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Thor Industries (THO) Tops Q4 Earnings, Gains from Jayco

SMP PLOW THO CPS

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Thor Industries Inc. (THO - Free Report) reported fourth-quarter (ended Jul 31, 2016) fiscal 2016 earnings of $1.57 per share that comfortably surpassed the Zacks Consensus Estimate of $1.37. Earnings also increased 19.8% from $1.31 per share recorded in the fourth quarter of fiscal 2015. Net income from continuing operations went up 20.1% to $82.8 million from $69 million in the prior-year quarter.

Revenues rose 21.7% year over year to $1.29 billion in the reported quarter and beat the Zacks Consensus Estimate of $1.28 billion. The year-over-year improvement in the top line was driven by strong industry growth and the acquisition of Jayco.

Gross profit margin expanded to 17.3% from 16.2% in the year-ago quarter, led by higher volumes and favorable changes in product mix.

Fiscal 2016 Results

Earnings per share for fiscal 2016 were $4.91, up 29.6% from $3.79 earned in fiscal 2015 and ahead of the Zacks Consensus Estimate of $4.79. Sales for fiscal 2016 also improved 14.4% year over year to $4.58 billion from $4.01 billion in fiscal 2015, beating the Zacks Consensus Estimate of $4.52 billion. Gross margins for fiscal 2016 increased to 15.9% from 13.9% a year ago, primarily due to higher volumes, year-over-year improvements in material costs and favorable changes in product mix.

Segment Results

 

Sales of Towable RVs went up 19.8% year over year to $961.1 million, driven by rising sales of lower-priced travel trailers and the inclusion of one month of Jayco’s revenues. Pre-tax income increased 26.8% to $108.7 million from $85.7 million in the prior-year quarter, backed by an increase in sales and higher material costs.

Revenues from Motorized RVs surged 35.3% to $292.7 million from $216.4 million in the year-ago quarter. The upside was driven by strong dealer and consumer response to new products, including the moderately priced Gas Class A and Class C motorhomes, along with the inclusion of Jayco’s one-month sales. Pre-tax income from the segment increased 11.6% to $22.2 million from $19.9 million a year ago.

Financial Position

Thor Industries had cash and cash equivalents of $209.9 million as of Jul 31, 2016, up from $183.5 million as of Jul 31, 2015. Long term debt as on Jul 31, 2016 was $360 million. There was no long term debt as of Jul 31, 2015.

Outlook

Thor Industries expects strength in the RV market and shift toward more moderately priced towable products as well as the inclusion of full-year results of Jayco to lead to double-digit revenue growth in fiscal 2017. However, the gross margin in fiscal 2017 will be diluted with the inclusion of low-margin product sales of Jayco, although it should add meaningfully to full-year earnings per share.  

THOR INDS INC Price, Consensus and EPS Surprise

THOR INDS INC Price, Consensus and EPS Surprise | THOR INDS INC Quote

Zacks Rank

Currently, Thor Industries carries a Zacks Rank #3 (Hold).

Some better-ranked auto stocks include Cooper-Standard Holdings Inc. (CPS - Free Report) ,Standard Motor Products Inc. (SMP - Free Report) and Douglas Dynamics, Inc. (PLOW - Free Report) .

Cooper-Standard has witnessed positive estimate revisions in the last 60 days and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Standard Motor Products, a Zacks Rank #1 stock, has a long-term expected growth rate of 15%.

Douglas Dynamics has seen its estimates move north in the last 60 days. The stock sports a Zacks Rank #1.

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