Add
THO to Portfolio
Set Alert
Email to a
Friend
| |||
|
|
Quotes & Info
|
| THO > SEC Filings for THO > Form 10-Q on 9-Jun-2009 | All Recent SEC Filings |
9-Jun-2009
Quarterly Report
proceeds of such sales will then be available to make new loans. We do not
anticipate any significant impact to our liquidity and capital resources beyond
the $10,000 that we have allocated to Thor CC. The retail loans will be made to
prime and super prime customers with high credit scores. We expect to outsource
the servicing of the loans.
Thor CC currently offers retail financing through Thor recreation vehicle
dealers in the following states: Alabama, Florida, Georgia, Maryland, North
Carolina, South Carolina, Tennessee and Virginia. We expect that Thor CC will
expand its lending ability beyond these states in the future.
One of our recreation vehicle dealers accounted for 14.5% of RV net sales for
the three months ended April 30, 2009 and 12.5% for the nine months ended
April 30, 2009.
Trends and Business Outlook
Industry conditions in the RV market have been adversely affected by the lack of
available wholesale and retail financing and low consumer confidence. As a
result, market conditions continue to be soft and we anticipate this weakness to
continue for the remainder of 2009.
The motorized market has been significantly impacted by current market
conditions. The volatility of fuel prices and the tightening of the retail
credit markets are placing pressure on retail sales and our dealers continue to
be cautious in the amount of inventory they are willing to carry. Based on the
foregoing, for the nine months ended April 30, 2009 net sales in our motorized
segment decreased 69.8% compared to the nine months ended April 30, 2008. Our
towable market has also been significantly impacted albeit less than our
motorized market as the price of a towable recreation vehicle is generally about
one-fourth that of a motorhome and sales of more expensive recreation vehicles
have suffered greater in the current economic downturn. Dealers continue to sell
older model-year units before replacing them with new products. The decline in
wholesale demand has directly impacted our gross margins as we have had to
increase our discounts to maintain competitive pricing. For the nine months
ended April 30, 2009, net sales in our towables segment decreased 52.5% compared
to the nine months ended April 30, 2008. These significant decreases in net
sales, offset in part by increases in net sales in our bus segment, were
primarily responsible for the loss before income taxes for the nine months ended
April 30, 2009 of $10,129 compared to income before income taxes of $140,026 for
the nine months ended April 30, 2008. The decrease was also due to a non-cash
goodwill impairment charge of $9,717 for the goodwill associated with an
operating subsidiary in the motorized reportable segment, trademark impairment
of $564 associated with an operating subsidiary in the motorized reportable
segment and one-time charges of $4,700 associated with an increase to our
insurance reserves of $4,000 and to legal and settlement costs of $700.
The Company has reacted to the difficult business environment by scaling back
its activities and reducing its workforce. If the current market environment
persists, we may have to take additional cost-cutting measures including idling
additional plants, if necessary.
We believe an important determinant of demand for recreation vehicles is
demographics. The baby boomer population is now reaching retirement age and
retirees are a large market for our products. The baby boomer retiree population
in the United States is expected to grow faster than the total
United States population. We believe a primary indicator of the strength of the
recreation vehicle industry is retail RV sales, which we closely monitor to
determine industry trends. Recently, although the entire RV industry has been
weak, the towable segment of the RV industry has been stronger than the
motorized segment. For the towable segment, retail unit sales as reported by
Statistical Surveys, Inc. were down approximately 42% for the three months ended
March 31, 2009 compared with the same period last year. For the motorized
segment, retail unit sales were down approximately 53%. A difficult credit
environment and declining consumer confidence have slowed retail recreation
vehicle sales and appear to affect the motorized segment more severely.
Economic or industry-wide factors affecting our recreation vehicle business
include raw material costs of commodities used in the manufacture of our
product. Material cost is the primary factor determining our cost of products
sold. Material costs have generally been flat in 2009. Future increases in raw
material may impact our profit margins negatively if we were unable to raise
prices for our products by corresponding amounts.
