# Thor Industries Inc: Form 10-Q for the period ended Apr 30, 2024

- Company: [Thor Industries Inc](/companies/tho.md) (CIK 730263)
- Form: 10-Q
- Filed: 2024-06-05
- Accepted by EDGAR: Jun 5, 2024, 06:33 ET
- Period: 2024-04-30
- Accession: 0000730263-24-000006
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/730263/000073026324000006/tho-20240430.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/730263/000073026324000006/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-04-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-02-01 to 2024-04-30 | $2.80bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-08-01 to 2024-04-30 | $7.51bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-02-01 to 2024-04-30 | $2.38bn | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2023-08-01 to 2024-04-30 | $6.46bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-02-01 to 2024-04-30 | $421.9m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2023-08-01 to 2024-04-30 | $1.05bn | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2024-02-01 to 2024-04-30 | $226.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2023-08-01 to 2024-04-30 | $664.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Income tax | 3 months, 2024-02-01 to 2024-04-30 | $28.8m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-08-01 to 2024-04-30 | $47.9m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-02-01 to 2024-04-30 | $114.5m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-08-01 to 2024-04-30 | $175.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-02-01 to 2024-04-30 | $2.13 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-08-01 to 2024-04-30 | $3.26 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-02-01 to 2024-04-30 | $2.15 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-08-01 to 2024-04-30 | $3.29 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-02-01 to 2024-04-30 | 53,722,154 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-08-01 to 2024-04-30 | 53,742,146 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-08-01 to 2024-04-30 | $207.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-02-01 to 2024-04-30 | $26.3m | us-gaap:PaymentsToAcquireProductiveAssets |
| Capital expenditure | 9 months, 2023-08-01 to 2024-04-30 | $102.9m | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 9 months, 2023-08-01 to 2024-04-30 | $76.7m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 9 months, 2023-08-01 to 2024-04-30 | $43.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-04-30 | $371.8m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-04-30 | $2.87bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-04-30 | $7.22bn | us-gaap:Assets |
| Current liabilities | at 2024-04-30 | $1.74bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2024-04-30 | $1.21bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-04-30 | $35.5m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2024-04-30 | $4.00bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 87,366 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 independent dealers and consumers and our profitability;
- 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 (including the Securities and Exchange Commission's ("SEC") final climate rules and litigation regarding its enforceabilty) 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 three months ended March 31, 2024, THOR’s combined U.S. and Canadian market share was approximately 40.2% for travel trailers and fifth wheels combined and approximately 47.9% 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 three months ended March 31, 2024 was approximately 25.6% for motorcaravans and campervans combined and approximately 17.5% 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 sequence 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 three quarters of fiscal 2024 and are expected to continue to impact the remainder of calendar year 2024. 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. As of April 30, 2024, the Company had made sufficient payments on the U.S term loan tranche to satisfy all annual principal payment requirements on the U.S. term loan over the term of the loan. 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 April 30, 2024 decreased 22.2% to approximately 87,900 units, compared to approximately 113,000 units as of April 30, 2023. As of April 30, 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 unit prices as well as interest rates and other carrying costs.

THOR’s North American RV backlog as of April 30, 2024 decreased $353,067, or 17.5%, to $1,667,131 compared to $2,020,198 as of April 30, 2023. The decrease in backlog is primarily a result of a reduction in orders from dealers, mainly for motorized products, 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 Quarter Ended March 31, 2024 | 2023 | Increase% (Decrease) | Change |
| --- | ---: | ---: | ---: | ---: |
| North American Towable units | 75,525 | 65,208 | 10,317 | 15.8 |
| North American Motorized units | 10,416 | 13,392 | (2,976) | (22.2) |
| Total | 85,941 | 78,600 | 7,341 | 9.3 |

In June 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 301,500 units and 42,500 units, respectively, for an annual total of approximately 344,000 units, up 9.8% from the 2023 calendar year wholesale shipments. The RVIA’s most likely forecast for calendar year 2024 of 344,000 total units could range from a lower estimate of approximately 328,900 total units to an upper estimate of approximately 359,100 total units.

As part of their June 2024 forecast, RVIA also released their initial estimates for calendar year 2025 wholesale unit shipments. In the most likely scenario, towable and motorized shipments are projected to increase to an approximated annual total of 391,400 units, or 13.8% higher than the most likely scenario for calendar year 2024 wholesale shipments. This calendar year 2025 most likely forecast could range from a lower estimate of approximately 374,200 units to an upper estimate of approximately 408,600 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 Quarter Ended March 31, 2024 | 2023 | Increase% (Decrease) | Change |
| --- | ---: | ---: | ---: | ---: |
| North American Towable units | 64,471 | 73,734 | (9,263) | (12.6) |
| North American Motorized units | 9,417 | 10,985 | (1,568) | (14.3) |
| Total | 73,888 | 84,719 | (10,831) | (12.8) |

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.

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. We believe interest remains high due to an ongoing interest in the RV lifestyle 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 quarters ended March 31, 2024 and 2023 to correspond to the North American industry wholesale periods noted above, were as follows:

|  | U.S. and Canada Wholesale Unit Shipments Calendar Quarter Ended March 31, 2024 | 2023 | Increase% (Decrease) | Change |
| --- | ---: | ---: | ---: | ---: |
| North American Towable units | 29,693 | 24,707 | 4,986 | 20.2 |
| North American Motorized units | 4,831 | 5,855 | (1,024) | (17.5) |
| Total | 34,524 | 30,562 | 3,962 | 13.0 |

### Company North American Retail Statistics

Retail statistics of the Company’s North American RV products, as reported by Stat Surveys, for the calendar quarters ended March 31, 2024 and 2023 to correspond to the North American industry retail periods noted above, were as follows:

|  | U.S. and Canada Retail Unit Registrations Calendar Quarter Ended March 31, 2024 | 2023 | Increase% (Decrease) | Change |
| --- | ---: | ---: | ---: | ---: |
| North American Towable units | 25,337 | 30,266 | (4,929) | (16.3) |
| North American Motorized units | 4,515 | 5,267 | (752) | (14.3) |
| Total | 29,852 | 35,533 | (5,681) | (16.0) |

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 calendar year 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 calendar year 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 ongoing 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 resulted in exposing a wider range of consumers to the RV lifestyle. As a result, 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 through these measures.

