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Thor investor presentation 2.4.14   final v001-r65kg4 Thor investor presentation 2.4.14 final v001-r65kg4 Presentation Transcript

  • www.thorindustries.com
  • Forward Looking Statements  2 This presentation includes certain statements that are “forward looking” statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward looking statements are made based on management’s current expectations and beliefs regarding future and anticipated developments and their effects upon Thor Industries, Inc., and inherently involve uncertainties and risks. These forward looking statements are not a guarantee of future performance. 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, interest rate fluctuations, 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, market and political 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, 2013 and Part II, Item 1A of our quarterly report on Form 10-Q for the period ended October 31, 2013. We disclaim any obligation or undertaking to disseminate any updates or revisions to any forward looking statements contained in this presentation or to reflect any change in our expectations after the date of this presentation or any change in events, conditions or circumstances on which any statement is based, except as required by law.
  • Who is THOR  Founded in 1980 by Wade Thompson & Peter Orthwein with the acquisition of Airstream, Inc.  The sole owner of operating subsidiaries that represent one of the world’s largest manufacturers of recreational vehicles • #1 in overall RV 34.4% of market* • #2 in Travel Trailers 32.9% of market* • #1 in Fifth Wheels 50.8% of market* • #2 in Motorhomes 23.2% of market**   Approximately 8,300 employees***  107 facilities in 4 US states***  3 On July 31, 2013, Thor announced the sale of its bus business to Allied Specialty Vehicles for $100 million in cash. The sale was completed as of October 20, 2013, subject to final closing adjustments in accordance with the Stock Purchase Agreement. 6.5 million square feet under roof*** Source: *Statistical Surveys, Inc., YTD U.S. and Canada units YTD November 2013 **Motorhomes includes Class A, B and C *** as of July 31, 2013 (continuing operations)
  • THOR’s Product Range Towable Segment: Travel Trailers FY2013 Sales* Towable Segment: Fifth Wheels Motorized RV's $591,542 18% Towable Segment: Specialty Trailers Motorized Segment: Motor Homes Towable RV's $2,650,253 82% *Fiscal year ended July 31, 2013, continuing operations ($ in thousands) 4
  • THOR Subsidiaries 5
  • Why Invest in THOR   Sustainable Business Model • Successfully weathered a severe downturn • Increased capital investments position Thor for growth and margin improvement over the long term  6 Disciplined, Profitable Growth • Profitable every year since 1980 • All time record $3.2 billion sales FY2013, up 23% from FY2012 • $2.6 billion sales in FY2012, up 13% from $2.3 billion sales in FY2011 • FY2013 net income from continuing operations of $151.7 million, up 36% from FY2012 • FY2013 EPS from continuing operations of $2.86, up 38% from $2.07 in FY2012, FY2013 EPS of $2.88, up 27% from $2.26 in FY2012 Solid Balance Sheet • Cash and cash equivalents of $295.0 million on October 31, 2013 • Operations historically generate significant cash • Solid history of regular quarterly dividends, increased from $0.18 to $0.23 at the beginning of FY14
  • What Makes THOR Different  Proven business model: • Entrepreneurial and decentralized • No ivory tower: approximately 8,300 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  Long-term RV market leadership: • Best positioned in towable RVs, historically fastest growing area • #2 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 * as of July 31, 2013 (continuing operations) 7
  • THOR’s Competitive Advantages   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  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 Strength to pay warranty and honor repurchase agreements, important to dealers and consumers
