
currency exchange rates.
Net cash provided by operating activities for fiscal year 2020
was $540.9 million compared to
$508.0 million in fiscal 2019.
During the fiscal year, the Company made payments on its EHG
acquisition-related debt of $275.0
million.
Segment Results
North American Towable RVs
- North American Towable RV net sales were $1.18 billion for the fourth quarter of fiscal
2020, largely unchanged compared to fourth-quarter net sales of
$1.16 billion in the prior-year
period. For fiscal 2020, North American Towable RV net sales were
$4.14 billion, down 9.2% from
$4.56 billion in fiscal 2019. This
fiscal year decrease was substantially due to lower net sales in
the third quarter of fiscal 2020 as compared to the third quarter
of fiscal 2019, primarily due to the impact of the COVID-19
pandemic and the resulting production shutdowns for six to eight
weeks for our North American Towable production facilities.
- North American Towable RV gross profit margin was 16.6% for the
fourth quarter of fiscal 2020, compared to 16.0% in the prior-year
period. For fiscal 2020, North American Towable RV gross profit
margin was 15.0%, an increase of 1.5% from fiscal 2019. The
improvement in gross profit margin for the fourth quarter and
fiscal year was primarily the result of lower material and warranty
costs as a percentage of North American towables net sales.
- North American Towable RV income before income tax for the
fourth quarter of fiscal 2020 was $129.2
million, compared to $109.9
million in the fourth quarter last year. North American
Towable RV income before income tax was $336.2 million for fiscal 2020, up 4.3% from
$322.2 million in fiscal 2019, driven
by the improvement in gross profit margin despite the COVID-related
production shutdowns that occurred in the third quarter and early
part of the fourth quarter of fiscal 2020.
- North American Towable RV backlog at July 31, 2020 was $2.76
billion, an increase of approximately $2.07 billion, or nearly 300%, from the
July 31, 2019 backlog level of
$693.2 million.
North American Motorized RVs
- North American Motorized RV net sales were $366.5 million for the fourth quarter of fiscal
2020, compared to $387.4 million in
the prior-year period. The decrease in motorized net sales for the
quarter was driven primarily by lower unit sales as well as a shift
in product mix, including a higher volume of our modestly priced
Class B motorhomes, which are generally priced lower than Class A
and Class C motorhomes. For fiscal 2020, North American Motorized
RV net sales were $1.39 billion, down
15.7% from $1.65 billion in fiscal
2019. The fiscal year decrease in net sales within the Motorized
segment was primarily due to lower net sales in the third quarter
of fiscal 2020 as compared to the third quarter of fiscal 2019,
primarily due to the impact of the COVID-19 pandemic and the
resulting six to eight weeks of production shutdowns for our North
American Motorized production facilities.
- North American Motorized RV gross profit margin was 12.1% for
the fourth quarter of fiscal 2020, compared to 9.6% in the
prior-year period. The improvement in gross profit margin for the
fourth quarter was primarily the result of lower material and
warranty costs as a combined percentage of North American motorized
net sales, and overhead savings from management-led cost saving
initiatives. North American Motorized RV gross profit margin for
fiscal 2020 was 10.8%, up 80 basis points over fiscal 2019 due to
improvements in each of the material, labor, and warranty cost
percentages.
- North American Motorized RV income before income tax for the
fourth quarter of fiscal 2020 increased to $24.3 million compared to $16.8 million a year ago, driven by the
improvement in gross profit margin for the quarter despite the
reduction in sales. North American Motorized RV income before
income tax for fiscal 2020 was $71.9
million, down 11.1% from $80.9
million in the prior year reflecting the temporary halt to
production in the third quarter of fiscal 2020 and the resulting
reduction in sales due to the COVID-19 pandemic.
- North American Motorized RV backlog at July 31, 2020 increased approximately
$992.8 million, or 216.4%, to
$1.45 billion compared to
$458.8 million a year earlier.
European RVs
- European RV net sales were $739.9
million for the fourth quarter of fiscal 2020, compared to
$719.5 million in the prior-year
period. The increase in European net sales was driven
primarily by a change in product mix and selective selling
price increases. European RV net sales were $2.49 billion for full-year fiscal 2020 compared
to $1.49 billion in fiscal 2019. The
increase in full-year net sales is the result of the inclusion of
twelve months of sales in fiscal 2020, while fiscal 2019 only
included the six months of operations following the February 1, 2019 date of the EHG
acquisition.
