Thor Industries, Inc. (NYSE: THO) has reported better-than-expected results for the second quarter of Fiscal 2022 (ended January 31, 2022). Earnings in the quarter exceeded the consensus estimate by a whopping 41.3%, and the revenues surpassed the same by 9%.
Strength in North America and weakness in European businesses, impressive order backlog, and strength in the industry were the main highlight of the release. Shares of Thor Industries increased 3.1% on Wednesday, closing the trading session at $87.27.
Thor Industries has expertise in manufacturing recreational vehicles (RVs). Along with RVs, the company provides accessories and related parts to customers in Europe, the U.S., and Canada. The company has headquarters in Elkhart, IN.
Financial Highlights
Thor Industries reported earnings of $4.79 per share in the quarter and surpassed analysts’ estimates of $3.39 per share. On a year-over-year basis, the bottom line expanded 101.3% from the year-ago reported figure of $2.38 per share.
Revenues stood at $3.88 billion, above the consensus estimate of $3.56 billion. The top line advanced 42.1% year-over-year on the back of solid demand for products and synergies from acquired assets.
On a segmental basis, revenues of North American Towable RVs increased 44.6% year-over-year to $1.99 billion. While North American Motorized RVs revenues grew 69.3% year-over-year to $0.98 billion, European RVs revenues at $0.72 billion reflected a decline of 1.3%.
Order backlog stood at $10.44 billion for North American Towable RVs, $4.23 billion for North American Motorized RVs, and $3.05 billion for European RVs.
The company’s cost of products sold increased 38.3% year-over-year while gross profit expanded 62.8% to $675.3 million. The gross margin increased by 220 basis points (bps) to 17.4%. Selling, general, and administrative expenses increased 29.7% from the year-ago quarter to $267.5 million. Cost inflation and supply-chain restrictions were spoilsports in the quarter.
Balance Sheet & Cash Flow
Exiting the second quarter, Thor Industries had cash and cash equivalents of $330.3 million, down 26.4% from the year-ago quarter. Long-term debts at $2.17 billion grew 35.9% year-over-year.
In the first half of Fiscal 2022, the company’s cash flow from operating activities was $298.1 million, reflecting an improvement over cash outflow of $88.6 million in the year-ago comparable period. Capital expenditure surged 144.9% year-over-year to $117.8 million.
Capital Deployment
During the first half of 2022, Thor Industries used $534 million for repayments of borrowings under revolving credit facilities. It distributed dividends of $47.8 million (up 5.4% year-over-year) and the repurchase of treasury shares amounted to $58.3 million.
The share buybacks was a part of the company’s $250 million share repurchase program authorized in December 2021.
Management’s Comment
Thor Industries’ Senior Vice-President and COO, Todd Woelfer, said, “We remain very optimistic about the growth of the RV industry for 2022 and in the long term.”
He added, “We continue to agree with the RV Industry Association forecast which projects total North American wholesale RV shipments ranging between 578,800 and 603,300 units with a most likely total of 591,100 units. This forecast represents the second best year on record for wholesale shipments and is in line with our continued bullish view of what lies ahead over the remainder of fiscal year 2022 and into fiscal year 2023.”
Also, the company’s Senior Vice-President and CFO, Colleen Zuhl, said, “In Europe, we have a strong order book, however, given the heavier concentration of motorhomes to our business in Europe as compared to our North America operations, chassis shortages had a more significant impact on our European production and shipment volumes. We currently expect to see the global chassis issues begin to resolve by the end of the 2022 calendar year. Demand for our European products remains very strong and our European operations are well positioned to perform strongly once our chassis suppliers are able to meet this demand.”
Stock Rating
Recently, James Hardiman, an analyst at Citigroup, provided a Hold rating in its first coverage report on Thor Industries. The price target was set at $100 (14.59% upside potential).
Thor Industries has a Moderate Buy consensus rating based on one Buy and two Holds. The average Thor Industries price target is $125, suggesting 43.2% upside potential from the closing price on Wednesday. Over the past year, shares of Thor Industries have lost 33.9%.
Bloggers Opinion
Per TipRanks data, the financial blogger opinions are 100% Bullish on THO, compared with the sector’s average of 70%.
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