When consumer confidence improves from its current historic low level and retail
and wholesale credit availability improve, we expect to see a rebound in sales
and expect to benefit from our ability to rapidly ramp up production in an
industry with fewer competitors than before. We have been increasing our market
share in the towable and motorized segments and we expect the trend to continue.
Government entities are primary users of our buses. Demand in this segment is
subject to fluctuations in government spending on transit. In addition, hotel
and rental car companies are also major users of our small and mid-size buses
and therefore airline travel is an important indicator for this market. The
majority of our buses have a 5-year useful life and are being continuously
replaced by operators. Bus sales may benefit from the U.S. government's emphasis
on mass transportation in the American Reinvestment and Recovery Act stimulus
package.
We do not expect the current condition of the U.S. auto industry, including the
recent bankruptcy filings of General Motors and Chrysler, to have a significant
impact on our supply of chassis. In addition to General Motors and Chrysler, the
Company purchases chassis from Ford, Navistar, and Daimler Benz. Supply of
chassis is adequate for now and we believe that on-hand inventory would
compensate for changes in supply schedules if they occur. To date, we have not
noticed any unusual cost increases from our chassis suppliers. If the condition
of the U.S. auto industry significantly worsens, this could result in supply
interruptions and a decrease in our sales and earnings while we obtain
replacement chassis from other sources.
Three Months Ended April 30, 2009 vs.
Three Months Ended April 30, 2008
Three Months Three Months
Ended Ended Change
4/30/2009 4/30/2008 Amount %
NET SALES:
Recreation Vehicles
Towables $ 264,317 $ 480,020 $ (215,703 ) (44.9 )
Motorized 47,724 120,940 (73,216 ) (60.5 )
Total Recreation Vehicles 312,041 600,960 (288,919 ) (48.1 )
Buses 103,431 106,971 (3,540 ) (3.3 )
Total $ 415,472 $ 707,931 $ (292,459 ) (41.3 )
# OF UNITS:
Recreation Vehicles
Towables 12,086 21,296 (9,210 ) (43.2 )
Motorized 671 1,570 (899 ) (57.3 )
Total Recreation Vehicles 12,757 22,866 (10,109 ) (44.2 )
Buses 1,551 1,597 (46 ) (2.9 )
Total 14,308 24,463 (10,155 ) (41.5 )
% of % of
Segment Segment Change
Net Sales Net Sales Amount %
GROSS PROFIT:
Recreation Vehicles
Towables $ 34,062 12.9 $ 69,731 14.5 $ (35,669 ) (51.2 )
Motorized 1,910 4.0 10,671 8.8 (8,761 ) (82.1 )
Total Recreation Vehicles 35,972 11.5 80,402 13.4 (44,430 ) (55.3 )
Buses 10,475 10.1 9,597 9.0 878 9.1
Total $ 46,447 11.2 $ 89,999 12.7 $ (43,552 ) (48.4 )
|
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Recreation Vehicles Towables $ 15,809 6.0 $ 27,835 5.8 $ (12,026 ) (43.2 ) Motorized 3,729 7.8 7,279 6.0 (3,550 ) (48.8 ) Total Recreation Vehicles 19,538 6.3 35,114 5.8 (15,576 ) (44.4 ) Buses 9,244 8.9 4,293 4.0 4,951 115.3 Corporate 5,189 - 8,496 - (3,307 ) (38.9 ) Total $ 33,971 8.2 $ 47,903 6.8 $ (13,932 ) (29.1 ) |
INCOME (LOSS) BEFORE INCOME TAXES: Recreation Vehicles Towables $ 18,374 7.0 $ 42,014 8.8 $ (23,640 ) (56.3 ) Motorized (11,514 ) (24.1 ) 3,390 2.8 (14,904 ) (439.6 ) Total Recreation Vehicles 6,860 2.2 45,404 7.6 (38,544 ) (84.9 ) Buses 1,243 1.2 5,113 4.8 (3,870 ) (75.7 ) Corporate (3,531 ) - (6,177 ) - 2,646 42.8 Total $ 4,572 1.1 $ 44,340 6.3 $ (39,768 ) (89.7 ) |
As of As of Change
April 30, 2009 April 30, 2008 Amount %
ORDER BACKLOG:
Recreation Vehicles
Towables $ 180,075 $ 194,938 $ (14,863 ) (7.6 )
