Analyst Firm: Thor Earnings Exceeded Expectations

Analyst firm Robert W. Baird said Thor Industries’ preliminary quarterly sales of $849 million topped its forecast of $835 million, including upside in RVs and specialty vehicles.

Backlog fell against an unusually strong comparison, but Baird said appears consistent with its outlook. Margin remains the key. As discounting abates and a February price increase kicks in, Baird said it expect profitability to improve.

“Our checks with industry contacts indicate the pace of the retail recovery has slowed (gas prices), but we see decent value in Thor near $30,” analyst Craig Kennison said in a research note.

Baird reported that it believes Heartland RV added about $117 million to revenue, implying organic RV growth near 11 percent. Industry shipments improved 10 percent in the first two months of the quarter, with towables up 9 percent and motorhomes up 18 percent in February and March.

Specialty vehicles sales dropped 10 percent to $109 million as stimulus spending shrinks, but topped Baird’s $104 million estimate.

Baird reported that Thor management has cited commodities and other cost pressures. At the same time, the analyst firm said a price increase by Thor – which also applied to backlog – should result in a better margin after a disappointing first half.

Meanwhile, Baird noted that Thor backlog fell 5 percent year over year, to $633 million, and is at the lower end of Baird’s expected range. Backlog decreased to $427 million, but still remains healthy as the pace of the wholesale delivery improves.

“We maintain a bullish consumer outlook as credit eases, but our checks indicate the pace of the recovery has been slower than anticipated – a concern we attribute to higher gas prices,” Kennison said. “Still, near $30, we like Thor for value investors as our cyclical thesis unfolds and discounting abates.”

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