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 of these 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 22.3% and 9.6% of the caravan and motorcaravan (including campervans) European market for the three months ended March 31, 2024, 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 April 30, 2024 was approximately 24,700 units. Independent RV dealer inventory levels of our European products are generally in line with historic seasonal 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 April 30, 2023.

THOR’s European RV backlog as of April 30, 2024 decreased $1,539,205, or 44.3%, to $1,935,119 compared to $3,474,324 as of April 30, 2023, primarily due to improved chassis supply availability as chassis constraints in the prior year resulted in significantly elevated backlogs as of April 30, 2023.

### 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 Quarter Ended March 31,% 2024 | 2023 | Change | Caravan Calendar Quarter Ended March 31,% 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| OEM Reporting Countries (1) | 35,317 | 33,504 | 5.4 | 10,705 | 11,431 | (6.4) |
| Non-OEM Reporting Countries (1) | 4,982 | 4,359 | 14.3 | 3,840 | 4,140 | (7.2) |
| Total | 40,299 | 37,863 | 6.4 | 14,545 | 15,571 | (6.6) |

(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 Quarter Ended March 31, 2024 | 2023 | Increase% (Decrease) | Change |
| --- | ---: | ---: | ---: | ---: |
| Motorcaravan and Campervan | 9,049 | 6,694 | 2,355 | 35.2 |
| Caravan | 1,874 | 2,057 | (183) | (8.9) |
| Total OEM-Reporting Countries | 10,923 | 8,751 | 2,172 | 24.8 |

(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, 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 April 30, 2024 Compared to the Three Months Ended April 30, 2023

| NET SALES: Recreational vehicles | Three Months Ended April 30, 2024 | Three Months Ended April 30, 2023 | Change Amount | % Change |
| --- | ---: | ---: | ---: | ---: |
| North American Towable | $1,071,393 | $1,124,410 | $(53,017) | (4.7) |
| North American Motorized | 646,948 | 795,940 | (148,992) | (18.7) |
| Total North America | 1,718,341 | 1,920,350 | (202,009) | (10.5) |
| European | 931,061 | 866,751 | 64,310 | 7.4 |
| Total recreational vehicles | 2,649,402 | 2,787,101 | (137,699) | (4.9) |
| Other | 216,227 | 201,164 | 15,063 | 7.5 |
| Intercompany eliminations | (64,516) | (59,445) | (5,071) | (8.5) |
| Total | $2,801,113 | $2,928,820 | $(127,707) | (4.4) |

| # OF UNITS: Recreational vehicles |  |  |  |  |
| --- | ---: | ---: | ---: | ---: |
| North American Towable | 34,193 | 29,716 | 4,477 | 15.1 |
| North American Motorized | 4,964 | 6,203 | (1,239) | (20.0) |
| Total North America | 39,157 | 35,919 | 3,238 | 9.0 |
| European | 15,363 | 15,593 | (230) | (1.5) |
| Total | 54,520 | 51,512 | 3,008 | 5.8 |

| GROSS PROFIT: Recreational vehicles |  | % of Segment Net Sales |  | % of Segment Net Sales | Change Amount | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| North American Towable | $138,103 | 12.9 | $143,988 | 12.8 | $(5,885) | (4.1) |
| North American Motorized | 71,753 | 11.1 | 93,307 | 11.7 | (21,554) | (23.1) |
| Total North America | 209,856 | 12.2 | 237,295 | 12.4 | (27,439) | (11.6) |
| European | 162,915 | 17.5 | 151,780 | 17.5 | 11,135 | 7.3 |
| Total recreational vehicles | 372,771 | 14.1 | 389,075 | 14.0 | (16,304) | (4.2) |
| Other, net | 49,081 | 22.7 | 43,562 | 21.7 | 5,519 | 12.7 |
| Total | $421,852 | 15.1 | $432,637 | 14.8 | $(10,785) | (2.5) |

| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Recreational vehicles |  |  |  |  |  |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| North American Towable | $64,895 | 6.1 | $60,180 | 5.4 | $4,715 | 7.8 |
| North American Motorized | 34,489 | 5.3 | 41,880 | 5.3 | (7,391) | (17.6) |
| Total North America | 99,384 | 5.8 | 102,060 | 5.3 | (2,676) | (2.6) |
| European | 72,167 | 7.8 | 65,065 | 7.5 | 7,102 | 10.9 |
| Total recreational vehicles | 171,551 | 6.5 | 167,125 | 6.0 | 4,426 | 2.6 |
| Other | 19,731 | 9.1 | 15,217 | 7.6 | 4,514 | 29.7 |
| Corporate | 35,233 | — | 27,702 | — | 7,531 | 27.2 |
| Total | $226,515 | 8.1 | $210,044 | 7.2 | $16,471 | 7.8 |

34

| INCOME (LOSS) BEFORE INCOME TAXES: Recreational vehicles | Three Months Ended April 30, 2024 | % of Segment Net Sales | Three Months Ended April 30, 2023 | % of Segment Net Sales | Change Amount | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| North American Towable | $68,409 | 6.4 | $77,583 | 6.9 | $(9,174) | (11.8) |
| North American Motorized | 33,172 | 5.1 | 48,186 | 6.1 | (15,014) | (31.2) |
| Total North America | 101,581 | 5.9 | 125,769 | 6.5 | (24,188) | (19.2) |
| European | 77,382 | 8.3 | 72,401 | 8.4 | 4,981 | 6.9 |
| Total recreational vehicles | 178,963 | 6.8 | 198,170 | 7.1 | (19,207) | (9.7) |
| Other, net | 18,831 | 8.7 | 16,970 | 8.4 | 1,861 | 11.0 |
| Corporate | (55,444) | — | (59,689) | — | 4,245 | 7.1 |
| Total | $142,350 | 5.1 | $155,451 | 5.3 | $(13,101) | (8.4) |

| ORDER BACKLOG: Recreational vehicles | As of April 30, 2024 | As of April 30, 2023 | Change Amount | % Change |
| --- | ---: | ---: | ---: | ---: |
| North American Towable | $741,302 | $757,127 | $(15,825) | (2.1) |
| North American Motorized | 925,829 | 1,263,071 | (337,242) | (26.7) |
| Total North America | 1,667,131 | 2,020,198 | (353,067) | (17.5) |
| European | 1,935,119 | 3,474,324 | (1,539,205) | (44.3) |
| Total | $3,602,250 | $5,494,522 | $(1,892,272) | (34.4) |

