Thor Industries CEO Bob Martin told CNBC on Tuesday that he expected strong demand for recreational vehicles even after the coronavirus pandemic ended, in part due to its growing appeal to younger travelers.
“If we get into this next generation of buyers, the millennial generation will be bigger than the boomers. We see this as a long-term opportunity for the entire industry,” said Martin at Closing Bell.
Martin’s comments came after Thor of Elkhart, Indiana, released second quarter results earlier in the day that exceeded Wall Street’s earnings and earnings expectations.
The maker of Airstream reported net sales of $ 2.73 billion, a 36% year-over-year increase compared to analyst projections of $ 2.53 billion. Earnings per share of $ 2.38 exceeded forecasts by 83 cents.
The Covid pandemic has by and large hurt the travel industry, but RV travel has proven to be more popular as people avoid planes and choose ways to get out of the home while maintaining social distance. Other outdoor activities, such as boating and cycling, were also growing in popularity.
Martin, who has been Thor’s managing director since 2013, said the health crisis had made the appeal of motorhome travel clear to younger generations and offered a potential tailwind in the years to come.
“It’s something we did through our marketing efforts, social media, just to introduce a motorhome to a younger buyer …” Martin said, referring specifically to the company’s Class B motorhomes, which are colloquially known as conversion vans are known.
“When people walk in, they see that they have their own bathroom, bedroom, sink and are able to drive safely. It just becomes part of their lifestyle. They join camping groups, and so do we that it’s very sticky, “added Martin.
Thor ramped up production last year to meet growing consumer interest in RVs. As of Jan 31, Thor’s consolidated RV backlog was $ 10.81 billion, an increase of nearly 280% from the same point in time in 2020 and a sign of continued demand.
“We’re also looking at record arrears. So when we talk to dealers and look at retail stats, they’ll keep rising this year,” Martin told CNBC.
Expectations for a strong recovery in travel are rising as Covid vaccinations continue to be introduced. Helane Becker, an analyst and chief executive of the aviation industry at Cowen, told CNBC on Tuesday, “We believe there will be a jailbreak when more vaccines get into people’s arms and people just want to get out and travel.”
Martin said Thor had seen positive signs of the Covid pandemic that led him to believe that there would be no widespread withdrawal from RV travel once people feel more comfortable again.
“Lifestyle has evolved into this. We believe it just got more people into it,” Martin said, adding that many of the recent buyers have already been customers looking to upgrade their model. “I think psychologically many people will still be reluctant to travel and vacation in different ways, once they have tried the RV lifestyle.”
Thor’s shares closed Tuesday 1.77% to $ 132.36 apiece. The stock is up nearly 160% over the past 12 months.