  • RV Industry Conditions  Market is still competitive, though improved from year ago • Top three RV competitors account for 79.1% of industry units* • “Flight to quality” – consumers, dealers, lenders all seek to do business with strong companies like Thor  Industry better balanced today for supply and demand  Pricing & promotional environment remains competitive, but improved over prior year  Consumer confidence has been stabilizing as final results were 81.2 in January 2014 down from 82.5 in December, but up from 73.8 a year ago as middle- and lower-income consumers were concerned about lackluster growth in employment and income levels**  Wholesale and Retail lenders are prudent - applying “healthy discipline”  RV buyers seek the “power of choice” – want variety in brands and models *Source: Statistical Surveys, Inc., U.S. and Canada YTD November 2013 9 ** Source: University of Michigan Preliminary Consumer Sentiment Index for January 2014
  • 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 2014 (e) 10 196.6 215.7 186.9 189.9 211.7 215.8 187.9 173.1 163.1 203.4 227.8 259.5 247.2 247.5 254.5 292.7 321.2 300.1 256.8 311.0 320.8 370.1 384.4 390.5 353.5 237.0 165.6 242.3 252.4 285.7 321.1 335.5 106.9 133.6 140.6 199.2 441.1 413.9 389.9 295.8 339.6 RV Market Wholesale Trends: Units (000’s) Historical Data: Recreation Vehicle Industry Association, Calendar year 2013 and 2014: RVIA estimate as of Winter 2013
  • 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 2014 (e) 11 96.6 Historical Data: Recreation Vehicle Industry Association, Calendar year 2013 and 2014: RVIA estimate as of Winter 2013 13.2 25.2 24.8 28.2 38.3 41.9 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 28.5 35.4 41.2 64.1 68.9 156.1 160.2 157.2 RV Market Motorized Wholesale Trends: Units (000’s)
  • 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 2014 (e) 12 78.4 98.1 99.4 127.1 133.7 118.1 122.1 137.9 142.9 126.7 120.8 121.1 156.5 176.5 201.3 194.3 192.2 199.5 229.1 249.6 239.1 207.6 250.6 258.9 298.3 323.0 334.5 298.1 208.6 152.4 217.1 227.4 257.6 282.8 293.6 135.1 226.9 243.0 285.0 253.7 232.7 RV Market Towable Wholesale Trends: Units (000’s) Historical Data: Recreation Vehicle Industry Association, Calendar year 2013 and 2014: RVIA estimate as of Winter 2013
  • RV: State of Balance  Dealers • • • • •  Continued optimism Right-sized towable inventory Lean motorized inventory Access to wholesale credit Financial health Consumers • • • • • Better access to retail credit Historically low interest rates Great demographic trends Renewed focus on family vacations Will shorten trips to reduce fuel usage Backlog: January 31 ($ millions) RV 2012 % change Towables $501.9 $375.4 +33.7% Motorized $343.3 $241.2 +42.3% TOTAL 13 2013 $845.2 $616.6 +37.1%
  • THOR RV Dealer Inventory  Total Dealer inventory remains appropriate for current conditions, towable inventory is stable, motorized inventory is somewhat light  Dealer inventory at October 31, 2013 up 4.9% compared with October 31, 2012, in line with 5.1% RV sales growth in the fiscal first quarter  Lenders still comfortable with current dealer inventory turns and current credit line utilization, year-over-year turns have increased resulting in reduction in average age of Thor units on dealers’ lots Dealer Inventory: October 31 (units) 2013 RV 14 2012 % change 53,716 51,206 +4.9%
  • The RV Market Ahead  Retail demand has driven rebound in towables, rebound in motorized continuing  Wholesale & Retail units should be fairly balanced going forward Calendar Year 2010 2011 2012 2013 YTD Industry Retail Registrations* 246,180 units (+8.6%) 262,803 units (+6.8%) 290,317 units (+14.5%) Industry Wholesale Shipments** 15 226,776 units (+10.6%) 242,300 units (+46.2%) 252,407 units (+4.1%) 285,749 units (+13.2%) 299,451 units (+12.2%) * Statistical Surveys, inc., includes US and Canada. 2010, 2011 & 2012 Full Year Actual, 2013 YTD through November ** RVIA wholesale shipments for full years 2010, 2011 and 2012, 2013 YTD through November
