Thor Industries Inc: Form 10-Q for the period ended Oct 31, 2025

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, including the impact of tariffs, 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 or market share while also managing associated costs, including labor-related costs and production capacity costs;
• the level and magnitude of warranty and recall claims incurred;
• the ability of our suppliers to financially support any defects in their products;
• the financial health of our independent dealers and their ability to successfully manage through various economic conditions;
• legislative, trade, regulatory and tax law 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 audits or 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;
• the ability to realize anticipated benefits of strategic realignments or other reorganizational actions;
• the level of 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;
• 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, including confidential and personal information, 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 adverse weather conditions and/or weather-related events;
• the impact of changing emissions and other related climate change regulations in the various jurisdictions in which our products are produced, used and/or sold;
• changes to our investment and capital allocation strategies or other facets of our strategic plan; and
• changes in market liquidity conditions, credit ratings and other factors that may impact our access to future funding and the cost of debt.

These and other risks and uncertainties are discussed more fully in Item 1A of our Annual Report on Form 10-K for the year ended July 31, 2025.

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 nine months ended September 30, 2025, THOR’s current combined U.S. and Canadian market share based on units sold was approximately 39.1% for travel trailers and fifth wheels combined and approximately 47.9% for motorhomes. In Europe, according to the European Caravan Federation (“ECF”), our European market share for the nine months ended September 30, 2025 based on units sold was approximately 26.3% for motorcaravans and campervans combined and approximately 17.2% for caravans.

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 October 31, 2025 decreased 5.5% to approximately 70,900 units, compared to approximately 75,000 units as of October 31, 2024.

As of October 31, 2025, we believe North American dealer inventory levels for most products are generally in line with 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 current retail activity, current RV wholesale prices as well as current interest rates and other carrying costs.

THOR’s North American RV backlog as of October 31, 2025 increased $36,333, or 1.9%, to $1,932,525 compared to $1,896,192 as of October 31, 2024. The increase in backlog is primarily a result of an increase in year-over-year orders for motorized products, due in part to our multiple price-conscious product offerings as well as new product introductions since the prior year. The increase in the North American Motorized backlog was partially offset by a decrease in North American Towable backlog.

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:

In early December 2025, RVIA issued a revised forecast for calendar year 2025 North American wholesale unit shipments. Under RVIA’s most likely scenario, towable and motorized unit shipments are projected to be approximately 304,000 units and 35,700 units, respectively, for a 2025 calendar year total of approximately 339,700 units, up 1.8% from the 2024 calendar year wholesale shipments. According to RVIA, the most likely forecast for calendar year 2025 could range from a lower estimate of approximately 334,000 total units to an upper estimate of approximately 345,400 total units.

As part of their December 2025 forecast, RVIA also issued a revised forecast for calendar year 2026 wholesale unit shipments. In the most likely scenario, towable and motorized unit shipments are projected to increase to an approximated annual total of 349,000 units, or approximately 2.8% higher than the most likely scenario for calendar year 2025 wholesale shipments. This calendar year 2026 most likely forecast could range from a lower estimate of approximately 332,100 total units to an upper estimate of approximately 366,000 total units.

North American Industry Retail Statistics

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

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

We 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 grow from the current levels as consumer confidence and general economic conditions improve, as we believe interest in the RV lifestyle remains high 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 nine-month periods ended September 30, 2025 and 2024 to correspond to the North American industry wholesale periods noted above, were as follows:

Company North American Retail Statistics

Retail statistics of the Company’s North American RV products, as reported by Stat Surveys, for the nine-month periods ended September 30, 2025 and 2024 to correspond to the North American industry retail periods noted above, were as follows:

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 level of consumer confidence, the rate of unemployment, the rate of inflation, 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 fiscal 2026. In addition, due to inflationary pressures, including the impact of ongoing tariff changes, current 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, particularly in the fall and winter months which historically are lower retail sales periods. 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 2025 and the early part of calendar 2026 will continue to be negatively impacted by these factors.

