The Recreation Vehicle Industry Association commissioned an Economic Impact Study on the RV industry, released on June 7, 2016. The study found that the RV industry contributes about $49.7 billion in economic output or 0.28 percent of the Gross Domestic Product. Through its production and distribution linkages, the industry impacts firms in 426 of the 440 sectors of the United States economy.
Nationwide, the industry is responsible for 216,170 jobs, both directly and inderectly, creating an economic impact of $37.5 billion. The full study results, along with each individual state and congressional district's economic impact is available on the website by clicking here .
Fri Jul 1, 2016
In one of the largest and most expensive acquisitions in the RV industry’s history, Thor Industries has acquired Jayco Corp. for about $576 million in cash.
The acquisition was completed on June 30 and is effective July 1 and represents a unique and significant opportunity to enhance the growth of Thor and advance the company’s strategic focus on growing its RV business, according to a press release.
In particular, Jayco brings complementary products in travel trailers, folding camping trailers, higher-end diesel Type A motorhomes and larger Type C motorhomes. Jayco will be a wholly owned subsidiary of Thor, and the existing senior management team will continue to lead the business.
"We are thrilled to welcome Jayco to the Thor portfolio of companies," Thor President and CEO Bob Martin says. “Jayco is a company that I have admired for more than 20 years while working in the industry and living in the community very close to their operations. We value the longstanding success of Jayco and are committed to providing the Bontrager family and their team of dedicated employees, the resources they need to continue the success they have built at Jayco over the past half century. This investment also illustrates our confidence in the future of the RV industry as younger consumers enter and expand the market over the coming decades. Both existing and new RVers will see the benefits of our subsidiaries' efforts as they lead in innovation with new technology and features in our products that make RVs easier to use and better connected."
Jayco Director of Corporate Marketing Ashley Lehman says the deal had been in the works since last fall and the deal represented a good opportunity for the company.
“Jayco has been approached many times over the years. This one just felt right to the owners given the business cycle that the industry faces and they liked the partnership they saw with Thor Industries and how the companies they acquire continue to run themselves.”
Wilbur Bontrager, Chairman of the Board of Jayco says he and his family view the transaction as an opportunity to grow even further.
"Our family is very proud of the legacy we have established and nurtured over the past 48 years,” Bontrager says. “As a family run and owned business, we view today's transaction as an opportunity to continue growing our business while joining an even larger family."
Derald Bontrager, President and CEO of Jayco, says the two giants of the RV industry have similar visions and it makes the transition an easy one.
"The core values that are synonymous with Jayco and its brands shape the way we run our business, and these values will remain and guide us as we look to the future,” he says. “One of the things we found most attractive about Thor was their decentralized business structure, which allows their subsidiaries to continue operating independently. Most importantly, within this structure, our current leadership team will continue to manage Jayco, just as we have been running it since our founding. We will continue with the same focus our father had on serving our dealers and consumers better than anyone else in the industry."
The transaction is a positive, strategic fit for both companies. Jayco brings a lineup of several innovative products into the Thor family. In particular, the travel trailers, camping trailers, high-end diesel motorhomes and super C motorhomes will enhance and complement the existing Thor family of products.
Jayco has its own subsidiaries that will be enveloped under the Thor name, such as Jayco, Starcraft RV, Highland Ridge and Entegra Coach, including brands like the Jay Flight, the number one selling travel trailer for the past 11 years.
The purchase price of about $576 million in cash, is subject to post-closing adjustments. The purchase price was funded through existing cash balances as well as about $360 million in borrowings from an asset-based revolving line of credit arranged through the Company's lenders. The Company plans to repay the loan through internally generated cash flow and anticipates that it will be repaid within three years of closing, according to the press release. It is executed and effective June 30, 2016.
Jayco posted a revenue of about $1.5 billion in 2015, with about a $70 million profit. Thor expects the purchase to add one month of Jayco revenue in the fourth quarter of fiscal 2016. The company also expects to incur various charges associated with the acquisition in the fourth quarter including professional fees, debt-related fees and purchase accounting expenses and charges, and as a result, the net impact on fourth-quarter and full-year income is not expected to be material, according to the press release.
In May, Jayco announced that it had built its one millionth RV, an accomplishment the founders say was what they wanted to do when they founded the company 50 years ago.
Jayco and its subsidiaries Jayco, Starcraft RV, Highland Ridge and Entegra Coach currently operate in 31 facilities which include 17 production lines covering 2.2 million square feet of production space located primarily in northern Indiana with additional facilities in Twin Falls, Idaho.
"Jayco has a well-deserved reputation of providing their dealers and retail consumers with the RVs and service they demand and the value they deserve,” Martin says. “That product innovation and dedication to their dealers and retail consumers will continue, without interruption, through the support of Thor as we continue to focus on growing our business in the North American market. We are excited by what we can bring to Jayco and by what they can bring to us to deliver exceptional product quality and an outstanding customer experience that will benefit everyone involved in the RV lifestyle."
Thor Executive Chairman Peter Orthwein says the company has attempted to buy successful companies with the strong management like Jayco that can benefit from the company’s financial strength in order to grow even further.
“The acquisition of Jayco furthers this strategy and allows Jayco to continue its history of success by offering a strong portfolio of products and services to the market, resulting in enhanced competitiveness within the industry,” Orthwein says. “As our decentralized structure has proven for more than 30 years, we believe the best path to success is through competition. We are confident that Jayco will continue to compete effectively in the market just as they have over the past 48 years in the same manner that all Thor subsidiaries compete today amongst themselves and with other outside companies."
In addition to Jayco and its subsidiaries, Thor also owns Airstream, Bison Coach, Crossroads RV, Cruiser RV, DRV, Dutchmen, Heartland RV, Keystone, K-Z, Livin Lite and Postle Aluminum, as well as Thor Motor Coach.