  • Acquisition of Bison Coach    16 On October 31, 2013 Thor acquired the net assets of specialty trailer manufacturer Bison Coach based in Milford, Indiana for $16.7 million in cash, subject to post-closing adjustments Bison’s products include an innovative line of equine trailers with Living Quarters (LQ), constructed of light-weight aluminum and aluminum over steel construction Bison is a leader in equine LQ trailers, and they are one of only two competitors that construct their own living quarters, an area where Thor can leverage its RV expertise
  • Acquisition of Livin’ Lite     17 On August 30, 2013 Thor acquired the net assets of innovative RV manufacturer Livin’ Lite based in Wakarusa, Indiana for aggregate cash consideration of $16.8 million Livin’ Lite’s products are complementary to existing product lines, with light-weight aluminum construction targeting a niche market within the overall Towable RV market Livin’ Lite also provides an entry into two markets that Thor subsidiaries have not participated in – folding camping trailers and truck campers Lightweight products are typically sold at a modest premium compared to traditional products, with opportunities for growth through licensing agreements with Jeep and others
  • Three-Year Strategic Plan    Thor’s management team 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   18 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 Currently in process of reviewing the strategic plan and expect to provide an update in the third quarter of fiscal 2014
  • Comments on 2nd Quarter 2014 Preliminary Sales   Towable RV revenue softened in the quarter to $474.1 million, down 9.3% from last year as sales were impacted by severe winter weather during the quarter as well as operational moves made over the past few months that resulted in initial slowing of production. Towable sales for the first six months fell 5.2% to $1.10 billion, from $1.16 billion in the first six months of 2013  Ongoing strength in motorized RVs, as the market recovery continued to gain momentum, motorized sales increased 42.5% to $162.2 million for the second quarter of 2014. Motorized sales for the first six months grew 43.8% to $339.3 million, from $236.0 million in the first six months of 2013  Dealers remain optimistic, dealers and lenders comfortable with current inventory levels overall, as towable inventory is appropriate for current demand, while motorized inventory is somewhat less than ideal  19 Strong sales growth in motorized offset by somewhat softer towable sales resulting in a slight decrease in sales from continuing operations of $636.3 million. Sales from continuing operations for the first six months were $1.44 billion, up 2.9% from $1.40 billion in the first six months of 2013 Increasing RV backlog, total backlog up 37.1% to $845.2 million. Towable backlog increased 33.7% to $501.9 million while motorized backlog increased 42.3% to $343.3 million. Motorized backlog driven by strong industry growth and market acceptance of new product.
  • Comments on 1st Quarter 2014 Results   Net income from continuing operations for the first quarter was $36.4 million, up 27% from $28.7 million in the prior-year first quarter. Diluted earnings per share (EPS) from continuing operations for the first quarter was $0.68, up 26% from $0.54 in the first quarter last year  Including discontinued operations from the Bus business, net income was $41.1 million, up 33% from $31.0 million in the first quarter of fiscal 2013. Diluted EPS including discontinued operations was $0.77, up 33% from $0.58 in the first quarter last year  Towable RV sales were $622.9 million, down 3% from $639.2 million in the prior-year period. Income before tax was $45.6 million, up 7% from $42.7 million in the first quarter last year. Towable RV income before tax increased to 7.3% of revenues from 6.7% a year ago, as a result of specific actions taken to improve operating efficiencies  Motorized RV sales were $177.1 million, up 45% from $122.2 million in the prior-year first quarter. Income before tax was $13.4 million, up 60% from $8.4 million last year. As a percent of revenues, motorized RV income before tax rose to 7.6% of revenues from 6.9% a year ago, driven by improved volumes and enhanced operating efficiencies  20 Consolidated sales for the first quarter of fiscal 2014 were $800.0 million, up 5% from $761.4 million in the first quarter last year, based on strong growth in motorized recreational vehicle (RV) sales offsetting a small decrease in towable RV sales Increasing RV backlog, total backlog up 41.9% to $733.2 million. Towable backlog increased 13.5% to $419.8 million while motorized backlog more than doubled to $313.4 million