### CONSOLIDATED

Consolidated net sales for the three months ended April 30, 2024 decreased $127,707, or 4.4%, compared to the three months ended April 30, 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 motorized market. Approximately 33.2% of the Company’s consolidated net sales for the quarter ended April 30, 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 a nominal increase 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 April 30, 2024 decreased $10,785, or 2.5%, compared to the three months ended April 30, 2023. Consolidated gross profit was 15.1% of consolidated net sales for the three months ended April 30, 2024 and 14.8% for the three months ended April 30, 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 April 30, 2024 increased $16,471, or 7.8%, compared to the three months ended April 30, 2023, primarily due to modest increases in deferred compensation, research and development and settlement costs.

The decrease of $13,101, or 8.4%, in income before income taxes for the three months ended April 30, 2024 as compared to the three months ended April 30, 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 April 30, 2024 was 20.2% compared with 23.0% for the three months ended April 30, 2023. The primary reason for the decrease relates to the favorable impact of the terms of the resolution of certain matters discussed in Note 14 to the Condensed Consolidated Financial Statements during the three months ended April 30, 2024, as the Company expects certain payments made related to these matters to be deductible for tax purposes.

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 $7,531 for the three months ended April 30, 2024 compared to the three months ended April 30, 2023. This increase is primarily due to an increase in deferred compensation expense of $2,922 due to market value fluctuations between the two periods and an increase in innovation-led research and development costs of $3,093.

Net expense in Corporate interest and other income and expense decreased $11,776 for the three months ended April 30, 2024 compared to the three months ended April 30, 2023. This net expense decrease included a decrease in net interest expense of $5,360 on our debt, due to increased interest income received from higher average cash balances held and higher interest income rates combined with lower debt interest expense primarily due to lower average debt balances outstanding. The net expense decrease also includes favorable changes of $2,997 in the fair value of the Company's deferred compensation plan assets and $3,263 in the fair value of certain other equity investments, both due to market value fluctuations between the two periods.

### Segment Reporting

### NORTH AMERICAN TOWABLE RECREATIONAL VEHICLES

Analysis of the change in net sales for the three months ended April 30, 2024 compared to the three months ended April 30, 2023:

| Three Months Ended April 30, 2024 % of Segment Net Sales Three Months Ended April 30, 2023 % of Segment Net Sales NET SALES: North American Towable | Change Amount | % Change |
| --- | ---: | ---: |
| Travel Trailers $720,194 67.2 $679,753 60.5 | $40,441 | 5.9 |
| Fifth Wheels 351,199 32.8 444,657 39.5 | (93,458) | (21.0) |
| Total North American Towable $1,071,393 100.0 $1,124,410 100.0 | $(53,017) | (4.7) |
| **Three Months Ended April 30, 2024** **% of Segment Shipments** **Three Months Ended April 30, 2023** **% of Segment Shipments** | **Change Amount** | **% Change** |
| **# OF UNITS:** |  |  |
| North American Towable |  |  |
| Travel Trailers 28,526 83.4 22,257 74.9 | 6,269 | 28.2 |
| Fifth Wheels 5,667 16.6 7,459 25.1 | (1,792) | (24.0) |
| Total North American Towable 34,193 100.0 29,716 100.0 | 4,477 | 15.1 |
| **IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES:** |  | **% Change** |
| North American Towable |  |  |
| Travel Trailers |  | (22.3) |
| Fifth Wheels |  | 3.0 |
| Total North American Towable |  | (19.8) |

36

The decrease in total North American Towable net sales of 4.7% compared to the prior-year quarter resulted from a 15.1% increase in unit shipments and a 19.8% 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 trailer units, which increased 28.2% over the prior-year quarter. According to statistics published by RVIA, for the three months ended April 30, 2024, combined North American travel trailer and fifth wheel wholesale unit shipments increased 15.5% compared to the same period last year. According to the most recently published statistics from Stat Surveys, for the three months ended March 31, 2024 and 2023, our North American market share for travel trailers and fifth wheels combined was 40.2% 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 decrease in the overall net price per unit within the travel trailer product line of 22.3% was primarily due to the combined impact of sales price reductions due to lower input costs and product mix changes trending toward more moderately-priced units as compared to the prior-year quarter. The increase within the fifth wheel product line of 3.0% was primarily due to product mix changes.

North American Towable cost of products sold decreased $47,132 to $933,290, or 87.1% of North American Towable net sales, for the three months ended April 30, 2024 compared to $980,422, or 87.2% of North American Towable net sales, for the three months ended April 30, 2023. Changes in material, labor, freight-out and warranty costs comprised $44,186 of the $47,132 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 79.6% for the three months ended April 30, 2024 compared to 79.8% for the three months ended April 30, 2023, primarily due to a decrease in the material costs percentage from the combined net favorable impacts of lower discounting, cost-saving initiatives and product mix changes being partially offset by an increase in the labor percentage.

Total manufacturing overhead decreased $2,946 in correlation with the decrease in net sales but increased slightly as a percentage of North American Towable net sales from 7.4% to 7.5% as the decreased net sales levels resulted in higher overhead costs per unit sold.

The slight decrease in North American Towable gross profit of $5,885 for the three months ended April 30, 2024 compared to the three months ended April 30, 2023 was due to the decrease in net sales.

