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What changed in THOR INDUSTRIES INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of THOR INDUSTRIES INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+430 added−506 removedSource: 10-K (2023-09-25) vs 10-K (2022-09-28)

Top changes in THOR INDUSTRIES INC's 2023 10-K

430 paragraphs added · 506 removed · 344 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

80 edited+16 added−33 removed39 unchanged
Biggest changeFactors 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 independent dealers or on retail customers; • the dependence on a small group of suppliers for certain components used in production, including chassis; • interest rate fluctuations and their potential impact on the general economy and, specifically, on our profitability and on our independent dealers and consumers; • the extent and impact from the continuation of the COVID-19 pandemic, along with the responses to contain the spread of the virus, or its variants, by various governmental entities or other actors, which may have negative effects on retail customer demand, our independent dealers, our supply chain, our labor force, our production or other aspects of our business; • 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 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; • disruption of the delivery of units to independent dealers; • increasing costs for freight and transportation; • the ability to protect our information technology systems from data breaches, cyber-attacks and/or network disruptions; 13 • 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 and political conditions in the various countries in which our products are produced and/or sold; • the impact of changing emissions and other related climate change regulations in the various jurisdictions in which our products are produced, used and/or sold; • changes to our investment and capital allocation strategies or other facets of our strategic plan; and • changes in market liquidity conditions, credit ratings and other factors that may impact our access to future funding and the cost of debt.
Biggest changeFactors 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 rate fluctuations and their potential impact on the general economy and, specifically, on our profitability and on our independent dealers and consumers; • the ability to ramp production up or down quickly in response to rapid changes in demand while also managing costs and market share; • the level and magnitude of warranty and recall claims incurred; • the ability of our suppliers to financially support any defects in their products; • legislative, regulatory and tax law 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; 11 • the impact of losses under repurchase agreements; • the impact of the strength of the U.S. dollar on international demand for products priced in U.S. dollars; • general economic, market, public health and political conditions in the various countries in which our products are produced and/or sold; • the impact of changing emissions and other related climate change regulations in the various jurisdictions in which our products are produced, used and/or sold; • changes to our investment and capital allocation strategies or other facets of our strategic plan; and • changes in market liquidity conditions, credit ratings and other factors that may impact our access to future funding and the cost of debt.
Jayco manufactures and sells conventional travel trailers and fifth wheels under trade names such as Jay Flight , Jay Feather , Eagle and Pinnacle , and also manufactures Class A, Class B and Class C motorhomes under trade names such as Alante , Precept , Greyhawk and Redhawk .
Jayco manufactures and sells conventional travel trailers and fifth wheels under trade names such as Jay Flight , Jay Feather , Eagle and Pinnacle , and also manufactures Class A, Class C and Class B motorhomes under trade names such as Alante , Precept , Greyhawk and Redhawk .
The geographic centrality of the North American RV industry in northern Indiana, where the majority of our facilities and many of our suppliers are located, could exacerbate supply chain and other COVID-19 related risks, should northern Indiana, or any of the other areas in which we, our suppliers or our customers operate, become disproportionately impacted by the pandemic or other factors.
The geographic centrality of the North American RV industry in northern Indiana, where the majority of our facilities and many of our suppliers are located, could exacerbate supply chain and other COVID-19 related risks should northern Indiana, or any of the other areas in which we, our suppliers or our customers operate, become disproportionately impacted by the COVID-19 pandemic or other factors.
We believe that our products and facilities comply in all material respects with applicable vehicle safety (including those promulgated by NHTSA), environmental, industry, health, safety and other required regulations. We do not believe that ongoing compliance with the existing regulations discussed above will have a material effect in the foreseeable future on our capital expenditures, earnings or competitive position.
We believe that our products and facilities comply in all material respects with applicable vehicle safety (including those promulgated by NHTSA), environmental, industry, health, employee safety and other required regulations. We do not believe that ongoing compliance with the existing regulations discussed above will have a material effect in the foreseeable future on our capital expenditures, earnings or competitive position.
However, future developments in regulation and/or policy could impose significant challenges and costs upon our business operations. 9 Competition The recreational vehicle industry is generally characterized by low barriers to entry. The recreational vehicle market is intensely competitive, with numerous other manufacturers selling products that compete directly with our products.
However, future developments in regulation and/or policy could impose significant challenges and costs upon our business operations. Competition The recreational vehicle industry is generally characterized by low barriers to entry. The recreational vehicle market is intensely competitive, with numerous other manufacturers selling products that compete directly with our products.
For more information on THOR’s human capital resources, please visit www.thorindustries.com/sustainability . 12 Forward Looking Statements This Annual Report on Form 10-K includes certain statements that are “forward-looking” statements within the meaning of the U.S.
For more information on THOR’s human capital resources, please visit www.thorindustries.com/sustainability . 10 Forward-Looking Statements This Annual Report on Form 10-K includes certain statements that are “forward-looking” statements within the meaning of the U.S.
We believe in the invigorating power of human connection and commit to our team members by teaching our leaders how to nurture, guide and foster strong relationships with them. We treat others with dignity and respect, practicing thankfulness and gratitude.
We believe in the invigorating power of human connection and commit to our team members by teaching our leaders how to nurture, guide and foster strong relationships with them. We strive to treat others with dignity and respect, practicing thankfulness and gratitude.
Net sales included in Other mainly relate to the sale of aluminum extrusions and specialized RV-component products. Intercompany eliminations adjust for Airxcel and Postle sales to the Company’s North American towable and North American motorized segments, which are consummated at established transfer prices generally consistent with the selling prices of such components to third-party customers.
Net sales included in Other primarily relate to the sale of aluminum extrusions and specialized RV-component products. Intercompany eliminations adjust for Airxcel and Postle sales to the Company’s North American Towable and North American Motorized segments, which are consummated at established transfer prices generally consistent with the selling prices of such components to third-party customers.
An integrated motorcaravan contains driving and passenger space that is completely integrated into the vehicle, along with the living area, which creates a great feeling of openness. The driver/passenger and living areas are made of one compartment and form a single unit. A semi-integrated motorcaravan is one whose cab (driver/passenger compartment) belongs to the chassis.
An integrated motorcaravan contains driving and passenger space that is completely integrated into the vehicle, along with the living area, which creates a great feeling of openness. The driver/passenger and living areas are made of one compartment and form a single unit. A semi-integrated motorcaravan is one in which the cab (driver/passenger compartment) belongs to the chassis.
We also compete against consumer demand for used recreational vehicles, particularly during periods of economic downturn, and against other forms of consumer leisure, outdoor or vacation spending priorities. We also experience a certain level of competition between our own operating subsidiaries.
We also compete against consumer demand for used recreational vehicles, particularly during periods of economic downturn, and against other forms of consumer leisure, outdoor or vacation spending priorities. We also experience a certain level of competition among our own operating subsidiaries.
As of July 31, 2022, there were approximately 2,400 independent, non-franchise dealership locations carrying our products in the U.S. and Canada and approximately 1,100 dealership locations, of which two are Company-owned, carrying our products throughout Europe.
As of July 31, 2023, there were approximately 2,400 independent, non-franchise dealership locations carrying our products in the U.S. and Canada and approximately 1,100 dealership locations, of which two are Company-owned, carrying our products throughout Europe.
The North American Motorized Recreational Vehicles reportable segment consists of the following operating segments that have been aggregated: Airstream (motorized), Jayco (including Jayco motorized and Entegra Coach), Thor Motor Coach and Tiffin Group (Tiffin Motorhomes, Inc). The European Recreational Vehicles reportable segment consists solely of the EHG business.
The North American Motorized Recreational Vehicles reportable segment consists of the following operating segments that have been aggregated: Airstream (motorized), Jayco (including Jayco motorized and Entegra Coach), Thor Motor Coach and the Tiffin Group. The European Recreational Vehicles reportable segment consists solely of the EHG business.
We strive to operate in a way that our word is trusted, and we are committed to providing a safe work environment for our team members while empowering them to seize opportunities around them and give them avenues to grow and learn.
We endeavor to operate in a way that our word is trusted, and we are committed to providing a safe work environment for our team members while empowering them to seize opportunities around them and give them avenues to grow and learn.
A constructed living area provides access to the driver’s compartment and attaches to the cab section. As they are smaller and more compact than typical motorhomes, a campervan has the advantage of being easier to maneuver and easier to park.
A constructed living area provides access to the driver’s compartment and attaches to the cab section. As they are smaller and more compact than typical motorcaravans, a campervan has the advantage of being easier to maneuver and easier to park.
Barring any significant and longer-term material supply constraints, the existing backlogs of the North American towable, North American motorized and European recreational vehicle segments are expected to be filled in the remainder of calendar 2022 and calendar 2023.
Barring any significant and longer-term material supply constraints, the existing backlogs of the North American Towable, North American Motorized and European Recreational Vehicle segments are expected to be filled in the remainder of calendar 2023 and calendar 2024.
In our selection of individual, independent dealers, we emphasize the dealer’s ability to maintain a sufficient inventory of our products, as well as their financial stability, credit worthiness, reputation, experience and ability to provide service to the end customer. Many dealers, particularly in North America, carry the recreational vehicle lines of one or more of our competitors.
