# Thor Industries Inc: Form 10-Q for the period ended Jan 31, 2024

- Company: [Thor Industries Inc](/companies/tho.md) (CIK 730263)
- Form: 10-Q
- Filed: 2024-03-06
- Accepted by EDGAR: Mar 6, 2024, 11:33 ET
- Period: 2024-01-31
- Accession: 0000730263-24-000003
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/730263/000073026324000003/tho-20240131.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/730263/000073026324000003/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-01-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-11-01 to 2024-01-31 | $2.21bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2023-08-01 to 2024-01-31 | $4.71bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-11-01 to 2024-01-31 | $1.94bn | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2023-08-01 to 2024-01-31 | $4.08bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2023-11-01 to 2024-01-31 | $270.8m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2023-08-01 to 2024-01-31 | $628.8m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2023-11-01 to 2024-01-31 | $220.1m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2023-08-01 to 2024-01-31 | $438.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Interest expense | 3 months, 2023-11-01 to 2024-01-31 | $7.6m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-11-01 to 2024-01-31 | $1.6m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2023-08-01 to 2024-01-31 | $19.1m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-11-01 to 2024-01-31 | $7.2m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-08-01 to 2024-01-31 | $60.8m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-11-01 to 2024-01-31 | $0.13 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2023-08-01 to 2024-01-31 | $1.13 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-11-01 to 2024-01-31 | $0.14 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-08-01 to 2024-01-31 | $1.14 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-11-01 to 2024-01-31 | 53,650,583 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2023-08-01 to 2024-01-31 | 53,752,150 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2023-08-01 to 2024-01-31 | −$44.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2023-11-01 to 2024-01-31 | $36.4m | us-gaap:PaymentsToAcquireProductiveAssets |
| Capital expenditure | 6 months, 2023-08-01 to 2024-01-31 | $76.6m | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 6 months, 2023-08-01 to 2024-01-31 | $51.1m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 6 months, 2023-08-01 to 2024-01-31 | $30.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-01-31 | $340.2m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-01-31 | $2.84bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-01-31 | $7.23bn | us-gaap:Assets |
| Current liabilities | at 2024-01-31 | $1.63bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2024-01-31 | $1.39bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-01-31 | $17.2m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2024-01-31 | $3.94bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 86,900 characters.

**Unless otherwise indicated, all U.S. Dollar and Euro amounts are presented in thousands except share and per share data.**

### Forward-Looking Statements

This report 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 1934, as amended. These forward-looking statements are made based on management’s current expectations and beliefs regarding future and anticipated developments and their effects upon THOR, and inherently involve uncertainties and risks. These forward-looking statements are not a guarantee of future performance. We cannot assure you that actual results will not differ materially from our expectations. Factors which could cause materially different results include, among others:

- the impact of inflation on the cost of our products as well as on general consumer demand;
- the effect of raw material and commodity price fluctuations, and/or raw material, commodity or chassis supply constraints;
- the impact of war, military conflict, terrorism and/or cyber-attacks, including state-sponsored or ransom attacks;
- the impact of sudden or significant adverse changes in the cost and/or availability of energy or fuel, including those caused by geopolitical events, on our costs of operation, on raw material prices, on our suppliers, on our independent dealers or on retail customers;
- the dependence on a small group of suppliers for certain components used in production, including chassis;
- interest rates and interest rate fluctuations and their potential impact on the general economy and, specifically, on our profitability and on our independent dealers and consumers;
- the ability to ramp production up or down quickly in response to rapid changes in demand while also managing costs and market share;
- the level and magnitude of warranty and recall claims incurred;
- the ability of our suppliers to financially support any defects in their products;
- legislative, regulatory and tax law (including recent and pending tax-law changes implementing new, widely adopted "Pillar II" tax principles) and/or policy developments including their potential impact on our independent dealers, retail customers or on our suppliers;
- the costs of compliance with governmental regulation;
- the impact of an adverse outcome or conclusion related to current or future litigation or regulatory investigations;
- public perception of and the costs related to environmental, social and governance matters;
- legal and compliance issues including those that may arise in conjunction with recently completed transactions;
- lower consumer confidence and the level of discretionary consumer spending;
- the impact of exchange rate fluctuations;
- restrictive lending practices which could negatively impact our independent dealers and/or retail consumers;
- management changes;
- the success of new and existing products and services;
- the ability to maintain strong brands and develop innovative products that meet consumer demands;
- the ability to efficiently utilize existing production facilities;
- changes in consumer preferences;
- the risks associated with acquisitions, including: the pace and successful closing of an acquisition, the integration and financial impact thereof, the level of achievement of anticipated operating synergies from acquisitions, the potential for unknown or understated liabilities related to acquisitions, the potential loss of existing customers of acquisitions and our ability to retain key management personnel of acquired companies;
- a shortage of necessary personnel for production and increasing labor costs and related employee benefits to attract and retain production personnel in times of high demand;
- the loss or reduction of sales to key independent dealers, and stocking level decisions of our independent dealers;
- disruption of the delivery of units to independent dealers or the disruption of delivery of raw materials, including chassis, to our facilities;
- increasing costs for freight and transportation;
- the ability to protect our information technology systems from data breaches, cyber-attacks and/or network disruptions;
- asset impairment charges;
- competition;
- the impact of losses under repurchase agreements;
- the impact of the strength of the U.S. dollar on international demand for products priced in U.S. dollars;
- general economic, market, public health and political conditions in the various countries in which our products are produced and/or sold;
- the impact of changing emissions and other related climate change regulations in the various jurisdictions in which our products are produced, used and/or sold;
- changes to our investment and capital allocation strategies or other facets of our strategic plan; and
- changes in market liquidity conditions, credit ratings and other factors that may impact our access to future funding and the cost of debt.

These and other risks and uncertainties are discussed more fully in Item 1A of our Annual Report on Form 10-K for the year ended July 31, 2023.

We disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this report or to reflect any change in our expectations after the date hereof or any change in events, conditions or circumstances on which any statement is based, except as required by law.

### Executive Overview

We were founded in 1980 and have grown to become the largest manufacturer of recreational vehicles (“RVs”) in the world based on units sold and revenue. We are also the largest manufacturer of RVs in North America, and one of the largest manufacturers of RVs in Europe. In North America, according to Statistical Surveys, Inc. (“Stat Surveys”), for the calendar year ended December 31, 2023, THOR’s combined U.S. and Canadian market share was approximately 41.8% for travel trailers and fifth wheels combined and approximately 48.7% for motorhomes. In Europe, according to the European Caravan Federation (“ECF”) and based on unit registrations for Europe's original equipment manufacturer (“OEM”) reporting countries, our European market share for the calendar year ended December 31, 2023 was approximately 20.9% for motorcaravans and campervans combined and approximately 18.2% for caravans.

Our business model includes decentralized operating units, and our RV products are primarily sold to independent, non-franchise dealers who, in turn, retail those products. The Company also sells component parts to both RV and other original equipment manufacturers, including aluminum extruded components, and sells aftermarket component parts through dealers and retailers. Our growth has been achieved both organically and through acquisition, and our strategy is designed to increase our profitability by driving innovation, servicing our customers, manufacturing quality products, improving the efficiencies of our facilities and making strategic acquisitions.

We generally do not finance independent dealers directly, but we do provide repurchase agreements to the independent dealers’ floor plan lenders.

We generally have financed our growth through a combination of internally generated cash flows from operations and, when needed, outside credit facilities. Ongoing supply chain challenges, particularly chassis issues within our European operations, have and could continue to impact our business and our consolidated financial results and financial position. In addition, the impact of ongoing inflation on consumer confidence, which historically has been highly correlated with RV retail sales, and the impact of inflation on the availability of discretionary funds of our end consumers, combined with significantly higher interest rates compared to recent years impacting both our independent dealers and the end consumer, had a negative impact on demand for our products at both the wholesale and retail levels during the first half of fiscal 2024 and are expected to continue to impact the remainder of our fiscal year. These risks to our business are more fully described in Part 1, Item 1A of our Annual Report on Form 10-K for the fiscal year ended July 31, 2023.

### Recent Events

### Refinancing of Credit Agreements

On November 15, 2023, the Company entered into amendments to both its term loan and ABL agreements to extend maturities and lower the applicable margins used to determine the interest rate on the U.S. dollar-denominated loan tranche. The maturity date for the term loan was extended from February 1, 2026 to November 15, 2030. Covenants and other material provisions of the term loan agreement remain materially unchanged. Following the amendments, the principal amounts outstanding under the term loan agreement were $450,000 on the U.S. dollar-denominated term loan tranche and 330,000 Euro on the Euro-denominated term loan tranche. Under the provisions of the amended term loan, both the U.S. and Euro tranches require annual principal payments of 1.0% of the new term loan balance, payable quarterly in 0.25% installments starting on May 1, 2024. Pursuant to the ABL amendment, the maturity date for loans under the ABL agreement was extended from September 1, 2026 to November 15, 2028. Maximum availability under the ABL remains at $1,000,000 and the applicable margin, covenants and other material provisions of the ABL remain materially unchanged. As a result of these amendments and associated maturity date extensions, the Company recognized total expense of $14,741 in the second quarter of fiscal 2024.

### Industry Outlook — North America

The Company monitors industry conditions in the North American RV market using a number of resources including its own performance tracking and modeling. The Company also considers monthly wholesale shipment data as reported by the RV Industry Association (“RVIA”), which is typically issued on a one-month lag and represents manufacturers’ North American RV production and delivery to dealers. In addition, we monitor monthly North American retail sales trends as reported by Stat Surveys, whose data is typically issued on a month-and-a-half lag. The Company believes that monthly RV retail sales data is important as consumer purchases impact future dealer orders and ultimately our production and net sales.