Despite the continuing near-term challenges, we remain optimistic about the future of 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 calendar year 2020 through early calendar year 2023 resulted in exposing a wider range of consumers to the RV lifestyle. As a result, we believe many of those who have been exposed to the industry for the first time will become future owners once general economic conditions improve, 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 committed future 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. We are closely monitoring the imposition and effect of new or changing U.S. tariffs on imports, as well as retaliatory tariffs or other measures certain other countries have already or may impose on U.S. imports, that may increase our material costs, disrupt our supply of materials or negatively impact our sales into other countries. We are currently uncertain as to the ultimate impact these measures may have given the rapidly changing environment surrounding tariffs and other related political topics. The impact of increased or new tariffs on our fiscal 2026 first quarter results was relatively modest due to the timing of, and changes in, both the announced tariff rates and effective dates and our engagement with our vendors regarding the extent and timing of any resultant cost increases. We would expect potential additional tariff impacts on our remaining fiscal 2026 results, but it is difficult to assess the ultimate impact they may have given the ongoing changes in tariff rates, what components will be impacted and when, plus the fact that we are often not importing products or components directly but rather through third-party vendors and therefore do not have complete visibility regarding the timing or impact on the pricing of components we purchase. We intend to continue negotiations with our vendors regarding the timing and extent of any tariff pass-through costs, and where possible, will seek alternative supply sources with lower-priced components.

Historically, we have generally been able to offset net cost increases over time, but given the size and nature of the tariffs implemented in calendar 2025 or currently in the process of being implemented and future tariffs being discussed, it may not be possible or desirable for us to pass on the full impact of tariff increases immediately as we are conscious of the impact it likely would have on the retail consumer and their demand for our products.

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, especially when considering the impact tariffs or supply chain constraints may have on the availability of goods. 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. Uncertainties related to changing state and federal emission standards may also negatively impact the availability of chassis used in our production of certain North American motorized RVs and could also impact consumer buying patterns. 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, but that could change quickly, and with little advance notice, given the current and potential future impact tariffs and other macroeconomic or political factors may have on supply. 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 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 15.9% and 10.0% of the caravan and motorcaravan (including campervans) European market for the nine months ended September 30, 2025, 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 October 31, 2025 decreased 9.8% to approximately 22,900 units as compared to approximately 25,400 units as of October 31, 2024. In both Germany, which accounts for approximately 60% of our European product sales, and in the other various countries we serve, independent RV dealer inventory levels of our motorized and campervan European products are generally in line with historic seasonal levels, while urban vehicle and towable inventory remains slightly elevated, but improving.

THOR’s European Recreational Vehicle backlog as of October 31, 2025 decreased $113,173, or 5.5%, to $1,930,463 compared to $2,043,636 as of October 31, 2024, primarily due to improved chassis supply availability and a return to more normalized dealer inventory levels as of October 31, 2025.

European Industry Retail Statistics

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

(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)

(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 adjustments, 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 assistance 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, 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. 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. While confidence remains in our customer base, in the short term, we expect to experience stable market volume but ongoing pressure on overall sales prices due to the current economic environment. Our long-term outlook for future growth in European RV retail sales remains optimistic due to favorable demographic trends and as more people utilize 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 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 major industry fair, the 2025 Caravan Salon show in September 2025, experienced near-record attendance, which demonstrates the continued high level of interest in the RV lifestyle. 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. Labor agreements and various governmental regulations are primary drivers in the cost of our labor force and impact how and when we can adjust our labor force to align with changing production needs. Adjusting our full-time workforce downwards in most of the locations where we operate in Europe generally results in negotiated separation costs, which may be material depending on the size of the workforce reduction. Material and labor costs are the primary factors determining our cost of products sold and any future increases in these costs could negatively impact our profit margins if we are unable to offset those costs through a combination of product recontenting, material sourcing strategies, efficiency improvements, headcount reductions or raising the selling prices for our products by corresponding amounts.

Disruption in the sequence of chassis supply has, in the past, inhibited—and could, in the future, inhibit—our ability to efficiently and consistently maintain our planned production levels. Uncertainties related to changing emission standards may also negatively impact the availability of chassis and/or other components used in our production of certain European motorized RVs and could also impact consumer buying patterns.

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

In addition to potential future material supply constraints, labor shortages have in the past impacted, and could in the future, impact our European operations given the numerous locations where our manufacturing sites are located and the differing availability of skilled labor in those locations. As previously noted, high levels of labor costs and limitations on our ability to reduce those costs commensurate with market conditions have in the past, and could in the future, negatively impact our European operations.