In our selection of individual, independent dealers, we emphasize the dealer’s ability to maintain a sufficient inventory of our products, as well as their financial stability, creditworthiness, reputation, experience and ability to provide service to the end customer. Many dealers, particularly in North America, carry the recreational vehicle lines of one or more of our competitors.
In addition, the SEC maintains a website that contains reports, proxy and information statements and other information that is filed electronically with the SEC. The website can be accessed at www.sec.gov . 14
In addition, the SEC maintains a website that contains reports, proxy and information statements and other information that is filed electronically with the SEC. The website can be accessed at www.sec.gov . 12
Heartland, including Cruiser RV and DRV, manufactures and sells conventional travel trailers and fifth wheels under trade names such as Landmark , Bighorn , Elkridge , Trail Runner , North Trail , Cyclone , Torque , Prowler , Milestone , Shadow Cruiser , Lithium , MPG , Hitch, Sundance and Stryker and luxury fifth wheels under the trade name DRV Mobile Suites .
Heartland, including Cruiser RV and DRV, manufactures and sells conventional travel trailers and fifth wheels under trade names such as Bighorn , Trail Runner , North Trail , Cyclone , Torque , Prowler , Milestone , Shadow Cruiser , MPG , Hitch, Sundance and Stryker and luxury fifth wheels under the trade name DRV Mobile Suites .
The North American Towable Recreational Vehicles reportable segment consists of the following operating segments that have been aggregated: Airstream (towable), Heartland (including Cruiser RV and DRV), Jayco (including Jayco towable, Starcraft and Highland Ridge), Keystone (including CrossRoads and Dutchmen), KZ (including Venture RV) and Tiffin Group (Vanleigh RV).
The North American Towable Recreational Vehicles reportable segment consists of the following operating segments that have been aggregated: Airstream (towable), Heartland (including Cruiser RV and DRV), Jayco (including Jayco towable, Starcraft and Highland Ridge), Keystone (including CrossRoads and Dutchmen), and KZ (including Venture RV).
There are approximately 80 RV manufacturers in the U.S. and Canada, according to RVIA and approximately 30 RV manufacturers across Europe according to Caravaning Industry Association e.V. (“CIVD”). Our primary RV competitors within the North American towable and motorized segments are Forest River, Inc. and Winnebago Industries, Inc.
There are approximately 80 RV manufacturers in the U.S. and Canada, according to Statistical Surveys, Inc. and approximately 30 RV manufacturers across Europe according to Caravaning Industry Association e.V. Our primary RV competitors within the North American Towable and North American Motorized segments are Forest River, Inc. and Winnebago Industries, Inc.
If shortages of chassis or other component parts were to become more significant or longer term in nature, or if other 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.
If shortages of chassis or other component parts were to become more significant, or if other 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.
Conventional trailers are towed by means of a frame hitch attached to the towing vehicle. Fifth wheel trailers, designed to be towed by pickup trucks, are constructed with a raised forward section that is attached to a receiver in the bed area of the pickup truck. A motorhome is a self-powered vehicle built on a motor vehicle chassis.
Fifth wheel trailers, designed to be towed by pickup trucks, are constructed with a raised forward section that is attached to a receiver in the bed area of the pickup truck. A motorhome is a self-powered vehicle built on a motor vehicle chassis.
We are the largest recreational vehicle manufacturer in North America in terms of both units sold and revenue. According to Statistical Surveys, Inc., for the six months ended June 30, 2022, THOR’s current combined U.S. and Canadian market share based on unit retail sales was approximately 41.9% for travel trailers and fifth wheels combined and approximately 49.4% for motorhomes.
We are the largest recreational vehicle manufacturer in North America in terms of both units sold and revenue. According to Statistical Surveys, Inc., for the six months ended June 30, 2023, THOR’s current combined U.S. and Canadian market share based on unit retail sales was approximately 42.7% for travel trailers and fifth wheels combined and approximately 49.0% for motorhomes.
European Recreational Vehicles THOR, through its Erwin Hymer Group (EHG) operating subsidiary, is a leading manufacturer of recreational vehicles in Europe, according to statistics published by the Caravaning Industry Association e.V.
European Recreational Vehicles THOR, through its Erwin Hymer Group ("EHG") operating subsidiary, is a leading manufacturer of recreational vehicles in Europe, according to statistics published by the Caravaning Industry Association e.V. (“CIVD”) and the European Caravan Foundation (“ECF”).
Most dealers are financed on a “floor plan” basis by an unrelated bank or financing company, which lends the dealer all or substantially all of the wholesale purchase price and retains a security interest in the vehicles purchased.
We generally do not finance dealer purchases. Most dealers are financed on a “floor plan” basis by an unrelated bank or financing company, which lends the dealer all, or substantially all, of the wholesale purchase price and retains a security interest in the vehicles purchased.
Our primary RV competitors within the European segment are Trigano, Hobby/Fendt, Knaus Tabbert and various vehicle manufacturers. According to CIVD, EHG’s current European market share for the six months ended June 30, 2022 based on unit retail sales was approximately 21.8% for motorcaravans and campervans combined and approximately 18.0% for caravans.
Our primary RV competitors within the European Recreational Vehicle segment are Trigano, Hobby/Fendt, Knaus Tabbert and various vehicle manufacturers. According to CIVD, EHG’s current European market share for the six months ended June 30, 2023 based on unit retail sales was approximately 20.6% for motorcaravans and campervans combined and approximately 18.5% for caravans.
Starcraft manufactures and sells conventional travel trailers and fifth wheels under trade names such as Autumn Ridge and Telluride . Highland Ridge manufactures and sells conventional travel trailers and fifth wheels under trade names such as Mesa Ridge and Open Range .
Starcraft manufactures and sells conventional travel trailers and fifth wheels under trade names such as Autumn Ridge and Super Lite. Highland Ridge manufactures and sells conventional travel trailers and fifth wheels under trade names such as Open Range .
Tiffin Group, LLC, a wholly-owned subsidiary of the Company, owns the Tiffin Group. Tiffin Motorhomes, Inc. operates out of various locations in Alabama, while Vanleigh RV operates out of Mississippi.
(collectively, the "Tiffin Group"). Tiffin Group, LLC, a wholly-owned subsidiary of the Company, owns the Tiffin Group. Tiffin Motorhomes, Inc. operates out of various locations in Alabama and Mississippi.
European Recreational Vehicles In Europe, a caravan is a travel trailer which is a non-motorized vehicle designed to be towed by passenger automobiles, SUVs or vans. Caravans provide comfortable, self-contained living facilities for camping, vacationing and multiple other purposes.
European Recreational Vehicles In Europe, a caravan is a travel trailer which is a non-motorized vehicle designed to be towed by passenger automobiles, SUVs or vans. Caravans provide comfortable, self-contained living facilities for camping, vacationing and multiple other purposes. In Europe, the focus is on lighter and smaller caravans that can even be towed by small passenger cars.
At July 31, 2022, we employed approximately 32,000 full-time employees worldwide, including approximately 23,000 full-time employees in the United States, of which approximately 2,800 were salaried, and approximately 9,000 full-time employees in Europe, of which approximately 2,400 were salaried. As of July 31, 2022, fewer than 200 of our North American employees were represented by certified labor organizations.
At July 31, 2023, we employed approximately 24,900 full-time employees worldwide, including approximately 15,900 full-time employees in the United States, of which approximately 2,600 were salaried, and approximately 9,000 full-time employees in Europe, of which approximately 4,200 were salaried. As of July 31, 2023, fewer than 200 of our North American employees were represented by certified labor organizations.
Backlog represents unfilled dealer orders on a particular day which can and do fluctuate on a seasonal basis. The manufacturing time in the recreational vehicle business is relatively short.
The increase in European Recreational Vehicle backlog is primarily a result of increased selling prices. Backlog represents unfilled dealer orders on a particular day which can and do fluctuate on a seasonal basis. The manufacturing time in the recreational vehicle business is relatively short.
The principal raw materials used in the manufacturing processes for motorhomes, including motorcaravans, campervans and urban vehicles, and travel trailers, including caravans, are chassis, aluminum, lumber, plywood, plastic, fiberglass and steel purchased from numerous suppliers.
We purchase many of the components used in the production of our recreational vehicles in their finished form. The principal raw materials used in the manufacturing processes for motorhomes, including motorcaravans, campervans and urban vehicles, and travel trailers, including caravans, are chassis, aluminum, lumber, plywood, plastic, fiberglass and steel purchased from numerous suppliers.
At THOR, we are committed to: • Inspiring an inclusive culture which embraces individual differences; • Treating team members fairly and with respect; • Establishing a workplace free from discrimination and harassment; • Training team members to be aware of their rights and responsibilities in regards to fair treatment; and • Providing equal opportunities based on ability, performance and potential. 11 Commitment to Ethical Behavior Each year, THOR conducts training with certain employees, based on their role and level in the organization, on its business ethics policy.
At THOR, we are committed to: • Inspiring an inclusive culture which embraces individual differences; • Treating team members fairly and with respect; • Establishing a workplace free from discrimination and harassment; • Training team members to be aware of their rights and responsibilities in regards to fair treatment; and • Providing equal opportunities based on ability, performance and potential.