North American RV independent dealer inventory of our North American RV products as of January 31, 2024 decreased 27.6% to approximately 87,800 units, compared to approximately 121,300 units as of January 31, 2023. As of January 31, 2024, we believe North American dealer inventory levels for most products are generally at, or slightly higher than, the levels that dealers are comfortable stocking given the current retail sales levels and associated carrying costs. We believe dealers will continue to closely evaluate the unit stocking levels that they will elect to carry in future periods, which may be less than historical unit stocking levels, due to a combination of factors such as retail activity, RV wholesale prices as well as interest rates and other carrying costs.

THOR’s North American RV backlog as of January 31, 2024 decreased $1,092,226, or 36.4%, to $1,908,889 compared to $3,001,115 as of January 31, 2023. The decrease in backlog is primarily a result of a reduction in orders from dealers, which we believe is due to lower retail sales and dealer concerns over current interest costs and other carrying costs compared to the prior-year period.

### North American Industry Wholesale Statistics

Key wholesale statistics for the North American RV industry, as reported by RVIA for the periods indicated, are as follows:

|  | U.S. and Canada Wholesale Unit Shipments Calendar Year 2023 | 2022 | Increase% (Decrease) | Change |
| --- | ---: | ---: | ---: | ---: |
| North American Towable units | 267,295 | 434,858 | (167,563) | (38.5) |
| North American Motorized units | 45,879 | 58,410 | (12,531) | (21.5) |
| Total | 313,174 | 493,268 | (180,094) | (36.5) |

In February 2024, RVIA issued a revised forecast for calendar year 2024 wholesale unit shipments. Under the RVIA’s most likely scenario, towable and motorized unit shipments are projected to be approximately 301,800 units and 48,300 units, respectively, for an annual total of approximately 350,100 units, up 11.8% from the 2023 calendar year wholesale shipments. The RVIA’s most likely forecast for calendar year 2024 of 350,100 total units could range from a lower estimate of approximately 334,700 total units to an upper estimate of approximately 365,500 total units.

### North American Industry Retail Statistics

Key retail statistics for the North American RV industry, as reported by Stat Surveys for the periods indicated, are as follows:

|  | U.S. and Canada Retail Unit Registrations Calendar Year 2023 | 2022 | Increase% (Decrease) | Change |
| --- | ---: | ---: | ---: | ---: |
| North American Towable units | 334,250 | 399,815 | (65,565) | (16.4) |
| North American Motorized units | 44,955 | 48,811 | (3,856) | (7.9) |
| Total | 379,205 | 448,626 | (69,421) | (15.5) |

Note: Data reported by Stat Surveys is based on official state and provincial records. This information is subject to adjustment, is continuously updated and is often impacted by delays in reporting by various states or provinces.

We believe that North American retail consumer interest remains high due to an ongoing interest in the RV lifestyle. While we anticipate that near-term demand will be influenced by many factors, including consumer confidence and the level of consumer spending on discretionary products, we believe future retail demand over the longer term will exceed historical, pre-pandemic levels as consumers continue to value the perceived benefits offered by the RV lifestyle, which provides people with the ability to connect with loved ones and nature as well as the potential to get away for short, frequent breaks or longer adventures.

### Company North American Wholesale Statistics

The Company’s North American wholesale RV shipments, for the calendar years ended December 31, 2023 and 2022 to correspond to the North American industry wholesale periods noted above, were as follows:

|  | U.S. and Canada Wholesale Unit Shipments Calendar Year 2023 | 2022 | Increase% (Decrease) | Change |
| --- | ---: | ---: | ---: | ---: |
| North American Towable units | 102,141 | 181,645 | (79,504) | (43.8) |
| North American Motorized units | 21,416 | 29,643 | (8,227) | (27.8) |
| Total | 123,557 | 211,288 | (87,731) | (41.5) |

### Company North American Retail Statistics

Retail statistics of the Company’s North American RV products, as reported by Stat Surveys, for the calendar years ended December 31, 2023 and 2022 to correspond to the North American industry retail periods noted above, were as follows:

|  | U.S. and Canada Retail Unit Registrations Calendar Year 2023 | 2022 | Increase% (Decrease) | Change |
| --- | ---: | ---: | ---: | ---: |
| North American Towable units | 135,648 | 163,575 | (27,927) | (17.1) |
| North American Motorized units | 21,906 | 23,633 | (1,727) | (7.3) |
| Total | 157,554 | 187,208 | (29,654) | (15.8) |

Note: Data reported by Stat Surveys is based on official state and provincial records. This information is subject to adjustment, is continuously updated and is often impacted by delays in reporting by various states or provinces.

### North American Outlook

Historically, RV industry sales have been impacted by a number of economic conditions faced by RV dealers, and ultimately retail consumers, such as the rate of unemployment, the rate of inflation, the level of consumer confidence, the disposable income of consumers, interest rates, credit availability, the health of the housing market, tax rates and fuel availability and prices. We believe these factors will continue to affect retail sales in 2024. In addition, due to inflationary pressures, higher interest rates and other factors, we believe that RV dealers will be continuously reevaluating their desired stocking levels, which may result in lower than historical dealer inventory stocking levels on a unit basis. It is difficult to predict the extent to which any or all of these factors will impact the RV industry or our business in a particular future period, however, we currently believe the remainder of our fiscal 2024 will continue to be negatively impacted by these factors.

Despite the near-term challenges, we remain optimistic about future growth in North American retail sales in the long term, as there are many factors driving product interest. Surveys conducted by THOR, RVIA and others show that Americans of all generations love the freedom of the outdoors and the enrichment that comes with living an active lifestyle. RVs allow people to be in control of their travel experiences, going where they want, when they want and with the people they want. The RV units we design, produce and sell allow people to spend time outdoors pursuing their favorite activities, creating cherished moments and deeply connecting with family and friends. Based on the on-going value consumers place on these factors, we expect to see long-term growth in the North American RV industry. The growth in industry-wide RV sales during late 2020 through early 2023 has also resulted in exposing a wider range of consumers to the RV lifestyle. We believe many of those who have been recently exposed to the industry for the first time will become future owners, and that those who became first-time owners since the onset of the pandemic will become long-term RVers, resulting in future repeat and upgrade sales opportunities. We also believe many consumers are likely to continue opting for fewer vacations via air travel, cruise ships and hotels, while preferring vacations that RVs are uniquely positioned to provide, allowing consumers the ability to explore or unwind, often close to home. In addition, we believe that the availability of camping and RV parking facilities will be an important factor in the future growth of the industry and view both the significant recent investments and the future committed investments by campground owners, states and the federal government in camping facilities and accessibility to state and federal parks and forests to be positive long-term factors.

Economic and industry-wide factors that have historically affected, and which we believe will continue to affect, our operating results include the costs of commodities, the availability of critical supply components and labor costs incurred in the production of our products. Material and labor costs are the primary factors determining our cost of products sold, and any future increases in raw material or labor costs will impact our profit margins negatively if we are unable to offset those cost increases through a combination of product recontenting, material sourcing strategies, efficiency improvements or raising the selling prices for our products by corresponding amounts. Historically, we have generally been able to offset net cost increases over time.

It is extremely difficult to predict when or whether future supply chain issues related to chassis or other components used in the production of RVs will arise. Modifying available chassis for certain motorized products to use for other products is not a viable alternative, particularly in the short term, due to engineering requirements. The North American recreational vehicle industry has, from time to time in the past, experienced shortages of chassis for various reasons, including component shortages, production delays or other production issues and work stoppages at the chassis manufacturers.

While the North American RV industry has at times faced supply shortages or delivery delays of other, non-chassis raw material components, the supply chain is currently able to support our demand. If any factors were to impact our suppliers' ability to fully supply our needs for key components, our costs of such components and our production output could be adversely affected.

### Industry Outlook — Europe

The Company monitors industry conditions in the European RV market using a number of resources including its own performance tracking and modeling. The Company also considers retail trends in the European RV market as reported by the European Caravan Federation (“ECF”) and its members. On a monthly basis, the Company receives original equipment manufacturer ("OEM")-specific reports for most of the individual member countries that make up the ECF through the Caravaning Industrie Verband e.V. (“CIVD”). The timing of these reports may vary, but typically they are issued on a one-to-two-month lag. While most countries provide OEM-specific information, the United Kingdom, which made up 20.7% and 8.3% of the caravan and motorcaravan (including campervans) European market for the calendar year ended December 31, 2023, respectively, does not provide OEM-specific information. Industry wholesale shipment data for the European RV market is not available.

Within Europe, over 90% of our sales are made to dealers within 10 different European countries. The market conditions, as well as the operating status of our independent dealers within each country, vary based on the various local economic and other conditions. It is inherently difficult to generalize about the operating conditions within the entire European region.

Independent dealer inventory of our European RV products as of January 31, 2024 was approximately 24,800 units. Independent RV dealer inventory levels of our European products are generally in line with historic levels in the various countries we serve. Within Germany, which accounts for approximately 60% of our European product sales, independent dealer inventory levels are also generally in line with historical norms. Comparable independent dealer inventory unit information was not available as of January 31, 2023.

THOR’s European RV backlog as of January 31, 2024 decreased $309,431, or 10.1%, to $2,746,307 compared to $3,055,738 as of January 31, 2023, primarily due to improved chassis supply availability as chassis constraints in the prior year resulted in elevated backlogs.

