Fourth Quarter 2013 Investor Presentation

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Fourth Quarter 2013 Investor Presentation

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Fourth Quarter 2013 Investor Presentation

  1. 1. www.thorindustries.com
  2. 2. 2  This release includes certain statements that are “forward looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward looking statements involve uncertainties and risks. There can be no assurance that actual results will not differ from our expectations. Factors which could cause materially different results include, among others, price fluctuations, material or chassis supply restrictions, legislative and regulatory developments, the costs of compliance with increased governmental regulation, legal issues, the potential impact of increased tax burdens on our dealers and retail consumers, lower consumer confidence and the level of discretionary consumer spending, the level of state and federal funding available for transportation, interest rate increases, restrictive lending practices, recent management changes, the success of new product introductions, the pace of acquisitions, the impact of the divestiture of the Company’s bus businesses, asset impairment charges, cost structure improvements, competition and general economic conditions and the other risks and uncertainties discussed more fully in Item 1A of our Annual Report on Form 10-K for the year ended July 31, 2012 and Part II, Item 1A of our Quarterly Report on Form 10-Q for the period ended April 30, 2013. We disclaim any obligation or undertaking to disseminate any updates or revisions to any forward looking statements contained in this release or to reflect any change in our expectations after the date of this release or any change in events, conditions or circumstances on which any statement is based, except as required by law. Forward Looking Statements
  3. 3. 3  The sole owner of operating subsidiaries that represent the world’s largest manufacturer of recreation vehicles • Founded in 1980 by Wade Thompson & Peter Orthwein with the acquisition of Airstream, Inc. • #1 in overall RV 35.8% of market* • #2 in Travel Trailers 32.9% of market* • #1 in Fifth Wheels 49.8% of market* • #1 in Motorhomes 25.2% of market**  On July 31, 2013 announced the pending sale of its bus business to Allied Specialty Vehicles for $100 million in cash subject to customary closing conditions. This sale is expected to close by November 1, 2013  Approximately 8,800 employees***  96 facilities in 7 US states***  6.1 million square feet under roof*** Who is THOR Source: *Statistical Surveys, Inc., YTD U.S. and Canada units YTD May 2013, excluding fold- downs **Motorhomes includes Class A, B and C *** as of July 31, 2012
  4. 4. 4 Travel Trailers Fifth Wheels Motor Homes Buses** THOR’s Product Range Towable RV's $2,649,777 72% Motorized RV's $591,240 16% Bus Group** $448,756 12% FY2013 Preliminary Sales* *Fiscal year ended July 31, 2013 ($ in millions) ** Bus Group sales will be presented as Discontinued Operations in the upcoming form 10-K, due to the pending sale.
  5. 5. 5 THOR Subsidiaries: RV
  6. 6. 6  Disciplined, Profitable Growth • Profitable every year since 1980 • All time record $3.7 billion sales FY2013, up 19% from FY2012 • $3.1 billion sales in FY2012, up 12% from $2.8 billion sales in FY2011 • FY2012 Net Income of $121.7 million, up 15% from FY2011 • FY2012 EPS of $2.26, up 18% from $1.92 in FY2011  Sustainable Business Model • Profitably weathered a severe downturn • Increased capital investments position Thor for growth and margin improvement over the long term  Solid Balance Sheet • Cash and cash equivalents of $137.5 million on April 30, 2013 • Operations historically generate significant cash • Solid history of dividends, increased from $0.15 to $0.18 at the beginning of FY13 Why Invest in THOR
  7. 7. 7  Proven business model: • Entrepreneurial and decentralized • No ivory tower: approximately 8,800 employees, only 40 in corporate staff* • Decision-making driven by the customer • Big, but nimble • Best management team in the business, as proven by sustained performance  An innovator in each of its business segments  Significant RV market leadership: • Best positioned in towable RVs, historically fastest growing area • #1 in Motorhomes, poised for continued growth • Well positioned as a leading innovator in the RV market to meet the demands of dealers and consumers  Strong balance sheet to support growth and shareholder returns What Makes THOR Different * as of July 31, 2012