Motorized 33,287 81,499 (48,212 ) (59.2 )
Total Recreation Vehicles 213,362 276,437 (63,075 ) (22.8 )
Buses 228,084 249,533 (21,449 ) (8.6 )
Total $ 441,446 $ 525,970 $ (84,524 ) (16.1 )
|
CONSOLIDATED
Net sales and gross profit for the three months ended April 30, 2009 were down
41.3% and 48.4%, respectively, compared to the three months ended April 30,
2008. Selling, general and administrative expenses for the three months ended
April 30, 2009 decreased 29.1% compared to the three months ended April 30,
2008. Income before income taxes for the three months ended April 30, 2009 was
$4,572 as compared to income before taxes for the three months ended April 30,
2008 of $44,340. The specifics on changes in net sales, gross profit, selling,
general and administrative expenses and income before income taxes are addressed
in the segment reporting below.
Corporate costs included in selling, general and administrative expenses were
$5,189 for the three months ended April 30, 2009 compared to $8,496 for the
three months ended April 30, 2008. The decrease of $3,307 is due to a decrease
of $2,731 in insurance related expense, $600 in incentive based compensation,
and $792 in accounting related fees. These decreases were partially offset by
increases in legal costs of $530 and non-incentive compensation cost of $242.
Corporate interest income and other income was $930 for the three months ended
April 30, 2009 compared to $2,288 for the three months ended April 30, 2008. The
decrease of $1,358 is primarily due to a $1,211 decrease in interest income due
to lower interest rates and the contractual terms of our auction rate securities
which restrict the maximum yearly interest earned.
The overall effective tax rate for the three months ended April 30, 2009 was tax
expense at a 54% rate on $4,572 income before income taxes compared to tax
expense at a 37.1% rate on $44,340 income before income taxes for the three
months ended April 30, 2008. The primary reasons for the increase are additional
tax expense for uncertain tax positions pursuant to FIN48, adjustments to
various permanent items affected by the Company's return to profitability in the
third quarter and income tax credits. In the third quarter the Company adjusted
its effective tax rate to record the benefit of Qualified Alternative Fuel Motor
Vehicle tax credits for buses manufactured to run on alternative fuel. The
Company also recorded a tax benefit for additional research and development tax
credits. These benefits were offset partially by additional state tax expense
recorded as a result of the finalization of California tax audits. Recording
these adjustments to the effective tax rate in the third quarter caused a higher
than normal tax rate for the three month period ended April 30, 2009, but the
company projects the effective tax rate for the fiscal year to be more
comparable to the 24.6% rate for the nine months ended April 30, 2009.
Segment Reporting
RECREATION VEHICLES
Analysis of Percentage Change in Net Sales Versus Prior Year
Average Price
Per Unit Units Net Change
Recreation Vehicles
Towables (1.7 )% (43.2 )% (44.9 )%
Motorized (3.2 )% (57.3 )% (60.5 )%
|
TOWABLE RECREATION VEHICLES
The decrease in towables net sales of 44.9% resulted from a 43.2% decrease in
unit shipments and a 1.7% decrease in average sales price per unit resulting
primarily from mix of product.
The overall industry decrease in wholesale unit shipments of towables for
February, March and April 2009 compared to the same period last year was 56.8%
according to statistics published by the Recreation Vehicle Industry
Association.
