What Makes Thor Industries, Inc. (THO) So Fearsome?

Page 1 of 2

Thor Industries, Inc. (NYSE:THO) is the largest manufacturer of recreational vehicles (RVs) in the world. The company has a 36.1% share of the total RV market. This industry went off a cliff in the 2008 through 2010 period when the recession was in full force and consumers were scared — or unable — to commit to relatively large purchases such as RVs. In the depths of this gloom in 2009, Thor Industries, Inc. (NYSE:THO) was able to earn a profit, a small one but a profit nonetheless. This company has been profitable for more than 30 years in a row. Consider what a strong record that is given all the economic ups and downs in America over that time.

Thor Industries, Inc.

In fiscal year 2012 (the company’s year ends July 31), Thor Industries, Inc. (NYSE:THO) achieved all-time record revenue of $3.1 billion, up 12% from the previous year. Net income jumped 15% to $122 million. In its presentation of results, the company reported that 74%, or $2.3 billion of this revenue came from its towable-RV segment. The company’s bus-manufacturing segment — which includes both transit buses and luxury coaches — had revenue of $445 million and its motorized RV segment had sales of $354 million.

Learning about the products

A great way to gain an understanding of a company’s competitive advantages (and disadvantages) is to see or test the products and those of the competitors yourself. I got the chance to do that by attending a large RV show in Phoenix. I saw more varieties of RVs than I ever imagined existed. Each of the brands’ models had lots of exciting, innovative features. Today’s RV manufacturers have adapted their product offerings to virtually every conceivable customer need or want — including luxury features that make the vehicle look like a high-class hotel suite on wheels.

I spent about six hours at the show, and as the day went on I was drawn more and more to the Fifth Wheel vehicles manufactured by Thor Industries, Inc. (NYSE:THO). A Fifth Wheel is a trailer that attaches securely to the back of a pickup truck through a special hitching device in the truck bed. This secure anchor helps the driver maintain stability on the road instead of drifting into the adjacent lane and taking out a flock of Mini Coopers.

Thor’s Fifth Wheel vehicles were stunning and spacious on the inside, with beautiful decor and versatile floor plans to fit any lifestyle. The kitchen area, for example, was along the wall of some models and in the back of others, so you could separate the kitchen from the living area if you wanted to or make it the focal point of the living area. Except for the troublesome little detail that I don’t own a pickup truck, the Thor Industries, Inc. (NYSE:THO) Fifth Wheel was definitely the one I would buy. The company’s success is apparent in its 51.3% share of the total Fifth Wheel market in the U.S.

Why RVs are a growth industry

The website GoRVing.com provides compelling reasons why RV ownership is so appealing to more than 8 million owners across the
US. Vacation travel in an RV means you can go when and where you choose — no airline flights to rush to catch or fitting into someone else’s schedule. Some 48% of RV owners take their pets with them when they travel. Airline travel with a pet is difficult and many hotels do not accept pets. The surprising statistic was that a family of four’s RV vacation could cost up to 59% less than other means of travel — and this includes fuel and the cost of owning the vehicle. RV trips allow a couple or a family to escape from the stress of everyday life and experience the beauty of nature. The National Forest Service, for example, operates more than 4,300 campgrounds. Parents use the RV experience as a way to let their children appreciate the natural world.

Page 1 of 2