### European Industry Retail Statistics

Key retail statistics for the European RV industry, as reported by the ECF for the periods indicated, are as follows:

|  | European Unit Registrations Motorcaravan and Campervan (2) Calendar Year% 2023 | 2022 | Change | Caravan Calendar Year% 2023 | 2022 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| OEM Reporting Countries (1) | 129,269 | 130,849 | (1.2) | 47,740 | 54,565 | (12.5) |
| Non-OEM Reporting Countries (1) | 17,070 | 16,955 | 0.7 | 16,011 | 16,980 | (5.7) |
| Total | 146,339 | 147,804 | (1.0) | 63,751 | 71,545 | (10.9) |

(1) Industry retail registration statistics have been compiled from individual countries' reporting of retail sales, and include the following countries: Germany, France, Sweden, Netherlands, Norway, Italy, Spain and others, collectively the “OEM Reporting Countries.” The “Non-OEM Reporting Countries” are primarily the United Kingdom and others. Total European unit registrations are reported quarterly by the ECF.

(2) The ECF reports motorcaravans and campervans together.

Note: Data from the ECF is subject to adjustment, is continuously updated and is often impacted by delays in reporting by various countries. (The "Non-OEM Reporting Countries" either do not report OEM-specific data to the ECF or do not have it available for the entire time period covered).

### Company European Retail Statistics (1)

|  | European Unit Registrations (1) Calendar Year 2023 | 2022 | Increase% (Decrease) | Change |
| --- | ---: | ---: | ---: | ---: |
| Motorcaravan and Campervan | 27,005 | 27,664 | (659) | (2.4) |
| Caravan | 8,704 | 10,075 | (1,371) | (13.6) |
| Total OEM-Reporting Countries | 35,709 | 37,739 | (2,030) | (5.4) |

(1) Company retail registration statistics have been compiled from individual countries reporting of retail sales, and include the following countries: Germany, France, Sweden, Netherlands, Norway, Italy, Spain and others, collectively the “OEM Reporting Countries.”

Note: Data from the ECF is subject to adjustment, is continuously updated and is often impacted by delays in reporting by various countries.

### European Outlook

Our European operations offer a full lineup of leisure vehicles including caravans and motorized products including urban vehicles, campervans and small-to-large motorcaravans. Our product offerings are not limited to vehicles only but also include accessories and services, including vehicle rentals. We address European retail customers through a sophisticated brand management approach based on consumer segmentation according to target group, core values and emotions. With the help of data-based and digital marketing, we intend to continue expanding our retail customer reach to new and younger consumer segments.

The impact of current macroeconomic factors on our business, including inflation and interest rates, supply chain constraints, environmental and sustainability regulations and geopolitical events, is uncertain. Our outlook for future European RV retail sales depends upon the various economic and regulatory conditions in the respective countries in which we sell our products, and on our ability to manage through supply chain issues that have, and are expected to continue to, impact the efficiency of our production of our motorized products in the near term. End-customer demand for RVs depends strongly on consumer confidence. Factors such as the rate of unemployment, the rate of inflation, private consumption and investments, the level of disposable income of consumers, interest rates, the health of the housing market, tax rates and regulatory restrictions and, since the pandemic, travel safety considerations all influence retail sales. Our long-term outlook for future growth in European RV retail sales remains positive as more people discover RVs as a way to support their lifestyle in search of independence and individuality, as well as using the RV as a multi-purpose vehicle to escape urban life and explore outdoor activities and nature.

We and our independent European dealers market our European recreational vehicles through multiple avenues including at numerous RV fairs at the country and regional levels which occur throughout the calendar year. These fairs have historically been well-attended events that allow retail consumers the ability to see the newest products, features and designs and to talk with product experts in addition to being able to purchase or order an RV. The most recent 2023 Caravan Salon show in late August 2023 experienced near-record attendance, demonstrating the high level of interest in the RV lifestyle despite the current macroeconomic uncertainties facing many consumers. In addition to our attendance at various strategic trade fairs, we have and will continue to strengthen and expand our digital activities to reach high potential target groups, generate leads and steer customers directly to dealerships. With approximately 1,100 active independent dealers in Germany and throughout Europe with whom we do business, we believe our European brands have one of the strongest and most professionally structured dealer and service networks in Europe.

Economic or industry-wide factors affecting our European RV operating results include the availability and costs of commodities and component parts and the labor used in the manufacture of our products. Material and labor costs are the primary factors determining our cost of products sold and any future increases in these costs will impact our profit margins negatively if we are unable to offset those cost increases through a combination of product recontenting, material sourcing strategies, efficiency improvements or raising the selling prices for our products by corresponding amounts.

Throughout fiscal 2023, we experienced delays in the receipt of, and significant reductions in the volume of, chassis from our European chassis suppliers, limiting our ability to further increase production of our motorized products. While overall chassis supply has improved, we anticipate disruptions in the sequence of delivery of chassis to continue through the majority of calendar year 2024. The sequence of chassis supply inhibits our ability to efficiently and consistently maintain our planned production levels. Uncertainties related to changing emission standards may also impact the availability of chassis used in our production of certain European motorized RVs and could also impact consumer buying patterns.

In Europe, we also continue to experience cost increases, supply shortages and delivery delays of other, non-chassis raw material components which negatively impacted the efficiency of our production in the current fiscal year, and which resulted in the continuation of an elevated level of work in process inventory on hand compared to historical norms. We believe these shortages and delays will continue to result in production inefficiencies and a continuation of the elevated level of work in process inventory in the near term, which will have a negative impact on our European operating results as well as on our consolidated results due to the negative impact of carrying excess inventory levels and the negative impact of completing units off the production line.

Where possible, to minimize the future impact of supply chain constraints, we have identified a second-source supplier base for certain component parts, however, the engineering requirements required with an alternate component part, particularly the chassis our various units are built upon, limits the impact of these alternative suppliers on reducing any near-term supply constraints.

In addition to potential material supply constraints, labor shortages may also impact our European operations. Currently, we are experiencing a shortage of available skilled workers due to near full employment rates in the European countries where the majority of our manufacturing sites are located.

### Three Months Ended January 31, 2024 Compared to the Three Months Ended January 31, 2023

| NET SALES: Recreational vehicles | Three Months Ended January 31, 2024 | Three Months Ended January 31, 2023 | Change Amount | % Change |
| --- | ---: | ---: | ---: | ---: |
| North American Towable | $730,968 | $829,751 | $(98,783) | (11.9) |
| North American Motorized | 570,424 | 738,583 | (168,159) | (22.8) |
| Total North America | 1,301,392 | 1,568,334 | (266,942) | (17.0) |
| European | 782,294 | 646,938 | 135,356 | 20.9 |
| Total recreational vehicles | 2,083,686 | 2,215,272 | (131,586) | (5.9) |
| Other | 166,534 | 164,859 | 1,675 | 1.0 |
| Intercompany eliminations | (42,851) | (33,496) | (9,355) | (27.9) |
| Total | $2,207,369 | $2,346,635 | $(139,266) | (5.9) |

| # OF UNITS: Recreational vehicles |  |  |  |  |
| --- | ---: | ---: | ---: | ---: |
| North American Towable | 21,958 | 19,934 | 2,024 | 10.2 |
| North American Motorized | 4,438 | 5,438 | (1,000) | (18.4) |
| Total North America | 26,396 | 25,372 | 1,024 | 4.0 |
| European | 13,080 | 12,588 | 492 | 3.9 |
| Total | 39,476 | 37,960 | 1,516 | 4.0 |

| GROSS PROFIT: Recreational vehicles |  | % of Segment Net Sales |  | % of Segment Net Sales | Change Amount | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| North American Towable | $53,897 | 7.4 | $52,863 | 6.4 | $1,034 | 2.0 |
| North American Motorized | 60,721 | 10.6 | 107,212 | 14.5 | (46,491) | (43.4) |
| Total North America | 114,618 | 8.8 | 160,075 | 10.2 | (45,457) | (28.4) |
| European | 119,325 | 15.3 | 91,430 | 14.1 | 27,895 | 30.5 |
| Total recreational vehicles | 233,943 | 11.2 | 251,505 | 11.4 | (17,562) | (7.0) |
| Other, net | 36,904 | 22.2 | 31,430 | 19.1 | 5,474 | 17.4 |
| Total | $270,847 | 12.3 | $282,935 | 12.1 | $(12,088) | (4.3) |

| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Recreational vehicles |  |  |  |  |  |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| North American Towable | $56,006 | 7.7 | $53,955 | 6.5 | $2,051 | 3.8 |
| North American Motorized | 30,792 | 5.4 | 42,418 | 5.7 | (11,626) | (27.4) |
| Total North America | 86,798 | 6.7 | 96,373 | 6.1 | (9,575) | (9.9) |
| European | 69,263 | 8.9 | 64,981 | 10.0 | 4,282 | 6.6 |
| Total recreational vehicles | 156,061 | 7.5 | 161,354 | 7.3 | (5,293) | (3.3) |
| Other | 19,049 | 11.4 | 16,293 | 9.9 | 2,756 | 16.9 |
| Corporate | 45,015 | — | 31,096 | — | 13,919 | 44.8 |
| Total | $220,125 | 10.0 | $208,743 | 8.9 | $11,382 | 5.5 |

31

| INCOME (LOSS) BEFORE INCOME TAXES: Recreational vehicles | Three Months Ended January 31, 2024 | % of Segment Net Sales | Three Months Ended January 31, 2023 | % of Segment Net Sales | Change Amount | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| North American Towable | $661 | 0.1 | $(7,119) | (0.9) | $7,780 | 109.3 |
| North American Motorized | 26,460 | 4.6 | 61,544 | 8.3 | (35,084) | (57.0) |
| Total North America | 27,121 | 2.1 | 54,425 | 3.5 | (27,304) | (50.2) |
| European | 38,057 | 4.9 | 12,015 | 1.9 | 26,042 | 216.7 |
| Total recreational vehicles | 65,178 | 3.1 | 66,440 | 3.0 | (1,262) | (1.9) |
| Other, net | 7,343 | 4.4 | 8,289 | 5.0 | (946) | (11.4) |
| Corporate | (65,627) | — | (42,011) | — | (23,616) | (56.2) |
| Total | $6,894 | 0.3 | $32,718 | 1.4 | $(25,824) | (78.9) |

| ORDER BACKLOG: Recreational vehicles | As of January 31, 2024 | As of January 31, 2023 | Change Amount | % Change |
| --- | ---: | ---: | ---: | ---: |
| North American Towable | $836,202 | $1,152,991 | $(316,789) | (27.5) |
| North American Motorized | 1,072,687 | 1,848,124 | (775,437) | (42.0) |
| Total North America | 1,908,889 | 3,001,115 | (1,092,226) | (36.4) |
| European | 2,746,307 | 3,055,738 | (309,431) | (10.1) |
| Total | $4,655,196 | $6,056,853 | $(1,401,657) | (23.1) |