The increase in North American Towable selling, general and administrative expenses of $4,715 for the three months ended April 30, 2024 compared to the three months ended April 30, 2023 is primarily due to an increase in legal and professional fees and settlement costs of $3,495 and compensation costs of $3,211, partially offset by a reduction in sales-related travel and entertainment costs of $1,152. 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 and the cost increases noted above.

The decrease in North American Towable income before income taxes of $9,174 for the three months ended April 30, 2024 compared to the three months ended April 30, 2023 was primarily attributable to the decrease in North American Towable net sales, and the primary reason for the decrease in percentage was the increase in the selling, general and administrative expense percentage noted above.

### NORTH AMERICAN MOTORIZED RECREATIONAL VEHICLES

Analysis of the change in net sales for the three months ended April 30, 2024 compared to the three months ended April 30, 2023:

| Three Months Ended April 30, 2024 % of Segment Net Sales Three Months Ended April 30, 2023 % of Segment Net Sales NET SALES: North American Motorized | Change Amount | % Change |
| --- | ---: | ---: |
| Class A $211,340 32.7 $238,972 30.0 | $(27,632) | (11.6) |
| Class C 312,980 48.4 390,839 49.1 | (77,859) | (19.9) |
| Class B 122,628 18.9 166,129 20.9 | (43,501) | (26.2) |
| Total North American Motorized $646,948 100.0 $795,940 100.0 | $(148,992) | (18.7) |
| **Three Months Ended April 30, 2024** **% of Segment Shipments** **Three Months Ended April 30, 2023** **% of Segment Shipments** | **Change Amount** | **% Change** |
| **# OF UNITS:** |  |  |
| North American Motorized |  |  |
| Class A 1,040 21.0 1,206 19.4 | (166) | (13.8) |
| Class C 2,867 57.8 3,563 57.4 | (696) | (19.5) |
| Class B 1,057 21.2 1,434 23.2 | (377) | (26.3) |
| Total North American Motorized 4,964 100.0 6,203 100.0 | (1,239) | (20.0) |
| **IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES:** |  | **% Change** |
| North American Motorized |  |  |
| Class A |  | 2.2 |
| Class C |  | (0.4) |
| Class B |  | 0.1 |
| Total North American Motorized |  | 1.3 |

The decrease in total North American Motorized net sales of 18.7% compared to the prior-year quarter resulted from a 20.0% decrease in unit shipments and a 1.3% increase 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. According to statistics published by RVIA, for the three months ended April 30, 2024, combined North American motorhome wholesale unit shipments decreased 19.9% compared to the same period last year. According to the most recently published statistics from Stat Surveys, for the three months ended March 31, 2024 and 2023, our North American market share for motorhomes was 47.9% 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 increases in the overall net price per unit within the Class A product line of 2.2% and the Class B product line of 0.1% were primarily due to increases from product mix changes and selling price increases being mostly offset by higher discounting levels since the prior-year quarter. The decrease in the overall net price per unit within the Class C product line of 0.4% was primarily due to higher discounting levels.

North American Motorized cost of products sold decreased $127,438 to $575,195, or 88.9% of North American Motorized net sales, for the three months ended April 30, 2024 compared to $702,633, or 88.3% of North American Motorized net sales, for the three months ended April 30, 2023. The changes in material, labor, freight-out and warranty costs comprised $118,533 of the $127,438 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 83.1% for the three months ended April 30, 2024 compared to 82.5% for the three months ended April 30, 2023, with the increase mainly due to an increase in the material cost percentage, primarily due to higher sales discounting effectively decreasing net selling prices and correspondingly increasing the material cost percentage, partially offset by a decrease in the labor percentage.

Total manufacturing overhead decreased $8,905 in correlation with the net sales decrease but was consistent as a percentage of North American Motorized at 5.8% for both periods.

The decrease in North American Motorized gross profit of $21,554 for the three months ended April 30, 2024 compared to the three months ended April 30, 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 $7,391 for the three months ended April 30, 2024 compared to the three months ended April 30, 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 $7,822. Selling, general and administrative expense as a percentage of North American Motorized net sales was consistent with the prior year.

The decrease in North American Motorized income before income taxes of $15,014 for the three months ended April 30, 2024 compared to the three months ended April 30, 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 and an increase in amortization expense as a percentage of net sales.

### EUROPEAN RECREATIONAL VEHICLES

Analysis of the change in net sales for the three months ended April 30, 2024 compared to the three months ended April 30, 2023:

| NET SALES: European | Three Months Ended April 30, 2024 | % of Segment Net Sales | Three Months Ended April 30, 2023 | % of Segment Net Sales | Change Amount | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Motorcaravan | $492,490 | 52.9 | $394,359 | 45.5 | $98,131 | 24.9 |
| Campervan | 289,450 | 31.1 | 282,415 | 32.6 | 7,035 | 2.5 |
| Caravan | 64,379 | 6.9 | 116,412 | 13.4 | (52,033) | (44.7) |
| Other | 84,742 | 9.1 | 73,565 | 8.5 | 11,177 | 15.2 |
| Total European | $931,061 | 100.0 | $866,751 | 100.0 | $64,310 | 7.4 |
|  | **Three Months Ended April 30, 2024** | **% of Segment Shipments** | **Three Months Ended April 30, 2023** | **% of Segment Shipments** | **Change Amount** | **% Change** |
| **# OF UNITS:** |  |  |  |  |  |  |
| European |  |  |  |  |  |  |
| Motorcaravan | 6,601 | 43.0 | 5,339 | 34.2 | 1,262 | 23.6 |
| Campervan | 6,194 | 40.3 | 5,694 | 36.5 | 500 | 8.8 |
| Caravan | 2,568 | 16.7 | 4,560 | 29.3 | (1,992) | (43.7) |
| Total European | 15,363 | 100.0 | 15,593 | 100.0 | (230) | (1.5) |

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

| European | Foreign Currency % | Mix and Price % | % Change |
| --- | ---: | ---: | ---: |
| Motorcaravan | 0.0 | 1.3 | 1.3 |
| Campervan | 0.0 | (6.3) | (6.3) |
| Caravan | 0.0 | (1.0) | (1.0) |
| Total European | 0.0 | 8.9 | 8.9 |

The increase in total European Recreational Vehicle net sales of 7.4% compared to the prior-year quarter resulted from a 1.5% decrease in unit shipments and an 8.9% 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 $64,310 includes no change due to foreign exchange rates since the prior-year quarter.