- European RV gross profit margin was 13.2% of net sales for the
fourth quarter compared to 13.4% in the prior-year period. European
RV gross profit margin was 12.2% for fiscal 2020, up from 10.1% in
fiscal 2019. The 2020 fiscal year increase in gross profit as a
percentage of European RV net sales is due to the unfavorable
impact of $61.4 million related to
the fair value step-up in purchase accounting of acquired inventory
that was subsequently sold during the first three months following
the acquisition which negatively impacted fiscal 2019, partially
offset by changes in product mix.
- European RV income before income tax for the fourth quarter of
fiscal 2020 was $28.4 million,
compared to income before income tax of $25.0 million during the fourth quarter of fiscal
2019. European RV income before income tax for fiscal 2020 was
$9.9 million, compared to a loss of
$5.9 million in fiscal 2019. The
increase in income before income taxes for fiscal 2020 was a
combination of various factors over the two fiscal years, including
the following:
-
- The absence of the impacts of the fair value step up of
inventory in fiscal 2020 as compared to the $61.4 million negative impact in fiscal
2019.
- A net loss before income taxes of $18.3 million in the first six months of fiscal
2020, while fiscal 2019 had no results for the first six months in
the corresponding prior-year period.
- The adverse impact of the COVID-19 pandemic on the third
quarter of fiscal 2020 as compared to the third quarter of fiscal
2019.
- European RV backlog was $1.53
billion as of July 31, 2020,
an increase of $673.3 million, or
79.0%, compared to $852.7 million as
of July 31, 2019.
"This year's financial results are a testament to our ability to
successfully manage through uncertainty, along with the proven
agility and flexibility of our business model," said Colleen Zuhl, Thor's Senior Vice President and
Chief Financial Officer. "In an unprecedented year, with vastly
changing operating conditions caused by the COVID-19 pandemic, we
effectively managed our world-wide operations keeping the safety of
our employees as the top priority while also generating a solid
profit for our shareholders. With the full-year addition of EHG, we
generated an annual record high cash flow from operations of
$540.9 million for fiscal 2020, and,
as planned, we continued to regularly pay down our
EHG acquisition-related debt. During the fiscal year, we paid
$275.0 million on the EHG
acquisition-related debt, and life-to-date, we have paid
approximately $678 million on the EHG
acquisition-related debt since the acquisition of EHG.
"Our cash and cash equivalents totaled $538.5 million at the end of the year, and we
currently have approximately $660
million available for borrowing on our ABL. Our priorities
for cash remain consistent with our historical priorities, which
are (1) reducing our debt obligations (2) paying and growing our
dividend over time, and (3) funding our growth both organically and
opportunistically through acquisitions. We may also consider
strategic and opportunistic repurchases of shares and special
dividends as determined by our Board of Directors," concluded
Zuhl.
Year in Review
"Fiscal 2020 was both a challenging and rewarding year for
Thor," said Bob Martin. "I am proud
of our employees and our management teams around the world for
continuing to prioritize employee safety above all else. Once
again, our teams have demonstrated Thor's resilience and ability to
manage through uncertainty. We have shown that when challenges
arise, we come together to work collaboratively, we make decisions
quickly with as much data as possible, and we adjust as conditions
require. When we needed to ramp production back up based on
increased demand for our products across the board, we did so
quickly and effectively, while continuing to prioritize employee
safety by maintaining compliance with our robust safety protocols.
We supported one another and worked closely with our dealer and
supply partners. We are proud to be providing end consumers with
products that allow them to travel in the safety of a contained
living space. I am also proud of the financial results we generated
for our shareholders in spite of the many challenges we
encountered. We delivered robust cash flow and profitability by
managing our costs and our cash outlays during the initial phases
of the COVID-19 pandemic when, for the first time in our history,
we were required to shut down production at all of our domestic
locations and almost all of our foreign facilities for what was an
unknown period at first. In the end, we had a successful and
profitable fiscal year and one that won't soon be forgotten."
Outlook for Fiscal Year 2021
"We are entering our fiscal year 2021 with a strong balance
sheet, record backlogs and dealer inventories at historic lows.
There is considerable interest in the RV lifestyle from first-time
buyers, and we are seeing continued strength in the upgrade buyer
as well. We are also seeing challenges and constraints in the
supply chain as suppliers ramp up to meet the unexpectedly high
level of demand from manufacturers. Managing through peaks and
valleys of demand and supply constraints is part of the history of
our business and is not new to our management teams. Today we are
working closely with our supply chain partners to manage production
and delivery of the components we need and, where necessary,
seeking alternative supply solutions. We are committed to quickly
resolving any temporary supply chain issues but recognize that in
the short term we may experience impacts to our production
schedules.
