Thor Industries has announced results for the fourth quarter and fiscal year ended July 31, showing an increase of 23.3 percent to $2.3 billion, including $719.5 million in net sales from Erwin Hymer Group. To date, the company has paid down over $480 million of its acquisition financing debt.
“We are encouraged by the improvement in the North American RV towables segment in the fourth quarter, as we saw our flexible business model and the benefits of our variable cost structure drive improvement in margins for the quarter,” said Bob Martin, Thor president and CEO. “Fiscal 2019 was a year of significant accomplishments amid challenging industry conditions. We completed the largest acquisition in our company’s and the RV industry’s history, while managing through the overhang of inventory among our independent dealers. As we look ahead to fiscal 2020, we see many reasons for optimism as we leverage the global growth opportunities of EHG. Our confidence was reinforced at the recent Düsseldorf Caravan Salon in late August, the Hershey RV show in mid-September and our Open House event held last week. Each of these important events were well attended and reflected the current optimistic sentiment of our independent dealers and consumers.”
Overall gross profit margin was 14.4 percent in the quarter, compared to 13 percent in the prior-year period, primarily reflecting favorable product mix and improvements in material, labor, and warranty cost percentages in the North American towable segment, the company’s largest segment.
The North American independent dealer inventory rationalization continued during the fiscal fourth quarter, as North American industry wholesale shipments declined at a faster rate than retail registrations. As a result, Thor’s North American independent dealer inventory levels decreased by 25 percent to approximately 103,400 units as of July 31, compared to approximately 138,500 units as of July 31, 2018.
Thor’s North American independent dealer inventory at the end of fiscal 2019 was at its lowest point since the first quarter of fiscal 2017, and management believes dealer ordering will start to align with consumer demand by the end of calendar 2019.
European dealer inventory is also going through a rationalization, though inventories were not as high as in North America. The company believes independent dealer inventory levels of EHG products in Europe, while somewhat elevated in certain locations, are now generally appropriate for seasonal consumer demand in Europe and are expected to be at a normalized level in 2020.
Fiscal year 2019 net sales of $7.86 billion include the net sales of EHG since the date of acquisition on Feb. 1.
North American Towable RV sales were $1.16 billion for the fourth quarter, compared to fourth-quarter sales of $1.41 billion in the prior-year period. This decrease was driven primarily by lower unit volume compared with the fourth quarter of last year and was partially offset by a shift in product mix toward higher-priced units. For the full-year fiscal 2019, North American Towable RV sales were $4.5 billion, down 24 percent from the record $6 billion in the prior year.
North American motorized RV sales were $387 million for the fourth quarter compared to sales of $421 million in the prior-year period. The decrease in motorized sales was driven primarily by lower unit sales, as well as a mix shift toward lower-priced Class C motorhomes. For the full-year fiscal 2019, North American Motorized RV sales were $1.6 billion, down 23 percent from $2.15 billion in fiscal 2018.
European RV sales were $719.5 million for the fourth quarter of fiscal 2019. European RV sales were $1.49 billion for fiscal 2019, reflecting six months of results of EHG, which was acquired on Feb. 1.
“Our expansion into the European RV market represents a first step in our long-term goal of growing our business beyond North America and capitalizing on global growth opportunities,” said Martin. “Our integration plan is proceeding, and we have made measurable progress in a number of areas. We are developing a culture of collaboration among our companies at the same time as we integrate EHG into the Thor family of companies. This collaboration will focus on near-term opportunities to adopt global best practices in purchasing to capture cost efficiencies and sharing best practices in R&D and product development among our companies. … Additionally, we have created an international product transfer team that is responsible for the planning and implementation of the manufacturing, sales and distribution of EHG products in North America. We showed a select number of European-model EHG products at our Open House event held last week, and the response was overwhelmingly positive.”