THOR Industries Announces $2.5B in Net Sales in Q1 2024 – RVBusiness – Breaking RV Industry News
ELKHART, Ind. – THOR Industries, Inc. (NYSE: THO) today announced financial results for its first fiscal quarter ended Oct. 31, 2023.
Bob Martin
“We are pleased with our performance to start fiscal 2024 as the fiscal first quarter played out largely as expected,” Bob Martin, president and CEO of THOR Industries, stated in a release.
“As anticipated, independent dealer destocking efforts in North America and seasonally lower first quarter production within our European segment impacted our unit shipment volumes during the quarter,” he continued. “Despite this, our fiscal 2024 first quarter financial performance demonstrates the collective efforts of our operating companies to prioritize profitability in a soft demand environment. Against this backdrop, our experienced operating teams remain focused on prudently managing cost structures and enacting commercial strategies to adapt to evolving market conditions. Over our history, the agility and flexibility of our business model has been core to our success and will continue to position THOR and its independent dealers well as we move through fiscal 2024 and beyond.”
First-Quarter Financial Results
Consolidated net sales were $2.50 billion in the first quarter of fiscal 2024, compared to $3.11 billion for the first quarter of fiscal year 2023.
Consolidated gross profit margin for the first quarter was 14.3%, a decrease of 140 basis points when compared to the first quarter of fiscal year 2023.
Net income attributable to THOR Industries, Inc. and diluted earnings per share for the first quarter of fiscal year 2024 were $53.6 million and $0.99, respectively, compared to $136.2 million and $2.53, respectively, for the first quarter of fiscal 2023.
THOR’s consolidated results were driven by the results of its individual segments as noted below.
- North American Towable RV net sales were down 28.3% for the first quarter of fiscal 2024 compared to the prior-year period, driven by a 13.0% decrease in unit shipments and a 15.3% decrease in the overall net price per unit. The decrease in the overall net price per unit was primarily due to a shift in product mix toward travel trailers and more moderately-priced units along with higher sales discounting levels compared to the prior-year quarter.
- North American Towable RV gross profit margin was 12.5% for the first quarter of fiscal 2024, compared to 14.9% in the prior-year period. The decrease in gross profit margin was primarily driven by increased sales discounts and a higher manufacturing overhead percentage due to the reduction in net sales, partially offset by a decrease in the material cost percentage, before the effects of discounting, due to the combined favorable impacts of product mix changes and cost-savings initiatives.
- North American Towable RV income before income taxes for the first quarter of fiscal 2024 was $49.2 million, compared to $111.0 million in the first quarter of fiscal 2023. This decrease was driven by decreased net sales and the corresponding decline in gross margin percentage.
- North American Motorized RV net sales decreased 36.7% for the first quarter of fiscal 2024 compared to the prior-year period. The decrease was primarily due to a 31.5% reduction in unit shipments, partly due to greater independent dealer restocking in the prior-year period, as well as a 5.2% decrease resulting from changes in product mix and net price per unit as current-year shipments trended toward more moderately-priced Class B and Class C units compared to higher-priced Class A units.
- North American Motorized RV gross profit margin was 11.2% for the first quarter of fiscal 2024, compared to 16.5% in the prior-year period. The decrease in the gross profit margin for the first quarter was primarily driven by an increase in sales discounts, higher material costs largely due to increased chassis costs and an increase in manufacturing overhead cost as a percentage of net sales due to the reduction in net sales.
- North American Motorized RV income before income taxes for the first quarter of fiscal 2024 decreased to $37.1 million compared to $124.4 million in the prior-year period, driven by the decrease in net sales and the decline in the gross margin percentage.
- European RV net sales increased 40.4% for the first quarter of fiscal 2024 compared to the prior-year period, driven by a 19.5% increase in unit shipments and a 20.9% increase in the overall net price per unit due to the total combined impact of changes in foreign currency, product mix and price. This overall net price per unit increase of 20.9% includes a 10.0% increase due to the impact of foreign currency exchange rate changes.
- European RV gross profit margin was 17.3% of net sales for the first quarter compared to 13.7% in the prior-year period. This improvement in the gross profit margin for the quarter was primarily driven by net selling price increases, product mix changes and a reduction in the labor and manufacturing overhead costs as a percentage of net sales.
- European RV income before income taxes for the first quarter of fiscal 2024 was $28.8 million, compared to a loss before income taxes of $6.5 million during the first quarter of fiscal 2023. The improvement was primarily driven by the increase in net sales and the improvement in the gross profit margin percentage.
Management Commentary
Todd Woelfer
“In lockstep with our independent dealer partners, THOR continues to navigate the prolonged challenging RV environment in North America,” stated said Todd Woelfer, senior vice president and chief operating officer. “Prudent focus on operational execution across each of our business segments once again enabled THOR to deliver resilient margin performance even while we successfully worked to drive down prices in North America to reflect current market demand.
