Thor Industries recently announced record second quarter results with income before taxes of $141.1 million, on revenues of $1.97 billion, an increase of 24.1 percent. Gross profit for the second quarter ended Jan. 31 increased 27.7 percent to $270.3 million.
As a result of the strength of revenues and production during the quarter, as well as operating efficiencies and process improvements attained in the past year, primarily by Jayco, gross profit margins increased to 13.7 percent in the second quarter compared to 13.3 percent in the prior-year period.
Net income and diluted earnings per share for the second quarter of fiscal 2018 were $79.8 million and $1.51, respectively. This compares to net income and diluted earnings per share in the prior-year second quarter of $64.8 million and $1.23, respectively.
In the second quarter of the company’s fiscal 2018, the Tax Act was enacted which provided significant changes to the U.S. tax code, including reducing the federal corporate income tax rate to 21 percent, effective Jan. 1, 2018.
As the company’s 2018 fiscal year ends on July 31, Thor’s estimated federal corporate income tax rate for fiscal 2018 will be prorated to a blended 26.9 percent rate. In addition to the benefit of the lower blended federal tax rate of 26.9 percent in the second quarter, an income tax benefit of $12.5 million was recognized to reflect the impact of applying the lower tax rate to the results of the first quarter of fiscal 2018.
Thor also recognized a non-recurring, non-cash income tax charge of $34 million due to the revaluation of its net deferred tax assets as a result of the lower federal tax rate under the Tax Act.
“Our innovative products and the breadth of products we offer at all price points along the spectrum, particularly within the entry-level and mid-price point categories, combined with our outstanding dealer network, resulted in market share gains during calendar 2017,” said Bob Martin, Thor president and CEO. “We leveraged the combined strength in industry demand and share gains to drive increased profitability across both segments of our business through a combination of increased output from recently added production capacity, enhanced scheduling and optimization of production runs at our existing facilities, as well as various initiatives implemented across the company over the last year to improve operating efficiencies.”
Towable RV sales were $1.37 billion for the second quarter, up 26.9 percent from $1.08 billion in the prior-year period, driven primarily by continued strong demand for our more affordably-priced travel trailers and fifth wheels. Towable RV income before tax was $116.7 million, up 49.7 percent from $78 million in the second quarter last year. This increase was driven primarily by the increase in sales; improved gross margins due to improved operating efficiencies and process improvements, primarily by Jayco; decreased Selling, General and Administrative expense as a percent of revenues; and slightly lower amortization expense.
Towable RV backlog increased $493.1 million, or 37.3 percent, to $1.82 billion, compared to $1.32 billion at the end of the second quarter of fiscal 2017.
Motorized RV sales were $559.9 million for the second quarter, up 17.9 percent from $475 million in the prior-year second quarter. The increase in motorized RV sales was a result of the ongoing growth in our more moderately-priced gas Class A and Class C motorhomes, both of which continue to be in high demand by our dealers and end consumers.
“Our balance sheet remains very strong. As of Jan. 31, 2018, we held $109.8 million of cash. During the first half of fiscal 2018, we invested over $63 million on various capital projects that support our existing businesses and will further increase capacity across our product lines, while working capital increased $118 million to support our seasonal needs,” said Colleen Zuhl, Thor senior VP and CFO. “We also continued to reduce the outstanding balance under our credit facility, paying down $65 million during the first half of the year to exit with $80 million outstanding as of Jan. 31, 2018, compared to $145 million outstanding at July 31, 2017.”
