Thor Industries has announced record third quarter results with net sales of $2.25 billion, up 11.7 percent, and income before taxes of $180.5 million, an increase of 8.6 percent.
Gross profit for the quarter ended April 30, increased by 7.8 percent to $316.7 million. Net income and diluted earnings per share for the third quarter of fiscal 2018 were $133.8 million. This compares favorably to net income and diluted earnings per share in the prior-year third quarter of $111.3 million.
Net sales increased 12.8 percent for the towable segment, 8.8 percent for the motorized segment and 11.7 percent overall. Overall gross profit margins declined to 14.1 percent in the quarter compared to 14.6 percent in the prior-year period, reflecting increased costs primarily associated with warranty expenses, including expenses associated with an extended warranty program on certain products, as well as slightly higher labor and material costs.
Net income in the quarter benefited as a result of the Tax Cuts and Jobs Act enacted in December 2017, as the company’s third quarter effective tax rate of 25.9 percent compared favorably to a tax rate of 33.1 percent in the prior year.
“Our third quarter results reflect another period of solid growth of both sales and earnings,” said Bob Martin, Thor president and CEO. “While labor costs have moderated, we are experiencing inflationary price increases in certain raw material and commodity-based components due in large part to the headwinds created by the announcement and implementation of the steel and aluminum tariffs and other regulatory actions, as well as higher warranty costs. We will continue to manage these input factors through a combination of strategic actions and believe, over time, we will be able to offset these cost increases.
Towable RV sales were $1.61 billion for the third quarter, up 12.8 percent from $1.43 billion in the prior-year period. And the income in that segment before tax was $147.9 million, up 9.9 percent from $134.5 million in the third quarter last year.
Towable RV backlog decreased $259.8 million, or 16.6 percent, to $1.30 billion, compared to $1.56 billion at the end of the third quarter of fiscal 2017, reflecting the impact of capacity additions on improving delivery times.
Motorized RV sales were $598.5 million for the third quarter, up 8.8 percent from $549.9 million in the prior-year period. Motorized RV backlog decreased $97.2 million, or 12.2 percent, to $698.3 million from $795.5 million a year earlier, reflecting the impact of capacity additions on improving delivery times.
“Our balance sheet remains very healthy. As of April 30, we held $147 million of cash. During the first nine months of fiscal 2018, we invested over $100 million on various capital projects that support our existing businesses, while working capital increased $172.7 million to support our seasonal needs,” said Colleen Zuhl, Thor senior VP and CFO.
“Overall, the RV industry fundamentals remain strong and are supported by high consumer confidence rates, favorable employment trends, adequate availability of credit at historically low rates and a healthy housing market,” said Martin. “Dealer optimism also remains high, and their inventory is fresh. Demand continues to be driven by favorable demographic and lifestyle growth trends, including the ongoing strength of baby-boomer customers, as well as first-time and younger buyers.”