"Looking ahead, we expect a year of continued growth in fiscal
2021, and we concur with RVIA's recent RoadSigns most likely
forecast of an approximate 19.5% increase in calendar 2021
shipments over their most likely estimate for calendar 2020
shipments.
"In closing, we continue to be very positive about both the
short-term and long-term outlooks for our Company and our industry.
I recently returned from my own family vacation in our new Thor
Delano, and I have never seen a younger, more diverse group of
RVers on the road as I did during our road trip through the Midwest
this year. It was great to see the many new faces. The increased
demand for RVs, driven by the safety and security of traveling in
your own RV in these uncertain times, is an excellent sign for the
future growth of our Company," said Bob
Martin.
Supplemental Earnings Release Materials
Thor 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 materially from our expectations. Factors which could cause
materially different results include, among others: the extent and
impact from the continuation of the coronavirus pandemic, along
with the responses to contain the spread of the virus by various
governmental entities or other actors, which may have negative
effects on retail customer demand, our independent dealers, our
supply chain, or our production and which may have a negative
impact on our consolidated results of operations, financial
position, cash flows and liquidity; the ability to ramp production
up or down quickly in response to rapid changes in demand while
also managing costs and market share; the effect of raw material
and commodity price fluctuations, and/or raw material, commodity or
chassis supply restrictions; the impact of tariffs on material or
other input costs; the level and magnitude of warranty claims
incurred; legislative, regulatory and tax law and/or policy
developments including their potential impact on our dealers and
their retail customers or on our suppliers; the costs of compliance
with governmental regulation; legal and compliance issues including
those that may arise in conjunction with recently completed
transactions; lower consumer confidence and the level of
discretionary consumer spending; interest rate fluctuations and
their potential impact on the general economy and specifically on
our dealers and consumers; the impact of exchange rate
fluctuations; restrictive lending practices which could negatively
impact our independent dealers and/or retail consumers; management
changes; the success of new and existing products and services; the
ability to efficiently utilize existing production facilities;
changes in consumer preferences; the risks associated with
acquisitions, including: the pace and successful closing of an
acquisition, the integration and financial impact thereof, the
level of achievement of anticipated operating synergies from
acquisitions, the potential for unknown or understated liabilities
related to acquisitions, the potential loss of existing customers
of acquisitions, and our ability to retain key management personnel
of acquired companies; a shortage of necessary personnel for
production and increasing labor costs to attract production
personnel in times of high demand; the loss or reduction of sales
to key dealers; disruption of the delivery of units to dealers;
increasing costs for freight and transportation; asset impairment
charges; cost structure changes; competition; the impact of
potential losses under repurchase or financed receivable
agreements; the potential impact of the strength of the U.S. dollar
on international demand for products priced in U.S. dollars;
general economic, market and political conditions in the various
countries in which our products are produced and/or sold; the
impact of changing emissions and other regulatory standards in the
various jurisdictions in which our products are produced and/or
sold; changes to our investment and capital allocation strategies
or other facets of our strategic plan; and changes in market
liquidity conditions, credit ratings and other factors that may
impact our access to future funding and the cost of debt.
These and other risks and uncertainties are discussed more fully
in Item 1A of our Annual Report on Form 10-K for the year ended
July 31, 2020.