Tiffin Motorhomes, Inc. manufactures and sells premium diesel and gasoline Class A, Class B, and Class C motorhomes under trade names such as Allegro, Allegro Bay, Allegro Breeze, Allegro Bus, Allegro Red , Cahaba, Phaeton, Wayfarer and Zephyr . Vanleigh RV manufactures and sells fifth wheels under trade names such as Ambition, Beacon and Vilano.
Tiffin Motorhomes, Inc. manufactures and sells premium diesel and gasoline Class A, Class C and Class B motorhomes under trade names such as Allegro, Allegro Bay, Allegro Breeze, Allegro Bus, Allegro Red , Byway, Midas, Phaeton, Wayfarer and Zephyr .
The Togo Group was rebranded as Roadpass Digital in November 2021. 1 Fiscal 2021 Tiffin Group On December 18, 2020, the Company closed on a Stock Purchase Agreement (“Tiffin Group SPA”) for the acquisition of all of the issued and outstanding capital stock of luxury motorized recreational vehicle manufacturer Tiffin Motorhomes, Inc., including fifth wheel towable recreational vehicle manufacturer Vanleigh RV, and certain other associated operating and supply companies, which primarily supply component parts and services to Tiffin Motorhomes, Inc. and Vanleigh RV (collectively, the “Tiffin Group”).
Fiscal 2021 Tiffin Group On December 18, 2020, the Company closed on a Stock Purchase Agreement (“Tiffin Group SPA”) for the acquisition of all of the issued and outstanding capital stock of luxury motorized recreational vehicle manufacturer Tiffin Motorhomes, Inc., and certain other associated operating and supply companies, which primarily supply component parts and services to Tiffin Motorhomes, Inc.
Motorcaravans include various types, such as, integrated, semi-integrated and alcove, and are generally constructed on light duty truck chassis, supplied complete with engine and drivetrain components by chassis manufacturers such as Stellantis, Mercedes-Benz, Ford and Iveco.
Motorcaravans are similar to the Class A and Class C motorized products in the North American market. Motorcaravans include various types such as integrated, semi-integrated and alcove, and are generally constructed on light-duty truck chassis, supplied complete with engine and drivetrain components by chassis manufacturers such as Stellantis, Mercedes-Benz, Ford and Iveco.
An urban vehicle is a multi-functional vehicle, similar to a minivan, is generally built on a Stellantis or Ford chassis and is mainly used as a family car but has a small removable kitchen and sitting area that can be converted into a sleeping area. Additionally, these vehicles are equipped with a pop-up roof to provide additional sleeping quarters.
An urban vehicle is a multi-functional vehicle, similar to a minivan, which is generally built on a Stellantis or Ford chassis and is mainly used as a family vehicle but has a small removable kitchen and sitting area that can be converted into a sleeping area.
In North America and Europe, capacity increases can generally be achieved relatively quickly and at relatively low cost, largely by acquiring, leasing, or building additional facilities and equipment and increasing the number of production employees. In North America, capacity decreases can generally be achieved relatively quickly and at relatively low cost, mainly by decreasing the number of production employees.
In North America, capacity increases can generally be achieved relatively quickly and at relatively low cost, largely by acquiring, leasing or building additional facilities and equipment and increasing the number of production employees. In Europe, that process usually takes a bit longer and involves higher costs.
Production In order to minimize finished inventory, our recreational vehicles in both North America and Europe are generally produced to dealer order. Our facilities are designed to provide efficient assembly-line manufacturing of products.
Additionally, these vehicles are equipped with a pop-up roof to provide additional sleeping quarters. 5 Production In order to minimize finished inventory, our recreational vehicles in both North America and Europe are generally produced to dealer order. Our facilities are designed to provide efficient, assembly-line manufacturing of products.
For example, these standards, which are generally applicable to all companies, control our choice of paints, our air compressor discharge, the handling of our waste water and the noise emitted by our factories. We rely upon certifications obtained by chassis manufacturers with respect to compliance by our vehicles with applicable emission control standards.
For example, these standards, which are generally applicable to all companies, control our choice of paints, our air compressor discharge, the handling of our waste water and the noise emitted by our factories.
However, industry wholesale shipments in calendar 2021 and the first half of calendar 2022 did not follow typical historical seasonal patterns as we and dealers responded to the high consumer demand for RVs. We currently expect that our historical seasonal patterns will return in fiscal 2023 as dealer inventory levels and consumer demand become balanced.
However, industry wholesale shipments in calendar 2021 and the first half of calendar 2022 did not follow typical historical seasonal patterns as we and dealers responded to the high consumer demand for RVs.
Our Company and operating subsidiaries share a global commitment to all of our stakeholders to foster an inclusive workplace where dignity and respect for team members are encouraged and where each team member is supported to achieve their maximum potential.
We believe that we maintain a good working relationship with our employees. 9 We and our operating subsidiaries share a global commitment to all our stakeholders to foster an inclusive workplace where dignity and respect for team members is encouraged and where each team member is supported to achieve their maximum potential.
EHG manufactures a full line of motorized and towable recreational vehicles, including motorcaravans, campervans urban vehicles and caravans in eight RV production facilities within Europe. The operations of the Company’s Airxcel, Postle and Togo Group subsidiaries are included in “Other,” which is a non-reportable segment.
EHG manufactures a full line of motorized and towable recreational vehicles, including motorcaravans, campervans, urban vehicles and caravans in eight RV production facilities within Europe. The operations of the Company’s Airxcel and Postle subsidiaries are included in “Other" in Note 3 to the Consolidated Financial Statements.
Our Corporate office and subsidiaries offer standard medical, vision and dental programs as well as various programs to further address the needs of our employees. For example, all THOR North American team members have access to the Employee Assistance Program ("EAP") where they can receive up to five free sessions to assist with counseling needs, personal and/or work-related concerns.
Our Corporate office and subsidiaries offer competitive benefit packages to employees. For example, as part of our health and welfare benefits, all North American team members have access to the Employee Assistance Program (“EAP”) where they can receive up to five free sessions to assist with counseling needs as well as personal and/or work-related concerns.
Generally, each of our recreational vehicle operating subsidiaries have separate dealer agreements. One dealer, FreedomRoads, LLC, accounted for approximately 13.0% of our consolidated net sales in fiscal 2022 and for approximately 13.0% and 15.0% in fiscal 2021 and fiscal 2020, respectively.
Generally, our recreational vehicle operating subsidiaries each have separate dealer agreements. One dealer, FreedomRoads, LLC, accounted for approximately 13.0% of our consolidated net sales in fiscal 2023, 2022 and 2021. This dealer also accounted for approximately 13.0% of the Company’s consolidated trade accounts receivable at July 31, 2023 and approximately 10.0% at July 31, 2022.
The principal types of recreational vehicles that we produce in North America include conventional travel trailers and fifth wheels as well as Class A, Class C and Class B motorhomes. In Europe, we produce numerous types of motorized and towable recreational vehicles, including motorcaravans, campervans, urban vehicles, caravans and other RV-related products and services.
The principal types of recreational vehicles that we produce in North America include conventional travel trailers and fifth wheels as well as Class A, Class C and Class B motorhomes.
Our plants are subject to and are periodically inspected by various governmental and industry agencies concerned with health and safety in the workplace to ensure that our plants and products comply with applicable governmental and industry standards.
We rely upon certifications obtained by chassis manufacturers with respect to the compliance of our vehicles with applicable emission control standards. 8 Our plants are subject to, and are periodically inspected by, various governmental and industry agencies concerned with health and safety in the workplace to ensure that our plants and products comply with applicable governmental and industry standards.
Its products are sold under trade names such as Ace, Aria, Axis, Challenger, Chateau, Compass, Delano, Echelon, Four Winds, Gemini, Geneva, Hurricane, Magnitude, Miramar, Omni, Outlaw, Palazzo, Quantum, Resonate, Rize, Sanctuary, Scope, Sequence, Tellaro, Tuburon, Tranquility, Tuscany, Vegas, Venetian and Windsport .
Its products are sold under trade names such as Ace, Aria, Axis, Chateau, Compass, Dazzle, Delano, Echelon, Four Winds, Gemini, Geneva, Hurricane, Magnitude, Miramar, Omni, Outlaw, Palazzo, Quantum, Resonate, Rize, Riviera, Sanctuary, Scope, Sequence, Tellaro, Tiburon, Tranquility, Twist, Vegas and Windsport . 2 Tiffin Group The Tiffin Group manufactures and sells conventional motorhomes and includes the operations of Tiffin Motorhomes, Inc.
Marketing and Distribution We sell our recreational vehicles primarily to independent, non-franchise dealers located throughout the United States, Canada and Europe. Each of our recreational vehicle operating subsidiaries sells to its own network of independent dealers, with many dealers carrying more than one of our product lines, as well as products from other manufacturers.
Each of our recreational vehicle operating subsidiaries sells to its own network of independent dealers, with many dealers carrying more than one of our product lines as well as products from other manufacturers.