### CONSOLIDATED

Consolidated net sales for the three months ended January 31, 2024 decreased $139,266, or 5.9%, compared to the three months ended January 31, 2023. The decrease in consolidated net sales is primarily due to lower dealer and consumer demand in comparison to the prior-year period, primarily in the North American RV markets. Approximately 35.4% of the Company’s consolidated net sales for the quarter ended January 31, 2024 were transacted in a currency other than the U.S. dollar. The Company’s most material exchange rate exposure is sales in Euros. The decrease in consolidated net sales includes an increase of $26,558 from the change in currency exchange rates between the two periods. To determine this impact, net sales transacted in currencies other than U.S. dollars have been translated to U.S. dollars using the average exchange rates that were in effect during the comparative period.

Consolidated gross profit for the three months ended January 31, 2024 decreased $12,088, or 4.3%, compared to the three months ended January 31, 2023. Consolidated gross profit was 12.3% of consolidated net sales for the three months ended January 31, 2024 and 12.1% for the three months ended January 31, 2023. The decrease in consolidated gross profit was primarily due to the impact of the decrease in consolidated net sales while the slight increase in the consolidated gross profit percentage is due to the favorable impacts of selling price increases, stable material costs and cost-saving initiatives in the current-year quarter compared to the prior-year quarter.

Selling, general and administrative expenses for the three months ended January 31, 2024 increased $11,382, or 5.5%, compared to the three months ended January 31, 2023, primarily due to third-party fees of $7,175 related to the debt refinancing in the second quarter of fiscal 2024 as discussed in Note 12 to the Condensed Consolidated Financial Statements.

The decrease of $25,824, or 78.9%, in income before income taxes for the three months ended January 31, 2024 as compared to the three months ended January 31, 2023 was primarily driven by the decrease in consolidated net sales and the increase in consolidated selling, general and administrative expenses noted above.

The overall effective income tax rate for the three months ended January 31, 2024 was 22.7% compared with 21.1% for the three months ended January 31, 2023. The primary reason for the increase relates to the jurisdictional mix of pre-tax income between foreign and domestic operations between the comparable periods.

Additional information concerning the changes in net sales, gross profit, selling, general and administrative expenses and income before income taxes are addressed below and in the segment reporting that follows.

Corporate costs included in consolidated selling, general and administrative expenses increased $13,919 for the three months ended January 31, 2024 compared to the three months ended January 31, 2023. This increase includes an increase of $7,990 in legal and professional fees, including the debt financing-related third-party fees of $7,175 discussed above. This increase also includes an increase in deferred compensation expense of $5,231 due to market value fluctuations between the two periods, an increase in innovation-led research and development costs of $2,578 and an increase in stock-based and other compensation of $1,015. These increases were partially offset by $4,200 of income from adjustments made during the quarter related to certain legal and recall matters as discussed in Note 14 to the Condensed Consolidated Financial Statements.

Net expense in Corporate interest and other income and expense increased $9,697 for the three months ended January 31, 2024 compared to the three months ended January 31, 2023. This net expense increase included an increase in net interest expense of $1,336 on our debt, primarily due to extinguishment charges of $7,566 related to the refinancing of our debt facilities as discussed in Note 12 to the Condensed Consolidated Financial Statements more than offsetting increased interest income received from higher average cash balances held and higher interest income rates and lower debt interest expense primarily due to lower average debt balances outstanding. In addition, the current-year period included a non-cash foreign currency loss of $2,627 on certain Euro-denominated loans as compared to a $6,923 gain in the prior-year period. The current-year period also included operating losses of $3,502 related to our Roadpass Digital joint venture as discussed in Note 8 to the Condensed Consolidated Financial Statements. These increases were partially offset by a favorable change of $5,156 in the fair value of the Company's deferred compensation plan assets due to market fluctuations between the two periods.

### Segment Reporting

### NORTH AMERICAN TOWABLE RECREATIONAL VEHICLES

Analysis of the change in net sales for the three months ended January 31, 2024 compared to the three months ended January 31, 2023:

| Three Months Ended January 31, 2024 % of Segment Net Sales Three Months Ended January 31, 2023 % of Segment Net Sales NET SALES: North American Towable | Change Amount | % Change |
| --- | ---: | ---: |
| Travel Trailers $471,483 64.5 $527,829 63.6 | $(56,346) | (10.7) |
| Fifth Wheels 259,485 35.5 301,922 36.4 | (42,437) | (14.1) |
| Total North American Towable $730,968 100.0 $829,751 100.0 | $(98,783) | (11.9) |
| **Three Months Ended January 31, 2024** **% of Segment Shipments** **Three Months Ended January 31, 2023** **% of Segment Shipments** | **Change Amount** | **% Change** |
| **# OF UNITS:** |  |  |
| North American Towable |  |  |
| Travel Trailers 17,652 80.4 15,494 77.7 | 2,158 | 13.9 |
| Fifth Wheels 4,306 19.6 4,440 22.3 | (134) | (3.0) |
| Total North American Towable 21,958 100.0 19,934 100.0 | 2,024 | 10.2 |
| **IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES:** |  | **% Change** |
| North American Towable |  |  |
| Travel Trailers |  | (24.6) |
| Fifth Wheels |  | (11.1) |
| Total North American Towable |  | (22.1) |

33

The decrease in total North American Towable net sales of 11.9% compared to the prior-year quarter resulted from a 10.2% increase in unit shipments and a 22.1% decrease in the overall net price per unit due to the combined impact of changes in product mix and price. The increase in unit shipments is primarily due to the heightened demand for the lower cost travel trailers units, which increased 13.9% over the prior-year quarter. According to statistics published by RVIA, for the three months ended January 31, 2024, combined North American travel trailer and fifth wheel wholesale unit shipments increased 12.9% compared to the same period last year. According to the most recently published statistics from Stat Surveys, for the three months ended December 31, 2023 and 2022, our North American market share for travel trailers and fifth wheels combined was 39.7% and 41.2%, respectively. Comparisons of Company shipments to industry shipments on a quarterly basis would not necessarily be indicative of the results expected for a full fiscal year.

The decreases in the overall net price per unit within both the travel trailer product line of 24.6% and the fifth wheel product line of 11.1% were primarily due to the combined impact of sales price reductions due to lower input costs, higher sales discounting levels and product mix changes trending toward more moderately-priced units as compared to the prior-year quarter.

North American Towable cost of products sold decreased $99,817 to $677,071, or 92.6% of North American Towable net sales, for the three months ended January 31, 2024 compared to $776,888, or 93.6% of North American Towable net sales, for the three months ended January 31, 2023. Changes in material, labor, freight-out and warranty costs comprised $91,773 of the $99,817 decrease in cost of products sold. Material, labor, freight-out and warranty costs as a combined percentage of North American Towable net sales decreased to 82.2% for the three months ended January 31, 2024 compared to 83.5% for the three months ended January 31, 2023, primarily due to a decrease in the material costs percentage from the combined favorable impacts of cost-saving initiatives and product mix changes. This decrease was partially offset by an increase in the labor percentage primarily due to product mix changes.

Total manufacturing overhead decreased $8,044 in correlation with the decrease in sales but increased as a percentage of North American Towable net sales from 10.1% to 10.4% as the decreased net sales levels resulted in higher overhead costs per unit sold.

The increase in North American Towable gross profit of $1,034 for the three months ended January 31, 2024 compared to the three months ended January 31, 2023 was due to the decrease in net sales being more than offset by the favorable impact of the decrease in the cost of products sold percentage noted above.

The increase in North American Towable selling, general and administrative expenses of $2,051 for the three months ended January 31, 2024 compared to the three months ended January 31, 2023 is primarily due to increases in costs related to our repurchase obligations of $2,085 and legal and professional fees of $1,845, partially offset by the decrease in North American Towable net sales and income before income taxes causing related commissions, incentive and other compensation to decrease by $1,538. The increase in the overall selling, general and administrative expense as a percentage of North American Towable net sales is primarily due to the decrease in net sales.

The increase in North American Towable income before income taxes of $7,780 for the three months ended January 31, 2024 compared to the loss before income taxes for the three months ended January 31, 2023 was primarily attributable to lower amortization costs and larger gains on the sales of fixed assets in the current-year quarter.

