Thor Industries, Inc. · NYSE:THO

Thor Industries — Q2 2017 Earnings Presentation

63 slides from Thor Industries's earnings presentation, Mar 6, 2017

1. Slide 1: Investor Presentation March 6, 2017

   Investor Presentation March 6, 2017 www.thorindustries.com

2. Slide 2: Forward Looking Statements

   FORWARD LOOKING STATEMENTS This presentation includes certain statements that are “forward looking” statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 193

3. Slide 3: Table of Contents

   TABLE OF CONTENTS Second Quarter 2017 Update – Page 4 Thor Basics: An Introduction to the Company – Page 16 Appendix 1: Investor Q&A – Page 31 Appendix 2: Financial and Market Data – Page 55 3

4. Slide 4: XS = (=) N - o ww a © = Co mo] < °

   XS = (=) N - o ww a © = Co mo] < ° (T) (1 ”

5. Slide 5: Second Quarter Key Messages

   SECOND QUARTER KEY MESSAGES We posted the 12th consecutive quarter of record revenues and record net income from continuing operations We posted strong growth in revenues, both organically and from acquisitions, in the second quarter with double-digit organic growth in both segments - towables and m

6. Slide 6: Continued Positive Trends

   CONTINUED POSITIVE TRENDS Record revenues and earnings for the second quarter of fiscal 2017 Revenues grew 62.9% to $1.59 billion from $975.1 million in the second quarter of fiscal 2016 Towable revenues grew 55.0% to $1.08 billion Motorized revenues grew 95.6% to $475.0 million Jayco added $431.3 m

7. Slide 7: Continued Positive Trends

   CONTINUED POSITIVE TRENDS Bob Martin – Thor President & CEO: “The second quarter marked another period of growth for Thor, as we experienced a positive start to the spring retail show season around the country. Growing demand from new consumers broadening our market has continued, with younger famil

8. Slide 8: Second Quarter 2017 Key Stats – Income Statement

   SECOND QUARTER 2017 KEY STATS – INCOME STATEMENT Net Income (Continuing Ops., $ millions) Net Sales (Continuing Ops., $ millions) $2,640 FY12 $3,242 FY13 $3,525 FY14 $4,007 FY15 $4,582 FY16 $2,005 FY16 YTD $3,297 FY17 YTD $111.4 FY12 $151.7 FY13 $175.5 FY14 $202.0 FY15 $258.0 FY16 $96.0 FY16 YTD $14

9. Slide 9: Second Quarter 2017 Key Stats – Balance Sheet

   SECOND QUARTER 2017 KEY STATS – BALANCE SHEET Cash & Investments Working Capital Operating Cash Flow ($ Millions) ($ Millions) ($ Millions) $289.3 $237.3 $220.0 $183.5 FY12 FY13 FY14 FY15 $209.9 $185.4 $134.7 FY16 2Q16 2Q17 $469.0 $373.8 FY12 FY13 $473.3 FY14 FY15 FY16 2Q16 2Q17 $470.9 $434.9 $397.5

10. Slide 10: Second Quarter Reflects Continued Record Performance

    SECOND QUARTER REFLECTS CONTINUED RECORD PERFORMANCE Three Months Ended January 31, 2017 2016 % Chg. Net Sales $ 1,588.5 $ 975.1 62.9% Gross Profit 211.7 148.8 42.3% % of Sales 13.3% 15.3% SG&A 97.0 67.4 43.9% % of Sales 6.1% 6.9% Income Before Tax (cont. ops.) $ 98.4 $ 65.9 49.3% % of Sales 6.2% 6.

11. Slide 11: Second Quarter 2017 Results Up Double Digits

    SECOND QUARTER 2017 RESULTS UP DOUBLE DIGITS SECOND QUARTER 2017 RESULTS UP DOUBLE DIGITS Net Sales ($ millions) $1,588.5 $975.1 +63% FY16 FY17 Net Income ($ Millions) $64.8 $44.7 +45% FY16 FY17 Diluted EPS $1.23 $0.85 +45% FY15 FY16 RV Backlog ($ millions) $2,090.3 $1,105.2 +89% FY16 FY17 Peter B.