The overall net price per unit increase of 8.9% includes no impact of foreign currency exchange rate changes and an 8.9% constant-currency 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 6.3% and the Caravan product line of 1.0% 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 $53,175 to $768,146, or 82.5% of European Recreational Vehicle net sales, for the three months ended April 30, 2024 compared to $714,971, or 82.5% of European Recreational Vehicle net sales, for the three months ended April 30, 2023. Changes in material, labor, freight-out and warranty costs comprised $45,667 of the $53,175 increase. Material, labor, freight-out and warranty costs as a combined percentage of European Recreational Vehicle net sales decreased to 72.9% for the three months ended April 30, 2024 compared to 73.0% for the three months ended April 30, 2023, with the slight decrease due to improved labor and warranty cost percentages being mostly offset by an increase in the material cost percentage due to increased sales discounting. Total manufacturing overhead increased $7,508 with the increase in net sales and increased slightly as a percentage of European Recreational Vehicle net sales from 9.5% to 9.6%.

European Recreational Vehicle gross profit increased $11,135 for the three months ended April 30, 2024 compared to the three months ended April 30, 2023 primarily due to the increase in European Recreational Vehicle net sales, and the gross profit percentage remained consistent with the prior-year quarter.

European Recreational Vehicle selling, general and administrative expenses increased $7,102 for the three months ended April 30, 2024 compared to the three months ended April 30, 2023 and included an increase in sales-related travel, advertising and promotional costs of $1,235 in correlation with the increase in European Recreational Vehicle net sales, and an increase of $1,798 in professional fees. The increase in European Recreational Vehicle net sales and income before income taxes also caused related commissions, incentive and other compensation to increase by $1,022. The increase in the overall selling, general and administrative expense as a percentage of European Recreational Vehicle net sales is primarily due to the increase in professional fees noted above.

The increase in European Recreational Vehicle income before income taxes of $4,981 for the three months ended April 30, 2024 compared to the three months ended April 30, 2023 was primarily due to the increase in European Recreational Vehicle net sales. The primary reason for the slight decrease in percentage was the increase in the selling, general and administrative expense percentage noted above.

### Nine Months Ended April 30, 2024 Compared to the Nine Months Ended April 30, 2023

| NET SALES: Recreational vehicles | Nine Months Ended April 30, 2024 | Nine Months Ended April 30, 2023 | Change Amount | % Change |
| --- | ---: | ---: | ---: | ---: |
| North American Towable | $2,747,815 | $3,271,967 | $(524,152) | (16.0) |
| North American Motorized | 1,928,531 | 2,658,042 | (729,511) | (27.4) |
| Total North America | 4,676,346 | 5,930,009 | (1,253,663) | (21.1) |
| European | 2,421,556 | 2,017,991 | 403,565 | 20.0 |
| Total recreational vehicles | 7,097,902 | 7,948,000 | (850,098) | (10.7) |
| Other | 581,682 | 598,671 | (16,989) | (2.8) |
| Intercompany eliminations | (170,343) | (163,132) | (7,211) | (4.4) |
| Total | $7,509,241 | $8,383,539 | $(874,298) | (10.4) |

| # OF UNITS: Recreational vehicles |  |  |  |  |
| --- | ---: | ---: | ---: | ---: |
| North American Towable | 84,258 | 81,941 | 2,317 | 2.8 |
| North American Motorized | 14,984 | 19,791 | (4,807) | (24.3) |
| Total North America | 99,242 | 101,732 | (2,490) | (2.4) |
| European | 40,335 | 38,131 | 2,204 | 5.8 |
| Total | 139,577 | 139,863 | (286) | (0.2) |

| GROSS PROFIT: Recreational vehicles |  | % of Segment Net Sales |  | % of Segment Net Sales | Change Amount | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| North American Towable | $310,011 | 11.3 | $392,717 | 12.0 | $(82,706) | (21.1) |
| North American Motorized | 211,866 | 11.0 | 386,254 | 14.5 | (174,388) | (45.1) |
| Total North America | 521,877 | 11.2 | 778,971 | 13.1 | (257,094) | (33.0) |
| European | 405,068 | 16.7 | 312,075 | 15.5 | 92,993 | 29.8 |
| Total recreational vehicles | 926,945 | 13.1 | 1,091,046 | 13.7 | (164,101) | (15.0) |
| Other, net | 123,686 | 21.3 | 111,002 | 18.5 | 12,684 | 11.4 |
| Total | $1,050,631 | 14.0 | $1,202,048 | 14.3 | $(151,417) | (12.6) |

| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Recreational vehicles |  |  |  |  |  |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| North American Towable | $184,717 | 6.7 | $192,181 | 5.9 | $(7,464) | (3.9) |
| North American Motorized | 103,756 | 5.4 | 142,475 | 5.4 | (38,719) | (27.2) |
| Total North America | 288,473 | 6.2 | 334,656 | 5.6 | (46,183) | (13.8) |
| European | 221,119 | 9.1 | 192,942 | 9.6 | 28,177 | 14.6 |
| Total recreational vehicles | 509,592 | 7.2 | 527,598 | 6.6 | (18,006) | (3.4) |
| Other | 56,549 | 9.7 | 50,592 | 8.5 | 5,957 | 11.8 |
| Corporate | 98,395 | — | 82,221 | — | 16,174 | 19.7 |
| Total | $664,536 | 8.8 | $660,411 | 7.9 | $4,125 | 0.6 |

