Thor Industries Inc.: Modern Chariot Maker Banks On Boomers

Dec. 6, 2006
Capital investments aim to ensure enough product for baby boomers -- the sweet spot in terms of sales.

Naming a company after the Norse God of Thunder seems pretty smug. But recreation vehicle manufacturer Thor Industries Inc., one of IndustryWeek's IW 50 Best Manufacturers for 2006, isn't that snooty. The name actually comes from the first two letters of the owners' last names, Wade Thompson and Peter Orthwein.

Founded in 1980 via an acquisition of Airstream (maker of the retro/hip silver travel trailers), Thor Industries claims to be the only publicly held recreation vehicle manufacturer to show an increase in retail unit sales for September 2006.

According to a company statement, travel trailer and fifth-wheel sales were up 7% from last year. Retail motor home sales were also up 9% from last year.

Quarterly reports also were strong, sort of. Thor's first-quarter numbers, which ended Oct. 31, show bus income before tax was up 51% from last year and bus sales ($91.8 million) increased 16%. The Jackson Center, Ohio-based company also reduced corporate costs by $600,000 during the same period. However, net income was $32.6 million, down 25% from last year; sales for the quarter were down 4%; RV income before tax was down 29% and RV sales dropped 7%.

"Our retail travel trailer, fifth wheel and park model sales in the quarter were 23,152 units, up 9% from 21,226 units last year, according to our internal tracking system," said Wade Thompson, Thor chairman, in a Nov. 27 statement. "Approximately 1,160 hurricane-related retail sales are excluded from last year's figures. Our retail motor home sales in the quarter were 1,944 units, up 11% from 1,755 last year. We have achieved significant retail market share increases in all of our RV product categories, according to Statistical Surveys [Inc.]. Our market share in travel trailers and fifth wheels to September 30, 2006, was 32.1% -- up from 30.9% last year -- and we are the only publicly held company to show an increase in both market share and unit retail sales. Our motor home market share is 14.2% -- up from 12.7% last year. Midsize bus industry shipments for the nine months ended Sept. 30, 2006, are up 9.3% this year to 10,166 units versus 9,302 units last year. Thor's share of the midsize industry is 38%," said Thompson.

Thor Industries Inc.
At A Glance
Thor Industries Inc.Jackson Center, OhioPrimary Industry: Motor VehiclesNumber of employees: 8,4732005 In ReviewRevenue: $2.6 billionProfit Margin: 4.76%Sales Turnover: 2.98Inventory Turnover: 14.34Revenue Growth: 16.94%Return On Assets: 15.97%Return On Equity: 23.80%

According to the company, favorable demographic trends are the reason for success.

Baby boomers and retirees are the industry "sweet spot" -- with an estimated 78 million people with discretionary wealth and leisure time, the company notes in a presentation obtained from its Web site. The presentation also sources U.S. Census Bureau statistics that show the 55 to 64 age group will grow 48% by 2010.

To take advantage of favorable demographics, Thor has added over 3.7 million square feet to its manufacturing space and spent $30 million in fiscal 2006 on capital projects.

The company also hints at future plans, noting that it intends to be the industry consolidator. According to the company, there are 75 manufacturers in the $12 billion recreation vehicle industry.

If Thor is successful in its acquisitions, maybe it should consider changing its name to Abundantia, the goddess of abundance, good luck, prosperity and success.

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