Three Months Ended October 31, 2025 Compared to the Three Months Ended October 31, 2024

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CONSOLIDATED

Consolidated net sales for the three months ended October 31, 2025 increased $246,339, or 11.5%, compared to the three months ended October 31, 2024. Approximately 27.4% of the Company’s consolidated net sales for the quarter ended October 31, 2025 were transacted in a currency other than the U.S. dollar. The Company’s most material exchange rate exposure is sales in Euros. The $246,339 increase in consolidated net sales includes an increase of $37,497 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 three months ended October 31, 2025 increased $39,532, or 14.0%, compared to the three months ended October 31, 2024. Consolidated gross profit was 13.4% of consolidated net sales for the three months ended October 31, 2025 and 13.1% for the three months ended October 31, 2024. The increases in consolidated gross profit and the consolidated gross profit percentage were both primarily due to the impact of the increase in consolidated net sales in the current-year quarter compared to the prior-year quarter.

Selling, general and administrative expenses for the three months ended October 31, 2025 increased $13,833, or 5.8%, compared to the three months ended October 31, 2024, primarily due to an increase in sales-related travel, advertising and promotional costs in correlation with the 11.5% increase in consolidated net sales and an increase in incentive compensation due to the increase in consolidated income before income taxes.

The minor decrease in Other income, net of $160 for the three months ended October 31, 2025 as compared to the three months ended October 31, 2024 is primarily due to impairment charges taken on certain North American Towable assets held for sale being mostly offset by the favorable changes in Corporate other income and expenses as discussed below.

The increase of $33,644 in income before income taxes for the three months ended October 31, 2025 as compared to the loss before income taxes for the three months ended October 31, 2024 was primarily driven by the increase in consolidated net sales.

The overall effective income tax rate for the three months ended October 31, 2025 was 28.7% compared with 24.5% for the three months ended October 31, 2024. The primary reason for the increase relates to certain losses in foreign jurisdictions without an associated tax benefit and changes in statutory tax rates in certain foreign jurisdictions during the three months ended October 31, 2025.

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 decreased $6,021 for the three months ended October 31, 2025 compared to the three months ended October 31, 2024. This decrease includes a decrease in compensation costs of $15,271, primarily due to employee separation costs related to certain headcount reductions in the prior-year quarter, and a decrease in research and development costs of $3,037. These decreases were partially offset by an increase in deferred compensation expense of $3,971 due to market value fluctuations between the two periods, which was effectively offset by the increase in other income related to the deferred compensation plan assets noted below, and an increase in certain dealer promotional costs of $4,044. In addition, incentive compensation increased $1,560 due to the increase in income before income taxes compared to the prior-year quarter, and costs related to our standby repurchase obligations also increased $1,750, primarily due to a favorable adjustment in the prior-year quarter due to a decrease in dealer inventory levels during that period.

Net expense from Corporate interest and other income and expenses decreased $13,788 for the three months ended October 31, 2025 compared to the three months ended October 31, 2024. Net interest expense decreased $5,422 primarily due to lower debt interest expense as a result of lower average outstanding debt balances and lower interest rates. This decrease in net expense also included a favorable change of $4,968 in the fair value of the Company’s deferred compensation plan assets and the recorded operating results of our equity investments as discussed in Note 8 to the Condensed Consolidated Financial Statements improved by $1,829 in the current quarter compared to the prior-year quarter.

Segment Reporting

NORTH AMERICAN TOWABLE RECREATIONAL VEHICLES

Analysis of the change in net sales for the three months ended October 31, 2025 compared to the three months ended October 31, 2024:

The decrease in total North American Towable net sales of 0.2% compared to the prior-year quarter resulted from a 14.0% decrease in unit shipments mostly offset by a 13.8% increase in the overall net price per unit due to the combined impact of changes in product mix and price. The decrease in unit shipments is primarily due to lower demand for the lower-cost travel trailers units relative to the prior-year quarter, as travel trailer unit shipments decreased 21.8% over the prior-year quarter. According to statistics published by RVIA, for the three months ended October 31, 2025, combined North American travel trailer and fifth wheel wholesale unit shipments decreased 2.2% compared to the same period last year. According to the most recently published statistics from Stat Surveys, for the three months ended September 30, 2025 and 2024, our North American market share for travel trailers and fifth wheels combined was 39.1% and 38.6%, 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 increases in the overall net price per unit within the travel trailer product line of 5.8% and within the fifth wheel product line of 2.7% were primarily due to product mix changes as compared to the prior-year quarter. The increase in the overall net price in the North American Towable segment of 13.8% was primarily due to the greater percentage of sales of the higher-priced fifth wheel products as compared to travel trailers in the current-year quarter.