12. Slide 12: Second Quarter 2017 – All Segments Show Strong Results

    SECOND QUARTER 2017 – ALL SEGMENTS SHOW STRONG RESULTS Income from Continuing Operations before Income Taxes: 2Q17 2Q16 Recreational Vehicles Towables $ 78,000 $ 53,069 Motorized 28,488 20,519 Total Recreational Vehicles 106,488 73,588 Other, net* 5,696 3,010 Corporate (13,819) (10,710) Total $ 98,3

13. Slide 13: Investing in Future Growth

    INVESTING IN FUTURE GROWTH Capital Expenditures Business Acquisitions Thousands $60,000 $51,976 $50,924 $50,000 $42,283 $40,000 $30,406 $30,000 $24,305 $24,539 $20,000 $10,063 $10,000 $0 FY12FY13FY14FY15 FY16FY16 FY17 YTD YTD Thousands $600,000 $557,651 $500,000 $400,000 $300,000 $194,486 $200,000 $

14. Slide 14: Second Quarter Jayco Impact

    SECOND QUARTER JAYCO IMPACT Jayco had a significant, positive impact on the second quarter: Added $431.3 million in revenues Added $38.1 million to gross profit, but dilutive to gross profit margin Accretive to the second quarter Significant contribution to backlogs –adding 50.0% of the 89.1% increa

15. Slide 15: Current RV Industry Conditions Remain Positive

    CURRENT RV INDUSTRY CONDITIONS REMAIN POSITIVE Consumer confidence remains strong. Final results were 96.3 in February down slightly from January’s final reading of 98.5, and up meaningfully from 91.7 a year ago. The index has remained higher during the past three months than any three month period

16. Slide 16: Thor Basics: An Introduction to the Company

    (Thor Basics: An Introduction) to the Company 16

17. Slide 17: Thor – Quick Facts

    THOR – QUICK FACTS Thor is the sole owner of operating subsidiaries that, combined, represent one of the world’s largest RV manufacturers Founded in 1980 by Wade Thompson & Peter Orthwein with the acquisition of Airstream, Inc. Two major business segments include: Towable RVs = travel trailers, fift

18. Slide 18: Key Stats – Other

    KEY STATS – OTHER Key Ratios FY16 FY15 FY2016 Sales by Segment* Total Assets $2.3 billion $1.5 billion Other $149.2 3% Working Capital $365.2 million $397.5 million Motorized RV's Debt to Total Assets 0.15 0.00 $1,094.2 24% Towable RV's $3,338.7 Gross Margin 15.9% 13.9% 73% Inventory Turnover 14.1x

19. Slide 19: Thor Operating Entities

    (THOR OPERATING)ENTITIES 19

20. Slide 20: Thor Overview

    THOR OVERVIEW What started as one RV company has grown into a family of subsidiaries that together make up one of the world’s largest RV manufacturers. Thor Industries is more than just strength in numbers; it’s strength in quality. Whether organically or through acquisition, we’ve grown through bei

21. Slide 21: Thor's RV Product Range

    (THOR’S RV PRODUCT)RANGE Towable RV Segment Products Travel Trailers (hitch to the bumper of the tow vehicle) Fifth Wheels (hitch to a specially mounted hitch in the bed of a pickup truck) Specialty Trailers (includes camping trailers, truck campers and horse trailers with living quarters) Motorized

22. Slide 22: What Makes Thor Different

    (WHAT MAKES THOR)DIFFERENT We strive to provide RV consumers with superior products and services through innovative solutions which enhance the enjoyment of the RV lifestyle Our decentralized operating structure and independent operating subsidiaries foster an entrepreneurial spirit and an unending

23. Slide 23: Corporate Integrity

    CORPORATE INTEGRITY No golden parachutes No ‘pro forma’ earnings. We report net income, not adjusted earnings to cover up performance Consistent focus on shareholder value Simple compensation philosophy: Mainly cash compensation based on pre-tax income – a true pay-for-performance philosophy Restric

24. Slide 24: Regular Quarterly Dividends

    (REGULAR QUARTERLY)DIVIDENDS Fiscal Years Ended July 31 $0.33 $0.30 $0.27 $0.23 $0.18 $0.15 FY12 FY13 FY14 FY15 FY16 FY17 *In addition to regular quarterly dividends, Thor paid special dividends of $1.50 in FY13 and $1.00 in FY14. The declaration of future dividends and the establishment of the per

25. Slide 25: Consumer Trends: Growing RV Popularity

    CONSUMER TRENDS: GROWING RV POPULARITY Leisure Travel Such as Camping Continues to be Popular* Approximately 28.6 million households in North America camp at least once a year, but only 22% of them are RV campers. The remaining campers primarily use tents or cabins, which makes them a solid target m

26. Slide 26: Consumer Trends: Growing RV Popularity

    CONSUMER TRENDS: GROWING RV POPULARITY Opportunities with Millennials* Millennials (defined as age 19-35) are camping more, with 58% surveyed indicating they plan to camp more nights. This demographic is camping in groups, as they view camping as an opportunity to spend time with family and friends.