Towable gross profit decreased $35,669 to $34,062 or 12.9% of towable net sales
for the three months ended April 30, 2009 compared to $69,731 or 14.5% of
towable net sales for the three months ended April 30, 2008. The decrease was
due to a combination of increased discounts from unit list prices, increased
wholesale and retail incentives provided to customers and changes in cost of
products sold. Additional discounts and incentives were provided as a result of
an overall decline in the recreation vehicle industry.
Cost of products sold decreased $180,034 to $230,255 or 87.1% of towable net
sales for the three months ended April 30, 2009 compared to $410,289 or 85.5% of
towable net sales for the three months ended April 30, 2008. The change in
material, labor, freight-out and warranty comprised $169,808 of the $180,034
decrease in cost of products sold due to decreased sales volume. Material,
labor, freight-out and warranty as a percentage of net sales was 78.8% for both
the three months ended April 30, 2009 and 2008. Manufacturing overhead as a
percentage of net sales increased to 8.3% from 6.7% due to a decrease in
production resulting in lower absorption of fixed overhead costs. Manufacturing
overhead decreased $10,226 due to lower variable overhead costs, resulting from
lower production offset by unabsorbed fixed overhead costs.
Selling, general and administrative expenses were $15,809 or 6.0% of towable net
sales for the three months ended April 30, 2009 compared to $27,835 or 5.8% of
towable net sales for the three months ended April 30, 2008. The primary reason
for the $12,026 decrease in selling, general and administrative expenses was
decreased net sales which caused commissions, bonuses, and other compensation to
decrease by $9,557. In addition, advertising and selling related costs decreased
$810 due to decreased sales activity, legal and settlement costs decreased $653
due to the resolution of various legal and product disputes and accounting and
other expenses decreased $1,006.
Towables income before income taxes decreased to 7.0% of towable net sales for
the three months ended April 30, 2009 from 8.8% of towable net sales for the
three months ended April 30, 2008. The primary factor for this decrease was the
loss of gross profit on reduced sales volume of $215,703.
MOTORIZED RECREATION VEHICLES
The decrease in motorized net sales of 60.5% resulted from a 57.3% decrease in
unit shipments and a 3.2% decrease in average sales price per unit resulting
primarily from mix of product. The overall market decrease in unit shipments of
motorhomes was 76.9% for the three month period of February, March and
April 2009 compared to the same period last year according to statistics
published by the Recreation Vehicle Industry Association.
Motorized gross profit decreased $8,761 to $1,910 or 4.0% of motorized net sales
for the three months ended April 30, 2009 compared to $10,671 or 8.8% of
motorized net sales for the three months ended April 30, 2008. The decrease in
margin was due to a combination of increased discounts from unit list prices,
increased wholesale and retail incentives provided to customers and changes in
cost of products sold. Additional discounts and incentives were provided as a
result of an overall decline in the recreation vehicle industry.
Cost of products sold decreased $64,455 to $45,814 or 96.0% of motorized net
sales for the three months ended April 30, 2009 compared to $110,269 or 91.2% of
motorized net sales for the three months ended April 30, 2008. The change in
material, labor, freight-out and warranty comprised $61,650 of the $64,455
decrease in cost of products sold due to decreased sales volume. Material,
labor, freight-out and warranty as a percentage of net sales increased to 84.6%
from 84.4%. Manufacturing overhead as a percentage of motorized net sales
increased to 11.4% from 6.8% due to a decrease in production resulting in lower
absorption of fixed overhead costs. Manufacturing overhead decreased $2,805 due
to lower variable overhead costs resulting from lower production offset by
unabsorbed fixed overhead costs.
Selling, general and administrative expenses were $3,729 or 7.8% of motorized
net sales for the three months ended April 30, 2009 compared to $7,279 or 6.0%
of motorized net sales for the three months ended April 30, 2008. The primary
reason for the $3,550 decrease was decreased net sales which caused commissions,
bonuses, and other compensation to decrease by $2,075. In addition, legal and
settlement costs decreased $911 due to the resolution of various legal and
product disputes and advertising and selling related costs decreased $386.