42

| INCOME (LOSS) BEFORE INCOME TAXES: Recreational vehicles | Nine Months Ended April 30, 2024 | % of Segment Net Sales | Nine Months Ended April 30, 2023 | % of Segment Net Sales | Change Amount | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| North American Towable | $118,319 | 4.3 | $181,471 | 5.5 | $(63,152) | (34.8) |
| North American Motorized | 96,684 | 5.0 | 234,163 | 8.8 | (137,479) | (58.7) |
| Total North America | 215,003 | 4.6 | 415,634 | 7.0 | (200,631) | (48.3) |
| European | 144,206 | 6.0 | 77,948 | 3.9 | 66,258 | 85.0 |
| Total recreational vehicles | 359,209 | 5.1 | 493,582 | 6.2 | (134,373) | (27.2) |
| Other, net | 35,650 | 6.1 | 30,004 | 5.0 | 5,646 | 18.8 |
| Corporate | (173,033) | — | (156,146) | — | (16,887) | (10.8) |
| Total | $221,826 | 3.0 | $367,440 | 4.4 | $(145,614) | (39.6) |

### CONSOLIDATED

Consolidated net sales for the nine months ended April 30, 2024 decreased $874,298, or 10.4%, compared to the nine months ended April 30, 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 32.2% of the Company’s net sales for the nine months ended April 30, 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 $77,181 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 nine months ended April 30, 2024 decreased $151,417 compared to the nine months ended April 30, 2023. Consolidated gross profit was 14.0% of consolidated net sales for the nine months ended April 30, 2024 and 14.3% for the nine months ended April 30, 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 and an increase in sales discounting.

Selling, general and administrative expenses for the nine months ended April 30, 2024 increased $4,125, or 0.6%, compared to the nine months ended April 30, 2023, which included decreases due to the 10.4% decrease in consolidated net sales and the decrease in income before income taxes, which resulted in lower commissions and other incentive compensation, 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. These decreases were more than offset by other cost increases, which included third-party fees related to the debt refinancing in the second quarter of fiscal 2024, research and development costs, dealer settlement and repurchase costs as well as increased advertising and promotion costs.

The decrease of $145,614, or 39.6%, in income before income taxes for the nine months ended April 30, 2024 compared to the nine months ended April 30, 2023 was primarily driven by the decrease in consolidated net sales noted above.

The overall effective income tax rate for the nine months ended April 30, 2024 was 21.6% compared with 23.0% for the nine months ended April 30, 2023. The primary reason for the decrease relates to the favorable impact of the terms of the resolution of certain matters discussed in Note 14 to the Condensed Consolidated Financial Statements during the nine months ended April 30, 2024, as the Company expects certain payments made related to these matters to be deductible for tax purposes.

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 $16,174 increase in Corporate costs included in selling, general and administrative expenses for the nine months ended April 30, 2024 compared to the nine months ended April 30, 2023 includes an increase of $9,112 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 $16,174 increase also includes an increase in deferred compensation expense of $6,606 due to market value fluctuations between the two periods, an increase in innovation-led research and development costs of $7,260 and an increase in stock-based and other compensation costs of $6,479. These increases were partially offset by income of $16,900 related to the legal and recall matters discussed in Note 14 to the Condensed Consolidated Financial Statements.

The $713 increase in net expense in Corporate interest and other income and expense for the nine months ended April 30, 2024 compared to the nine months ended April 30, 2023 includes a decrease of $10,009 in non-cash foreign currency gains on certain Euro-denominated loans in the current-year period as compared to the prior-year period. In addition, operating losses related to our Roadpass Digital joint venture as discussed in Note 8 to the Condensed Consolidated Financial Statements were $6,282 larger in the current-year period as compared to the prior-year period, primarily due to the current period including nine months of results as compared to four months in the prior-year period. These net expense increases were mostly offset by favorable changes of $6,223 in the fair value of the Company's deferred compensation plan assets and $4,599 in the fair value of certain other equity investments, both due to market value fluctuations between the two periods. Net interest expense also decreased by $7,856, in spite of the one-time debt refinancing fees incurred in the second quarter of fiscal 2024, due to increased interest income received from higher average cash balances held and higher interest income rates combined with 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 nine months ended April 30, 2024 compared to the nine months ended April 30, 2023:

| Nine Months Ended April 30, 2024 % of Segment Net Sales Nine Months Ended April 30, 2023 % of Segment Net Sales NET SALES: North American Towable | Change Amount | % Change |
| --- | ---: | ---: |
| Travel Trailers $1,811,215 65.9 $2,030,451 62.1 | $(219,236) | (10.8) |
| Fifth Wheels 936,600 34.1 1,241,516 37.9 | (304,916) | (24.6) |
| Total North American Towable $2,747,815 100.0 $3,271,967 100.0 | $(524,152) | (16.0) |
| **Nine Months Ended April 30, 2024** **% of Segment Shipments** **Nine Months Ended April 30, 2023** **% of Segment Shipments** | **Change Amount** | **% Change** |
| **# OF UNITS:** |  |  |
| North American Towable |  |  |
| Travel Trailers 68,808 81.7 63,106 77.0 | 5,702 | 9.0 |
| Fifth Wheels 15,450 18.3 18,835 23.0 | (3,385) | (18.0) |
| Total North American Towable 84,258 100.0 81,941 100.0 | 2,317 | 2.8 |
| **IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES:** |  | **% Change** |
| North American Towable |  |  |
| Travel Trailers |  | (19.8) |
| Fifth Wheels |  | (6.6) |
| Total North American Towable |  | (18.8) |