27. Slide 27: Jayco Acquisition – June 30, 2016

    JAYCO ACQUISITION –JUNE 30, 2016 Jayco Jayco is a $1.5 billion manufacturer and marketer of recreational vehicles, of which approximately 65% of revenue is from towable RVs and 35% of revenue is from motorized RVs* Jayco sells both towable and motorized RVs through its Jayco, Starcraft RV, Entegra C

28. Slide 28: Jayco – Strategic Rationale

    JAYCO –STRATEGIC RATIONALE STRATEGIC FIT: Jayco has a strong cultural fit with Thor, including an entrepreneurial spirit, a focus on dealers and customers and a commitment to high quality products and innovation ACQUISITION FIT: Jayco meets Thor’s criteria of acquiring successful businesses with a d

29. Slide 29: Jayco – Product Profile

    JAYCO –PRODUCT PROFILE COMPLEMENTARY PRODUCTS: Jayco complements Thor’s other RV subsidiaries through its travel trailers, folding camping trailers, “Super C” motorhomes and luxury Class A diesel motorhomes THOR CAMPING TRAVEL FIFTH CLASS B CLASS C CLASS A TRAILER TRAILER WHEEL JAYCO 29

30. Slide 30: Thor Fundamentals

    THOR FUNDAMENTALS Profitable every year since our founding in 1980 36 years of continuous annual profitability We are primarily assemblers, not manufacturers Variable cost structure provides flexibility in cyclical industry An industry leader in innovation, product quality and customer service Stron

31. Slide 31: Appendix 1: Investor Q&A

    Appendix 1: Investor Q&A 31

32. Slide 32: Investor Q&A: Executive Overview

    INVESTOR Q&A: EXECUTIVE OVERVIEW Executive Overview: We posted our 12th- consecutive quarter of record revenue record net income from continuing operations. We posted strong growth in revenues, both organically and from acquisitions, in the second quarter with double-digit organic growth in both seg

33. Slide 33: Investor Q&A: Second Quarter Operating Results

    (INVESTOR Q&A: SECOND)(QUARTER OPERATING)RESULTS What was the impact on Thor’s results from the Jayco acquisition? We posted strong growth in revenues, both organically and from acquisitions, in the second quarter with double-digit organic growth in both segments - Towables and Motorized. Thor’s sec

34. Slide 34: Investor Q&A: Second Quarter Operating Results (Continued)

    (INVESTOR Q&A: SECOND)QUARTER OPERATING RESULTS (CONTINUED) What was the impact of Jayco on Towable and Motorized unit volumes, Dealer Inventory and Backlog? The impact on Towable and Motorized unit volumes, Dealer Inventory and Backlog is illustrated below: $000s 2Q17 2Q16 Change Towable Unit Sales

35. Slide 35: Investor Q&A: Second Quarter Operating Results (Continued)

    (INVESTOR Q&A: SECOND)QUARTER OPERATING RESULTS (CONTINUED) Your revenues for the second quarter grew at a faster rate than earnings, what are the factors that drove the difference in growth rates? Certainly we are very pleased with the 45.0% growth in net income during the second quarter of fiscal

36. Slide 36: Investor Q&A: Second Quarter Operating Results (Continued)

    (INVESTOR Q&A: SECOND)QUARTER OPERATING RESULTS (CONTINUED) What specific actions are you taking to improve Jayco’s gross margins? All of our subsidiaries are focused on continuous improvements in their operations, and Jayco’s management team shares that focus and drive. Over the near term, we expec

37. Slide 37: Investor Q&A: Second Quarter Operating Results (Continued)

    (INVESTOR Q&A: SECOND)QUARTER OPERATING RESULTS (CONTINUED) Thor continues to report very strong sales and earnings growth, what is driving this performance? How does Thor’s performance compare to industry growth over the same period? Thor’s strong growth in the second quarter was driven by the addi

38. Slide 38: Investor Q&A: Second Quarter Operating Results (Continued)

    (INVESTOR Q&A: SECOND)QUARTER OPERATING RESULTS (CONTINUED) Backlog is up significantly, even absent the increase from the Jayco products. What’s driving the increase and do you have the capacity to fulfill demand? Backlogs have increased as a result of the positive reception by dealers and consumer

39. Slide 39: Investor Q&A: Second Quarter Operating Results (Continued)

    (INVESTOR Q&A: SECOND)QUARTER OPERATING RESULTS (CONTINUED) What was the nature and amount of expenses recognized in the second quarter that were directly related to the Jayco acquisition? In the second quarter of fiscal 2017, we incurred amortization expense related to the Jayco acquisition of appr

