Thor Industries Inc.: Building a Base of Happy Campers

Despite a down market, the RV manufacturer is still taking orders and turning a profit.

As the idea of living "green" seems to have penetrated nearly every corner of the country, many have started doing their part by either trading in their gas-guzzling SUVs for the latest hybrids, using public transportation, or at least trying to carpool once in a while. Of course, it's possible rising gas prices have also played a small part.

Whatever the reason, these changes in habit haven't helped companies like Thor Industries, a Jackson Center, Ohio-based manufacturer of recreation vehicles (RVs) and builder of commercial buses. But while the RV market as a whole has suffered as a result, the IndustryWeek 50 Best Manufacturer seems to have escaped relatively unscathed -- all things considered.

In early December, Thor Industries announced that its backlog on Nov. 30 was up 19% from 2006. RV backlog was up 23% from last year, while bus backlog was up 15%. A month earlier, Thor's sales were reported to have risen 5% in its fiscal third-quarter, posting another record order backlog on Oct. 31, coming in at $476 million, up 17% from $406.3 million a year earlier. Officials also reported that the number of orders the company received in November rose 19% from the same month in 2006.

In addition, Thor came out with news reflecting a particularly good trip to the Recreation Vehicle Industry Association's annual national RV trade show this year, which was held in late November in Louisville, Ky. The company said it received orders of approximately $250 million (an increase of 5% from $238 million in 2006), which are in addition to the backlog.

"The Louisville RV show order input is very gratifying and reflects our continuing leadership in product innovation," said Wade F. B. Thompson, chairman of Thor Industries. "We introduced many new products and floor plans that were extremely well received by dealers."

That was the good news. The other side of the coin has given way to a 30% drop in the company's stock since early October -- dipping below $35 and introducing a new 52-week low. Shares fell 5% on Nov. 27 alone, when the company narrowly missed first-quarter profit estimates. While Thor reported an increase in earnings of 25% to $38.2 million (68 cents per share) and a revenue gain of 5% to $763.7 million, analysts were expecting a net income of 69 cents per share on sales of $762.6 million.

Thor Industries
At A Glance

Thor Industries
Jackson Center, Ohio
Primary Industry: Motor Vehicles
Number of Employees: 9,363
2006 In Review
Revenue: $2.87 billion
Profit Margin: 5.62%
Sales Turnover: 3.03
Inventory Turnover: 15.02
Revenue Growth: 19.85%
Return On Assets: 20.10%
Return On Equity: NA

Those numbers were given a little perspective in a Dec. 6 Forbes article, in which Citigroup's Gregory Badishkanian said Thor reported "particularly encouraging" first quarter results given negative investor sentiment regarding the industry. Badishkanian added that the company is well positioned within its core markets and operates with various competitive advantages such as its scale and depth of product portfolio.

In the midst of the busy couple of months, Richard Riegel III also assumed his new role as Thor's COO. Having joined the company in 1998 as vice president of corporate development, Riegel most recently served as group president. In his new role, each of Thor's subsidiaries will report to Riegel. Previous COO H. Coleman Davis III will continue as a board member and as chairman of Keystone RV, Thor's largest operating subsidiary.


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