Company Reports

Thor’s fiscal 2024 third-quarter results forced the company to again cut its full-year guidance, but we don’t see a reason to change our fair value estimate. At the start of the fiscal year, management expected dealers' reluctance to meaningfully increase inventory would end during the second half of fiscal 2024. However, the lack of interest-rate cuts means dealers remain leery of holding excess inventory, and Thor now expects this weakness to continue into fiscal 2025. We agree with management, however, that macroeconomic conditions will eventually improve and consumer interest in eventually owning another recreational vehicle remains strong.

Thor’s stock fell by over 14% during March 6 trading after the firm’s fiscal 2024 second quarter saw management lower full-year guidance. We don’t see a permanent demand problem for the recreational vehicle industry in North America, we instead see the guidance change resulting from a delay in an inevitable inventory restocking, so we are leaving our fair value estimate in place. Management expected a second-half fiscal 2024 recovery in dealer demand, but that timing is now later in fiscal 2024 due to high interest rates and dealers remaining cautious on accumulating inventory when they still have 2023 model year product to sell. Inventories are low per Thor and 2025 model year product comes out in July, so we don’t see dealers keeping inventory low forever and we think high interest rates, rather than a lack of consumer demand, are delaying an inventory rebuild. Management is combating these dealer fears with more incentive spending, especially in motorhomes, but this means full-year gross margin is now expected to be 14.0%-14.5%, down from 14.5%-15%. That change, along with about $500 million less revenue guided, led to diluted earnings per share guidance falling to $5.00-$5.50 from $6.25-$7.25.

Founded in 1980 via the acquisition of Airstream, Thor Industries has grown to become the world’s largest recreational vehicle manufacturer. The company fabricates and sells a wide array of vehicles through three segments: North American towables, North American motorized, and Europe. Additionally, the company sells aftermarket component parts and digital solutions that are classified within its other segment. During fiscal 2023, the company generated 38% of sales from its North American towables segment and 30% of sales from its North American motorized segment, while Europe accounted for 27% of sales.

We are raising our Thor Industries fair value estimate to $141 from $139 on the time value of money after the firm reported fiscal 2024 first-quarter results that maintained guidance while diluted EPS of $0.99 (down 60.9% year over year) beat the $0.98 Refinitiv consensus. Management has stressed a focus on profitability over volume and that showed in the results with revenue down 19.5% and unit deliveries falling 9.5%. North American towable and motorized deliveries fell by 13% and 31.5%, respectively, but the European segment grew volume 19.5% and swung to a profit from a loss a year ago. Europe saw higher pricing, including a 10-percentage-point revenue growth contribution from foreign currency translation as well as improvement in chassis availability, which the industry struggled with last year. Thor expects its European dealers to be at normalized levels for most brands by the end of fiscal second quarter, so we don’t expect robust first-quarter European growth to last for all fiscal 2024. Europe’s Oct. 31 backlog of $3.3 billion now makes up the majority of Thor’s total backlog of $5.4 billion and total backlog fell 27.8% from October 2022 and by 70.3% from October 2021.

Founded in 1980 via the acquisition of Airstream, Thor Industries has grown to become the world’s largest recreational vehicle manufacturer. The company fabricates and sells a wide array of vehicles through three segments: North American towables, North American motorized, and Europe. Additionally, the company sells aftermarket component parts and digital solutions that are classified within its other segment. During fiscal 2023, the company generated 38% of sales from its North American towables segment and 30% of sales from its North American motorized segment, while Europe accounted for 27% of sales.

We are initiating coverage on recreational vehicle manufacturer Thor Industries with a no-moat rating and a fair value estimate of $139 per share. Thor is the world’s largest RV manufacturer with greater than 40% market share in North America for both motorhomes and towables, and greater than 20% market share in Europe, generating over $11 billion in sales in fiscal 2023. The company boasts a portfolio of over 30 brands, most notably Airstream and Tiffin, targeting customers in both the North American and European market. For fiscal 2023, North America accounted for over 72% of sales and Europe accounted for over 27% of sales.

Founded in 1980 via the acquisition of Airstream, Thor Industries has grown to become the world’s largest recreational vehicle manufacturer. The company fabricates and sells a wide array of vehicles through three segments: North American towables, North American motorized, and Europe. Additionally, the company sells aftermarket component parts and digital solutions that are classified within its other segment. During fiscal 2023, the company generated 38% of sales from its North American towables segment and 30% of sales from its North American motorized segment, while Europe accounted for 27% of sales.