THOR Industries has announced results for the second quarter of fiscal 2020, which ended Jan. 31, showing net sales were $2 billion, an increase of $712.6 million, or 55.2 percent, compared to the prior year. Second quarter results include an increase of $74.5 million in North American RV sales and the addition of $637.1 million in net sales from Erwin Hymer Group (EHG).
“With record second-quarter revenues, improved quarterly gross profit margin year-over-year, a growing order backlog and successful new product introductions in the Class B space, all key indicators for THOR Industries were strong in the second quarter,” said Bob Martin, President and CEO of THOR Industries. “I am especially pleased to note that consolidated revenues were a new second-quarter record for THOR. EHG also reported strong revenues and, as anticipated, returned to quarterly profitability in line with historical trends. It has been a strong start to the year, and we believe we are very well positioned for growth in North America and Europe as we enter our peak selling and cash flow season.”
The net sales increase includes the addition of $637.1 million in net sales from the European RV segment and an increase of $102.3 million in net sales in the North American towable RV segment, partially offset by a decrease of $27.8 million in net sales in the North American motorized RV segment.
Consolidated gross profit margin was 12.8 percent for the second quarter of fiscal 2020, compared to 11 percent in the corresponding period a year ago. This reflects the positive impact of ongoing, management-led actions to reduce material and labor costs as a percentage of sales in both North American RV segments and the addition of 12.5 percent gross profit margin from the European RV segment.
Independent dealer inventory levels of THOR products in North America decreased by 16.5 percent to about 115,200 units as of Jan. 31, from approximately 137,900 units as of Jan. 31, 2019. Management believes that the North American independent dealer inventory rationalization of the past 18 months is now largely complete, and orders for the remainder of calendar 2020 are expected to be in line with consumer demand. Management also believes that independent dealer inventory levels of EHG products in Europe have rationalized and are also now generally appropriate for seasonal consumer demand moving into the peak selling season.
North American towable RV sales were $983.9 million for the second quarter of fiscal 2020, compared to second-quarter sales of $881.6 million in the prior-year period, an increase of 11.6 percent.
North American motorized RV sales were $343.7 million for the second quarter, compared to $371.5 million in the prior-year period. This decrease of 7.5 percent in motorized RV sales was primarily driven by lower unit volumes and a shift in product mix towards lower-priced products.
European RV sales were $637.1 million for the second quarter, following EHG’s historical trend of sequentially improving net sales from the first to the second quarter.
European RV gross profit was $79.5 million, or 12.5 percent of net sales, in the fiscal second quarter.
“The last week or two have seen a sharp increase in the concern and market reaction related to the coronavirus and the effect it may have on individuals and communities impacted by the virus, supply chains – particularly for materials sourced from China or other areas that are facing increased infection rates, and on the domestic and global economies,” said Martin. “This is a fast-developing situation that we are monitoring on a daily basis. We are hopeful that the virus will be contained very quickly and that its impact on individuals will be minimized. In the meantime, in addition to monitoring the situation, we have put in place various action items, including travel limitations for the safety of our employees, and we are in frequent contact with our key vendors discussing availability of the component parts needed to meet our production schedules. We are also evaluating and arranging alternative supply sources for all critical parts which we deem to have potential supply concerns. “
The company has not experienced any production shutdowns at any of its facilities in the U.S. or Europe as a result of the coronavirus. It also is monitoring its raw material availability closely and where needed, establishing alternative sources of supply. It has not seen any reduction of dealer orders nor any negative impact on retail sales and does not expect the virus to delay the start-up of its newly announced Hymer USA facility.