  8. 8. 8  Focus on assembly - not heavy manufacturing • Limited vertical integration – only where it makes sense • Flexibility – performance in any market condition • Low overhead costs • High return on assets employed  Strong market share in all RV reportable segments • Provides scale and purchasing power • Low cost producer  Balance sheet supports acquisitions and organic growth  Meaningful, strategic capacity  Diversified lineup of innovative product offerings  Preferred partnership in retail/wholesale financing  Strength to pay warranty and honor repurchase agreements, important to dealers and consumers THOR’s Competitive Advantages
  9. 9. Recreation Vehicles
  10. 10. 10  Currently a very competitive environment • Top three RV competitors account for 78.2% of industry units* • “Flight to quality” – consumers, dealers, lenders all seek to do business with strong companies like Thor  Industry better balanced today  Pricing & promotional environment remains competitive  Consumer confidence better than last year, slight dip in July but still near a 5- year high  Wholesale and Retail lenders are prudent - applying “healthy discipline”  RV buyers seek the “power of choice” – want variety in brands and models Industry Conditions: RV *Source: Statistical Surveys, Inc., U.S. YTD May 2013
  11. 11. 11 RV Market Wholesale Trends: Units (000’s) 295.8 339.6 441.1 413.9 389.9 199.2 107.2 133.6 140.6 196.6 215.7 186.9 189.9 211.7 215.8 187.9 173.1 163.1 203.4 227.8 259.2 247.0 247.5 254.5 292.7 321.2 300.1 256.8 311.0 320.8 370.1 384.4 390.5 353.4 237.0 165.7 242.3 252.3 285.8 309.8 321.8 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(e) 2014(e) Historical Data: Recreation Vehicle Industry Association, Calendar year 2013 and 2014: RVIA estimate as of Summer 2013
  12. 12. 12 RV Market Motorized Wholesale Trends: Units (000’s) 68.9 96.6 156.1 160.2 157.2 64.1 28.5 35.4 41.2 69.5 82.0 68.7 67.7 73.7 72.8 61.1 52.3 41.9 46.9 51.3 58.2 52.8 55.3 55.1 63.5 71.5 61.0 49.2 60.4 62.0 71.7 61.4 55.8 55.4 28.4 13.2 25.2 24.8 28.2 33.5 35.6 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(e) 2014(e) Historical Data: Recreation Vehicle Industry Association, Calendar year 2013 and 2014: RVIA estimate as of Summer 2013
  13. 13. 13 RV Market Towable Wholesale Trends: Units (000’s) 126.3 150.6 189.7 167.9 159.8 90.2 49.1 58.1 59.5 82.8 85.3 75.4 78.2 86.2 89.6 82.9 80.4 77.6 102.6 113.6 128.3 121.2 123.9 131.6 155.0 178.0 176.8 156.9 195.8 214.4 254.6 281.3 292.4 261.7 185.1 138.3 199.2 212.9 242.9 261.5 271.1 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(e) 2014(e) Historical Data: Recreation Vehicle Industry Association, excluding camping trailers and truck campers, Calendar year 2013 and 2014: RVIA estimate as of Summer 2013
  14. 14. 14  Dealers • Continued optimism • Right-sized inventory • Smaller base of dealers • Access to wholesale credit • Financial health RV: State of Balance RV 2013 2012 % change Towables $228 $224 +2% Motorized $213 $111 +92% TOTAL $441 $335 +32% Backlog: July 31 ($ millions)  Consumers • Better access to retail credit • Confidence better • Low interest rates • Great demographic trends • Will shorten trips to reduce fuel usage
  15. 15. 15 THOR RV Dealer Inventory  Total Dealer inventory remains appropriate for current conditions  Dealer inventory at April 30, 2013 up 14.4% compared with April 30, 2012, in line with 15.2% RV sales growth in the fiscal third quarter.  Lenders still comfortable with current dealer inventory turns and current credit line utilization, turns have increased resulting in reduction in average age of units on dealers’ lots 2013 2012 % change RV 64,899 56,734 +14.4% Dealer Inventory: April 30 (units)
  16. 16. 16  Dealer inventories remain appropriate for consumer demand  “Now, it’s all about the retail consumer”  Wholesale & Retail units should be fairly balanced going forward The RV Market Ahead * Statistical Surveys, inc., includes US and Canada. 2010, 2011 & 2012 Full Year Actual,, 2013 YTD through May, excluding camping trailers ** RVIA wholesale shipments excluding camping trailers and truck campers for full years 2010, 2011 and 2012, 2013 YTD through May Calendar Year 2010 2011 2012 2013 YTD Industry Retail Registrations* 213,074 units (+12.5%) 232,970 units (+9.3%) 251,201 units (+7.8%) 118,718 units (+11.4%) Industry Wholesale Shipments** 224,400 units (+48.1%) 237,762 units (+6.0%) 271,078 units (+14.0%) 136,618 units (+13.9%)