40. Slide 40: Investor Q&A: Year-to-Date Operating Results

    INVESTOR Q&A: YEAR-TO-DATE OPERATING RESULTS What was the impact on Thor’s results from the Jayco acquisition? We posted strong growth in revenues, both organically and from acquisitions, in the first six months of fiscal 2017, with double-digit organic growth in both Towables and Motorized. Thor’s

41. Slide 41: Investor Q&A: Year-to-Date Operating Results (Continued)

    (INVESTOR Q&A: YEAR-TO-)DATE OPERATING RESULTS(CONTINUED) What was the impact of Jayco on Towable and Motorized unit volumes? The impact on Towable and Motorized unit volumes for the first six months of fiscal 2017 is illustrated below: $000s 2Q17 2Q16 Change Towable Unit Sales ex. Jayco 67,004 55,4

42. Slide 42: Investor Q&A: Balance Sheet and Cash Flow

    (INVESTOR Q&A: BALANCE)SHEET AND CASH FLOW What payments have you made on the debt facility and what was the average interest rate on borrowings? How much availability existed at January 31, 2017 under the line? During the quarter we paid the debt facility down by $15 million in addition to the $20

43. Slide 43: Investor Q&A: Balance Sheet and Cash Flow (Continued)

    (INVESTOR Q&A: BALANCE)(SHEET AND CASH FLOW)(CONTINUED) What is driving the increase in inventory and accounts receivable for the first six months of Fiscal 2017? Total inventory increased to approximately $477.6 million at the end of the second quarter compared to $403.9 million at July 31, 2016. T

44. Slide 44: Investor Q&A: Market Conditions

    (INVESTOR Q&A: MARKET)CONDITIONS Are you seeing any signs of slowing in the market? No, in fact, we are seeing the opposite. There continue to be a few important trends underlying growth in the industry which we’ve seen in our backlogs and growth in retail sales throughout 2016 and into early 2017:

45. Slide 45: Investor Q&A: Market Conditions (Continued)

    INVESTOR Q&A: MARKET CONDITIONS (CONTINUED) What is the nature of the current Dealer and Consumer credit environment? The wholesale lending environment remains healthy, with normal credit line utilization and continued discipline among lenders concerning curtailments. Consumer credit is available, a

46. Slide 46: Investor Q&A: Market Conditions (Continued)

    INVESTOR Q&A: MARKET CONDITIONS (CONTINUED) What is the current state of the Canadian RV market? The Canadian market remains challenging as the weakness in the value of the Canadian dollar relative to the U.S. dollar continues. Since we sell our products to Canadian dealers priced in U.S. dollars, t

47. Slide 47: Investor Q&A: Market Conditions (Continued)

    INVESTOR Q&A: MARKET CONDITIONS (CONTINUED) How do used RVs impact the demand and pricing for new products? Robust demand for used RV inventory enhances trade-in values, which is necessary to support the new RV market where many consumers choose to purchase new units every 3-5 years. In recent years

48. Slide 48: Investor Q&A: Outlook

    (INVESTOR Q&A:)OUTLOOK What is your outlook for the remainder of fiscal year 2017? We continue to expect double-digit growth in revenues and improvements in earnings throughout fiscal 2017. Industry growth dynamics should continue as consumers remain optimistic about future economic conditions and n

49. Slide 49: Investor Q&A: Outlook (Continued)

    INVESTOR Q&A: OUTLOOK (CONTINUED) When looking to add capacity, what metrics do you look at to determine if it’s a wise investment? Unlike other, more capital intensive industries, RV production facilities are typically smaller, between 70,000 and 90,000 square feet, with an average cost in the rang

50. Slide 50: Investor Q&A: Outlook (Continued)

    INVESTOR Q&A: OUTLOOK (CONTINUED) With all your current capacity additions, do you expect the startup of production to have an adverse impact on margins? Will it have an impact on quality and warranty cost? Although we usually experience costs associated with the startup of production in new or expa

51. Slide 51: Investor Q&A: Outlook (Continued)

    INVESTOR Q&A: OUTLOOK (CONTINUED) Thor has continued to grow revenues since the recession. Has Thor reached its peak? No. We do not believe either Thor or the RV Industry has reached a peak. RVIA has forecasted growth in industry wholesale shipments for calendar 2017 of 3.5%, which follows the stron

