Thor Industries, Inc. (NYSE: THO) stock lost over 2.5% on 11th June, 2019 (as of 9:40 am GMT-4; Source: Google finance) as the company posted lower than expected results for the third quarter of FY 19. The financial results for the third quarter of 2019 include acquisition-related costs and purchase accounting adjustments related to the EHG acquisition. Meanwhile, to date, the Company has paid approximately $255 million of principal on the debt incurred to finance the EHG acquisition, including paying down all $100 million outstanding on its asset-based credit facility (ABL) and approximately $155 million of its term loan.
Moreover, the North American independent dealer inventory rationalization process had continued during the third quarter 2019, as North American industry wholesale shipments fall at a double-digit percentage compared with a single-digit decline in retail registrations through the end of March 2019. As a result of the lower wholesale shipments relative to retail demand, Thor’s North American independent dealer inventory levels fell by 20.3% to approximately 132,500 units, compared to approximately 166,200 units as of April 30, 2018. In the first nine months of fiscal 2018, the THO has taken steps to adjust its North American production levels accordingly. A number of Thor’s North American production facilities have reduced their production unit rates, while others have shifted to four-day production weeks, with the option of taking extended holiday shutdowns in the fiscal fourth quarter. Finished goods inventory levels were higher at April 30, 2019 than at July 31, 2018 due to the inclusion of finished goods inventory at EHG.
THO in the third quarter of FY 19 has reported the adjusted earnings per share of $1.65, missing the analysts’ estimates for the adjusted earnings per share of $1.74, as per Zacks Investment Research. The company had reported the adjusted revenue growth of 11.3 percent to $2.51 billion in the third quarter of FY 19, missing the analysts’ estimates for revenue of $2.67 billion. The net revenue includes the $767.5 million in net sales from the European RV segment, which was partially offset by a 23.1% decline in North American Towable RV sales and a 23.3% decline in North American Motorized RV sales. THO’s gross profit margin was 11.7% in the third quarter, compared to 14.1% in the prior-year period, primarily due to the $61.4 million impact on the European RV segment gross profit on the back of the acquired inventory, being stepped up under purchase accounting, and the impact of lower North American sales levels and higher relative sales discounts and promotions compared with unusually low levels in the prior year.