44

The decrease in total North American Towable net sales of 16.0% compared to the prior-year period resulted from a 2.8% increase in unit shipments and a 18.8% 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 recent heightened seasonal demand for the lower cost travel trailer units as compared to the prior-year period. According to statistics published by RVIA, for the nine months ended April 30, 2024, combined North American travel trailer and fifth wheel wholesale unit shipments increased 5.5% compared to the same period last year. According to the most recently published statistics from Stat Surveys, for the nine-month periods ended March 31, 2024 and 2023, our North American market share for travel trailers and fifth wheels combined was 40.5% and 42.1%, respectively. Comparisons of Company shipments to industry shipments on an interim 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 19.8% and the fifth wheel product line of 6.6% 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 $441,446 to $2,437,804, or 88.7% of North American Towable net sales, for the nine months ended April 30, 2024 compared to $2,879,250, or 88.0% of North American Towable net sales, for the nine months ended April 30, 2023. Changes in material, labor, freight-out and warranty costs comprised $421,175 of the $441,446 decrease in cost of products sold. Material, labor, freight-out and warranty costs as a combined percentage of North American Towable net sales were 80.4% for the nine months ended April 30, 2024 compared to the same 80.4% for the nine months ended April 30, 2023, as a decrease in the material cost percentage was offset by modest increases in the labor and warranty percentages. Total manufacturing overhead decreased $20,271 in correlation with the decrease in sales but increased as a percentage of North American Towable net sales from 7.6% to 8.3%, as the decreased net sales levels resulted in higher overhead costs per unit sold.

The decrease of $82,706 in North American Towable gross profit for the nine months ended April 30, 2024 compared to the nine months ended April 30, 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 $7,464 in North American Towable selling, general and administrative expenses for the nine months ended April 30, 2024 compared to the nine months ended April 30, 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 $13,827. These decreases were mostly offset by an increase of $10,985 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 $63,152 in North American Towable income before income taxes for the nine months ended April 30, 2024 compared to the nine months ended April 30, 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 nine months ended April 30, 2024 compared to the nine months ended April 30, 2023:

| Nine Months Ended April 30, 2024 % of Segment Net Sales Nine Months Ended April 30, 2023 % of Segment Net Sales NET SALES: North American Motorized | Change Amount | % Change |
| --- | ---: | ---: |
| Class A $597,559 31.0 $887,678 33.4 | $(290,119) | (32.7) |
| Class C 922,388 47.8 1,216,537 45.8 | (294,149) | (24.2) |
| Class B 408,584 21.2 553,827 20.8 | (145,243) | (26.2) |
| Total North American Motorized $1,928,531 100.0 $2,658,042 100.0 | $(729,511) | (27.4) |
| **Nine Months Ended April 30, 2024** **% of Segment Shipments** **Nine Months Ended April 30, 2023** **% of Segment Shipments** | **Change Amount** | **% Change** |
| **# OF UNITS:** |  |  |
| North American Motorized |  |  |
| Class A 2,995 20.0 4,326 21.9 | (1,331) | (30.8) |
| Class C 8,451 56.4 10,844 54.8 | (2,393) | (22.1) |
| Class B 3,538 23.6 4,621 23.3 | (1,083) | (23.4) |
| Total North American Motorized 14,984 100.0 19,791 100.0 | (4,807) | (24.3) |
| **IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES:** |  | **% Change** |
| North American Motorized |  |  |
| Class A |  | (1.9) |
| Class C |  | (2.1) |
| Class B |  | (2.8) |
| Total North American Motorized |  | (3.1) |

The decrease in total North American Motorized net sales of 27.4% compared to the prior-year period resulted from a 24.3% decrease in unit shipments and a 3.1% 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 nine months ended April 30, 2024, combined North American motorhome wholesale unit shipments decreased 23.8% compared to the same period last year. According to statistics published by Stat Surveys, for the nine-month periods ended March 31, 2024 and 2023, our North American market share for motorhomes was 48.2% and 47.4%, respectively. Comparisons of Company shipments to industry shipments on an interim 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 1.9%, the Class C product line of 2.1% and the Class B product line of 2.8% 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 $555,123 to $1,716,665, or 89.0% of North American Motorized net sales, for the nine months ended April 30, 2024 compared to $2,271,788, or 85.5% of North American Motorized net sales, for the nine months ended April 30, 2023. Changes in material, labor, freight-out and warranty costs comprised $524,625 of the $555,123 decrease. Material, labor, freight-out and warranty costs as a combined percentage of North American Motorized net sales increased to 82.9% for the nine months ended April 30, 2024 compared to 79.9% for the nine months ended April 30, 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 $30,498 with the decrease in net sales but increased as a percentage of North American Motorized net sales from 5.6% to 6.1% as the decrease in net sales levels resulted in higher overhead costs per unit sold.

The decrease of $174,388 in North American Motorized gross profit for the nine months ended April 30, 2024 compared to the nine months ended April 30, 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 $38,719 in North American Motorized selling, general and administrative expenses for the nine months ended April 30, 2024 compared to the nine months ended April 30, 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 $38,584.

The decrease of $137,479 in North American Motorized income before income taxes for the nine months ended April 30, 2024 compared to the nine months ended April 30, 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 nine months ended April 30, 2024 compared to the nine months ended April 30, 2023:

| NET SALES: European | Nine Months Ended April 30, 2024 | % of Segment Net Sales | Nine Months Ended April 30, 2023 | % of Segment Net Sales | Change Amount | % Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Motorcaravan | $1,263,814 | 52.2 | $901,926 | 44.7 | $361,888 | 40.1 |
| Campervan | 755,783 | 31.2 | 648,717 | 32.1 | 107,066 | 16.5 |
| Caravan | 180,093 | 7.4 | 272,521 | 13.5 | (92,428) | (33.9) |
| Other | 221,866 | 9.2 | 194,827 | 9.7 | 27,039 | 13.9 |
| Total European | $2,421,556 | 100.0 | $2,017,991 | 100.0 | $403,565 | 20.0 |
|  | **Nine Months Ended April 30, 2024** | **% of Segment Shipments** | **Nine Months Ended April 30, 2023** | **% of Segment Shipments** | **Change Amount** | **% Change** |
| **# OF UNITS:** |  |  |  |  |  |  |
| European |  |  |  |  |  |  |
| Motorcaravan | 16,714 | 41.4 | 12,523 | 32.8 | 4,191 | 33.5 |
| Campervan | 16,316 | 40.5 | 13,853 | 36.3 | 2,463 | 17.8 |
| Caravan | 7,305 | 18.1 | 11,755 | 30.9 | (4,450) | (37.9) |
| Total European | 40,335 | 100.0 | 38,131 | 100.0 | 2,204 | 5.8 |

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

| European | Foreign Currency % | Mix and Price % | % Change |
| --- | ---: | ---: | ---: |
| Motorcaravan | 3.8 | 2.8 | 6.6 |
| Campervan | 3.8 | (5.1) | (1.3) |
| Caravan | 3.8 | 0.2 | 4.0 |
| Total European | 3.8 | 10.4 | 14.2 |

The increase in total European Recreational Vehicle net sales of 20.0% compared to the prior-year period resulted from increases of 5.8% in unit shipments and 14.2% 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 $403,565 includes an increase of $77,181, or 3.8% of the 20.0% increase, due to the increase in foreign exchange rates since the prior-year period. Sales on a constant-currency basis increased by 16.2%.