52. Slide 52: Investor Q&A: Outlook (Continued)

    INVESTOR Q&A: OUTLOOK (CONTINUED) Given this is the longest expansion in the RV industry in history, what gives you confidence that it will continue? Unlike many of the expansions we’ve experienced over the past two decades, the current expansion has been driven largely by new consumers entering the

53. Slide 53: Investor Q&A: Outlook (Continued)

    INVESTOR Q&A: OUTLOOK (CONTINUED) What are your views on RV industry consolidation? Consolidation in our industry does not threaten the competitive environment as years of consolidation have evidenced. In fact, it tends to benefit the industry by heightening the competitive landscape and broadens th

54. Slide 54: Investor Q&A: Outlook (Continued)

    INVESTOR Q&A: OUTLOOK (CONTINUED) How would tax reform impact Thor? How much of your cost of goods is sourced overseas? Until we see the details of any bills passed or expected to pass Congress for changing the structure of corporate taxes, we cannot speculate on the potential impact of such changes

55. Slide 55: Appendix 2: Financial and Market Data

    Appendix 2: Financial and Market Data 55

56. Slide 56: RV Wholesale Market Trends (Units 000s)

    (RV WHOLESALE MARKET)TRENDS (UNITS 000S) 1972 583.0 1973 528.8 1974 295.8 1975 339.6 1976 441.1 1977 413.9 1978 389.9 1979 199.2 1980 106.9 1981 133.6 1982 140.6 1983 196.6 1984 215.7 1985 186.9 1986 189.9 1987 211.7 1988 215.8 1989 187.9 1990 173.1 1991 163.1 1992 203.4 1993 227.8 1994 259.5 1995 2

57. Slide 57: RV Wholesale Market Motorized Trends (Units 000s)

    RV WHOLESALE MARKET (MOTORIZED TRENDS (UNITS)000S) 1972 118.8 1973 129.0 1974 68.9 1975 96.6 1976 156.1 1977 160.2 1978 157.2 1979 64.1 1980 28.5 1981 35.4 1982 41.2 1983 69.5 1984 82.0 1985 68.7 1986 67.7 1987 73.7 1988 72.8 1989 61.1 1990 52.3 1991 41.9 1992 46.9 1993 51.3 1994 58.2 1995 52.8 1996

58. Slide 58: RV Wholesale Market Towable Trends (Units 000s)

    (RV WHOLESALE MARKET)(TOWABLE TRENDS)(UNITS 000S) 1972 466.2 1973 399.8 1974 226.9 1975 243.0 1976 285.0 1977 253.7 1978 232.7 1979 135.1 1980 78.4 1981 98.1 1982 99.4 1983 127.1 1984 133.7 1985 118.1 1986 122.1 1987 137.9 1988 142.9 1989 126.7 1990 120.8 1991 121.1 1992 156.5 1993 176.5 1994 201.3

59. Slide 59: RV Industry Demand

    RV INDUSTRY DEMAND Industry retail demand has shifted toward more light-weight, affordably priced towables and gas Class A and Class C motorhomes as consumers seek value Wholesale units typically outpace retail in the early part of the calendar year; historically sales become more balanced as we rea

60. Slide 60: Thor Backlog & Dealer Inventory

    THOR BACKLOG & DEALER INVENTORY Dealers remain confident with orders reflecting normal ordering patterns Orders generally expected to reflect 1-for-1 replacement as units are sold at retail Jayco added approximately $553.0 million to backlog as of January 31, 2017 January 31, January 31, Backlog ($0

61. Slide 61: RV Industry Retail Market Share

    (RV INDUSTRY RETAIL)MARKET SHARE Y/E 12/31/16 Y/E 12/31/15 Y/E 12/31/14 Y/E 12/31/13 Total Share % Total Share % Total Share % Total Share % THOR* 195,973 47.4% 178,520 47.6% 160,663 48.9% 153,514 50.9% Forest River** 144,909 35.1% 132,923 35.4% 112,979 34.4% 99,822 33.1% Winnebago 13,093 3.2% 12,14

62. Slide 62: Thor RV Retail Market Share Trend (Units)

    (THOR RV RETAIL MARKET)SHARE TREND (UNITS) Towable Retail Share* Class A/C Retail Share* Class B Retail Share* 54.8% 54.9% 53.7% 51.3% 49.7% 48.9% 37.8% 32.8% 31.0% 29.4% 25.4% 24.4% 22.1% 21.9% 22.1% 18.3% 16.7% 14.4% 2011 2012 2013 2014 2015 2016 *Source: Statistical Surveys Inc., U.S. and Canada,

63. Slide 63: www.thorindustries.com

    www.thorindustries.com

Thor Industries — Q2 2017 Earnings Presentation on 6ix