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What to Look For in This RV Maker's Earnings

Rev your engines, RV investors. When Thor Industries (NYSE: THO  ) reports its fiscal first quarter results on Dec. 2, the bulk of the sales numbers will come from towable sales. But ditch the hitch, and pay closer attention instead to the numbers surrounding Thor's motorized RVs.

Info we already know
On Nov. 4, Thor Industries announced certain preliminary data for the quarter. Its total sales hopped up 5.4% to $802.6 million. Of this amount, towable RV sales inched down 2.1%, but motorized RV sales rocketed up 44.8% to $176.9 million.

The backlog figures were particularly interesting. Total backlog finished up 41.9%, to $733.2 million. Of this amount, $313.4 million was from motorized RV sales. This portion of the backlog was up 113% over last year.

While motorized RVs represented only 22% of sales for the quarter, they represented 43% of the backlog. In fact, motorized backlog represents nearly double all of fiscal first-quarter's results. This suggests that demand for motorized RVs is accelerating at a rapid pace.

CEO Bob Martin pointed out that the motorized RV market "continues to recover sharply." Thor Industries is expanding production of its motorized RVs.

What about the previous quarter?
These preliminary results and commentary are consistent with the prior earnings release by Thor Industries on Sept. 26. In that quarter, while towable RV sales only increased by 13%, motorized RV sales rose 56%. That worked out to 18% of overall sales -- a figure that rose to 22% in the most recent quarter. This shows further evidence of motorized RVs' continued acceleration.

Chairman Peter B. Orthwein stated, "We are focused on generating growth in sales and earnings over the coming fiscal year and believe the current industry conditions will support our efforts."

Is this a Thor-only thing?
To get an industrywide perspective on the demand for motorized RVs, look no further than competitor¬†Winnebago Industries (NYSE: WGO  ) , which last reported its results on Oct. 17. It reported an overall sales increase of 31.8%. While the earnings released didn't break out the motorized RV sales, it stated that the quarter was "positively affected by increased motor home deliveries."

In the conference call, CFO Sarah Nielson stated, "The primary growth in revenue was a result of a significant increase in motor home deliveries."

Both she and CEO Randy Potts explained that demand in the market for motorized RVs far outstrips their supply. As Potts put it, "I think most everybody in the business right now is selling everything they can get their hands on." Just like Thor Industries, Winnebago Industries has a supply constraint on its motor RVs, not a demand one. Nielson called the company's backlog "extremely strong."

Foolish final thoughts
For motorized RV producers, the game is now simple: How many can you produce, and how fast can you increase that production? In Thor's upcoming earnings, keep an eye out for demand comments, too, because you never know whether things may suddenly change. Finally, watch oil prices as well. Cheaper fuel prices make RV ownership more appealing -- and more affordable.

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9/26/2016 1:37 PM
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