Providing our team members with resources to help make good decisions through an ethics program cultivates strong teamwork and productivity. Issues can be communicated anonymously using our multilingual third-party hotline via phone, email or online inquiry systems. Every report is investigated and, if warranted, corrective actions are taken or implemented. THOR protects team members, who report issues, from any retaliation.
Issues can be communicated anonymously using our multilingual, third-party hotline via phone, email or online inquiry systems. Every report is investigated and, if warranted, corrective actions are taken or implemented, and we have a policy that protects team members who report issues from any retaliation.
(“Airxcel”) manufactures a comprehensive line of high-quality RV-related products which they sell primarily to RV original equipment manufacturers as well as consumers via aftermarket sales through dealers and retailers. Postle Postle Operating, LLC ("Postle") manufactures and sells aluminum extrusions and specialized component products to RV and other manufacturers.
In addition, EHG’s operations include other RV-related products and services. Other Airxcel AirX Intermediate, Inc. (“Airxcel”) manufactures a comprehensive line of high-quality RV-related products which they sell primarily to RV original equipment manufacturers as well as consumers via aftermarket sales through dealers and retailers.
Total assets include those assets used in the operation of each reportable and non-reportable segment, and the Corporate assets consist primarily of cash and cash equivalents, deferred income taxes, deferred compensation plan assets and certain Corporate real estate holdings primarily utilized by certain U.S.-based operating subsidiaries. 4 The table below sets forth the contribution of each of the Company’s reportable segments to net sales in each of the last three fiscal years: 2022 2021 2020 Amount % Amount % Amount % Recreational vehicles: North American Towables (1) $ 8,661,945 53.1 $ 6,221,928 50.5 $ 4,140,482 50.7 North American Motorized (1) 3,979,647 24.4 2,669,391 21.7 1,390,098 17.0 European 2,887,453 17.7 3,200,079 26.0 2,485,391 30.4 Total recreational vehicles 15,529,045 95.2 12,091,398 98.2 8,015,971 98.1 Other (2) 1,225,824 7.5 373,174 3.0 234,481 2.9 Intercompany eliminations (442,344) (2.7) (147,192) (1.2) (82,519) (1.0) Total $ 16,312,525 100.0 $ 12,317,380 100.0 $ 8,167,933 100.0 (1) The North American Towables and Motorized totals include approximately 7 months of operations in FY 2021 for the Tiffin Group from the December 18, 2020 acquisition date.
The table below sets forth the contribution of each of the Company’s reportable segments to net sales in each of the last three fiscal years: 2023 2022 2021 Amount % Amount % Amount % Recreational vehicles: North American Towable (1) $ 4,202,628 37.8 $ 8,661,945 53.1 $ 6,221,928 50.5 North American Motorized (1) 3,314,170 29.8 3,979,647 24.4 2,669,391 21.7 European 3,037,147 27.3 2,887,453 17.7 3,200,079 26.0 Total recreational vehicles 10,553,945 94.9 15,529,045 95.2 12,091,398 98.2 Other (2) 777,639 7.0 1,225,824 7.5 373,174 3.0 Intercompany eliminations (209,979) (1.9) (442,344) (2.7) (147,192) (1.2) Total $ 11,121,605 100.0 $ 16,312,525 100.0 $ 12,317,380 100.0 (1) The North American Towable and North American Motorized totals include approximately 7 months of operations in FY 2021 for the Tiffin Group from the December 18, 2020 acquisition date.
Airstream also sells the Interstate, Atlas and Rangeline series of Class B motorhomes. 2 Heartland Heartland manufactures and sells conventional travel trailers and fifth wheels and includes the operations of Heartland, Cruiser RV and DRV.
Heartland Heartland manufactures and sells conventional travel trailers and fifth wheels and includes the operations of Heartland, Cruiser RV and DRV.
All of our sites follow safety laws and regulations, and all accidents, injuries or unsafe equipment, practices, or conditions are required to be reported to management immediately and are reviewed to determine if additional safety measures are warranted. The health and wellness of our employees are top priorities for THOR.
We require all accidents, injuries, unsafe equipment and hazardous conditions or practices be reported immediately to management so the details can be reviewed to determine what, if any, additional safety measures are warranted to support team member health, safety and well-being. The health, safety and wellness of our employees are key priorities for THOR.
While we are not dependent on any one supplier, we do depend on a consistent supply of chassis from a limited number of chassis suppliers.
While we are not dependent on any one supplier, we do depend on a consistent supply of chassis from a limited number of chassis suppliers. Sales of our motorized RV products, including motorhomes, motorcaravans, campervans and urban vehicles, rely on these chassis.
The North American and European recreational vehicle industries have, from time to time in the past and during the fiscal year ended July 31, 2022, experienced shortages of chassis for various reasons, including component shortages, production delays and work stoppages at the chassis manufacturers.
The North American recreational vehicle industry has, from time to time, experienced shortages of chassis for various reasons, including component shortages, production delays or other production issues and work stoppages at the chassis manufacturers.
Historically, the most important retail sales events occur at various consumer recreational vehicle shows or trade fairs which take place throughout the year at different locations across the United States, Canada and Europe. However, due to the COVID-19 pandemic and efforts to limit its spread, most retail show sponsors and dealers cancelled these shows in calendar 2020 and calendar 2021.
These shows allow dealers to view new and existing products as well as place orders. Historically, the most important retail sales events occur at various consumer recreational vehicle shows or trade fairs which take place throughout the year at different locations across the United States, Canada and Europe.
The Company’s total commercial commitments under standby repurchase obligations on dealer inventory financing as of July 31, 2022 and July 31, 2021 were $4,308,524 and $1,821,012, respectively. The losses incurred due to repurchase were not material in fiscal 2022, 2021 or 2020.
The Company’s total commercial commitments under standby repurchase obligations on dealer inventory financing as of July 31, 2023 and July 31, 2022 were $3,893,048 and $4,308,524, respectively.
North American Recreational Vehicles THOR, through its operating subsidiaries, is currently the largest manufacturer of RVs in North America, by units sold and revenue, based on retail statistics published by Statistical Surveys, Inc. and other reported data. Our North American operating subsidiaries are as follows: Airstream Airstream manufactures and sells premium quality travel trailers and motorhomes.
The Company purchased the Tiffin Group to complement its existing RV product offerings and North American independent dealer base. 1 North American Recreational Vehicles THOR, through its operating subsidiaries, is currently the largest manufacturer of RVs in North America, by units sold and revenue, based on retail statistics published by Statistical Surveys, Inc. ("Stat Surveys") and other reported data.
Our European recreational vehicle operations include eight primary RV production locations producing numerous brands within Europe, including Buccaneer, Buerstner, Carado, Compass, CrossCamp, Dethleffs, Elddis, Eriba, Etrusco, Hymer, Laika, LMC, Niesmann+Bischoff, Sunlight and Xplore. Acquisitions Fiscal 2022 Airxcel On September 1, 2021, the Company acquired Wichita, Kansas-based AirX Intermediate, Inc. (“Airxcel”).
(“ KZ ”, which includes Venture RV), Thor Motor Coach, Inc. (“ Thor Motor Coach ”) and Tiffin Motorhomes, Inc. (" Tiffin Group "). Our European recreational vehicle operations include eight primary RV production locations producing numerous brands within Europe, including Buccaneer, Buerstner, Carado, Compass, CrossCamp, Dethleffs, Elddis, Eriba, Etrusco, Hymer, Laika, LMC, Niesmann+Bischoff, Sunlight and Xplore.
Within our European-based operations, we are subject to employee contracts, Works Councils and certain labor organizations. We believe that we maintain a good working relationship with our employees.
Our European-based operations are subject to employee contracts, Works Councils and certain other labor organizations.
Airstream travel trailers are distinguished by their rounded shape and bright aluminum finish and, in our opinion, constitute the most recognized product in the recreational vehicle industry. Airstream manufactures and sells travel trailers under the trade names Airstream Classic , Airstream Pottery Barn , Globetrotter , International , Flying Cloud , Caravel , Bambi and Basecamp .
Our North American operating subsidiaries are as follows: Airstream Airstream manufactures and sells premium quality travel trailers and motorhomes. Airstream travel trailers are distinguished by their rounded shape and bright aluminum finish and, in our opinion, constitute the most recognized product in the recreational vehicle industry.
In Europe, short-term capacity decreases can generally be achieved by adjusting work schedules and reducing the number of contract and temporary workers. We purchase many of the components used in the production of our recreational vehicles in finished form.
In North America, capacity decreases can generally be achieved relatively quickly and at relatively low cost, mainly by decreasing the number of production employees. In Europe, short-term capacity decreases can generally be achieved by adjusting work schedules and reducing the number of contract and temporary workers.
North American Recreational Vehicles Travel trailers are non-motorized vehicles which are designed to be towed by passenger automobiles, pickup trucks, SUVs or vans. Travel trailers provide comfortable, self-contained living facilities for camping, vacationing and multiple other purposes. Within North America we produce “conventional” and “fifth wheel” trailers.
Travel trailers provide comfortable, self-contained living facilities for camping, vacationing and multiple other purposes. Within North America we produce “conventional” and “fifth wheel” trailers. Conventional trailers are towed by means of a frame hitch attached to the towing vehicle.