North American Towable cost of products sold decreased $8,246 to $778,095, or 86.7% of North American Towable net sales, for the three months ended October 31, 2025 compared to $786,341, or 87.5% of North American Towable net sales, for the three months ended October 31, 2024. The changes in material, labor, freight-out and warranty costs comprised $3,695 of the $8,246 decrease in cost of products sold. Material, labor, freight-out and warranty costs as a combined percentage of North American Towable net sales decreased slightly to 78.9% for the three months ended October 31, 2025 compared to 79.2% for the three months ended October 31, 2024, as an increase in the material cost percentage was offset by a similar decrease in the warranty cost percentage, and the freight-out percentage decreased slightly.

Total manufacturing overhead decreased $4,551, primarily due to employee cost savings from recent towable organizational restructuring initiatives, which led to a decrease as a percentage of North American Towable net sales from 8.3% to 7.8%.

The increases in North American Towable gross profit of $6,558 and the gross profit percentage for the three months ended October 31, 2025 compared to the three months ended October 31, 2024 were both driven by the decrease in the costs of products sold noted above.

North American Towable selling, general and administrative expenses increased $55, or 0.1%, for the three months ended October 31, 2025 compared to the three months ended October 31, 2024. The change includes an increase of $2,511 in sales-related travel, advertising and promotion costs and a decrease in employee compensation costs of $2,220 due to cost savings from the recent towable organizational restructuring initiatives noted above. The overall selling, general and administrative expense as a percentage of North American Towable net sales did not change compared to the prior year.

The decrease in North American Towable income before income taxes of $350 for the three months ended October 31, 2025 as compared to the three months ended October 31, 2024 is primarily due to the increase in North American Towable gross profit noted above being mostly offset by impairment charges of $7,822 taken on certain assets held for sale based on the current estimated sales proceeds of these assets. North American Towable income before income taxes as a percentage of North American Towable net sales remained unchanged.

NORTH AMERICAN MOTORIZED RECREATIONAL VEHICLES

Analysis of the change in net sales for the three months ended October 31, 2025 compared to the three months ended October 31, 2024:

The increase in total North American Motorized net sales of 30.9% compared to the prior-year quarter resulted from a 32.3% increase in unit shipments and a 1.4% decrease in the overall net price per unit due to the impact of changes in product mix and price. The increase in unit shipments is primarily due to an increase 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 October 31, 2025, combined North American motorhome wholesale unit shipments increased 14.6% compared to the same period last year. According to the most recently published statistics from Stat Surveys, for the three months ended September 30, 2025 and 2024, our North American market share for motorhomes was 47.3% and 47.8%, 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 increase in the overall net price per unit within the Class A product line of 4.1% is primarily due to a higher concentration of sales of the generally higher-priced product lines in the current-year period. The modest decreases in the Class C product line of 0.5% and the Class B product line of 1.2% were both primarily due to product mix changes towards more moderately-priced units compared to the prior-year quarter.

North American Motorized cost of products sold increased $126,993 to $589,474, or 89.2% of North American Motorized net sales, for the three months ended October 31, 2025 compared to $462,481, or 91.5% of North American Motorized net sales, for the three months ended October 31, 2024. The changes in material, labor, freight-out and warranty costs comprised $123,261 of the $126,993 increase primarily due to the increased net sales volume. Material, labor, freight-out and warranty costs as a combined percentage of North American Motorized net sales decreased to 83.5% for the three months ended October 31, 2025 compared to 84.8% for the three months ended October 31, 2024, with the decrease primarily due to decreases in both the direct labor and warranty cost percentages.

