TRG | The Bottom Line – 9/24

TRG’s earliest stock call going into the global pandemic was our 3/12/20 thought piece & RV dealer survey: “RV Industry Update: How ‘One Big Global Dumpster Fire’ Could Be a Buying Opportunity.” Our thesis at the time drew parallels with consumer behavior changes post 9/11, coupled with very early feedback from RV dealers in the nascent stages of quarantine. Where are we today? The following from a TX-based RV dealer sums up consumer demand: “Last year felt busier, but maybe because the demand jumped up suddenly whereas this year it’s been busier than normal but at a more consistent level vs. a sudden spike.” In a vacuum, Q3 was another strong demand quarter. That said, there is a greater variation in sales figures, as there is a lack of uniformity in ability to get units (i.e., the big are getting better access to units). Dealer inventories remain at historic low levels, driven by higher demand, continued supply chain constraints, and labor constraints to name a few. Consensus is that it will be late 2022 or into 2023 before the inventory issue is resolved. Lead times remain long as supply chain bottlenecks continue to delay unit deliveries and preventing OEM’s from aggressively taking down backlogs. OEMs are left with a conundrum of waiting for the right parts or using alternative parts that get the job done but may not be the specified product for a specific unit (think different color cabinets, alternative furniture, etc).