We believe that the working relationships between the management and sales personnel of our operating entities and the independent dealers provide us with valuable information on customer preferences and the quality and marketability of our products. 7 Our European brands distribute their vehicles in Europe through dealer networks that offer various EHG brands covering all price segments in each region, avoiding brand overlap even in regions with two or more dealers that offer EHG brands.
Our European brands distribute their vehicles in Europe through dealer networks that offer various EHG brands covering all price segments in each region, avoiding brand overlap even in regions with two or more dealers that offer EHG brands. The European dealer base is comprised primarily of independent dealers, although EHG does operate two Company-owned dealerships.
EHG produces and sells numerous brands primarily within Europe, such as Buccaneer, Buerstner, Carado, Compass, CrossCamp, Dethleffs, Elddis, Eriba, Etrusco, Hymer, Laika, LMC, Niesmann+Bischoff, Sunlight and Xplore. In addition, EHG’s operations include other RV-related products and services. Other Airxcel AirX Intermediate, Inc.
Erwin Hymer Group EHG manufactures towable and motorized recreational vehicles, including motorcaravans, caravans, campervans and urban vehicles in eight primary RV production locations within Europe. EHG produces and sells numerous brands primarily within Europe, such as Buccaneer, Buerstner, Carado, Compass, CrossCamp, Dethleffs, Elddis, Eriba, Etrusco, Hymer, Laika, LMC, Niesmann+Bischoff, Sunlight and Xplore.
The European dealer base is comprised primarily of independent dealers, although EHG does operate two Company-owned dealerships. Approximately 45% of the independent European dealers sell EHG brands exclusively. Each of our recreational vehicle operating subsidiaries has its own wholesale sales force that works directly with its independent dealers.
Approximately 45% of independent European dealers sell EHG brands exclusively. Each of our recreational vehicle operating subsidiaries has its own wholesale sales force that works directly with its independent dealers. Typically, there are wholesale shows held during the year in certain locations within the United States and Europe.
We believe that the performance of our Company is significantly impacted by our human capital management, and, as a result, we consistently strive to attract, select, engage, develop and retain strong, diverse talent as summarized below. 10 Competitive Pay and Benefits THOR is made up of a number of subsidiaries located in various regions within the United States and Europe, each of which operates independently with its own unique culture.
We believe that our performance is significantly impacted by our human capital management, and, as a result, we consistently strive to attract, select, engage, develop and retain strong, diverse talent as summarized below.
We also benefit in the United States from the recreational vehicle awareness advertising and marketing programs sponsored by the RVIA in national print media and television.
We believe that we, and our dealers, are better positioned now to reach new and existing RV consumers through a strategic combination of retail shows and digital marketing activities. We also benefit in the United States from the recreational vehicle awareness advertising and marketing programs sponsored by the RVIA in national print media and television.
The Togo Group was rebranded as Roadpass Digital in November 2021. Product Line Sales and Segment Information The Company has three reportable segments: (1) North American Towable Recreational Vehicles, (2) North American Motorized Recreational Vehicles and (3) European Recreational Vehicles.
Postle Postle Operating, LLC ("Postle") manufactures and sells aluminum extrusions and specialized component products to RV and other manufacturers. 3 Product Line Sales and Segment Information The Company has three reportable segments: (1) North American Towable Recreational Vehicles, (2) North American Motorized Recreational Vehicles and (3) European Recreational Vehicles.
As such, compensation and benefits are tailored to meet the specific needs and expectations of the employees at each of our subsidiaries with the goal of attracting and retaining the best talent. At all subsidiaries, we offer competitive pay, health insurance plans, company-paid life insurance and paid-time off.
Competitive compensation and benefits packages are tailored to meet the specific needs and expectations of the employees at each of our operating subsidiaries with the goal of attracting and retaining the best talent. Team Member Safety and Wellness Our commitment to maintaining the health, safety and well-being of each of our team members is reflected in our safety culture.
This further negatively impacts our production schedule and cost structure as we try to balance our production and personnel staffing levels and schedules to the available chassis, often with short notice.
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. These factors may continue to negatively impact our production schedule and cost structure as we try to balance our production and personnel staffing levels and schedules to the available chassis, often with short notice.
The North American and European RV industries are also facing continuing supply shortages or delivery delays of other, non-chassis, raw material components.
While the North American and European RV industries have also at times faced supply shortages or delivery delays of other, non-chassis, raw material components, our supply chain has been resilient enough to mostly support our fiscal 2023 sales, although falling somewhat short in Europe.
Where possible, we continue to work closely with our suppliers on various supply chain strategies to minimize these constraints, and we continue to identify alternative suppliers. This situation is fluid, with the items experiencing shortages changing frequently as disruptions caused by COVID-19 and other events are impacting the entire supply chain as well as the transportation of those items.
Where possible, we will continue to work closely with our suppliers on various supply chain strategies to minimize any constraints, and will continue to identify alternative suppliers where possible.
Diversity, Equity and Inclusion ("DE&I") We strive to have an inclusive culture and diverse workforce, reflective of the communities in which our individual operating companies are located. We believe attracting and retaining talented and diverse employees will enable us to be more innovative and responsive to consumer needs and deliver strong sustained performance and growth.
Our EAP services are designed to help provide support for team members who are navigating life issues. Inclusion We strive to have an inclusive culture which enables our family of companies to be more innovative and responsive to consumer needs and deliver strong sustained performance and growth.
Airxcel manufactures a comprehensive line of high-quality component products which are sold primarily to original equipment RV manufacturers as well as consumers via aftermarket sales through dealers and retailers. Airxcel provides industry-leading products in recreational vehicle heating, cooling, ventilation, cooking, window coverings, sidewalls and roofing materials, among others.
Acquisitions Fiscal 2022 Airxcel On September 1, 2021, the Company acquired Wichita, Kansas-based AirX Intermediate, Inc. (“Airxcel”) as part of its long-term strategic growth plan. Airxcel manufactures a comprehensive line of high-quality component products which are sold primarily to RV original equipment manufacturers ("OEMs") as well as consumers via aftermarket sales through dealers and retailers.
The Tiffin Group operates as an independent operation in the same manner as the Company’s other recreational vehicle subsidiaries. The Tiffin Group's motorized operations are aggregated within the Company’s North American motorized recreational vehicle reportable segment and its towable operations are aggregated within the Company’s North American towable recreational vehicle reportable segment.
Airxcel operates as an independent operation in the same manner as the Company's other subsidiaries.
Within each of our manufacturing and distribution facilities, in both North America and Europe, we have site-specific safety and environmental plans designed to reduce risk.
Each of our operating subsidiaries, in both North America and Europe, has developed and maintain site-specific environmental health and safety plans that align with our overall goal of reducing risk and complying with safety laws, standards and regulations.
The Company acquired Airxcel as part of its long-term, strategic growth plan and the acquisition is expected to provide numerous benefits, including strengthening the RV supply chain, diversifying the Company's revenue sources and expanding Airxcel’s supply chain business in North America and Europe. Airxcel operates as an independent operation in the same manner as the Company's other subsidiaries.
Airxcel provides industry-leading products in recreational vehicle heating, cooling, ventilation, cooking, window coverings, sidewalls and roofing materials, among others. The acquisition provides numerous benefits, including strengthening the RV supply chain, diversifying the Company's revenue sources and expanding Airxcel’s supply chain business in North America and Europe.
Backlog The backlogs for our North American towable, North American motorized and European recreational vehicle segments as of July 31, 2022 and July 31, 2021, respectively, were as follows: July 31, 2022 July 31, 2021 Change Amount % Change Recreational vehicles North American Towables $ 2,571,009 $ 9,284,229 $ (6,713,220) (72.3) North American Motorized 3,436,629 4,014,738 (578,109) (14.4) Total North America 6,007,638 13,298,967 (7,291,329) (54.8) European 2,753,602 3,559,097 (805,495) (22.6) Total $ 8,761,240 $ 16,858,064 $ (8,096,824) (48.0) 8 The significant decrease in North American backlog was anticipated as we focused heavily during fiscal 2022 to increase production and sales in order to satisfy dealer orders existing at July 31, 2021.
The losses incurred due to repurchase were not material in fiscal 2023, 2022 or 2021. 7 Backlog The backlogs for our North American Towable, North American Motorized and European Recreational Vehicle segments as of July 31, 2023 and July 31, 2022, respectively, were as follows: July 31, 2023 July 31, 2022 Change Amount % Change Recreational vehicles North American Towable $ 756,047 $ 2,571,009 $ (1,814,962) (70.6) North American Motorized 1,242,936 3,436,629 (2,193,693) (63.8) Total North America 1,998,983 6,007,638 (4,008,655) (66.7) European 3,549,660 2,753,602 796,058 28.9 Total $ 5,548,643 $ 8,761,240 $ (3,212,597) (36.7) The decreases in backlogs for North American Towable and North American Motorized products are primarily a result of a reduction in orders from independent dealers.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe pace and significance of acquisitions and the nature and extent of integration of acquired companies, assets, operations, joint venture arrangements and other equity investment arrangements involve a number of related risks including, but not limited to: • The diversion of management’s attention from the management of existing operations to various transaction and integration activities; • The potential for disruption to existing operations and strategic plans; • The assimilation and retention of employees, including key employees; • Risks related to transacting business in geographies outside the U.S., regulatory environments or product categories in which we are less accustomed, including but not limited to: foreign currency exchange rate changes, expanded macro-economic risks due to operations in and sales to a wide base of countries, political and regulatory exposures to a wide array of countries, varying employee/employer relationships, including the existence of workers' councils and labor organizations, new product categories and other challenges caused by distance, language, and cultural differences, making it harder to do business in certain jurisdictions; • The ability of our management teams to manage expanded operations, including international operations, to meet operational and financial expectations; • The integration of departments and systems, including accounting systems, technologies, books and records, controls and procedures; • The adverse impact on profitability if acquired operations, joint ventures or other equity investments do not achieve expected financial results or realize the synergies and other benefits expected; • The potential loss of, or adverse effects on, existing business relationships with suppliers and customers; • The assumption of liabilities of the acquired businesses, which could be greater than anticipated; and 19 • The potential adverse impact on operating results if, in future periods, impairments of significant amounts of goodwill and other assets occur.
