netrashetty
Netra Shetty
Thor Industries (NYSE: THO) is the largest manufacturer of recreational vehicles by units sold and revenues in North America with 2009 revenues of $1.52 billion. The company manufactures travel trailers, park homes and motorhomes under the Airstream, Four Winds and other brand names. Thor also manufactures city and tourist buses under the El Dorado National, Goshen Coach and other brand names. The company manufactures and sells substantially all of its products in North America.
Thor's reliance on a few key bus dealers puts the revenues of its Buses segment at risk. Thor's products compete against similar products manufactured by companies like Winnebago Industries (WGO), Coachmen Industries (COA) and Fleetwood Enterprises (FLE). Also, because many of Thor's products are recreational, and thus discretionary, in economic downturns they are very often some of the first things consumers decide to forgo.
Business Segments
Towable Recreational Vehicles (63% of 2009 sales)
Towable Recreational Vehicles accounted for 63% of the company's 2009 total revenues, as it earned $953.3 million for the year.[1] Towable Recreational Vehicles manufactures conventional and fifth wheel travel trailers as well as park models. Travel trailers are designed to be self contained living spaces for short periods of time, such as on road trips. Conventional travel trailers connect to a vehicles tow hitch while fifth wheel travel trailers are specialized models that attach to the bed of a pickup truck. Park models, on the other hand, are designed to be towed to a permanent location such as a park or lake and used as a vacation cabin. The segment sells it's products through authorized dealers under the Airstream, Dutchmen and other brand names. The company's Towable Recreational Vehicles compete with similar products manufactured by companies like Coachmen Industries (COA) and Fleetwood Enterprises (FLE).
Contents
1 Business Segments
1.1 Towable Recreational Vehicles (63% of 2009 sales)
1.2 Motorized Recreational Vehicles (10% of 2009 sales)
1.3 Buses (27% of 2009 sales)
2 Business Financials
3 Key Trends and Forces
3.1 Rising raw materials costs compress Thor's gross margin
3.2 Decreases in disposable income decrease Thor's sales
3.3 High fuel prices decrease the demand for motorhomes and travel trailers
4 Key Competitors
5 References
Motorized Recreational Vehicles (10% of 2009 sales)
Motorized Recreational Vehicles accounted for 10% of Thor's 2009 total revenues, with $161.7 million for 2009.[1] Motorized Recreational Vehicles manufactures motorhomes based on truck chassis. Motorhomes are self contained living spaces with water tanks, sewage tanks, and electrical generators so that they don't need to be connected to utilities. Motorized Recreational Vehicles purchases chassis for its products from companies like Ford Motor Company (F), Workhorse Custom Chassis, and General Motors (GM). Thor sells its Motorized Recreational Vehicles through a network of authorized dealers under the Four Winds, Damon Motor Coach and other brand names. The company's Motorized Recreational Vehicles compete with similar products manufactured by companies like Winnebago Industries (WGO), Coachmen Industries (COA) and Fleetwood Enterprises (FLE).
Buses (27% of 2009 sales)
Buses accounted for 27% of Thor's 2009 revenues, as the segment earned $406.9 million in 2009.[1] The Buses segment manufactures buses used for airport shuttles, urban transit buses and tourist buses. The company manufactures some of its own bus chassis and purchases others from Ford Motor Company (F), Freightliner, and General Motors (GM). Buses purchases all of its engines from companies like Cummins (CMI), Caterpillar (CAT) and John Deere. The company sells it's buses to customers through independent dealers under the El Dorado National, Champion Bus and Goshen Coach names.