Total manufacturing overhead increased $3,732 in correlation with the net sales increase, but decreased as a percentage of North American Motorized net sales from 6.7% to 5.7% as the increase in net sales levels resulted in lower overhead costs per unit sold.

The increase in North American Motorized gross profit of $28,895 for the three months ended October 31, 2025 compared to the three months ended October 31, 2024 was driven by the increase in North American Motorized net sales, and the increase in the gross profit percentage is due to the decrease in the cost of products sold percentage noted above.

The increase in North American Motorized selling, general and administrative expenses of $5,211 for the three months ended October 31, 2025 compared to the three months ended October 31, 2024 was primarily due to the increases in North American Motorized net sales and income before income taxes, which caused related commissions, incentive and other compensation to increase by $3,272. The decrease in the overall selling, general and administrative expense as a percentage of North American Motorized net sales is primarily due to the increase in North American Motorized net sales.

The increase in North American Motorized income before income taxes of $24,068 for the three months ended October 31, 2025 compared to the three months ended October 31, 2024 was primarily due to the increase in North American Motorized net sales, and 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.

EUROPEAN RECREATIONAL VEHICLES

Analysis of the change in net sales for the three months ended October 31, 2025 compared to the three months ended October 31, 2024:

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

The increase in total European Recreational Vehicle net sales of 8.4% compared to the prior-year quarter resulted from a 1.0% increase in unit shipments and a 7.4% increase in the overall net price per unit due to the total impact of changes in foreign currency, product mix and price. The increase in total European Recreational Vehicle net sales of $50,576 includes an increase of $37,497, or 6.2% of the 8.4% increase, due to the increase in foreign exchange rates compared to the prior-year period. According to the most recently published statistics from the European Caravan Federation, our combined European market share for the three months ended September 30, 2025 and 2024 was approximately 24.4% and 22.8%, respectively.

The overall net price per unit increase of 7.4% includes a 6.2% increase due to the impact of foreign currency exchange rate changes and a 1.2% constant-currency increase due to the combined impact of product mix and price, primarily due to the higher concentration of Motorcaravan sales in the current-year quarter.

The constant-currency decreases in the overall net price per unit within the Motorcaravan product line of 0.5%, the Caravan product line of 6.3% and the Campervan product line of 2.6% were all primarily due to increased sales discounting in the current-year quarter along with a higher concentration of sales of lower-priced entry level and special-edition motorcaravan products in the current-year quarter.

European Recreational Vehicle cost of products sold increased $65,410 to $577,665, or 88.1% of European Recreational Vehicle net sales, for the three months ended October 31, 2025 compared to $512,255, or 84.7% of European Recreational Vehicle net sales, for the three months ended October 31, 2024. The changes in material, labor, freight-out and warranty costs comprised $59,082 of the $65,410 increase primarily due to the increased net sales volume and the increased material costs noted below. Material, labor, freight-out and warranty costs as a combined percentage of European Recreational Vehicle net sales increased to 74.9% for the three months ended October 31, 2025 compared to 71.4% for the three months ended October 31, 2024, primarily due to an increase in the material cost percentage as a result of the combined unfavorable impacts of increased sales discounting, increased chassis costs and a higher concentration of sales of entry-level and special-edition motorcaravan products, both of which have generally higher material cost percentages. The warranty cost percentage also increased.

Total manufacturing overhead increased by $6,328 with the increase in sales but decreased slightly as a percentage of European Recreational Vehicles net sales from 13.3% to 13.2% as the increase in net sales levels resulted in lower overhead costs per unit sold.

The decrease in European Recreational Vehicle gross profit of $14,834 for the three months ended October 31, 2025 compared to the three months ended October 31, 2024 and the decrease in the gross profit percentage were both due to the increase in the cost of products sold noted above.

European Recreational Vehicle selling, general and administrative expenses increased $12,254 for the three months ended October 31, 2025 compared to the three months ended October 31, 2024, primarily due to $6,702 in employee separation costs accrued related to strategic fiscal year 2026 plant reorganization initiatives. In addition, sales wages and benefits increased $1,279 in correlation with the increase in European Recreational Vehicle net sales. The increase in the overall selling, general and administrative expense as a percentage of European Recreational Vehicle net sales is also primarily due to the employee separation costs.

