Elkhart, Ind.-based THOR Industries, which has production facilities in Indiana, Ohio, Michigan, Idaho, Oregon, Germany, Italy, the UK and France, Friday issued a number of operational updates to coincide with the start of the North America summer camping and RV travel season.
Global Operations and Market Update
The company says that throughout late-April and May, its companies in North America and Europe resumed operations, with the exception of its production facility in the UK, which is expected to open in mid-June. THOR says its priority in all of its facilities is employee safety, which has been supported by a comprehensive set of strict safety protocols – protocols that are now a routine part of day-to-day operations.
Regarding product, the company says “the THOR companies are working closely with key suppliers to minimize any potential disruptions; however, chassis supply constraints within our European supplier base are expected to cause intermittent temporary line shut-downs or reduced output in the near-term.
“Prior to the onset of the COVID-19, THOR experienced a strong early start to the selling season, with high optimism from both North American and European dealers. Dealer inventory levels were appropriate for the spring season prior to the impact of COVID-19. The strong start to the selling season was significantly interrupted by the impact of COVID-19 as THOR temporarily shut down all of its North American and European operations. Despite the lack of production, during the temporary shut-down of our facilities in March and April, dealers continued to sell retail units – further reducing dealer inventory levels. As we begin to exit the various governmental restrictions, we are now experiencing even stronger demand from our independent dealer base – with a focus and urgency on the remainder of the 2020 selling season. Within the U.S., in particular, dealers are now experiencing low inventory levels of certain products. As a result, we are increasing production volumes where needed to address the higher than originally anticipated dealer demand. The flexibility of our operating model allows us to quickly ramp-up production when and where needed and is a key component of our ability to rapidly adapt to sudden changes in market conditions.”
Regarding staffing, payroll and operating expenses: “As a result of the current business climate and outlook, the company and its subsidiaries have called back a high number of our valuable team members. In addition, the compensation of all employed team members who were subject to reductions in salary and bonuses, including our CEO and other named executive officers, will return to their original terms beginning on June 1. Likewise, THOR’s board of directors compensation will also return to their original terms.
“At the outset of the pandemic, out of an abundance of caution and given the lack of clarity on the duration or the severity of the pandemic on THOR or our industry, we strategically borrowed $250 million from our asset-based loan facility. Today, May 29th, we are repaying that $250 million draw based on increased confidence in our outlook. We remain in a strong cash-on-hand position with ample availability on our credit facility.”
Outlook
Bob Martin, CEO, concluded with this look ahead:
“We believe strongly in the future of THOR and the RV industry. While our third quarter results were certainly negatively impacted by COVID-19, as we look ahead, we believe that the current environment will provide us the opportunity to introduce even more people to the life-long benefits the RV-life style offers. In addition to providing a personal space that allows people to maintain social distance in a safe manner, it also allows people to connect with loved-ones, provides the ability to get away for short, frequent breaks or longer adventures, and helps people reconnect to nature or explore some of the many attractions that are often just a drive away.”
