Categories Earnings, Industrials

Cost improvement, product mix help Thor Industries’ margin in Q4

A maker of recreational vehicles, Thor Industries (NYSE: THO) on Monday reported earnings of $1.67 per share in the fourth quarter, flat from a year ago, but much better than the street expectation of $1.43 per share.

The better results were primarily powered by improved profit margins in North America, which was primarily due to lower material, labor and warranty costs, besides a shift in product mix toward higher-priced units.

Thor industries stock
Image courtesy: Thor Industries

Gross profit margin in the North American Towable RV segment grew 260 basis points to 16% in Q4.

However, net sales for the quarter missed the Street projection of $2.35 billion. Thor reported Q4 sales of just $2.31 billion, which was 23% higher than last year, partly attributable to the inclusion of net sales from Erwin Hymer Group, which it acquired earlier this year.  

Shares of the company were trading up 0.47% during pre-market trading hours.

READ: IPO market turns shaky as investors say no to hype-driven firms

Thor CEO Bob Martin said, “As we look ahead to fiscal 2020, we see many reasons for optimism as we leverage the global growth opportunities of EHG. Our confidence was reinforced at the recent Düsseldorf Caravan Salon in late August, the Hershey RV show in mid-September and our Open House event held last week.”

Lower unit sales in North America continued to hurt the top-line in Q4. While towable RV sales declined 17.7% to $1.16 billion,  motorized RV sales declined to $387.4 million from $421.3 million in the same quarter last year.

READ: Major IPOs expected in late-2019 or 2020

For any company that sells a product, two important factors driving the business are demand and profit margins. Thor Industries has been struggling with both of late. Even though it has been pretty much an industry-wide weakness, Thor was among the worst hit.

Also Read:  Regions Financial’s Q2 earnings match expectations but revenue misses

In the past 12 months, THO shares have declined over 40%, primarily due to disappointing quarterly results.

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