Biggest changeThe pace and significance of acquisitions and the nature and extent of integration of acquired companies, assets, operations, joint venture arrangements and other equity investment arrangements involve a number of related risks including, but not limited to: • The diversion of management’s attention from the management of existing operations to various transaction and integration activities; • The potential for disruption to existing operations and strategic plans; • The assimilation and retention of employees, including key employees; • Risks related to transacting business in geographies outside the U.S., including but not limited to: foreign currency exchange rate changes, expanded macroeconomic risks due to operations in and sales to a wide base of countries, political and regulatory exposures to a wide array of countries, varying employee/employer relationships, including the existence of Works Councils and labor organizations and other challenges caused by distance, language and cultural differences, making it harder to do business in certain jurisdictions; • Risks related to regulatory environments or product categories with which we have limited or no experience, 17 • Risks related to acquisitions outside of our historical RV OEM operations, which may carry new and less well known operational challenges; • The ability of our management teams to manage expanded operations, including international operations, to meet operational and financial expectations; • The integration of departments and systems, including accounting systems, technologies, books and records, controls and procedures; • The adverse impact on profitability if acquired operations, joint ventures or other equity investments do not achieve expected financial results or realize the synergies and other benefits expected; • The potential loss of, or adverse effects on, existing business relationships with suppliers and customers; • The assumption of liabilities of the acquired businesses, which could be greater than anticipated; • The potential failure of our due diligence efforts to identify and properly evaluate risks or liabilities acquired or assumed in acquisition transactions; • The potential negative impact on available cash and/or future cash flows to support acquisitions, joint ventures or equity investments and related commitments; and • The potential adverse impact on operating results if, in future periods, impairments of significant amounts of goodwill and other assets occur.
Estimated warranty costs are accounted for at the time of product sale, and adjusted on a quarterly basis, to reflect our best estimate of the amounts necessary to settle future and existing claims on products.
Estimated warranty costs are accounted for at the time of product sale and adjusted on a quarterly basis to reflect our best estimate of the amounts necessary to settle existing and future claims on our products.
If existing or new competitors develop products that are superior to, more innovative than, achieve better consumer acceptance than, or are offered at a lower net price to dealers than our products, our market share, sales volume and profit margins may be adversely affected.
If existing or new competitors develop products that are superior to, are more innovative than, achieve better consumer acceptance than, or are offered at a lower net price to dealers than our products, our market share, sales volume and profit margins may be adversely affected.
In the past, certain chassis manufacturers have experienced difficulties in meeting one or both of these requirements. In addition, revisions to chassis by the suppliers often impact our engineering and production processes and may result in increased chassis or other costs to us.
In the past, certain chassis manufacturers have experienced difficulties in meeting one or both of these requirements. In addition, revisions to chassis by the suppliers often impact our engineering and production processes and may result in increased chassis costs and/or other costs to us.
A failure, or perceived failure, to achieve stated goals, respond to regulatory requirements or meet investor or customer expectations related to ESG concerns could cause harm to our business and reputation. For example, our RV products are powered by gasoline and diesel engines or are required to be towed by gasoline or diesel-powered vehicles.
A failure, or perceived failure, to achieve stated ESG goals, respond to regulatory requirements or meet investor or customer expectations related to ESG concerns could cause harm to our business and reputation. For example, our RV products are powered by gasoline and diesel engines or are required to be towed by gasoline or diesel-powered vehicles.
In various jurisdictions, governmental agencies require a manufacturer to recall and repair vehicles which contain certain hazards or defects. Any recalls of our vehicles, voluntary or involuntary, could have a material adverse effect on our results of operations and could harm our reputation.
In various jurisdictions, governmental agencies require a manufacturer to recall and repair vehicles which contain certain hazards or defects. Any recalls of our products, voluntary or involuntary, could have a material adverse effect on our results of operations and could harm our reputation.
Increased public attention to environmental, social and governance matters may expose us to negative public perception, impose additional costs on our business or impact our stock price. Recently, more attention is being directed towards publicly-traded companies regarding environmental, social and governance (“ESG”) matters.
Increased public attention to environmental, social and governance matters may expose us to negative public perception, impose additional costs on our business or impact our stock price. Recently, increased attention is being directed towards publicly traded companies regarding environmental, social and governance (“ESG”) matters.
However, certain key components are currently produced by only a small group of suppliers that have the capacity to supply large quantities, primarily: 1) motorized chassis, where there are a limited number of chassis suppliers, and 2) windows and doors, towable frames and slide-out mechanisms, axles and upholstered furniture for our recreational vehicles, where LCI Industries is a major supplier for these items within the North American RV industry.
Certain key components are currently produced by only a small group of suppliers that have the capacity to supply large quantities, primarily: (1) motorized chassis, where there are a limited number of chassis suppliers, and (2) doors, towable frames, slide-out mechanisms, axles and upholstered furniture for our recreational vehicles, where LCI Industries is a major supplier for these items within the North American RV industry.
Our U.S. operations are also subject to federal and numerous state consumer protection and unfair trade practice laws and regulations relating to the sale, transportation and marketing of motor vehicles, including so-called “lemon laws.” U.S. federal and state, as well as various European laws and regulations, impose upon vehicle operators various restrictions on the weight, length and width of motor vehicles that may be operated in certain jurisdictions or on certain roadways.
Our U.S. operations are also subject to federal and numerous state consumer protection and unfair trade practice laws and regulations relating to the sale, transportation and marketing of motor vehicles, including so-called “lemon laws.” U.S. federal and state, as well as various European laws and regulations, impose upon vehicle operators’ various restrictions on the weight, length and width of motor vehicles that may be operated in certain jurisdictions or on certain roadways.
Our European-based operations are subject to employee contracts, Works Councils and certain labor organizations, and a small number of our North American employees are currently represented by a labor union.
Our European-based operations are subject to employee contracts, Works Councils and certain other labor organizations, and a small number of our North American employees are currently represented by a labor union.
The misuse, leakage, unauthorized access or falsification of information could result in a violation of privacy laws, including the European Union's General Data Protection Regulation ("GDPR") and laws applicable in North America and the United States, and damage to our reputation which could, in turn, have a significant, negative impact on our results of operations, as a result of fines, remediation costs or other direct or indirect ramifications.
The misuse, leakage, unauthorized access or falsification of information could result in a violation of privacy laws, including the European Union’s General Data Protection Regulation (“GDPR”) and laws applicable in North America and the United States, and damage to our reputation which could, in turn, have a significant, negative impact on our results of operations, as a result of fines, remediation costs or other direct or indirect ramifications.
Sales to FreedomRoads, LLC accounted for approximately 13.0% of our consolidated net sales for fiscal 2022. During recent years, FreedomRoads, LLC has acquired a number of formerly independent RV dealerships. The leverage to negotiate better terms with us arising from FreedomRoads, LLC’s acquisitions or the loss of independent dealers could have a material adverse effect on our business.
Sales to FreedomRoads, LLC accounted for approximately 13.0% of our consolidated net sales for fiscal 2023. During recent years, FreedomRoads, LLC has acquired a number of formerly independent RV dealerships. The leverage to negotiate better terms with us arising from FreedomRoads, LLC’s acquisitions or the loss of independent dealers could have a material adverse effect on our business.
Finally, we also face competition from other consumer leisure, discretionary and vacation spending alternatives, such as cruises, vacation homes, timeshares and other traditional vacations along with other recreational products like boats and motorcycles. Changes in actual or perceived value among these alternatives by consumers could impact our future sales volume and profitability.
Finally, we also face competition from other consumer leisure, discretionary and vacation spending alternatives, such as cruises, vacation homes, timeshares, tent camping and other traditional vacations along with other recreational products like boats and motorcycles. Changes in actual or perceived value among these alternatives by consumers could impact our future sales volume and profitability.
Our results of operations are generally sensitive to changes in overall economic and political conditions, including recessionary conditions, inflationary or deflationary pressures, prolonged high unemployment rates, significant changes in the cost and/or availability of fuel or energy, low consumer confidence, higher interest rates, restrictions and/or shortages of natural gas, terrorism and military conflicts.