  17. 17. 17  Thor’s management team recently developed a three-year strategic plan focused on growth and margin improvement  The Strategic Plan was developed using a bottoms-up approach involving each of the Company’s operating subsidiaries and management teams  Key elements of growth include product innovation and capacity expansion – targeting mid- to high-single-digit growth  Key elements of margin expansion include improved product quality, value added content and features, and volume leverage – targeting 200 basis points of gross margin improvement over the planning horizon RV Expansion  On June 3, 2013, Thor acquired the RV production facilities in Wakarusa, Indiana formerly operated by Navistar to expand motorized production to meet current demand and to vertically integrate RV paint operations  Nearly one million square feet of production space and 35 paint booths on 150 acres  Final transition plans to be implemented when the seller exits, which is expected late this summer Three-Year Strategic Plan
  18. 18. 18  On July 31, 2013 Thor announced an agreement to sell its bus business to Allied Specialty Vehicles for $100 million in cash, subject to closing adjustments  Thor’s bus business includes Champion Bus, Inc., General Coach America, Inc., Goshen Coach, Inc., El Dorado National California, Inc., and El Dorado National Kansas, Inc. which generated sales of approximately $449 million for the fiscal year ended July 31, 2013  Thor will continue to operate the bus business until closing, which is expected to occur on or before November 1, 2013  The Company does not anticipate any impairment to goodwill or intangible assets of the bus business as a result of the sale  Divesting the bus business will allow Thor to focus on maintaining and growing the Company’s leadership position in the core RV business  Results of the Bus segment will be presented as discontinued operations in Thor’s annual report filed on Form 10-K for the year ended July 31, 2013 to be released in late September 2013 Sale of the Bus Business
  19. 19. 19  Consolidated sales for the third quarter of fiscal 2013 were $1.05 billion, up 13% from $926.5 million in the third quarter last year, based on strength in recreational vehicle (RV) sales. Net income for the third quarter was $43.8 million, up 6% from $41.3 million in the prior-year third quarter. Diluted earnings per share (EPS) for the third quarter was $0.82, up 5% from $0.78 in the third quarter last year.  Included in net income and EPS for the third quarter of fiscal 2013 were non-cash goodwill and intangible asset impairment charges of approximately $11.5 million. This included a $4.7 million intangible asset impairment charge triggered by the expected sale of the net assets associated with the Company’s ambulance product line, and a $6.8 million goodwill impairment charge relating to the bus segment reporting unit which historically included the ambulance product line. These charges reduced EPS by $0.15 for the quarter. Excluding these items, EPS would have been $0.97 for the quarter.  Total RV segment sales were $929.8 million, up 15% from $807.2 million in the third quarter last year. RV segment income before tax was $77.6 million, up 31% from $59.2 million in the prior-year period.  Towable RV sales were $742.5 million, up 9% from $680.5 million in the prior-year period. Income before tax was $62.5 million, up 22% from $51.1 million in the third quarter last year. Towable RV income before tax increased to 8.4% of revenues from 7.5% a year ago, as a result of increased volumes and specific actions taken to improve operating efficiencies.  Motorized RV sales were $187.3 million, up 48% from $126.7 million in the prior-year third quarter. Income before tax was $15.1 million, up 86% from $8.1 million last year. As a percent of revenues, motorized RV income before tax rose to 8.1% of revenues from 6.4% a year ago, driven by improved product mix, volumes and enhanced operating efficiencies.  Bus segment sales were $119.4 million, up slightly from $119.3 million in the third quarter last year. Income before tax was a loss of $7.7 million, compared to income of $2.8 million in the third quarter last year. Bus segment income before tax was unfavorably impacted by the non-cash impairment charges relating to goodwill and intangibles of approximately $11.5 million. Comments on 3rd Quarter 2013 Results