Business Financials
For the year ended July 31, 2009 (Thor's fiscal year ends on July 31), Thor had total revenues of $1.52 billion, a significant decline from the previous year's revenues of $2.64 billion.[2] The large decline mostly came as a result of its Recreational Vehicles sales falling in half between these two years. Evidence of this is seen through its 2008 sales of $2.2 billion in 2008 as compared to its 2009 sales of $1.1 billion.[3] This is because recreational vehicles are generally considered a luxury, and as a result in tough economic times like 2009, consumers will drastically cut back on the number of high expenditure luxuries. As a result of this sharp decline in total revenues, Thor's 2009 net income fell to just $17 million in 2009, compared to the previous year's net income of $93 million.[2]
Key Trends and Forces
Rising raw materials costs compress Thor's gross margin
If the cost of purchasing raw materials increases, Thor's gross margin decreases. On the other hand if the cost of purchasing raw materials decreases, Thor's gross margin increases. Thor attempts to pass increases in the price of raw materials on to its customers, but doing so often results in decreased sales. Therefore, it is usually unable to pass on all of the costs, and therefore when prices increases, their margins will decline.
Decreases in disposable income decrease Thor's sales
When consumers' disposable income decreases, Thor's sales decrease as consumers cut back on purchases of luxury and vacation items such as travel trailers and motor homes. On the other hand, when consumers have more disposable income their spending on vacation and luxury items increase along with Thor's sales. The effects of falling disposable income can be seen through Thor's recreational vehicle sales falling by 50% between 2008 and 2009.[3]
High fuel prices decrease the demand for motorhomes and travel trailers
Motorhomes get only about 6 mpg to 10 mpg.[4] Likewise, when consumers attach travel trailers to an automobile, that automobile becomes less fuel efficient because of the extra weight. When the price of fuel rises, consumers are less likely to purchase products that force them to use more gas.
Key Competitors
Winnebago Industries (WGO) manufactures motorhomes and similar vehicles for commercial sale and special uses (mobile law enforcement command centers, etc). The company's motorhomes compete with Thor's Motorized Recreational Vehicles.[5]
Coachmen Industries (COA) manufactures motorhomes as well as conventional and fifth wheel travel trailers. The company also manufactures prefabricated housing. The company's motorhomes compete with the Motorized Recreational Vehicles produced by Thor and its travel trailers compete with the Towable Recreational Vehicles produced by Thor. The company's prefabricated housing competes with the park homes manufactured by Thor.[6]
Fleetwood Enterprises (FLE) manufactures motorhomes, travel trailers, and prefabricated housing. The company's motorhomes compete with Thor's Motorized Recreational Vehicles and its travel trailers and prefabricated housing compete with Thor's Towable Recreational Vehicles.[7]
Thor's reliance on a few key bus dealers puts the revenues of its Buses segment at risk. Thor's products compete against similar products manufactured by companies like Winnebago Industries (WGO), Coachmen Industries (COA) and Fleetwood Enterprises (FLE). Also, because many of Thor's products are recreational, and thus discretionary, in economic downturns they are very often some of the first things consumers decide to forgo.
Business Segments
Towable Recreational Vehicles (63% of 2009 sales)
Towable Recreational Vehicles accounted for 63% of the company's 2009 total revenues, as it earned $953.3 million for the year.[1] Towable Recreational Vehicles manufactures conventional and fifth wheel travel trailers as well as park models. Travel trailers are designed to be self contained living spaces for short periods of time, such as on road trips. Conventional travel trailers connect to a vehicles tow hitch while fifth wheel travel trailers are specialized models that attach to the bed of a pickup truck. Park models, on the other hand, are designed to be towed to a permanent location such as a park or lake and used as a vacation cabin. The segment sells it's products through authorized dealers under the Airstream, Dutchmen and other brand names. The company's Towable Recreational Vehicles compete with similar products manufactured by companies like Coachmen Industries (COA) and Fleetwood Enterprises (FLE).