### NORTH AMERICAN MOTORIZED RECREATIONAL VEHICLES

Analysis of the change in net sales for the three months ended January 31, 2024 compared to the three months ended January 31, 2023:

| Three Months Ended January 31, 2024 % of Segment Net Sales Three Months Ended January 31, 2023 % of Segment Net Sales NET SALES: North American Motorized | Change Amount | % Change |
| --- | ---: | ---: |
| Class A $178,308 31.3 $244,128 33.1 | $(65,820) | (27.0) |
| Class C 275,632 48.3 334,911 45.3 | (59,279) | (17.7) |
| Class B 116,484 20.4 159,544 21.6 | (43,060) | (27.0) |
| Total North American Motorized $570,424 100.0 $738,583 100.0 | $(168,159) | (22.8) |
| **Three Months Ended January 31, 2024** **% of Segment Shipments** **Three Months Ended January 31, 2023** **% of Segment Shipments** | **Change Amount** | **% Change** |
| **# OF UNITS:** |  |  |
| North American Motorized |  |  |
| Class A 875 19.7 1,194 22.0 | (319) | (26.7) |
| Class C 2,539 57.2 2,935 54.0 | (396) | (13.5) |
| Class B 1,024 23.1 1,309 24.0 | (285) | (21.8) |
| Total North American Motorized 4,438 100.0 5,438 100.0 | (1,000) | (18.4) |
| **IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES:** |  | **% Change** |
| North American Motorized |  |  |
| Class A |  | (0.3) |
| Class C |  | (4.2) |
| Class B |  | (5.2) |
| Total North American Motorized |  | (4.4) |

The decrease in total North American Motorized net sales of 22.8% compared to the prior-year quarter resulted from a 18.4% decrease in unit shipments and a 4.4% decrease in the overall net price per unit due to the combined impact of changes in product mix and price, which included elevated sales discounts compared to the prior-year quarter. The decrease in unit shipments is primarily due to a softening in current dealer and consumer demand in comparison with the demand in the prior-year quarter, which included independent dealer restocking of certain motorized products. According to statistics published by RVIA, for the three months ended January 31, 2024, combined North American motorhome wholesale unit shipments decreased 15.8% compared to the same period last year. According to the most recently published statistics from Stat Surveys, for the three months ended December 31, 2023 and 2022, our North American market share for motorhomes was 47.3% for both periods. Comparisons of Company shipments to industry shipments on a quarterly basis would not necessarily be indicative of the results expected for a full fiscal year.

The decreases in the overall net price per unit within the Class A product line of 0.3%, the Class C product line of 4.2% and the Class B product line of 5.2% were all primarily due to higher discounting levels since the prior-year quarter, and consumers trending toward more moderately-priced units compared to the prior-year quarter.

North American Motorized cost of products sold decreased $121,668 to $509,703, or 89.4% of North American Motorized net sales, for the three months ended January 31, 2024 compared to $631,371, or 85.5% of North American Motorized net sales, for the three months ended January 31, 2023. The changes in material, labor, freight-out and warranty costs comprised $114,854 of the $121,668 decrease primarily due to the decreased net sales volume. Material, labor, freight-out and warranty costs as a combined percentage of North American Motorized net sales increased to 82.3% for the three months ended January 31, 2024 compared to 79.1% for the three months ended January 31, 2023, with the increase due to an increase in the material cost percentage, primarily due to higher sales discounting, which effectively decreases net selling prices and correspondingly increases the material cost percentage, as well as increased chassis costs.

Total manufacturing overhead decreased $6,814 in correlation with the net sales decrease but increased as a percentage of North American Motorized net sales from 6.4% to 7.1% as the decrease in net sales levels resulted in higher overhead costs per unit sold.

The decrease in North American Motorized gross profit of $46,491 for the three months ended January 31, 2024 compared to the three months ended January 31, 2023 was driven by the decrease in net sales, and the decrease in the gross profit percentage is due to the increase in the cost of products sold percentage noted above.

The decrease in North American Motorized selling, general and administrative expenses of $11,626 for the three months ended January 31, 2024 compared to the three months ended January 31, 2023 was primarily due to the decrease in North American Motorized net sales and income before income taxes, which caused related commissions, incentive and other compensation to decrease by $10,228. The decrease in commissions, incentive and other compensation also drove the slight decrease in the overall selling, general and administrative expense as a percentage of North American Motorized net sales.

The decrease in North American Motorized income before income taxes of $35,084 for the three months ended January 31, 2024 compared to the three months ended January 31, 2023 was primarily due to the decrease in North American Motorized net sales, and the primary reason for the decrease in percentage was the increase in the cost of products sold percentage noted above.

### EUROPEAN RECREATIONAL VEHICLES

Analysis of the change in net sales for the three months ended January 31, 2024 compared to the three months ended January 31, 2023:

| NET SALES: European | Three Months Ended January 31, 2024 | % of Segment Net Sales | Three Months Ended January 31, 2023 | % of Segment Net Sales | Change Amount | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Motorcaravan | $424,813 | 54.3 | $267,782 | 41.4 | $157,031 | 58.6 |
| Campervan | 244,724 | 31.3 | 227,136 | 35.1 | 17,588 | 7.7 |
| Caravan | 51,087 | 6.5 | 94,494 | 14.6 | (43,407) | (45.9) |
| Other | 61,670 | 7.9 | 57,526 | 8.9 | 4,144 | 7.2 |
| Total European | $782,294 | 100.0 | $646,938 | 100.0 | $135,356 | 20.9 |
|  | **Three Months Ended January 31, 2024** | **% of Segment Shipments** | **Three Months Ended January 31, 2023** | **% of Segment Shipments** | **Change Amount** | **% Change** |
| **# OF UNITS:** |  |  |  |  |  |  |
| European |  |  |  |  |  |  |
| Motorcaravan | 5,563 | 42.5 | 3,632 | 28.9 | 1,931 | 53.2 |
| Campervan | 5,382 | 41.1 | 4,826 | 38.3 | 556 | 11.5 |
| Caravan | 2,135 | 16.4 | 4,130 | 32.8 | (1,995) | (48.3) |
| Total European | 13,080 | 100.0 | 12,588 | 100.0 | 492 | 3.9 |

*IMPACT OF CHANGES IN FOREIGN CURRENCY, PRODUCT MIX AND PRICE ON NET SALES:*

| European | Foreign Currency % | Mix and Price % | % Change |
| --- | ---: | ---: | ---: |
| Motorcaravan | 4.1 | 1.3 | 5.4 |
| Campervan | 4.1 | (7.9) | (3.8) |
| Caravan | 4.1 | (1.7) | 2.4 |
| Total European | 4.1 | 12.9 | 17.0 |

The increase in total European Recreational Vehicle net sales of 20.9% compared to the prior-year quarter resulted from a 3.9% increase in unit shipments and a 17.0% increase in the overall net price per unit due to the total combined impact of changes in foreign currency, product mix and price. The increase in European Recreational Vehicle net sales of $135,356 includes an increase of $26,558, or 4.1%, due to the increase in foreign exchange rates since the prior-year quarter.

The overall net price per unit increase of 17.0% includes a 4.1% increase due to the impact of foreign currency exchange rate changes and a 12.9% increase due to the combined impact of product mix and selling prices, primarily due to the much higher concentration of Motorcaravan sales in the current-year quarter due to improved chassis supply and fewer other component constraints in the current-year quarter.

The constant-currency increase in the overall net price per unit within the Motorcaravan product line of 1.3% was primarily due to the impact of selling price increases and product mix changes. The constant-currency decreases in the overall net price per unit within the Campervan product line of 7.9% and the Caravan product line of 1.7% are primarily due to product mix changes and increased sales discounting. In addition, the current-year quarter included a higher concentration of Campervan units with a customer-supplied chassis that is not included in the unit sales price as opposed to a purchased chassis that is included in the unit sales price.

European Recreational Vehicle cost of products sold increased $107,461 to $662,969, or 84.7% of European Recreational Vehicle net sales, for the three months ended January 31, 2024 compared to $555,508, or 85.9% of European Recreational Vehicle net sales, for the three months ended January 31, 2023. Changes in material, labor, freight-out and warranty costs comprised $92,861 of the $107,461 increase. Material, labor, freight-out and warranty costs as a combined percentage of European Recreational Vehicle net sales decreased to 73.6% for the three months ended January 31, 2024 compared to 74.8% for the three months ended January 31, 2023, with the decrease primarily due to a decrease in the material cost percentage due to net selling price increases and product mix changes. The labor cost percentage also improved. Total manufacturing overhead increased $14,600 with the increase in net sales but remained constant as a percentage of European Recreational Vehicle net sales at 11.1%.

European Recreational Vehicle gross profit increased $27,895 for the three months ended January 31, 2024 compared to the three months ended January 31, 2023 primarily due to the increase in European Recreational Vehicle net sales, and the increase in the gross profit percentage is due to the decrease in the cost of products sold percentage noted above.

European Recreational Vehicle selling, general and administrative expenses increased $4,282 for the three months ended January 31, 2024 compared to the three months ended January 31, 2023 primarily due to the increase in sales-related travel, advertising and promotional costs of $2,019 in correlation with the increase in European Recreational Vehicle net sales. The decrease in the overall selling, general and administrative expense as a percentage of European Recreational Vehicle net sales is primarily due to the increase in European Recreational Vehicle net sales noted above.

The increase in European Recreational Vehicle income before income taxes of $26,042 for the three months ended January 31, 2024 compared to the three months ended January 31, 2023 was primarily due to the increase in European Recreational Vehicle net sales. The primary reasons for the increase in percentage were the decreases in both the cost of products sold and selling, general and administrative expense percentages noted above. Amortization expense was also 0.4% lower as a percentage of sales primarily due to the increase in European Recreational Vehicle net sales.