Motorized income before income taxes was a negative 24.1% of motorized net sales
for the three months ended April 30, 2009 and 2.8% of motorized net sales for
the three months ended April 30, 2008. The primary factor for this decrease was
the loss of gross profit on reduced sales volume of $73,216 and the $9,717
write-off of goodwill.
BUSES
Analysis of Percentage Change in Net Sales Versus Prior Year
Average Price Per Unit Units Net Change Buses (0.4 )% (2.9 )% (3.3 )%
The decrease in buses net sales of 3.3% resulted from a 2.9% decrease in unit
shipments and a 0.4% decrease in average price per unit resulting primarily from
mix of product.
Buses gross profit increased $878 to $10,475 or 10.1% of buses net sales for the
three months ended April 30, 2009 compared to $9,597 or 9.0% of buses net sales
for the three months ended April 30, 2008. The increase was due to the
additional margin we realized on additional features with higher margins
included in our buses.
Cost of products sold decreased $4,418 to $92,956 or 89.9% of buses net sales
for the three months ended April 30, 2009 compared to $97,374 or 91.0% of buses
net sales for the three months ended April 30, 2008. The decrease in material,
labor, freight-out and warranty represents $3,987 of the $4,418 decrease in cost
of products sold. Material, labor, freight-out and warranty as a percentage of
buses net sales decreased to 82.9% from 83.9%. This decrease in percentage of
cost of products sold was due to better procurement. Manufacturing overhead
decreased $431 which caused manufacturing overhead to decrease to 7.0% from 7.2%
as a percentage of buses net sales.
Selling, general and administrative expenses were $9,244 or 8.9% of buses net
sales for the three months ended April 30, 2009 compared to $4,293 or 4.0% of
buses net sales for the three months ended April 30, 2008. The primary reason
for the $4,951 increase in selling, general and administrative expenses was due
to a $4,000 increase in self insurance reserves and a $902 increase in legal and
settlement costs.
Buses income before income taxes was 1.2% of buses net sales for the three
months ended April 30, 2009 compared to 4.8% for the three months ended
April 30, 2008. This decrease is primarily due to the increases in selling,
general and administrative expenses noted above.
Nine Months Ended April 30, 2009 vs.
Nine Months Ended April 30, 2008
Nine
Months Nine Months
Ended Ended Change
4/30/2009 4/30/2008 Amount %
NET SALES:
Recreation Vehicles
Towables $ 664,517 $ 1,398,172 $ (733,655 ) (52.5 )
Motorized 112,499 372,265 (259,766 ) (69.8 )
Total Recreation Vehicles 777,016 1,770,437 (993,421 ) (56.1 )
Buses 303,956 300,400 3,556 1.2
Total $ 1,080,972 $ 2,070,837 $ (989,865 ) (47.8 )
# OF UNITS:
Recreation Vehicles
Towables 29,732 62,936 (33,204 ) (52.8 )
Motorized 1,419 4,681 (3,262 ) (69.7 )
Total Recreation Vehicles 31,151 67,617 (36,466 ) (53.9 )
Buses 4,648 4,567 81 1.8
Total 35,799 72,184 (36,385 ) (50.4 )
% of % of
Segment Segment Change
Net Sales Net Sales Amount %
GROSS PROFIT:
Recreation Vehicles
Towables $ 68,799 10.4 $ 200,986 14.4 $ (132,187 ) (65.8 )
Motorized (2,501 ) (2.2 ) 34,344 9.2 (36,845 ) (107.3 )
Total Recreation
Vehicles 66,298 8.5 235,330 13.3 (169,032 ) (71.8 )
Buses 28,369 9.3 25,661 8.5 2,708 10.6
Total $ 94,667 8.8 $ 260,991 12.6 $ (166,324 ) (63.7 )
|
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Recreation Vehicles . . . |
|
|