Contents
1 Business Segments
1.1 Towable Recreational Vehicles (63% of 2009 sales)
1.2 Motorized Recreational Vehicles (10% of 2009 sales)
1.3 Buses (27% of 2009 sales)
2 Business Financials
3 Key Trends and Forces
3.1 Rising raw materials costs compress Thor's gross margin
3.2 Decreases in disposable income decrease Thor's sales
3.3 High fuel prices decrease the demand for motorhomes and travel trailers
4 Key Competitors
5 References
Motorized Recreational Vehicles (10% of 2009 sales)
Motorized Recreational Vehicles accounted for 10% of Thor's 2009 total revenues, with $161.7 million for 2009.[1] Motorized Recreational Vehicles manufactures motorhomes based on truck chassis. Motorhomes are self contained living spaces with water tanks, sewage tanks, and electrical generators so that they don't need to be connected to utilities. Motorized Recreational Vehicles purchases chassis for its products from companies like Ford Motor Company (F), Workhorse Custom Chassis, and General Motors (GM). Thor sells its Motorized Recreational Vehicles through a network of authorized dealers under the Four Winds, Damon Motor Coach and other brand names. The company's Motorized Recreational Vehicles compete with similar products manufactured by companies like Winnebago Industries (WGO), Coachmen Industries (COA) and Fleetwood Enterprises (FLE).
Buses (27% of 2009 sales)
Buses accounted for 27% of Thor's 2009 revenues, as the segment earned $406.9 million in 2009.[1] The Buses segment manufactures buses used for airport shuttles, urban transit buses and tourist buses. The company manufactures some of its own bus chassis and purchases others from Ford Motor Company (F), Freightliner, and General Motors (GM). Buses purchases all of its engines from companies like Cummins (CMI), Caterpillar (CAT) and John Deere. The company sells it's buses to customers through independent dealers under the El Dorado National, Champion Bus and Goshen Coach names.
Business Financials
For the year ended July 31, 2009 (Thor's fiscal year ends on July 31), Thor had total revenues of $1.52 billion, a significant decline from the previous year's revenues of $2.64 billion.[2] The large decline mostly came as a result of its Recreational Vehicles sales falling in half between these two years. Evidence of this is seen through its 2008 sales of $2.2 billion in 2008 as compared to its 2009 sales of $1.1 billion.[3] This is because recreational vehicles are generally considered a luxury, and as a result in tough economic times like 2009, consumers will drastically cut back on the number of high expenditure luxuries. As a result of this sharp decline in total revenues, Thor's 2009 net income fell to just $17 million in 2009, compared to the previous year's net income of $93 million.[2]
Key Trends and Forces
Rising raw materials costs compress Thor's gross margin
If the cost of purchasing raw materials increases, Thor's gross margin decreases. On the other hand if the cost of purchasing raw materials decreases, Thor's gross margin increases. Thor attempts to pass increases in the price of raw materials on to its customers, but doing so often results in decreased sales. Therefore, it is usually unable to pass on all of the costs, and therefore when prices increases, their margins will decline.
Decreases in disposable income decrease Thor's sales
When consumers' disposable income decreases, Thor's sales decrease as consumers cut back on purchases of luxury and vacation items such as travel trailers and motor homes. On the other hand, when consumers have more disposable income their spending on vacation and luxury items increase along with Thor's sales. The effects of falling disposable income can be seen through Thor's recreational vehicle sales falling by 50% between 2008 and 2009.[3]
High fuel prices decrease the demand for motorhomes and travel trailers
Motorhomes get only about 6 mpg to 10 mpg.[4] Likewise, when consumers attach travel trailers to an automobile, that automobile becomes less fuel efficient because of the extra weight. When the price of fuel rises, consumers are less likely to purchase products that force them to use more gas.
Key Competitors
Winnebago Industries (WGO) manufactures motorhomes and similar vehicles for commercial sale and special uses (mobile law enforcement command centers, etc). The company's motorhomes compete with Thor's Motorized Recreational Vehicles.[5]
Coachmen Industries (COA) manufactures motorhomes as well as conventional and fifth wheel travel trailers. The company also manufactures prefabricated housing. The company's motorhomes compete with the Motorized Recreational Vehicles produced by Thor and its travel trailers compete with the Towable Recreational Vehicles produced by Thor. The company's prefabricated housing competes with the park homes manufactured by Thor.[6]
Fleetwood Enterprises (FLE) manufactures motorhomes, travel trailers, and prefabricated housing. The company's motorhomes compete with Thor's Motorized Recreational Vehicles and its travel trailers and prefabricated housing compete with Thor's Towable Recreational Vehicles.[7]
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