The overall net price per unit increase of 14.2% includes an increase of 3.8% due to the impact of foreign currency exchange rate changes and a constant-currency increase of 10.4% 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 2.8% and the Caravan product line of 0.2% 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 5.1% was primarily due to the impact of product mix changes and increased sales discounting. In addition, the current-year period 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 $310,572 to $2,016,488, or 83.3% of European Recreational Vehicle net sales, for the nine months ended April 30, 2024 compared to $1,705,916, or 84.5% of European Recreational Vehicle net sales, for the nine months ended April 30, 2023. Changes in material, labor, freight-out and warranty costs comprised $268,517 of the $310,572 increase. Material, labor, freight-out and warranty costs as a combined percentage of European Recreational Vehicle net sales decreased to 72.7% for the nine months ended April 30, 2024 compared to 73.9% for the nine months ended April 30, 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 and warranty cost percentages also improved. Total manufacturing overhead increased with the increase in European Recreational Vehicle net sales but remained consistent as a percentage of European Recreational Vehicle net sales at 10.6% for both periods.

The increase of $92,993 in European Recreational Vehicle gross profit for the nine months ended April 30, 2024 compared to the nine months ended April 30, 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 $28,177 in European Recreational Vehicle selling, general and administrative expenses for the nine months ended April 30, 2024 compared to the nine months ended April 30, 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 $8,403. Sales-related travel and advertising and promotional costs also increased $10,163, primarily due to increased display space at the annual Dusseldorf show and attending more regional shows in comparison to the prior-year period. An increase in the foreign exchange rates in the current period as compared to the prior-year period also contributed to the overall increase.

The increase of $66,258 in European Recreational Vehicle income before income taxes for the nine months ended April 30, 2024 compared to the nine months ended April 30, 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 in the current year compared to the prior-year period.

### Liquidity and Capital Resources

As of April 30, 2024, we had $371,819 in cash and cash equivalents, of which $264,541 was held in the U.S. and the equivalent of $107,278, 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 $69,413 decrease in cash and cash equivalents are described in more detail below, but the decrease was primarily attributable to cash provided by operations of $207,532 being more than offset by cash used in investing activities of $102,889 and cash used in financing activities of $173,327.

Net working capital at April 30, 2024 was $1,131,154 compared to $1,077,098 at July 31, 2023. Capital expenditures of $106,069 for the nine months ended April 30, 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 $998,000 at April 30, 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 $35,000, 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 provided by operating activities for the nine months ended April 30, 2024 was $207,532 as compared to net cash provided by operating activities of $474,120 for the nine months ended April 30, 2023.

For the nine months ended April 30, 2024, net income adjusted for non-cash items (primarily depreciation, amortization of intangibles and stock-based compensation) provided $392,784 of operating cash. The change in net working capital resulted in a net use of $185,252 of operating cash during that period, primarily due to a seasonal increase in trade accounts receivable, required income tax payments during the period exceeding the income tax provision for the period, and a decrease in certain accrued liabilities as a result of the reduction in sales and production when compared to the prior-year period.

For the nine months ended April 30, 2023, net income adjusted for non-cash items (primarily depreciation, amortization of intangibles and stock-based compensation) provided $511,534 of operating cash. The change in working capital resulted in the use of $37,414 of operating cash during that period.

### Investing Activities

Net cash used in investing activities for the nine months ended April 30, 2024 was $102,889, primarily due to capital expenditures of $106,069.

Net cash used in investing activities for the nine months ended April 30, 2023 was $171,562, primarily due to capital expenditures of $150,466.

### Financing Activities

Net cash used in financing activities for the nine months ended April 30, 2024 was $173,327, which included borrowings of $113,502 on the asset-based credit facility for temporary working capital needs and subsequent payments of $111,555 on the asset-based credit facility. In addition, borrowings of $186,723 were made in connection with the debt refinancing as discussed in Note 12 to the Condensed Consolidated Financial Statements, and payments totaling $227,626 were made on the term-loan credit facilities, of which $127,626 was paid in connection with the debt refinancing. Treasury share repurchases of $43,034 were made and regular quarterly dividend payments of $0.48 per share for each of the first three quarters of fiscal 2024 were also made totaling $76,730.

Net cash used in financing activities for the nine months ended April 30, 2023 was $266,068, including payments of $50,000 on the asset-based credit facility and $102,355 on the term-loan credit facilities, in addition to treasury share repurchases of $42,007. Regular quarterly dividend payments of $0.45 per share for each of the first three quarters of fiscal 2023 were also made totaling $71,978.

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, 1,364 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 $413,795 of debt denominated in Euros at April 30, 2024. A hypothetical 10% change in the Euro/U.S. Dollar exchange rate would change our April 30, 2024 debt balance by approximately $41,380.

**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 13.1% of our weighted-average interest rate at April 30, 2024) would result in an estimated $7,112 reduction in income before income taxes over a one-year period.

## Controls and procedures

As filed, 1,723 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 April 30, 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 Jun 5, 2024.
Source: SEC EDGAR, the filing index for accession 0000730263-24-000006. Last ingested by Listed: Nov 3, 2026, 13:07 ET. No prices; not investment advice.