The decrease in the European Recreational Vehicle income (loss) before income taxes of $27,815 for the three months ended October 31, 2025 compared to the three months ended October 31, 2024 was primarily due to the increases in cost of products sold and selling, general and administrative expenses as noted above, and the primary reason for the decrease in the percentage was the increase in both of those cost percentages as noted above.

Liquidity and Capital Resources

As of October 31, 2025, we had $509,878 in cash and cash equivalents, of which $293,032 was held in the U.S. and the equivalent of $216,846, predominantly in Euros, was held in Europe, compared to $586,596 on July 31, 2025, of which $412,088 was held in the U.S. and the equivalent of $174,508, predominantly in Euros, was held in Europe. Cash and cash equivalents held internationally may be subject to foreign withholding taxes if repatriated to the United States. The components of the $76,718 decrease in cash and cash equivalents are described in more detail below, but the decrease was primarily attributable to cash used in operating activities of $44,867, cash used in investing activities of $20,762, and cash used in financing activities of $13,483.

Net working capital at October 31, 2025 was $1,214,646 compared to $1,193,279 at July 31, 2025. Capital expenditures of $31,581 for the three months ended October 31, 2025 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 $930,000 at October 31, 2025. 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 2026 is approximately $195,000, 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 approximately two-thirds will be in North America and one-third in Europe, and that these expenditures will be funded by cash provided by our operating activities.

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

Operating Activities

Net cash used in operating activities for the three months ended October 31, 2025 was $44,867 as compared to net cash provided by operating activities of $30,740 for the three months ended October 31, 2024.

For the three months ended October 31, 2025, net income adjusted for non-cash items (primarily depreciation, amortization of intangibles and stock-based compensation) provided $100,706 of operating cash. The change in net working capital resulted in the use of $145,573 of operating cash during that period, primarily due to North American increases in inventory to support current demand.

For the three months ended October 31, 2024, net income adjusted for non-cash items (primarily depreciation, amortization of intangibles and stock-based compensation) provided $76,854 of operating cash. The change in net working capital resulted in the use of $46,114 of operating cash during that period, primarily due to the decreases in certain accrued liabilities as the impacts of the changes in accounts receivable and accounts payable mostly offset each other.

Investing Activities

Net cash used in investing activities for the three months ended October 31, 2025 was $20,762, primarily due to capital expenditures of $31,581, partially offset by proceeds from the dispositions of property, plant and equipment of $10,905.

Net cash used in investing activities for the three months ended October 31, 2024 was $25,342, primarily due to capital expenditures of $25,273.

Financing Activities

Net cash used in financing activities for the three months ended October 31, 2025 was $13,483, primarily for payments on the term-loan credit facilities of $10,000. During the first quarter of fiscal 2026, the Board approved and declared the payment of a regular quarterly dividend of $0.52 per share for the first quarter of fiscal 2026, but this dividend, totaling $27,476, was not paid until the second quarter of fiscal 2026.

Net cash used in financing activities for the three months ended October 31, 2024 was $64,620, primarily for payments on the term-loan credit facilities of $60,000. During the first quarter of fiscal 2025, the Board approved and declared the payment of a regular quarterly dividend of $0.50 per share for the first quarter of fiscal 2025, but this dividend, totaling $26,551, was not paid until the second quarter of fiscal 2025.

The Company increased its previous regular quarterly dividend of $0.50 per share to $0.52 per share in October 2025. In October 2024, the Company increased its previous regular quarterly dividend of $0.48 per share to $0.50 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, 2025. 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, 2025.

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 $376,064 of debt denominated in Euros at October 31, 2025. A hypothetical 10% change in the Euro/U.S. dollar exchange rate would change our October 31, 2025 debt balance by approximately $37,606.

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 20.0% of our weighted-average interest rate at October 31, 2025) would result in an estimated $4,070 reduction in income before income taxes over a one-year period.

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 October 31, 2025, 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.

Before deciding to invest in our Company, in addition to the other information contained in our Annual Report on Form 10-K and other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended July 31, 2025, which could materially and adversely affect our business, financial condition, prospects, results of operations and cash flows. In such case, the trading price of our common stock could decline, and you could lose all or part of your investment. The risks described in our most recent Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also materially affect our business, financial condition, results of operations and prospects.