THOR Industries reports that net sales for the second quarter were $3.9 billion, an increase of 42.1 percent as compared to the second quarter of fiscal 2021.
Net income attributable to THOR Industries and diluted earnings per share for Q2 were $266.6 million and $4.79, respectively, compared to $132.5 million and $2.38, respectively, in the prior-year period.
While the company had another fantastic quarter, CEO Bob Martin began his remarks on the company’s earnings report by referencing the Russian war on Ukraine.
“While we remain very focused on our performance as a business and I’m pleased to report on our results, we would be remiss if we did not state our firm support for the people of Ukraine in the defense of their country. We have sent and will continue to send our support and evaluate ways we can assist and respond to the humanitarian and refugee crisis unfolding in Europe. This includes offering our recently acquired facility in Nowa Sol, Poland as a staging operation for the Red Cross as it attempts to provide relief for the displaced Ukrainians,” said Martin, president and CEO. “We are also working on procuring and donating needed staples for these displaced persons. The people of Ukraine are at the front of our minds and we are focused on finding additional ways we can continue to be an impactful global citizen.
“As for the second fiscal quarter results, our performance was extremely strong, despite the continuation of supply chain challenges. Our results show the strong appeal of our products, the continued strong demand in our industry and the outstanding performance by our team members. In addition to our second-quarter record top line, we reported consolidated gross profit margin of 17.4 percent. Our increased margins were driven by the increase in net sales, improved quality and operating efficiencies, a reduction in sales discounts compared to the prior-year period and certain selling price increases put in place since the prior-year period to offset known and anticipated material cost increases. We continue to outperform the market and continue to hold a positive outlook.
“This quarter, our consolidated RV wholesale shipments were up by 14.5 percent compared to wholesale shipments during the second fiscal quarter ended Jan. 31, 2021. Our consolidated RV backlog for the second fiscal quarter of 2022 increased by more than 60 percent compared to RV backlog as of the second fiscal quarter ended Jan. 31, 2021. At the same time, our order backlog declined sequentially from our fiscal first quarter ended Oct. 31, 2021 and dealer inventory levels are improving. We are working hard to deliver enough units to continue to reduce our order backlog and we are making progress. Our backlog at the end of our second fiscal quarter of 2022 decreased by approximately $344 million to $17.73 billion from $18.07 billion at the end of our first fiscal quarter on Oct. 31, 2021.
As this is THOR’s last earnings report prior to the kick-off of the camping season in North America, Martin commented on the state of dealer inventories.
“Currently, independent dealer inventories remain below the levels we achieved prior to the pandemic, particularly for North American Motorized units. For towables, dealer inventories have grown closer to optimal levels as we head into prime retail season,” he said. “Going forward, we will monitor retail pull-through and adjust our production accordingly, carefully managing our production schedules to meet independent demand without overproducing. We learned from the industry-wide overproduction in 2018 and have established a system of dynamic checks to closely monitor dealer inventories. During the second fiscal quarter, we worked closely with our dealers to reconfirm the backlog, so we remain confident in the alignment among our current production rates, wholesale demand and retail demand. We will continue to work closely with our independent dealers and rely upon a number of other initiatives to ensure that our independent dealer inventories are adequately, but not over, supplied. We expect dealer towable inventories to normalize more quickly than motorized inventories due to ongoing chassis supply constraints that continue to affect motorized motorhome production levels.”
Colleen Zuhl, senior vice president and chief financial officer, also provided updates on the acquisition of Airxcel, which took place last fall.
“We are pleased to report that the integration of Airxcel has gone exceedingly well, which is a testament to our integration planning and the strong team at Airxcel,” Zuhl said. “Demand for their products remains very robust, and we are making investments in capacity to grow Airxcel’s presence both within THOR and across the entire industry. Our decentralized business model enables our supply companies to work with all RV OEMs on equal footing. As we grow the supply chain side of our business, we expect it to enhance our margins further.
“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.”
Added Martin: “The outlook for THOR and the RV industry continues to be very positive, and we believe our outstanding performance will continue for the balance of our fiscal year,” added Martin. “Consumer interest is at an all-time high as evidenced by record attendance and sales at the recent Florida RV SuperShow in Tampa, the largest RV show in the United States, and we see continued strong demand as we enter our peak selling season. This is an exciting time to be the world’s leading RV manufacturer, and we look forward to leveraging our position to grow our company and advance the RV industry for many years to come.”