Our results of operations are generally sensitive to changes in overall economic and political conditions, including recessionary conditions, inflationary or deflationary pressures, prolonged high unemployment rates, significant changes in the cost and/or availability of fuel or energy, low consumer confidence, higher interest rates, restrictions and/or shortages of natural gas or other fuels, terrorism and military conflicts.
Despite our security measures and business continuity plans, our information technology systems may be vulnerable to damage, disruption or shutdowns caused by cyber-attacks, including state-sponsored attacks, computer viruses, malware (including “ransomware”), phishing attacks or breaches due to errors or malfeasance by employees and others who have access, or gain access, to these systems.
Despite our security measures and business continuity plans, our information technology systems may be vulnerable to damage, disruption or shutdowns caused by cyber-attacks, including state-sponsored attacks, computer viruses, malware, ransomware, phishing attacks or breaches due to errors or malfeasance by employees and others who have access, or gain access, to these systems.
In connection with our use of information systems, we obtain, create and maintain confidential and personal information. Additionally, we rely upon information systems in our marketing and communication efforts. Due to our reliance on our information systems, we have established various levels of security, backup and disaster recovery procedures.
In connection with our use of information systems, we obtain, create and maintain confidential and personal information. Additionally, we rely upon information systems in our marketing and communication efforts. Due to our reliance on our information systems, we have established various levels of security as well as backup and disaster recovery procedures.
Competition for such employees is intense in the areas where we operate, particularly during periods of high industry demand, and could require us to pay higher wages to attract and retain a sufficient number of qualified employees.
Competition for such employees is intense in the areas where we operate, particularly during periods of high industry demand as such periods require us to pay higher wages to attract and retain a sufficient number of qualified employees.
Additionally, due to the robust interest in the RV lifestyle, a number of start-up companies in North America, and certain automotive manufacturers, in both North America and Europe, have entered the RV industry with the introduction of products that directly compete with our products.
Due to the robust interest in the RV lifestyle, a number of start-up companies in North America, and certain automotive manufacturers, in both North America and Europe, have recently entered the RV industry with the introduction of products that directly compete with our products.
The stock market, in general, experiences volatility that has often been unrelated to the underlying operating performance of companies. Likewise, our common stock has, at various points in our history, experienced volatility that has not been correlated to our operating results.
The stock market, in general, experiences volatility that has often been unrelated to the underlying operating performance of companies. Likewise, at various points in our history, our stock price has experienced volatility that has not been correlated to our operating results.
Our initiatives to invest in the future of the RV industry including automation of certain of our production processes and investments in new product and service innovation may be costly and may not be successful.
Our initiatives to invest in the future of the RV industry, including automation of certain of our production processes and investments in new product and service innovation, are likely to be costly and may not be successful.
Two major floor plan financial institutions held approximately 62% of our products' portion of our independent dealers’ total floored dollars outstanding at July 31, 2022. In the event that either of these lending institutions limit or discontinue dealer financing, we could experience a material adverse effect on our results of operations.
Two major floor plan financial institutions held approximately 51% of our products’ portion of our independent dealers’ total floored dollars outstanding at July 31, 2023. In the event that either of these lending institutions limit or discontinue dealer financing, we could experience a material adverse effect on our results of operations.
The concentration of our operations in northern Indiana creates certain risks, including: • Competition for workers skilled in the industry, especially during times of low unemployment or periods of high demand for RVs has, in the past, and may, in the future, increase the cost of our labor or limit the speed at which we can respond to changes in consumer demand; • We have, in the past, and could, in the future, experience employee retention and recruitment challenges as employees with industry knowledge and experience have been, and may continue to be, attracted to other positions or opportunities within or external to the RV industry, and their ability to change employers is relatively easy; and • The potential exists for a greater adverse impact from natural disasters, such as weather-related events and public health emergencies.
The concentration of our operations in northern Indiana creates certain risks, including those listed below which we have experienced in the past and may experience in the future: • Competition for workers skilled in the industry, especially during times of low unemployment or periods of high demand for RVs, which has in the past, and may, in the future, increase the cost of our labor or limit the speed at which we can respond to changes in consumer demand; • Retention and recruitment challenges as employees with industry knowledge and experience have been, and may continue to be, attracted to other positions or opportunities within or external to the RV industry, and their ability to change employers is relatively easy; and • The potential for greater adverse impact from natural disasters, such as weather-related events and public health emergencies.
Finally, as is standard in the industry, our arrangements with chassis and other suppliers are generally terminable at any time either by us or by the supplier. If we cannot obtain an adequate supply of chassis or other key components, this would result in a decrease in our sales and earnings.
In addition, as is standard in the industry, our arrangements with chassis and other suppliers are generally terminable at any time either by us or by the supplier. If we cannot obtain an adequate supply of chassis, raw materials or other key components, this would result in a decrease in our sales and earnings.
The Company’s debt arrangements and provisions in our debt agreements may make us more sensitive to the effects of economic downturns.
The Company’s debt arrangements, maturity dates and provisions in our debt agreements may make us more sensitive to the effects of economic downturns.
Although the RV industry has experienced increased sales and operating results as a result of the unique consumer demand for recreational vehicles since the start of the COVID-19 pandemic, more recently we have seen demand for RVs decrease amid high inflation, rising interest rates, political uncertainty and numerous other macroeconomic indices which have worsened in the regions in which we operate.
Although the RV industry recently experienced increased sales and operating results as a result of the unique consumer demand for recreational vehicles associated with the COVID-19 pandemic, more recently we have seen demand for RVs decrease amid high inflation, rising interest rates, political uncertainty and numerous other macroeconomic indices which have generally worsened in the regions in which we operate.
However, if we are not able to ramp production up or down quickly enough in response to rapid changes in demand, we may not be able to effectively manage our costs, which could negatively impact operating results, and we may lose sales and market share.
However, if we are unable to ramp production, and the corresponding workforce, up or down quickly enough in response to rapid changes in demand, we may not be able to effectively manage our costs, which could negatively impact operating results, and we may also lose sales and market share.
The majority of our U.S. operations are located in northern Indiana, which is home to a large proportion of the U.S. RV industry.
Our U.S.-based operations are primarily centered in northern Indiana. The majority of our U.S. operations are located in northern Indiana, which is home to a large proportion of the U.S. RV industry.
Business acquisitions pose integration and other risks. Our growth has been achieved by both organic growth and by acquisitions. Business acquisitions, including joint ventures and other equity investment arrangements, pose a number of risks, including integration risks, that may result in negative consequences to our business, financial condition or results of operations.
Our growth has been achieved both organically and through acquisition. Business acquisitions, including joint ventures and other equity investment arrangements, pose a number of risks, including integration risks, that may result in negative consequences to our business, financial condition or results of operations.
Further, a decrease in availability of consumer credit resulting from unfavorable economic conditions, or an increase in the cost of consumer credit, may cause consumers to reduce discretionary spending which could, in turn, reduce demand for our products and negatively affect our sales and profitability.
A decrease in availability of consumer credit resulting from unfavorable economic conditions, or additional increases in the cost of consumer credit, may cause consumers to reduce discretionary spending which could, in turn, reduce demand for our products and negatively affect our sales and profitability.
The network of carriers and their ability to deliver units to certain locations was initially negatively impacted by the COVID-19 pandemic due to driver concerns, border crossing restrictions and vaccination requirements.
As an example, the network of carriers and their ability to deliver units to certain locations was negatively impacted by the COVID-19 pandemic due to driver concerns, border crossing restrictions and vaccination requirements.
If we do not generate sufficient cash flows to meet our debt service, capital investment and working capital requirements, we may need to fund those requirements with additional borrowings from the ABL, reduce or cease our payments of dividends, reduce our level of capital investment and/or working capital or we may need to seek additional financing or sell assets.
If we do not generate sufficient cash flows to meet our debt service, capital investment and working capital requirements, we may need to fund those requirements with additional borrowings from the asset-based credit facility (“ABL”), reduce or cease our payments of dividends, reduce our level of capital investment and/or working capital or we may need to seek additional financing or sell assets.
Violations of the laws and regulations to which our business or operations are subject could lead to significant penalties, including restraints on our export or import privileges, monetary fines, criminal or civil proceedings and regulatory or other actions that could materially adversely affect our operating results.
A suggestion of or an investigation into potential violations of the laws and regulations to which our business or operations are subject could lead to significant penalties, including restraints on our export or import privileges, monetary fines, criminal or civil proceedings and regulatory or other actions that could materially adversely affect our operating results.
The North American and European recreational vehicle industries are currently and have from time to time in the past, experienced shortages of chassis for various other reasons, including component shortages, production delays, and capacity constraints including labor and work stoppages at the chassis manufacturers.
The North American and European RV industries have, from time to time in the past, experienced shortages of chassis for various other reasons, including component shortages, production delays, capacity constraints, labor constraints and work stoppages at the chassis manufacturers.
Sales by our U.S.-based subsidiaries into the Canadian market are subject to currency risk as devaluation of the Canadian dollar versus the U.S. dollar may negatively impact U.S.-dollar denominated sales into Canada. With the acquisition of EHG, we have Euro-denominated expenses, sales and assets which are subject to changes in the Euro and U.S. dollar currency exchange rate.
