Thor Industries, Inc. reported record net sales in its fiscal third quarter, the fifth consecutive quarter of record net sales for the RV manufacturer.
“I am pleased to report this quarter that Thor once again managed through an uncertain business environment to achieve record net sales and profitability across many of our brands,” said Bob Martin, CEO and president of Thor Industries. “Our teams have done an exceptional job navigating continued supply chain and labor constraints while still fulfilling ongoing dealer and consumer demand for our products. Our growth and profitability is a result of our ongoing commitment to prudent operational and financial management.”
Net sales in the fiscal third quarter, ending April 30, rose 34.6% from the same period in 2021. Profits rose 89.9% from the same period in 2021.
Independent dealer inventories of towable RVs were at more normal levels, Martin said, while high demand and supply chain issues have kept independent dealer inventories of motorized products at below optimal levels.
“We do not expect motorized RV inventory levels to return to more historically normal levels until early calendar 2023,” Martin said.
Colleen Zuhl, Thor’s chief financial officer and senior vice president, said the record sales came despite ongoing chassis supply constraints limiting production volume.
Order backlogs addressed
The company continues to make progress in managing and fulfilling its order backlog, Martin said. Thor decreased its backlog by more than 3% to $13.88 billion compared with the fiscal third quarter of 2021. This year, the company reduced the backlog by 21.7% since Jan. 30.
According to Thor, this sequential decline in backlog reflects the company’s continued progress in restocking inventory, namely for towable products, as well as the company’s proactive reconfirmation of the backlog.
The company pulled pack on towable production during the latter half of the company’s third quarter.
“We remain committed to managing our backlog as we continue to have regular dialogue with our dealers to make sure the backlog is aligned with both our dealers’ inventory needs and retail demand. Overall, backlog levels remain elevated compared to pre-pandemic levels as demand for RV products and enthusiasm for the RV lifestyle remains strong,” Thor said.
Some supply chain issues improved
The company is seeing positive signs in the moderation of supply chain issues, especially for North America, Thor said.
“We now have improved access to ‘parts and pieces’ needed for production especially North America towable production, and as a result, have been able to produce towable units and restock dealer inventories to historically normal levels. We expect that the easing of the supply chain challenges should help drive down our cost of goods sold as we look ahead,” the company said.
On the motorized side, approximately 10% of unit volumes in North America are affected by chassis supply constraints due to the ongoing chip shortage. As a result, the company continues to experience reduced and inconsistent chassis deliveries.
Strong North American retail demand
According to Todd Woelfer, COO and senior vice president, consumers continue to be interested in towables and motorized RVs despite macroeconomic factors. Motorized industry retail demand continues to outpace the industry’s ability to produce in the face of supply chain hurdles like limited chassis supply.
Industry retail registrations were below the record 2021 levels, but they exceeded both 2020 and 2019 registrations in North America and Germany.
According to Thor, a recent relative lowering of retail demand from record calendar 2021 levels occurred as consumers adapt to inflationary pressures, rising interest rates, higher gas prices and geopolitical concerns. Despite the risks, the company expects a growing number of consumers to pursue the RV lifestyle.
“We believe retail demand for the remainder of our fiscal year 2022 and the beginning of fiscal 2023 will be strong, barring additional macroeconomic impacts, and we expect calendar year 2022 North American RV industry retail sales of between 460,000 and 480,000 units, which would represent one of the best years of North American RV retail sales on record,” Woelfer said.
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