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Thor (THO) Q3 Earnings Miss Estimates on Lower Unit Volumes

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Thor Industries, Inc. (THO - Free Report) reported third-quarter fiscal 2019 (ended Apr 30, 2019) earnings of $1.65 per share, missing the Zacks Consensus Estimate of $1.74. The figure includes acquisition-related costs and purchase accounting adjustments related to the EHG acquisition. In the prior-year quarter, earnings per share were $2.54.

Net income attributable to the company was $32.7 million compared with $133.8 million in the prior-year quarter.

Reportedly, net sales grew 11.3% year over year to $2.51 billion. However, the figure lagged the Zacks Consensus Estimate of $2.67 billion. The figure includes $767.5 million in net sales from Thor’s European RV segment, partly offset by a 23.1% year-over-year decline in North American Towable RV sales and a 23.3% slump in North American Motorized RV sales.

Thor Industries, Inc. Price, Consensus and EPS Surprise


Gross profit was $292 million in the quarter compared with $316 million recorded in third-quarter fiscal 2018. Moreover, gross profit margin decreased to 11.7% from 14.1% in the year-ago quarter.

Favorable impact of foreign rate differences, resulting from the acquisition of EHG, aided Thor. In the reported quarter, effective tax rate was 24.3% compared with 25.9% in the prior-year quarter. For the rest of fiscal 2019, the company expects effective tax rate to be 21-23%.

Segment Results

Sales from North American Towable RVs were $1.24 billion, marking a year-over-year decline from $1.61 billion. This slump resulted from lower unit volume. Augmented softening volume sales and lowered overhead costs resulted in income before tax of $103.7 million compared with $147.9 million in the third quarter of last year.

Sales from North American Motorized RVs were $459.2 million compared with the year-ago figure of $598.5 million. This decline resulted from lower unit sales. This also lowered the segment’s income before tax to $25.2 million from the prior year’s figure of $38.9 million.

After the acquisition of EHG in February 2019, Thor added a new segment known as European RVs. The segment’s quarterly sales were $767.5 million, with loss before tax of $30.9 million.

Financial Position

As of Apr 30, 2019, Thor had cash and equivalents of $486.9 million, up from $275 million as of Jul 31, 2018.

In the first nine-month period of fiscal 2019, the company’s operating cash outflow was $175.8 million against an inflow of $197.2 million during the same period of the previous fiscal year.

Zacks Rank & Stocks to Consider

Thor currently carries a Zacks Rank #5 (Strong Sell). A few better-ranked stocks in the broader auto sector are Navistar International Corporation (NAV - Free Report) , Ford Motor Company (F - Free Report) and Allison Transmission Holdings, Inc. (ALSN - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Navistar has an expected long-term growth rate of 15.5%. The stock has gained 28.1% in the past six months.

Ford has an expected long-term growth rate of 7.3%. The stock has gained 13.6% in the past six months.

Allison Transmission has an expected long-term growth rate of 10%. Over the past six months, shares of the company have gained 2.5%.

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