### Six Months Ended January 31, 2024 Compared to the Six Months Ended January 31, 2023

| NET SALES: Recreational vehicles | Six Months Ended January 31, 2024 | Six Months Ended January 31, 2023 | Change Amount | % Change |
| --- | ---: | ---: | ---: | ---: |
| North American Towable | $1,676,422 | $2,147,557 | $(471,135) | (21.9) |
| North American Motorized | 1,281,583 | 1,862,102 | (580,519) | (31.2) |
| Total North America | 2,958,005 | 4,009,659 | (1,051,654) | (26.2) |
| European | 1,490,495 | 1,151,240 | 339,255 | 29.5 |
| Total recreational vehicles | 4,448,500 | 5,160,899 | (712,399) | (13.8) |
| Other | 365,455 | 397,507 | (32,052) | (8.1) |
| Intercompany eliminations | (105,827) | (103,687) | (2,140) | (2.1) |
| Total | $4,708,128 | $5,454,719 | $(746,591) | (13.7) |

| # OF UNITS: Recreational vehicles |  |  |  |  |
| --- | ---: | ---: | ---: | ---: |
| North American Towable | 50,065 | 52,225 | (2,160) | (4.1) |
| North American Motorized | 10,020 | 13,588 | (3,568) | (26.3) |
| Total North America | 60,085 | 65,813 | (5,728) | (8.7) |
| European | 24,972 | 22,538 | 2,434 | 10.8 |
| Total | 85,057 | 88,351 | (3,294) | (3.7) |

| GROSS PROFIT: Recreational vehicles |  | % of Segment Net Sales |  | % of Segment Net Sales | Change Amount | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| North American Towable | $171,908 | 10.3 | $248,729 | 11.6 | $(76,821) | (30.9) |
| North American Motorized | 140,113 | 10.9 | 292,947 | 15.7 | (152,834) | (52.2) |
| Total North America | 312,021 | 10.5 | 541,676 | 13.5 | (229,655) | (42.4) |
| European | 242,153 | 16.2 | 160,295 | 13.9 | 81,858 | 51.1 |
| Total recreational vehicles | 554,174 | 12.5 | 701,971 | 13.6 | (147,797) | (21.1) |
| Other, net | 74,605 | 20.4 | 67,440 | 17.0 | 7,165 | 10.6 |
| Total | $628,779 | 13.4 | $769,411 | 14.1 | $(140,632) | (18.3) |

| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Recreational vehicles |  |  |  |  |  |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| North American Towable | $119,822 | 7.1 | $132,001 | 6.1 | $(12,179) | (9.2) |
| North American Motorized | 69,267 | 5.4 | 100,595 | 5.4 | (31,328) | (31.1) |
| Total North America | 189,089 | 6.4 | 232,596 | 5.8 | (43,507) | (18.7) |
| European | 148,952 | 10.0 | 127,877 | 11.1 | 21,075 | 16.5 |
| Total recreational vehicles | 338,041 | 7.6 | 360,473 | 7.0 | (22,432) | (6.2) |
| Other | 36,818 | 10.1 | 35,375 | 8.9 | 1,443 | 4.1 |
| Corporate | 63,162 | — | 54,519 | — | 8,643 | 15.9 |
| Total | $438,021 | 9.3 | $450,367 | 8.3 | $(12,346) | (2.7) |

39

| INCOME (LOSS) BEFORE INCOME TAXES: Recreational vehicles | Six Months Ended January 31, 2024 | % of Segment Net Sales | Six Months Ended January 31, 2023 | % of Segment Net Sales | Change Amount | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| North American Towable | $49,910 | 3.0 | $103,888 | 4.8 | $(53,978) | (52.0) |
| North American Motorized | 63,512 | 5.0 | 185,977 | 10.0 | (122,465) | (65.8) |
| Total North America | 113,422 | 3.8 | 289,865 | 7.2 | (176,443) | (60.9) |
| European | 66,824 | 4.5 | 5,547 | 0.5 | 61,277 | 1,104.7 |
| Total recreational vehicles | 180,246 | 4.1 | 295,412 | 5.7 | (115,166) | (39.0) |
| Other, net | 16,819 | 4.6 | 13,034 | 3.3 | 3,785 | 29.0 |
| Corporate | (117,589) | — | (96,457) | — | (21,132) | (21.9) |
| Total | $79,476 | 1.7 | $211,989 | 3.9 | $(132,513) | (62.5) |

### CONSOLIDATED

Consolidated net sales for the six months ended January 31, 2024 decreased $746,591, or 13.7%, compared to the six months ended January 31, 2023. The decrease in consolidated net sales is primarily due to lower current dealer and consumer demand in comparison to demand in the prior-year period, primarily in the North American Towable and Motorized segments. Approximately 31.7% of the Company’s net sales for the six months ended January 31, 2024 were transacted in a currency other than the U.S. dollar. The Company’s most material exchange rate exposure is sales in Euros. The decrease in consolidated net sales includes an increase of $77,163 from the change in currency exchange rates between the two periods. To determine this impact, net sales transacted in currencies other than U.S. dollars have been translated to U.S. dollars using the average exchange rates that were in effect during the comparative periods.

Consolidated gross profit for the six months ended January 31, 2024 decreased $140,632 compared to the six months ended January 31, 2023. Consolidated gross profit was 13.4% of consolidated net sales for the six months ended January 31, 2024 and 14.1% for the six months ended January 31, 2023. The decreases in consolidated gross profit and the consolidated gross profit percentage were both primarily due to the impact of the decrease in consolidated net sales in the current-year period compared to the prior-year period.

Selling, general and administrative expenses for the six months ended January 31, 2024 decreased $12,346, or 2.7%, compared to the six months ended January 31, 2023, primarily due to the 13.7% decrease in consolidated net sales and a decrease in net costs related to the ongoing investigation of the Company’s advertising practices in Germany and a product recall as discussed in Note 14 to the Condensed Consolidated Financial Statements, partially offset by an increase in third-party fees related to the debt refinancing in the second quarter of fiscal 2024.

The decrease of $132,513, or 62.5%, in income before income taxes for the six months ended January 31, 2024 compared to the six months ended January 31, 2023 was primarily driven by the decrease in consolidated net sales noted above.

The overall effective income tax rate for the six months ended January 31, 2024 was 24.0% compared with 23.0% for the six months ended January 31, 2023. The primary reason for the increase relates to the jurisdictional mix of pre-tax income between foreign and domestic operations between the comparable periods.

Additional information concerning the changes in net sales, gross profit, selling, general and administrative expenses and income before income taxes are addressed below and in the segment reporting that follows.

The $8,643 increase in Corporate costs included in selling, general and administrative expenses for the six months ended January 31, 2024 compared to the six months ended January 31, 2023 includes an increase of $9,355 in legal and professional fees, primarily related to third-party fees of $7,175 incurred with the debt refinancing discussed in Note 12 to the Condensed Consolidated Financial Statements. The $8,643 increase also includes an increase in deferred compensation expense of $3,684 due to market value fluctuations between the two periods, an increase in innovation-led research and development costs of $4,167 and an increase in stock-based and other compensation of $5,531. These increases were partially offset by income of $14,200 related to the legal and recall matters discussed in Note 14 to the Condensed Consolidated Financial Statements.

The $12,489 increase in net expense in Corporate interest and other income and expense for the six months ended January 31, 2024 compared to the six months ended January 31, 2023 includes a decrease of $8,405 in non-cash foreign currency gains on certain Euro-denominated loans in the current-year period as compared to the prior-year period, and the current-year period included operating losses of $9,437 related to our Roadpass Digital joint venture as discussed in Note 8 to the Condensed Consolidated Financial Statements. These increases in net expense were partially offset by the favorable change of $3,226 in the fair value of the Company's deferred compensation plan assets due to market fluctuations between the two periods, and a decrease in net interest expense of $2,496, in spite of the one-time debt refinancing fees incurred in the second quarter of fiscal 2024, primarily due to increased interest income received from higher average cash balances held and higher interest income rates and lower debt interest expense primarily due to lower average debt balances outstanding.

### Segment Reporting

### NORTH AMERICAN TOWABLE RECREATIONAL VEHICLES

Analysis of the change in net sales for the six months ended January 31, 2024 compared to the six months ended January 31, 2023:

| Six Months Ended January 31, 2024 % of Segment Net Sales Six Months Ended January 31, 2023 % of Segment Net Sales NET SALES: North American Towable | Change Amount | % Change |
| --- | ---: | ---: |
| Travel Trailers $1,091,021 65.1 $1,350,698 62.9 | $(259,677) | (19.2) |
| Fifth Wheels 585,401 34.9 796,859 37.1 | (211,458) | (26.5) |
| Total North American Towable $1,676,422 100.0 $2,147,557 100.0 | $(471,135) | (21.9) |
| **Six Months Ended January 31, 2024** **% of Segment Shipments** **Six Months Ended January 31, 2023** **% of Segment Shipments** | **Change Amount** | **% Change** |
| **# OF UNITS:** |  |  |
| North American Towable |  |  |
| Travel Trailers 40,282 80.5 40,849 78.2 | (567) | (1.4) |
| Fifth Wheels 9,783 19.5 11,376 21.8 | (1,593) | (14.0) |
| Total North American Towable 50,065 100.0 52,225 100.0 | (2,160) | (4.1) |
| **IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES:** |  | **% Change** |
| North American Towable |  |  |
| Travel Trailers |  | (17.8) |
| Fifth Wheels |  | (12.5) |
| Total North American Towable |  | (17.8) |

The decrease in total North American Towable net sales of 21.9% compared to the prior-year period resulted from a 4.1% decrease in unit shipments and a 17.8% decrease in the overall net price per unit due to the combined impact of changes in product mix and price. The decrease in unit shipments is primarily due to a softening in dealer and consumer demand in comparison with demand in the prior-year period. According to statistics published by RVIA, for the six months ended January 31, 2024, combined North American travel trailer and fifth wheel wholesale unit shipments decreased 0.3% compared to the same period last year. According to the most recently published statistics from Stat Surveys, for the six-month periods ended December 31, 2023 and 2022, our North American market share for travel trailers and fifth wheels combined was 40.6% and 42.1%, respectively. Comparisons of Company shipments to industry shipments on a quarterly basis would not necessarily be indicative of the results expected for a full fiscal year.