  • THOR - Key Takeaways  Profitable every year since inception  Successfully weathered a severe downturn in 2008-09  Increased capital investments position Thor for growth and margin improvement over the long term  #1 overall RV market share in North America*  Rock-solid balance sheet. Significant cash on hand and historic cash generation  Diversified and innovative products  Strong consumer, dealer and lender relationships  Experienced team * Statistical Surveys, Inc., YTD U.S. and Canada units YTD November 2013 21
  • Appendix: Financial & Market Data
  • Corporate Integrity   No golden parachutes No ‘pro forma’ earnings. We report net income, not adjusted earnings to cover up performance   23 Consistent focus on shareholder value Simple compensation philosophy: • Mainly cash compensation, without a cap, based on pre-tax income – a true pay for performance philosophy • Shift focus from stock options to restricted stock units
  • THOR’s RV Competitive Advantage U.S. and Canada Retail Registrations (units) THOR Forest River* Jayco Winnebago K-Z Inc. Fleetwood RV** Subtotal All Others Grand Total YTD 11/30/13 Total Share % 100,005 34.4% 96,514 33.2% 33,519 11.5% 8,233 2.8% 7,560 2.6% 5,813 2.0% 251,644 86.7% 38,673 13.3% 290,317 100.0% Y/E 12/31/12 Total Share % 91,960 35.0% 81,871 31.2% 30,913 11.8% 7,053 2.7% 7,210 2.7% 5,839 2.2% 224,846 85.6% 37,957 14.4% 262,803 100.0% Source: Statistical Surveys, Inc., U.S. and Canada YTD November 2013 24 * Forest River includes Palomino, Coachmen, Prime Time, Shasta and Dynamax ** Fleetwood RV includes Monaco Y/E 12/31/11 Total Share % 85,636 34.8% 74,035 30.1% 29,333 11.9% 5,549 2.3% 6,778 2.8% 6,168 2.5% 207,499 84.3% 38,681 15.7% 246,180 100.0% Y/E 12/31/10 Total Share % 78,903 34.8% 64,005 28.2% 25,785 11.4% 5,808 2.6% 6,368 2.8% 6,913 3.0% 187,782 82.8% 38,994 17.2% 226,776 100.0%
  • Sales, continuing operations ($ millions) Fiscal years ended July 31, Year-to-Date through January 31 $3,242 $2,640 $2,340 $1,849 $1,398 $1,436 2013 YTD 2014 YTD Preliminary $1,115 2009 25 2010 2011 2012 2013
  • Net Income, continuing operations ($ millions) Fiscal years ended July 31, Year-to-Date through October 31 $151.7 $111.4 $91.2 $91.6 $36.4 $28.7 $2.5 2009 26 2010 2011 2012 2013 2013 YTD 2014 YTD
  • Diluted EPS, Continuing Operations Fiscal years ended July 31, Year-to-Date through October 31 $2.86 $2.07 $1.72 $1.66 0.54 0.68 $0.04 2009 27 2010 2011 2012 2013 2013 YTD 2014 YTD
  • 1st Quarter Financial Summary Net Sales Gross Profit % of Sales SG&A % of Sales Impairment charges % of Sales All Other Income Before Tax % of Sales Income Taxes Net Income (cont. ops.) Diluted EPS (cont. ops.) 2013 % Change 2014 5.1% 761.4 800.0 14.0% 92.3 105.2 12.1% 13.1% 3.5% 46.7 48.3 6.1% 6.0% n/a 0.0 0.7 0.0% 0.1% 1.4 1.8 23.3% 44.2 54.4 5.8% 6.8% 15.5 18.0 26.8% 28.7 36.4 25.9% $ 0.68 $ 0.54 Order Backlog 369.9 419.8 Towables 146.8 313.4 Motorized 516.7 733.2 Total *Amounts in millions except per share data 28 13.5% 113.6% 41.9% Net Sales by segment: • Towables -2.6%, motorized +44.9% Income before tax by segment: • Towables 7.3%, up from 6.7% • Actions to improve operating efficiency • Motorized 7.6%, up from 6.9% • Volume leverage, improved operating efficiency • EPS from continuing operations of $0.68 up from $0.54 in first quarter of 2013
  • 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 4Q2013 1Q2014 Quarterly Thor RV Unit Shipments 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 29
  • Thor RV Retail Market Share: Units Towable Retail Share* Class A/C Retail Share* 36.9% Class B Retail Share* 36.6% 36.5% 35.8% 32.9% 26.9% 23.3% 14.8% 16.1% 17.8% 19.5% 20.1% 21.6% 15.8% 14.4% 12.4% 6.7% 2.6% 2008 30 • 2009 2010 Source: Statistical Surveys Inc., U.S. and Canada, 2013 YTD November 30, 2013 2011 2012 2013 YTD
  • www.thorindustries.com