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 hereof 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 THREE
MONTHS AND FISCAL YEARS ENDED JULY 31, 2020 and 2019
|
($000's except
share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
July 31, (Unaudited)
|
|
Fiscal Years Ended
July 31,
|
|
|
2020
|
% Net
Sales (1)
|
|
2019
|
% Net
Sales (1)
|
|
2020
|
% Net
Sales (1)
|
|
2019
|
% Net
Sales (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
2,324,280
|
|
|
|
$
|
2,311,623
|
|
|
|
$
|
8,167,933
|
|
|
|
$
|
7,864,758
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
$
|
347,357
|
|
14.9%
|
|
$
|
331,812
|
|
14.4%
|
|
$
|
1,118,207
|
|
13.7%
|
|
$
|
973,094
|
|
12.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
155,151
|
|
6.7%
|
|
171,299
|
|
7.4%
|
|
634,119
|
|
7.8%
|
|
536,044
|
|
6.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
intangible assets
|
|
24,589
|
|
1.1%
|
|
25,262
|
|
1.1%
|
|
97,234
|
|
1.2%
|
|
75,638
|
|
1.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment
charges
|
|
—
|
|
—%
|
|
—
|
|
—%
|
|
10,057
|
|
0.1%
|
|
—
|
|
—%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related
costs
|
|
—
|
|
—%
|
|
2,355
|
|
0.1%
|
|
—
|
|
—%
|
|
114,866
|
|
1.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
(expense), net
|
|
(24,875)
|
|
(1.1)%
|
|
(28,232)
|
|
(1.2)%
|
|
(104,206)
|
|
(1.3)%
|
|
(60,032)
|
|
(0.8)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense), net
|
|
5,428
|
|
0.2%
|
|
5,089
|
|
0.2%
|
|
305
|
|
—%
|
|
(1,848)
|
|
—%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
|
148,170
|
|
6.4%
|
|
109,753
|
|
4.7%
|
|
272,896
|
|
3.3%
|
|
184,666
|
|
2.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
taxes
|
|
28,441
|
|
1.2%
|
|
17,262
|
|
0.7%
|
|
51,512
|
|
0.6%
|
|
52,201
|
|
0.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
119,729
|
|
5.2%
|
|
92,491
|
|
4.0%
|
|
221,384
|
|
2.7%
|
|
132,465
|
|
1.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: net income
(loss) attributable to non-controlling interests
|
|
561
|
|
—%
|
|
436
|
|
—%
|
|
(1,590)
|
|
—%
|
|
(810)
|
|
—%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Thor Industries, Inc.
|
|
$
|
119,168
|
|
5.1%
|
|
$
|
92,055
|
|
4.0%
|
|
$
|
222,974
|
|
2.7%
|
|
$
|
133,275
|
|
1.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common
share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
2.16
|
|
|
|
$
|
1.67
|
|
|
|
$
|
4.04
|
|
|
|
$
|
2.47
|
|
|
Diluted
|
|
$
|
2.14
|
|
|
|
$
|
1.67
|
|
|
|
$
|
4.02
|
|
|
|
$
|
2.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-avg. common
shares outstanding – basic
|
|
55,198,756
|
|
|
|
55,063,473
|
|
|
|
55,172,694
|
|
|
|
53,905,667
|
|
|
Weighted-avg. common
shares outstanding – diluted
|
|
55,576,318
|
|
|
|
55,211,141
|
|
|
|
55,397,376
|
|
|
|
54,026,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Percentages may not add due to
rounding differences
|
SUMMARY CONDENSED
CONSOLIDATED BALANCE SHEETS ($000) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 31,
2020
|
|
July 31,
2019
|
|
|
|
July 31,
2020
|
|
July 31,
2019
|
Cash and
equivalents
|
|
$
|
541,363
|
|
|
$
|
451,262
|
|
|
Current
liabilities
|
|
$
|
1,515,281
|
|
|
$
|
1,448,325
|
|
Accounts receivable,
net
|
|
814,227
|
|
|
716,227
|
|
|
Long-term
debt
|
|
1,652,831
|
|
|
1,885,253
|
|
Inventories,
net
|
|
716,305
|
|
|
827,988
|
|
|
Other long-term
liabilities
|
|
257,779
|
|
|
231,640
|
|
Prepaid expenses and
other
|
|
30,382
|
|
|
41,880
|
|
|
Stockholders'
equity
|
|
2,345,569
|
|
|
2,095,228
|
|
Total current
assets
|
|
2,102,277
|
|
|
2,037,357
|
|
|
|
|
|
|
|
Property, plant &
equipment, net
|
|
1,107,649
|
|
|
1,092,471
|
|
|
|
|
|
|
|
Goodwill
|
|
1,476,541
|
|
|
1,358,032
|
|
|
|
|
|
|
|
Amortizable
intangible assets, net
|
|
914,724
|
|
|
970,811
|
|
|
|
|
|
|
|
Deferred income taxes
and other, net
|
|
170,269
|
|
|
201,775
|
|
|
|
|
|
|
|
Total
|
|
$
|
5,771,460
|
|
|
$
|
5,660,446
|
|
|
|
|
$
|
5,771,460
|
|
|
$
|
5,660,446
|
|
Contact
Investor Relations:
Mark Trinske, Vice President of
Investor Relations
mtrinske@thorindustries.com
(574) 970-7912
View original
content:http://www.prnewswire.com/news-releases/thor-reports-increased-net-sales-improved-gross-profit-margin-and-higher-earnings-per-share-for-the-fourth-quarter-of-fiscal-2020-301138343.html
SOURCE Thor Industries, Inc.