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 .
Tue Jun 6, 2017
ELKHART, Indiana - Thor Industries, Inc. has announced record third-quarter net income of $111.3 million, or $2.11 per diluted share, on record revenues of $2.02 billion for the third quarter ended April 30.
Gross profit increased 45.5 percent to $293.8 million. As anticipated, due primarily to acquisition-related dilution and market-driven changes in product mix, gross profit margins decreased to 14.6 percent in the third quarter compared to 15.7 percent in the prior-year period. Diluted earnings per share for the fiscal 2017 third quarter increased 41.6 percent from the previous year. The strong growth in revenues and earnings was a combination of organic growth in both towable and motorized RVs, and the inclusion of the results from Jayco, which was acquired on June 30.
"We continue to see strength in the RV market, as dealers and consumers remain optimistic and the prospects for continued industry growth remain strong," Thor President and CEO Bob Martin says. "RVs provide exceptional value to consumers, allowing them to enjoy time with family and friends experiencing the many great outdoor spaces in North America at an affordable price point for the average family. Consumers continue to find new uses for RVs. From youth sports and tailgating, to festivals and concerts, they are able to enjoy their RVs over a longer season than many other recreation alternatives. All of these factors are driving the growing demand for our products. As an industry, and at Thor in particular, we continue to make strides in bringing new consumers into the RV lifestyle. This focus has driven an expansion in our customer base which has contributed to our strong top line growth and, while margins may be modestly suppressed on the more affordably priced units, to our bottom line as well. As we continue to focus on producing RVs that appeal to an ever broader base of consumers, we remain very optimistic for the long-term growth of Thor. Over time, we anticipate this short-term trend will translate into longer term demand for higher priced units as customers adopt the RV lifestyle and eventually trade up from entry-level units to mid-level and even high-end units.
"With the surging popularity of our RVs, and the RV lifestyle in general, we have seen a significant increase in demand for our products, particularly our wide array of affordable travel trailers and motorhomes. As a result of this significant increase in demand, we continue to expand capacity in a prudent, measured approach that will allow us to be nimble and flexible as market conditions and product demand change. Currently, we have new plants or expansion projects underway at nearly every Thor subsidiary, which will begin contributing to our overall production capacity in the fourth quarter of fiscal 2017 and early fiscal 2018. As Thor and other industry players add capacity, the labor market in Northern Indiana, particularly in Elkhart, has become more competitive as we compete for qualified workers in an area with low unemployment. Our team's foresight into this issue has resulted in several initiatives designed to minimize the impact of the labor challenges. When possible, we have focused our expansion efforts in outlying areas, such as Howe, Middlebury and Goshen, Indiana, where we can draw from a different geographic labor pool."
Towable RV sales were $1.43 billion for the third quarter, up 52.6 percent from $934.6 million in the prior-year period. Jayco contributed $362.9 million to towable sales for the quarter. Towable sales growth excluding the acquisition was 13.8 percent, driven primarily by continued strong demand for the more affordably priced travel trailers.
Towable RV income before tax was $134.5 million, up 38.8 percent from $96.9 million in the third quarter last year. This increase was driven primarily by the increase in sales and improved Selling General and Administrative expense as a percent of revenues, partially offset by increased amortization expense and lower gross margins associated with Jayco, product mix changes and labor costs.
Towable RV backlog increased $837.1 million, or 115.1 percent, to $1.56 billion, compared to $727.5 million at the end of the third quarter of fiscal 2016, reflecting the inclusion of Jayco's $445.9 million backlog as well as continued momentum and demand for travel trailers.
Motorized RV sales were $549.9 million for the third quarter, up 78.7 percent from $307.6 million in the prior-year third quarter. The increase in motorized RV sales was a result of continued robust growth in the more moderately priced gas type A and type C motorhomes, which have been in high demand by Thor dealers and end consumers. Motorized revenues also benefited from the inclusion of Jayco's motorized revenues of $153.7 million.
Motorized RV income before tax was $37.4 million, up 54.9 percent from $24.1 million last year, driven primarily by the growth in motorized sales and improved SG&A expense as a percent of revenues, partially offset by increased amortization expense and lower gross margins associated with Jayco, product mix changes and labor costs.
Motorized RV backlog increased $466.2 million, or 141.6 percent, to $795.5 million from $329.3 million a year earlier, reflecting the inclusion of Jayco's $123.2 million motorized backlog as well as continued, exceptional demand for the smaller gas type A and type C motorhomes.
"With the strong operating performance during the quarter and year to date, we have seen a significant increase in operating cash flow, which increased 26.2 percent to $182.8 million for the first nine months of fiscal 2017," Thor Senior Vice President and CFO Colleen Zuhl says. "During the third quarter, we invested approximately $28.5 million in capital projects, bringing our year to date investment in capital projects to $79.5 million. Total forecasted capital investments for the fiscal year remain at approximately $130 million as we expect to invest approximately $50 million in additional capital projects during the fourth quarter to meet the robust demand for our products as reflected in our record backlogs.
"We also made $30 million of principal payments on our revolving credit facility during the third quarter, bringing our payments to $65 million for the first nine months of our fiscal year. As of April 30, we held $189.4 million of cash and $295 million was outstanding under the debt agreement. Subsequent to April 30, we made additional principal payments on the revolving credit facility totaling $50 million."
For the third quarter, Jayco contributed about $516.5 million in sales and $66.1 million in gross profit.
Interest expense and amortization of debt issuance costs for the quarter were about $2.3 million.
Results for the quarter were also affected by the increase in amortization of intangibles. Total amortization for the quarter attributable to the Jayco acquisition amounted to $10 million.
"The growth in new consumers entering our core markets has been essential to the strong results and continued optimism we have at Thor," Thor Executive Chairman Peter Orthwein says. "As we continue to strategically build on our strengths in product innovation to meet the demands of consumers, and given the current favorable economic conditions, we are confident that the market will reward our efforts. While there are some modest labor and capacity challenges ahead as we manage through our growth, our management team will continue to focus on balancing the short-term costs associated with expanding our company with the long-term returns we expect to generate for our shareholders."
Thor announced that it has provided a detailed list of investor questions and answers relating to quarterly results and other topics that are posted on the Investor Relations section of its website at www.thorindustries.com.