Is Thor’s Glass Half Empty?

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Thor RV

Thor (THO) reported quarterly earnings last week. The company beat on revenue by $40 million and the stock is up about 3% post-earnings. I had the following takeaways on the quarter:

Strong Organic Growth

Thor reported another quarter of out-sized revenue growth. Total revenue was up 24% Y/Y. Revenue from Towables was up 27%, while revenue from Motorized vehicles rose 18%. ┬áIn the past the company’s top line was driven by acquisitions, but last quarter’s results were organic. Top line growth of over 20% this quarter is nothing to scoff at. As the top line continues to grow and Thor adds scale it could be difficult for the company to maintain its growth trajectory.

For now, growth appears to be baked in. Industry RV shipments grew 17% in calendar year 2017 to a record 504,599 units, or a five year compound annual growth rate (“CAGR”) of 17%. Thor’s calendar 2017 RV shipments were 258,260, which equated to a 51% market share. According to the company, favorable demographics are driving industry growth. High consumer confidence, wide availability of credit, and a low interest rate environment have been favorable for RV sales. Secondly, generation X and millennials made up 72% of campers in 2016; RV sales are synonymous with retirees, yet the next generation of buyers may have already materialized.

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