Tag Archive for: Thor

Another One Bites The Dust: THOR and Tiffin

Oligopolies. I’m not a big fan of industry consolidation. And I’m not at all happy to see Tiffin acquired by THOR. With Newmar and Tiffin out of the market as independent companies, the RV industry in North America is basically being controlled by two companies, Thor and Forest River, with a wee bit of the market owned by Winnebago.

That level of concentration in the industry is not good news for consumers.

An oligopoly is a market state where there is limited competition. The market players can engage in collusion to ensure profits are maximized. They impose barriers to entry which can stifle innovation. There is little incentive to be efficient and an oligopoly can fix artificially high prices. Customers experience poor service. There is an appearance of choice with brand proliferation however the underlying product is really being manufactured by a small set of companies.

Well, let’s take a look at this sad tale shall we?

Tiffin was family owned and operated for almost 50 years. They generated $800 million in sales for the last fiscal year. They have about 2,000 employees.

The selling price of the company? $300 million. Winnebago purchased Newmar for about $340 million. The main difference is that Winnebago borrowed a lot of money to make the deal. Roughly $290 million.

THOR borrowed $165 million. They will fund the balance from existing cash on-hand.

THOR expects to “enhance” the operating efficiencies of Tiffin’s margins to be in line with THOR’s North American Motorized segment. No material impact to earnings is expected in the upcoming fiscal year.

Be prepared for cheaply made Tiffins in the not too distant future.

The new structure is presented as an independent company within the THOR family of companies with Tiffin’s existing management to remain in place.

I read through the lengthy Stock Purchase Agreement between THOR and Tiffin. If you have an interest — and a few hours to spare — you can download the pdf here.

Fairly typical of complex legal documents that describe the sale of a business.

Many of the social media posts on this acquisition will say that things will remain the same with Tiffin. And yet that is not the practice of large corporations operating in an oligopoly. The overall objective will be to maximize return to shareholders. Increase margin. The operating model of Tiffin will change.

THOR Shareholders will benefit as limited competition protects profits.

Oligopolies are great for investors.

For consumers? Not so great.

So long Tiffin.

See It All In A Thor?

Any thoughts on the quality of the Thor line? Post a question like that and expect answers like this:

I have a Thor and pull a pick up behind it. That way I can collect all of the parts that fall off it.

Or:

Sounds like a Thor is an excellent value. For the price you get 2 new hobbies.
1. You get the RV lifestyle.
2. You get a full time hobby fixing it as it falls apart.

Thor has a new video promotion. Seems pretty compelling. See it all in a 2021 Motorhome from Thor. Wait. Aren’t we still in 2020? Although I do agree that many will not see it all in 2020. Not in a Thor or any other coach.

I’ve never owned a Thor and I have spent very little time looking at their coaches. Thor did buy out Entegra and I do like those coaches.

Quality?

Why don’t we hear about the quality of a Thor from another Thor.

Such a great video.

Airstream Classic 33FB

Airstreams. I love them. Lorraine doesn’t understand my passion for these trailers. She thinks that they are too small for full-timing and not at all practical for us. She is right. We would have a hard time squeezing everything we have with us now into this trailer. Okay, we would never be able to squeeze everything we have with us now into an Airstream.

Airstreams have a timeless, classic design and they last a long, long time. Much simpler to operate than a Class A motorcoach and, in several areas, more technologically advanced than our current Class A motorcoach.

Not well known is the relationship between Airstream and Thor. Thor was founded in 1980 when Wade Thompson and Peter Orthwein acquired Airstream. Yes, Thor began as Airstream.

There are two Airstreams at our park, one of them a new Classic.

My favourite model is the Classic 33FB. Priced out at around $230,000 CAD (before tax), it is an expensive trailer. I’ve seen lightly used ones selling for much less. Lots of great features which you can find detailed at the Airstream website here. Nice floor plan.

And here is a video walkthrough of the Classic 33FB from Airstream.

RV Shipments Keep Sliding

This cannot be a good sign for the economy:

The RV Industry Association’s April survey of manufacturers found that total RV shipments ended the month with 40,243 wholesale shipments, a decrease of 15.2 percent from the 47,442 units shipped last April.

All categories of towables and motorhomes were down for the month.

Towable RVs, led by conventional travel trailers, totaled 35,718 units for the month, a decrease of 13.7 percent compared to last April’s total of 41,411 units. Motorhomes finished the month with 4,525 units, down 25 percent compared to the April 2018 total of 6,031 units.

Through April, RV shipments have reached 140,219 units, down 24 percent from the 184,528 units at this point last year.

RV shipments are typically a leading indicator of a pending recession. Best to avoid investing in companies like Thor (52-week high of $110 and trading now at $56), Camping World (52-week high of $27 and trading now at $11) and those companies that are heavily exposed to the RV industry.

From the Atlantic:

RV sales turn out to be a pretty good predictor too: When RV sales are doing well, the economy follows; when RV sales tank, the economy is soon to tank too… The RV industry has repeatedly fallen in advance of more widespread economic troubles.

Everything’s Coming Up Daisies

Research and Markets, claiming to be the world’s largest market research store, has just released their report on the Recreational Vehicle market in North America. Their analysts forecast a pretty substantial rate of growth between 2018 and 2022 for the RV industry, a compound annual growth rate of just over 8 percent.

I did not have a chance to read the report because they want to charge me $2,500 for a single user electronic version. I did, however, get their overall message of continued growth.

The report covers the following companies:

  • Camping World Holdings
  • Forest River
  • Gulf Stream Coach
  • Northwood Manufacturing
  • REV Group
  • Thor Industries
  • Winnebago Industries

Several of them are private. Of the ones that are publicly traded, this is what their stock prices have been doing over the past five years.

Camping World is a leading outdoor and retailer and includes brands like Good Sam.

REV Group is recently listed and not without some controversy. REV Group builds American Coach, Monaco, Holiday Rambler and Fleetwood.

In June of this year, Johnson Fistel launched an investigation into potential violations of federal securities laws by REV Group to determine if the firm issued misleading business information to investors.

I’ve written about Thor before as they are a powerhouse company in the RV world. They cover a lot of brands including Airstream, Bison, CrossRoads, Cruiser, DRV, Dutchmen, Entegra, Heartland RV, Highland Ridge, Jayco, Keystone RV, K-Z, Redwood RV, Starcraft RV, Thor Motor Coach and Venture RV.

And the last publicly traded company highlighted in the report is Winnebago. I’ve written about them here when they recently acquired a boat company.

How do these companies stock prices line up against the S&P? For the most part, pretty closely:

Perhaps the RV industry will continue to grow at 8 percent CAGR from 2018-2022. As an investor, I hope that S&P 500 also continues its bull run for the next 5 years, particularly at the start of our retirement.

However, it has been a very long bull run. Including dividends, the S&P 500 has returned about 25% annually since March of 2009. Whenever this bull ends and the markets go down, sales of RVs may not continue to come up like daisies.