“Our teams’ execution within our long-standing operating model enabled THOR to generate positive net cash from operations despite consolidated net sales decreasing 19.5% compared to the prior-year period,” he continued. “Regardless of the prolonged macro challenges, our dedication to our strategy of prudent partnership with our dealers remains steadfast. We continue to employ our variable cost model to adapt to near-term market conditions as well as advance on our strategic initiatives to enhance future performance. As a consequence of our actions and North American dealer independent inventory destocking, we and our independent dealer partners are much better positioned to outperform as we move ahead.
“In North America,” Woelfer added, “we remain committed to our disciplined approach to operations that prioritizes profitability while maintaining market-leading positions across each of THOR’s product categories. During the quarter, we continued to sustain production levels lower than retail demand levels which resulted in the destocking of another 3,700 units of THOR products from channel inventory. At the same time, our teams continued to employ targeted promotional strategies in order to drive retail sales while also introducing our value-enhancing model year 2024 product offerings aimed at meeting consumer demand and addressing affordability challenges caused by current macroeconomic conditions.
“In Europe,” Woelfer concluded, “despite the typical seasonal slowdown in production as a result of the summer holidays, we achieved positive fiscal first quarter income before income taxes as net sales increased 40.4% year-over-year and gross profit margin increased 360 bps to 17.3%. While we expect to complete the restocking cycle for European motorized products in the second quarter of fiscal 2024, we are extremely pleased with the continued efforts of our European team to strengthen its operations and profitability profile. Additionally, our global teams continued to collectively make progress on certain automation, innovation and supply chain initiatives, demonstrating our commitment to investing in the long-term growth of our business.”
Colleen Zuhl
“In the first quarter of fiscal 2024, we generated cash flow from operations of $59.7 million,” stated Colleen Zuhl, senior vice president and chief financial officer.
“During the quarter, we continued to reinvest in the business and return capital to shareholders,” she continued. “In October, we announced a 7% increase in our regular quarterly dividend, which marked our 14th consecutive year of increasing our dividend. Also within the quarter, we repurchased $30.0 million of our common stock, representing 327,876 shares at an average repurchase price of $91.61. At the end of the first fiscal quarter, we had liquidity of more than $1.40 billion, including approximately $425.8 million in cash on hand and approximately $998.0 million available under our asset-based revolving credit facility (ABL), providing significant financial flexibility moving forward as we continue to execute against our long-term strategic plan through thoughtful capital deployment.”
“Subsequent to quarter-end,” Zuhl added, “the company entered into an amendment to its term-loan credit facility to extend its maturity from February 2026 to November 2030 and reduce the applicable margin used to determine the interest rate on USD loans by 0.25%. As of the November 15, 2023 amendment date, the principal amounts outstanding under the term-loan agreement were $450.0 million on the USD term loan tranche and €330.0 million ($358.6 million as of November 15, 2023) on the Euro term loan tranche. Covenants and other material provisions of the term-loan agreement remain materially unchanged. Concurrently, the company also amended its ABL agreement, extending the maturity from September 2026 to November 2028. Maximum availability under the ABL remains at $1.00 billion and there were no borrowings outstanding on the ABL as of the November 15, 2023 amendment date. The applicable margin, covenants, and other material provisions of the ABL remain materially unchanged. These transactions were a leverage-neutral event, and we are committed to our long-term net leverage ratio target of less than 1.0x across the business cycle.”
Outlook
“Despite continued mixed economic data and uncertainty on the macroeconomic level, our fiscal first quarter results demonstrate the strength of our business model and resilience of our operating companies in navigating the current environment. We continue to work closely with our independent dealer partners to monitor retail trends and adjust production accordingly to ensure channel inventory remains appropriate during the retail offseason months. At the same time, we remain focused on solid operational execution to enhance our gross profit margin performance in fiscal 2024 and generate solid cash flow to drive long-term shareholder value,” concluded Martin.
Fiscal 2024 Guidance
Based on the company’s fiscal first quarter performance and current expectations for the remainder of the fiscal year, the Company is reaffirming its previously communicated full-year fiscal 2024 guidance. As the Company’s fiscal 2024 guidance assumes a much stronger second half of fiscal 2024, in conjunction with the traditional retail selling season, the Company recognizes opportunity and risk to the forecast dependent upon future macro conditions and their impact on retail consumers.
For fiscal 2024, the company’s full-year guidance includes:
- Consolidated net sales in the range of $10.5 billion to $11.0 billion
- Consolidated gross profit margin in the range of 14.5% to 15.0%
- Diluted earnings per share in the range of $6.25 to $7.25
Supplemental Earnings Release Materials
THOR Industries 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 Industries is the sole owner of operating companies which, 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.
Source: https://rvbusiness.com/thor-industries-announces-2-5b-in-net-sales-in-q1-2024/
