Thor Industries blew past analysts’ earnings estimates in the fiscal second quarter of 2022. The manufacturer reported record net sales of $3.88 billion, up 42.1% from the same quarter in 2021. Earnings per share totaled $4.79, 41.2% higher than consensus analyst estimates of $3.39.
Thompson Research Group analyst Kathryn Thompson called the report a “substantial” beat, driven by better revenue and continued strong margin gains.
Thor stated it grew gross margins 2.2% to 17.4% in the fiscal second quarter. Thompson said Thor was able to maintain price ahead of rising costs and benefitted from leveraging volume and improving labor efficiency.
“Our results show the strong appeal of our products, the continued strong demand in our industry and the outstanding performance by our team members,” Thor President and CEO Bob Martin said. “We continue to outperform the market and continue to hold a positive outlook.”
Dealer inventories rose 43% year-over-year, Thompson reported, and 36% quarter-over-quarter. In a Q&A posting, Thor stated it is taking measures to ensure the manufacturer does not overbuild inventory, similar to 2018.
“We are taking a proactive approach to monitoring independent dealer inventory levels,” Thor stated. “Within some of our product segments, we have already started to make strategic shifts in production mix to prioritize certain product categories with lower levels of channel inventory. We will continue to proactively realign and rebalance production accordingly, with the ultimate goal of optimizing independent dealer inventory and protecting our dealer partners’ margins. We are, and will remain, keenly focused on dealer inventory levels and will continue to monitor our channel to minimize the risk of overbuilding.”
Thor reported a $17.73 billion backlog as of Jan. 31. The manufacturer stated the backlog is higher than the company prefers, but noted the backlog reduced by $344 million since its Oct. 31, 2021, peak of $18.07 billion.
“At the same time, we expect elevated backlog levels will remain while demand for RV products continues at above pre-pandemic levels,” Thor stated.
Towable replenishment is happening faster than motorized, as Thor stated ongoing supply constraints, particularly chassis, will extend North American motorized replenishment into 2023.
On the overall supply chain, Thor stated improvements are being made in “parts and pieces” availability. Chassis, affected by semiconductor chip shortages, have been constrained, the manufacturer stated.
“We remain confident in our ability to continue to provide high-quality products to our dealers and ultimately the end consumers in the face of the supply-chain challenges,” Thor stated.
Thor also tackled inflation and stated there has been no discernable impact from inflation on new RV retail unit sales.
“Market conditions remain very healthy, and retail sales have remained strong as an increased pipeline of new buyers and trade-up activity continues to drive demand for RV products,” Thor stated. “The breadth of Thor’s product offering allows consumers to choose from models and floorplans across all price points.”
Inflation lifted input costs and wholesale prices, Thor stated. Among anticipated cost pressures are higher commodity prices and transportations costs as well as labor shortages.
The intent, the manufacturer stated, is to implement price adjustments to cover known and anticipated changes in material costs and to adjust pricing accordingly.
“Management cited continued supply-chain constraints that the industry is working through,” Thompson said, “and remains conscious that margins could see downward pressure throughout the year as mix and continued cost increases work their way through the quarters.”
Martin also addressed the war in Ukraine during the financial report. Thor recently acquired a facility in Poland.
“While we remain very focused on our performance as a business and I am pleased to report on our results, we would be remiss if we did not state our firm support for the people of Ukraine in the defense of their country,” Martin said. “We have sent and will continue to send our support and evaluate ways we can assist and respond to the humanitarian and refugee crisis unfolding in Europe. This includes offering our recently acquired facility in Nowa Sol, Poland, as a staging operation for the Red Cross as it attempts to provide relief for the displaced Ukrainians. We are also working on procuring and donating needed staples for these displaced persons. The people of Ukraine are at the front of our minds and we are focused on finding additional ways we can continue to be an impactful global citizen.”