The decreases in the overall net price per unit within the travel trailer product line of 17.8% and the fifth wheel product line of 12.5% were primarily due to the combined impact of sales price reductions due to lower input costs, higher sales discounting levels and product mix changes trending toward more moderately-priced units as compared to the prior-year period.

North American Towable cost of products sold decreased $394,314 to $1,504,514, or 89.7% of North American Towable net sales, for the six months ended January 31, 2024 compared to $1,898,828, or 88.4% of North American Towable net sales, for the six months ended January 31, 2023. Changes in material, labor, freight-out and warranty costs comprised $376,989 of the $394,314 decrease in cost of products sold. Material, labor, freight-out and warranty costs as a combined percentage of North American Towable net sales increased slightly to 80.9% for the six months ended January 31, 2024 compared to 80.7% for the six months ended January 31, 2023, as modest increases in the labor and warranty percentages were mostly offset by a decrease in the material cost percentage. Total manufacturing overhead decreased $17,325 in correlation with the decrease in sales but increased as a percentage of North American Towable net sales from 7.7% to 8.8%, as the decreased net sales levels resulted in higher overhead costs per unit sold.

The decrease of $76,821 in North American Towable gross profit for the six months ended January 31, 2024 compared to the six months ended January 31, 2023 was driven by the decrease in net sales and the decrease in the gross profit percentage is due to the increase in the cost of products sold percentage noted above.

The decrease of $12,179 in North American Towable selling, general and administrative expenses for the six months ended January 31, 2024 compared to the six months ended January 31, 2023 includes the impact of the decrease in North American Towable net sales and income before income taxes, which caused related commissions, incentive and other compensation to decrease by $17,038. These decreases were partially offset by an increase of $8,006 in professional fees and related settlement and RV repurchase costs. The increase in the overall selling, general and administrative expense as a percentage of North American Towable net sales is primarily due to the decrease in net sales.

The decrease of $53,978 in North American Towable income before income taxes for the six months ended January 31, 2024 compared to the six months ended January 31, 2023 was primarily due to the decrease in North American Towable net sales, and the primary reasons for the decrease in percentage were the increases in the cost of products sold and selling, general and administrative expense percentages noted above.

### NORTH AMERICAN MOTORIZED RECREATIONAL VEHICLES

Analysis of the change in net sales for the six months ended January 31, 2024 compared to the six months ended January 31, 2023:

| Six Months Ended January 31, 2024 % of Segment Net Sales Six Months Ended January 31, 2023 % of Segment Net Sales NET SALES: North American Motorized | Change Amount | % Change |
| --- | ---: | ---: |
| Class A $386,219 30.1 $648,706 34.8 | $(262,487) | (40.5) |
| Class C 609,408 47.6 825,698 44.3 | (216,290) | (26.2) |
| Class B 285,956 22.3 387,698 20.9 | (101,742) | (26.2) |
| Total North American Motorized $1,281,583 100.0 $1,862,102 100.0 | $(580,519) | (31.2) |
| **Six Months Ended January 31, 2024** **% of Segment Shipments** **Six Months Ended January 31, 2023** **% of Segment Shipments** | **Change Amount** | **% Change** |
| **# OF UNITS:** |  |  |
| North American Motorized |  |  |
| Class A 1,955 19.5 3,120 23.0 | (1,165) | (37.3) |
| Class C 5,584 55.7 7,281 53.6 | (1,697) | (23.3) |
| Class B 2,481 24.8 3,187 23.4 | (706) | (22.2) |
| Total North American Motorized 10,020 100.0 13,588 100.0 | (3,568) | (26.3) |
| **IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES:** |  | **% Change** |
| North American Motorized |  |  |
| Class A |  | (3.2) |
| Class C |  | (2.9) |
| Class B |  | (4.0) |
| Total North American Motorized |  | (4.9) |

The decrease in total North American Motorized net sales of 31.2% compared to the prior-year period resulted from a 26.3% decrease in unit shipments and a 4.9% decrease in the overall net price per unit due to the combined impact of changes in product mix and price, which included elevated sales discounts compared to the prior-year period. The decrease in unit shipments is primarily due to a softening in current dealer and consumer demand in comparison with the demand in the prior-year period, which included independent dealer restocking of certain motorized products. According to statistics published by RVIA, for the six months ended January 31, 2024, combined North American motorhome wholesale unit shipments decreased 25.7% compared to the same period last year. According to statistics published by Stat Surveys, for the six-month periods ended December 31, 2023 and 2022, our North American market share for motorhomes was 48.3% and 47.2%, respectively. Comparisons of Company shipments to industry shipments on a quarterly basis would not necessarily be indicative of the results expected for a full fiscal year.

The decreases in the overall net price per unit within the Class A product line of 3.2%, the Class C product line of 2.9% and the Class B product line of 4.0% were all primarily due to higher discounting levels since the prior-year period and consumers trending toward more moderately-priced units compared to the prior-year period.

North American Motorized cost of products sold decreased $427,685 to $1,141,470, or 89.1% of North American Motorized net sales, for the six months ended January 31, 2024 compared to $1,569,155, or 84.3% of North American Motorized net sales, for the six months ended January 31, 2023. Changes in material, labor, freight-out and warranty costs comprised $406,092 of the $427,685 decrease. Material, labor, freight-out and warranty costs as a combined percentage of North American Motorized net sales increased to 82.8% for the six months ended January 31, 2024 compared to 78.8% for the six months ended January 31, 2023, with the increase due to an increase in the material cost percentage, primarily due to higher sales discounting, which effectively decreases net selling prices and correspondingly increases the material cost percentage, as well as increased chassis costs. Total manufacturing overhead decreased $21,593 with the decrease in net sales but increased as a percentage of North American Motorized net sales from 5.5% to 6.3% as the decrease in net sales levels resulted in higher overhead costs per unit sold.

The decrease of $152,834 in North American Motorized gross profit for the six months ended January 31, 2024 compared to the six months ended January 31, 2023 was driven by the decrease in net sales, while the decrease in the gross profit percentage is due to the increase in the cost of products sold percentage noted above.

The decrease of $31,328 in North American Motorized selling, general and administrative expenses for the six months ended January 31, 2024 compared to the six months ended January 31, 2023 is primarily due to the decreases in North American Motorized net sales and income before income taxes, which caused related commissions, incentive and other compensation to decrease by $30,763.

The decrease of $122,465 in North American Motorized income before income taxes for the six months ended January 31, 2024 compared to the six months ended January 31, 2023 was primarily due to the decrease in North American Motorized net sales, and the primary reason for the decrease in percentage was the increase in the cost of products sold percentage noted above.

### EUROPEAN RECREATIONAL VEHICLES

Analysis of the change in net sales for the six months ended January 31, 2024 compared to the six months ended January 31, 2023:

| NET SALES: European | Six Months Ended January 31, 2024 | % of Segment Net Sales | Six Months Ended January 31, 2023 | % of Segment Net Sales | Change Amount | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Motorcaravan | $771,324 | 51.7 | $507,567 | 44.1 | $263,757 | 52.0 |
| Campervan | 466,333 | 31.3 | 366,302 | 31.8 | 100,031 | 27.3 |
| Caravan | 115,714 | 7.8 | 156,109 | 13.6 | (40,395) | (25.9) |
| Other | 137,124 | 9.2 | 121,262 | 10.5 | 15,862 | 13.1 |
| Total European | $1,490,495 | 100.0 | $1,151,240 | 100.0 | $339,255 | 29.5 |
|  | **Six Months Ended January 31, 2024** | **% of Segment Shipments** | **Six Months Ended January 31, 2023** | **% of Segment Shipments** | **Change Amount** | **% Change** |
| **# OF UNITS:** |  |  |  |  |  |  |
| European |  |  |  |  |  |  |
| Motorcaravan | 10,113 | 40.5 | 7,184 | 31.9 | 2,929 | 40.8 |
| Campervan | 10,122 | 40.5 | 8,159 | 36.2 | 1,963 | 24.1 |
| Caravan | 4,737 | 19.0 | 7,195 | 31.9 | (2,458) | (34.2) |
| Total European | 24,972 | 100.0 | 22,538 | 100.0 | 2,434 | 10.8 |

*IMPACT OF CHANGES IN FOREIGN CURRENCY, PRODUCT MIX AND PRICE ON NET SALES:*

| European | Foreign Currency % | Mix and Price % | % Change |
| --- | ---: | ---: | ---: |
| Motorcaravan | 6.7 | 4.5 | 11.2 |
| Campervan | 6.7 | (3.5) | 3.2 |
| Caravan | 6.7 | 1.6 | 8.3 |
| Total European | 6.7 | 12.0 | 18.7 |

The increase in total European Recreational Vehicle net sales of 29.5% compared to the prior-year period resulted from increases of 10.8% in unit shipments and 18.7% in the overall net price per unit due to the total combined impact of changes in foreign currency, product mix and price. The increase in European Recreational Vehicle net sales of $339,255 includes an increase of $77,163, or 6.7% of the 29.5% increase, due to the increase in foreign exchange rates since the prior-year period. Sales on a constant-currency basis increased by 22.8%.

The overall net price per unit increase of 18.7% includes increases of 6.7% due to the impact of foreign currency exchange rate changes and 12.0% due to the combined impact of product mix and selling price increases, primarily due to the much higher concentration of Motorcaravan sales in the current-year period due primarily to improved supply of chassis and other components in the current-year period compared to the prior-year period.

The constant-currency increases in the overall net price per unit within the Motorcaravan product line of 4.5% and the Caravan product line of 1.6% were primarily due to the impact of selling price increases and product mix changes. The constant-currency decrease in the overall net price per unit within the Campervan product line of 3.5% was primarily due to the impact of product mix changes.