  20. 20. 20  Profitable every year since inception  Successfully weathered a severe downturn  Increased capital investments position Thor for growth and margin improvement over the long term  #1 overall RV market share  Rock-solid balance sheet. Significant cash and cash generation  Diversified and innovative products  Strong consumer, dealer and lender relationships  Experienced Team THOR - Key Takeaways
  21. 21. Appendix: Financial & Market Data
  22. 22. 22  No golden parachutes  No ‘pro forma’ earnings. We report net income, not adjusted earnings to cover up performance  Consistent focus on shareholder value  Simple compensation philosophy: • Mainly cash compensation, without a cap, based on pre-tax income – a true pay for performance philosophy • Shift focus from stock options to restricted stock units Corporate Integrity
  23. 23. 23 THOR’s RV Competitive Advantage Source: Statistical Surveys, Inc., U.S. YTD May 2013 * Includes Palomino, Coachmen, Prime Time, Shasta and Dynamax ** Fleetwood adjusted to include Navistar RV for 2010-13 with the purchase of Navistar’s RV business in May 2013. U.S. Retail Registrations (units, excluding fold-downs) Total Share % Total Share % Total Share % Total Share % THOR 34,482 35.6% 72,988 36.3% 67,278 36.6% 64,837 37.3% Forest River* 31,661 32.7% 60,322 30.0% 52,856 28.8% 46,788 26.9% Jayco 9,550 9.9% 21,413 10.7% 20,048 10.9% 17,784 10.2% Winnebago 3,014 3.1% 6,223 3.1% 4,852 2.6% 5,180 3.0% K-Z Inc. 2,399 2.5% 5,594 2.8% 5,327 2.9% 5,058 2.9% Fleetwood** 2,034 2.1% 4,482 2.2% 4,363 2.4% 5,334 3.1% Subtotal 83,140 85.9% 171,022 85.1% 154,724 84.2% 144,981 83.3% All Others 13,656 14.1% 29,950 14.9% 29,059 15.8% 28,965 16.7% Grand Total 96,796 100.0% 200,972 100.0% 183,783 100.0% 173,946 100.0% YTD 5/31/13 Y/E 12/31/12 Y/E 12/31/11 Y/E 12/31/10
  24. 24. 24 Sales ($ millions) Fiscal years ended July 31, Preliminary for Fiscal 2013 $822 $1,245 $1,571 $2,188 $2,558 $3,066 $2,856 $2,641 $1,522 $2,277 $2,756 $3,084 $3,690 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
  25. 25. 25 Net Income ($ millions) Fiscal years ended July 31, Year to date ended April 30 $26.7 $51.2 $78.6 $104.5 $119.1 $163.4 $134.7 $92.7 $17.1 $110.1 $106.3 $121.7 $77.4 $94.6 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD '12 YTD '13
  26. 26. 26 Diluted EPS Fiscal years ended July 31, Year to date ended April 30 $0.56 $0.94 $1.37 $1.81 $2.09 $2.87 $2.41 $1.66 $0.31 $2.07 $1.92 $2.26 $1.43 $1.78 2001* 2002* 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD '12 YTD '13 *Adjusted for 2-for-1 stock split
  27. 27. 27 3rd Quarter Financial Summary 2013 2012 % Change Net Sales 1,049.2 926.5 13.2% Gross Profit 133.8 109.5 22.2% % of Sales 12.8% 11.8% SG&A 57.8 47.0 23.0% % of Sales 5.5% 5.1% Impairment of goodwill and intangible assets 11.5 0.0 n/a % of Sales 1.1% 0.0% All Other 1.9 1.3 Income Before Tax 62.6 61.2 2.3% % of Sales 6.0% 6.6% Income Taxes 18.8 19.9 Net Income 43.8 41.3 6.1% Diluted EPS 0.82$ 0.78$ 5.1% Order Backlog Towables 439.5 345.9 27.1% Motorized 210.1 102.5 105.0% Buses 199.6 215.2 -7.2% Total 849.2 663.6 28.0% *Amounts in thousands except per share data Net Sales by segment: • Towables +9.1%, motorized +47.8%, bus up slightly Income before tax by segment: • Towables 8.4%, up from 7.5% • Volume leverage and actions to improve operating efficiency • Motorized 8.1%, up from 6.4% • Volume leverage • Bus (6.4%), down from 2.4% • Includes $11.5 million in impairment of goodwill and intangible assets • Tax rate impact, resolution of state tax matters • EPS of $0.82, net of $0.15 impact of non-cash impairment charges
  28. 28. 28 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 1Q2006 2Q2006 3Q2006 4Q2006 1Q2007 2Q2007 3Q2007 4Q2007 1Q2008 2Q2008 3Q2008 4Q2008 1Q2009 2Q2009 3Q2009 4Q2009 1Q2010 2Q2010 3Q2010 4Q2010 1Q2011 2Q2011 3Q2011 4Q2011 1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 Quarterly Thor RV Unit Shipments
  29. 29. 29 Thor RV Retail Market Share: Units • US Statistical Surveys, measured at calendar year end, 2013 YTD as of May 31, 2013 29.2% 30.4% 31.2% 40.3% 39.0% 38.6% 37.3% 13.9% 14.9% 16.2% 17.4% 20.0% 20.0% 25.5% 5.3% 3.1% 7.9% 14.6% 17.0% 18.2% 22.2% 2007 2008 2009 2010 2011 2012 2013 YTD TT/FW Retail Share* Class A/C Retail Share* Class B Retail Share*
  30. 30. www.thorindustries.com

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