Thor Industries experienced a setback as the maker of recreational vehicles adjusted its financial forecasts for 2024 due to ongoing economic difficulties.
Revised Projections
The company now anticipates fiscal 2024 earnings to fall within the range of $5 to $5.50 per share, a decrease from the previous forecast of $6.25 to $7.25 per share. Analysts, however, had expected earnings to reach $6.70 per share.
In terms of revenue, Thor now projects figures between $10 billion and $10.5 billion, down from the earlier estimate of $10.5 billion to $11 billion. The Wall Street consensus had placed revenue expectations at $10.6 billion. The 2024 fiscal year is set to conclude on July 31.
Explanation from Management
Chief Executive Bob Martin explained the adjustments by pointing to the delay in interest rate reductions and sluggish recovery in the retail sector amidst ongoing macroeconomic challenges. He stated, “Because we have not assumed any material relief from these macroeconomic challenges through the balance of fiscal 2024, we have revised our guidance.”
High Interest Rates Impact
The sustained high interest rates have increased the cost of purchasing RVs, influenced by efforts from the Federal Reserve to combat inflation.
Second-Quarter Performance
In the fiscal second quarter, Thor reported earnings of 13 cents per share from revenue amounting to $2.21 billion. These figures fell short of analysts’ expectations who had projected earnings of 67 cents per share from revenue totaling $2.27 billion.
Market Reaction
Following the updated financial forecasts, Thor Industries observed a 15% decline in its stock price, reaching $108.08 per share on Wednesday. This marked the largest percentage decrease since March 16, 2020, based on Dow Jones Market Data’s analysis. Fellow RV manufacturer Winnebago Industries also experienced a drop of 5.1% in stock price, settling at $64.76 per share, while mobile-home producer Skyline Champion saw a slight increase of 0.2%.
Positive Industry Outlook
Despite the current challenges faced by Thor Industries, the RV Industry Association’s February report projected an increase in RV shipments for 2024 by a range of 8.8% to 18.8% compared to 2023. Economists also predict a decline in interest rates and inflation in the upcoming year.
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