European Recreational Vehicle cost of products sold increased $257,397 to $1,248,342, or 83.8% of European Recreational Vehicle net sales, for the six months ended January 31, 2024 compared to $990,945, or 86.1% of European Recreational Vehicle net sales, for the six months ended January 31, 2023. Changes in material, labor, freight-out and warranty costs comprised $222,851 of the $257,397 increase. Material, labor, freight-out and warranty costs as a combined percentage of European Recreational Vehicle net sales decreased to 72.6% for the six months ended January 31, 2024 compared to 74.6% for the six months ended January 31, 2023, with the decrease primarily due to a decrease in the material cost percentage due to net selling price increases and product mix changes. The labor cost percentage also improved. Total manufacturing overhead increased with the increase in European Recreational Vehicle net sales but decreased as a percentage of European Recreational Vehicle net sales from 11.5% to 11.2% primarily due to the increase in net sales resulting in decreased overhead costs per unit sold.

The increase of $81,858 in European Recreational Vehicle gross profit for the six months ended January 31, 2024 compared to the six months ended January 31, 2023 was primarily due to the increase in European Recreational Vehicle net sales and the decrease in the cost of products sold percentage noted above.

The increase of $21,075 in European Recreational Vehicle selling, general and administrative expenses for the six months ended January 31, 2024 compared to the six months ended January 31, 2023 was primarily due to the increase in European Recreational Vehicle net sales and income before income taxes, which caused related commissions, incentive and other compensation to increase by $7,381. Sales-related travel, advertising and promotional costs also increased $8,927, primarily due to increased display space at the annual Dusseldorf show and attending more regional shows in comparison to the prior-year period.

The increase of $61,277 in European Recreational Vehicle income before income taxes for the six months ended January 31, 2024 compared to the six months ended January 31, 2023 was primarily due to the increase in European Recreational Vehicle net sales. The primary reasons for the increase in percentage were the decreases in both the cost of products sold and selling, general and administrative expense percentages noted above. Amortization expense was also 0.6% lower as a percentage of sales in the current year compared to the prior-year period.

### Liquidity and Capital Resources

As of January 31, 2024, we had $340,192 in cash and cash equivalents, of which $257,635 was held in the U.S. and the equivalent of $82,557, predominantly in Euros, was held in Europe, compared to $441,232 on July 31, 2023, of which $338,703 was held in the U.S. and the equivalent of $102,529, predominantly in Euros, was held in Europe. Cash and cash equivalents held internationally may be subject to foreign withholding taxes if repatriated to the U.S. The components of the $101,040 decrease in cash and cash equivalents are described in more detail below, but the decrease was primarily attributable to cash used in operations of $44,200 and cash used in investing activities of $80,943, partially offset by cash provided by financing activities of $26,754.

Net working capital at January 31, 2024 was $1,212,801 compared to $1,077,098 at July 31, 2023. Capital expenditures of $78,901 for the six months ended January 31, 2024 were made primarily for production building additions and improvements and replacing machinery and equipment used in the ordinary course of business.

We strive to maintain adequate cash balances to ensure we have sufficient resources to respond to opportunities and changing business conditions. In addition, the unused availability under our revolving asset-based credit facility is generally available to the Company for general operating purposes and approximated $938,000 at January 31, 2024. We believe our on-hand cash and cash equivalents and funds generated from operations, along with funds available under the revolving asset-based credit facility, will be sufficient to fund expected operational requirements for the foreseeable future.

Our priorities for the use of current and future available cash generated from operations remain consistent with our history, and include reducing our indebtedness, maintaining and, over time, growing our dividend payments and funding our growth, both organically and, opportunistically, through acquisitions. We may also consider strategic and opportunistic repurchases of shares of THOR stock under the share repurchase authorizations as discussed in Note 16 to the Condensed Consolidated Financial Statements, and special dividends based upon market and business conditions and excess cash availability, subject to potential customary limits and restrictions pursuant to our credit facilities, applicable legal limitations and determination by the Company's Board of Directors ("Board"). We believe our on-hand cash and cash equivalents and funds generated from operations will be sufficient to fund expected cash dividend payments and share repurchases for the foreseeable future.

Our current estimate of committed and internally approved capital spend for the remainder of fiscal 2024 is $100,000, primarily for certain building projects and certain automation projects, as well as replacing and upgrading machinery, equipment and other assets throughout our facilities to be used in the ordinary course of business. We anticipate that these expenditures will be funded by cash provided by our operating activities.

The Company’s Board currently intends to continue regular quarterly cash dividend payments in the future. As is customary under credit facilities, certain actions, including our ability to pay dividends, are subject to the satisfaction of certain conditions prior to payment. The conditions for the payment of dividends under the existing debt facilities include a minimum level of adjusted excess cash availability and a fixed charge coverage ratio test, both as defined in the credit agreements. The declaration of future dividends and the establishment of the per share amounts, record dates and payment dates for any such future dividends are subject to the determination of the Board, and will be dependent upon future earnings, cash flows and other factors, in addition to compliance with any then-existing financing facilities.

### Operating Activities

Net cash used in operating activities for the six months ended January 31, 2024 was $44,200 as compared to net cash provided by operating activities of $185,321 for the six months ended January 31, 2023.

For the six months ended January 31, 2024, net income adjusted for non-cash items (primarily depreciation, amortization of intangibles and stock-based compensation) provided $207,653 of operating cash. The change in net working capital resulted in a net use of $251,853 of operating cash during that period, primarily due to an increase in chassis inventory as European chassis suppliers continue to get caught up delivering their order backlog, and RV finished goods had a seasonal increase heading into the spring selling season. In addition, required income tax payments during the period exceeded the income tax provision for the period, and certain accrued liabilities decreased with the reduction in sales and production when compared to the prior-year end period.

For the six months ended January 31, 2023, net income adjusted for non-cash items (primarily depreciation, amortization of intangibles and stock-based compensation) provided $314,016 of operating cash. The change in working capital resulted in the use of $128,695 of operating cash during that period, primarily due to an increase in chassis inventory to support the motorized sales and production and as North American chassis suppliers got caught up delivering their order backlog, as the cash impact of the reductions in accounts receivable, accounts payable and accrued liabilities due to the net sales and production decreases mostly offset each other.

### Investing Activities

Net cash used in investing activities for the six months ended January 31, 2024 was $80,943, primarily due to capital expenditures of $78,901.

Net cash used in investing activities for the six months ended January 31, 2023 was $113,748, primarily due to capital expenditures of $100,985.

### Financing Activities

Net cash provided by financing activities for the six months ended January 31, 2024 was $26,754, which included borrowings of $113,502 on the asset-based credit facility for temporary working capital needs and payments of $51,925 on the asset-based credit facility. In addition, borrowings of $186,723 and payments of $127,626 were made on the term-loan credit facilities in connection with the debt refinancing as discussed in Note 12 to the Condensed Consolidated Financial Statements. Treasury share repurchases of $30,037 were made and regular quarterly dividend payments of $0.48 per share for each of the first two quarters of fiscal 2024 were also made totaling $51,135.

Net cash used in financing activities for the six months ended January 31, 2023 was $101,742, including payments of $15,000 on the asset-based credit facility and $12,355 on the term-loan credit facilities, in addition to treasury share repurchases of $25,407. Regular quarterly dividend payments of $0.45 per share for each of the first two quarters of fiscal 2023 were also made totaling $48,165.

The Company increased its previous regular quarterly dividend of $0.45 per share to $0.48 per share in October 2023. In October 2022, the Company increased its previous regular quarterly dividend of $0.43 per share to $0.45 per share.

### Accounting Standards

See Note 1 in the Notes to the Condensed Consolidated Financial Statements included in Item 1 of Part 1 of this Quarterly Report on Form 10-Q.

### Critical Accounting Estimates

For a discussion of our critical accounting estimates, refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 and the notes to our Consolidated Financial Statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended July 31, 2023. There have been no material changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended July 31, 2023.

## Market risk

As filed, 1,370 characters.

The Company is exposed to market risk from changes in foreign currency exchange rates and interest rates. At times, the Company enters into hedging transactions to mitigate certain of these risks in accordance with guidelines established by the Company’s management. The Company does not use financial instruments for trading or speculative purposes.

**CURRENCY EXCHANGE RISK –** The Company’s principal currency exposures mainly relate to the Euro and British Pound Sterling. The Company periodically uses foreign currency forward contracts to manage certain foreign exchange rate exposure related to anticipated sales transactions in Pounds Sterling with financial instruments whose maturity date, along with the realized gain or loss, occurs on or near the execution of the anticipated transaction.

The Company also holds $479,786 of debt denominated in Euros at January 31, 2024. A hypothetical 10% change in the Euro/U.S. Dollar exchange rate would change our January 31, 2024 debt balance by approximately $47,978.

**INTEREST RATE RISK –** Based on our assumption of the Company’s floating-rate debt levels over the next 12 months, a one-percentage-point increase in interest rates (approximately 13.2% of our weighted-average interest rate at January 31, 2024) would result in an estimated $8,776 reduction in income before income taxes over a one-year period.

## Controls and procedures

As filed, 1,725 characters.

The Company maintains “disclosure controls and procedures,” as such term is defined under Exchange Act Rule 13a-15(e), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company has carried out an evaluation, as of the end of the period covered by this report, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at attaining the level of reasonable assurance noted above.

During the quarter ended January 31, 2024, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

## Risk factors

As filed, 411 characters.

Although risks specific to the supply chain disruptions are ongoing, and macroeconomic issues like general inflation, as well as certain geopolitical events, including military conflicts, remain, at this point there have been no material changes in those risks or any others from the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended July 31, 2023.

Filed Mar 6, 2024.
Source: SEC EDGAR, the filing index for accession 0000730263-24-000003. Last ingested by Listed: Oct 24, 2026, 14:55 ET. No prices; not investment advice.