Sales by our U.S.-based subsidiaries into the Canadian market are subject to currency risk as devaluation of the Canadian dollar versus the U.S. dollar may negatively impact U.S.-dollar denominated sales into Canada. Our European-based subsidiaries primarily have Euro-denominated expenses, sales and assets which are subject to changes in the Euro and U.S. dollar currency exchange rate.
The methods and technologies used to obtain unauthorized access to our information systems are constantly changing and may be difficult to anticipate as are laws and regulations concerning data protection and privacy.
The methods and technologies used to obtain unauthorized access to our information systems are constantly changing as are laws and regulations concerning data protection and privacy.
The loss of our executive management or other key employees could have a material adverse effect on us in the event that our succession plans prove inadequate. We could be impacted by the potential adverse effects of union activities.
The loss of members of our executive management or other key employees could have a material adverse effect on our business and results of operations in the event that our succession plans prove inadequate. We could be impacted by the potential adverse effects of union activities.
The remaining components are sourced from a number of suppliers, that may not have 1) the ability to meet our needs timely or completely, 2) the financial reserves or borrowing power to successfully manage through an economic hardship or 3) the ability to financially support potential warranty or recall demands.
Raw materials and component parts are generally sourced from a number of suppliers that may not have: (1) the ability to meet our needs timely or completely, (2) the financial reserves or borrowing power to successfully manage through an economic hardship or (3) the ability to financially support potential warranty or recall demands.
If the COVID-19 pandemic worsens, or future health emergencies emerge in the regions in which we operate or sell our products, the transportation contractors may have difficulty finding drivers who are willing to deliver in those regions, or governmental agencies or other actors may restrict movement of goods in those regions.
If future health emergencies or other circumstances that inhibit transportation of our products emerge in the regions in which we operate or sell our products, the transportation contractors may again have difficulty finding drivers who are willing to deliver in those regions, or governmental agencies or other actors may restrict movement of goods in those regions.
Substantial or sudden increases in interest rates and decreases in the general availability of credit have had an adverse impact on our independent dealers and therefore on our business and results of operations in the past and may do so in the future.
Future substantial or sudden increases in interest rates and decreases in the general availability of credit could have an adverse impact on our independent dealers and therefore on our business and results of operations.
As of July 31, 2022, we distributed product to approximately 2,400 independent dealerships in the United States and approximately 1,100 independent dealerships in Europe. We operate two dealerships in Europe.
As of July 31, 2023, we distributed our products to approximately 2,400 independent dealerships in the United States and approximately 1,100 independent dealerships in Europe. We operate two dealerships in Europe.
In addition, our debt level could limit our ability to raise additional capital, if necessary, or increase borrowing costs on future debt, and may have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions, requiring us to use a portion of our cash flows to repay indebtedness and placing us at a disadvantage compared to competitors with lower debt obligations.
In addition, our debt level could limit our ability to raise additional capital, if necessary, or increase borrowing costs on future debt if we are unable to replace existing debt with comparable new debt and may have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions, requiring us to use a portion of our cash flows to repay indebtedness and placing us at a disadvantage compared to competitors with lower debt obligations. 23 Our ability to make payments on and to refinance our indebtedness depends on our ability to generate cash in the future.
As a public company, we may be required to disclose certain information that may put us at a competitive disadvantage compared to certain of our competitors who are either non-public or are not required to disclose specific industry-related information due to the immateriality of that information to their parent company’s consolidated operations. 27 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
In addition, as a public company, we are required to disclose certain information that may put us at a competitive disadvantage compared to certain of our competitors who are either non-public or are not required to disclose specific industry-related information due to the immateriality of that information to their parent company’s consolidated operations.
The market price of our common stock may also fluctuate significantly in response to numerous factors, many of which are beyond our control, including the following: • Development of new products and features by our competitors; • Development of new collaborative arrangements by us, our competitors or other parties; • Changes in government regulations applicable to our business; • Changes in investor perception of our business and/or management; • Changes in global economic conditions or general market conditions in our industry; • Changes in interest rates and credit availability and their impact on our industry, • COVID-19 or other health crisis developments, including the imposition of various governmental mandates in relation to COVID-19 or similar situations; • Occurrence of major disruptive or catastrophic events; and • Sales of our common stock held by certain equity investors or members of management.
The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including, among other things, the following: • Development of new products and features by our competitors; • Development of new collaborative arrangements by us, our competitors or other parties; • Actual or anticipated changes in government regulations applicable to our business in the various jurisdictions in which we operate; • Changes in investor perception of our business and/or management; • Changes in global economic conditions or general market conditions in our industry; • Changes in interest rates and credit availability and their impact on our industry; • Changes in market expectations of our future growth and profitability; • Future health crisis developments, including the imposition of various governmental mandates; • Occurrence of disruptive or catastrophic economic or political events; and • Sales of our common stock held by certain equity investors or members of management.
Since recreational vehicles are used primarily by vacationers and campers, historically, demand in the recreational vehicle industry generally declines during the fall and winter months, while sales and profits are generally highest during the spring and summer months.
Because recreational vehicles are used primarily by vacationers and campers, demand, sales and profits in the RV industry generally decline during the fall and winter months, while demand, sales and profits are generally highest during the spring and summer months.
Our success depends on the existence of an available, qualified workforce to manufacture our products and on our ability to continue to recruit and retain talented and diverse hourly and salaried employees.
We rely on the existence of an available, qualified workforce to manufacture our products and on our ability to recruit and retain talented hourly and salaried employees.
Thus, if we are obligated to repurchase a substantial number of recreational vehicles, or incur substantial discounting to resell these units in the future, we would incur increased costs and our profit margins and results of operations would be negatively affected.
Thus, if we are obligated to repurchase a substantial number of recreational vehicles or incur substantial discounting to resell these units in the future, we would incur increased costs and our profit margins and results of operations would be negatively affected. In difficult economic times, this amount could increase significantly compared to other years.
Our business relies on information systems and other technology (“information systems”) to support aspects of our global business operations, including but not limited to, procurement, supply chain management, manufacturing, design, distribution, invoicing and collection of payments. We also use information systems to accumulate, analyze and report our operational results.
Our business relies on information systems and other technology (“information systems”) to support aspects of our global business operations, including, but not limited to, procurement, supply chain management, manufacturing, design, distribution, invoicing, financial transactions with banks and financing institutions and other transactions with various third-party providers. We also use information systems to accumulate, analyze and report our operational results.
Within our European-based operations, we incur significant costs with respect to employee benefits which are largely governed by country and regional regulations. New or revised governmental mandates may also cause our operating results and financial condition to suffer. Our risk management policies and procedures may not be fully effective in achieving their purposes.
Within our European-based operations, we incur significant costs with respect to employee benefits which are largely governed by country and regional regulations. New or revised governmental mandates may also cause our operating results and financial condition to suffer.
In difficult economic times, this amount could increase significantly compared to recent years. 17 Our business depends on the performance of independent dealers and transportation carriers. We distribute all of our North American and the majority of our European products through a system of independent, non-franchise authorized dealers, many of whom sell products from competing manufacturers.
Our business depends on the performance of independent, non-franchise authorized dealers and independent transportation carriers. We distribute all of our North American and the majority of our European products through a system of independent, non-franchise authorized dealers, many of whom sell products from competing manufacturers.
These non-U.S. sales create the potential for numerous risks which could negatively impact our financial operating results, including foreign currency effects, tariffs, customs duties, inflation, difficulties in enforcing agreements and collecting receivables through foreign legal systems, compliance with international laws, treaties, and regulations, and unexpected changes in regulatory or tax environments, disruptions in supply or distribution, dependence on foreign personnel and various employee work agreements, foreign governmental action, as well as economic and social instability.
These implications include foreign currency effects, tariffs, customs duties, inflation, difficulties in enforcing agreements and collecting receivables through foreign legal systems, compliance with international laws, treaties and regulations, unexpected changes in regulatory or tax environments, disruptions in supply or distribution, dependence on foreign personnel and various employee work agreements, foreign governmental action, as well as economic and social instability.
If the products we introduce do not gain widespread acceptance, or if our competitors improve their products more rapidly or effectively than we do, we could lose sales or be required to reduce our prices, which could adversely impact our results of operations and financial position.
If the products we introduce do not gain widespread market acceptance, or if our competitors’ new products obtain better market acceptance or render our products obsolete, we could lose sales or be required to reduce our prices, which could adversely impact our results of operations and financial position.
Further, if we lose existing employees with needed skills or we are unable to upskill and develop existing employees, particularly with the introduction of new technologies, it could have a substantial adverse effect on our business. 18 We also rely upon the knowledge, experience and skills of our executive management and key operating company management employees to compete effectively in our business and manage our operations.
Further, if we lose existing employees with needed skills or we are unable to upskill and develop existing employees, particularly with the introduction of new technologies, it could have a substantial adverse effect on our business and results of operations.
Consequently, the results of any prior period may not be indicative of results for any future period. In addition, we have experienced in the past, and expect to experience in future periods, significant variability in quarterly sales, production rates and net income as a result of annual seasonality in our business.
In addition to the RV industry cyclicality, we have experienced, and expect to experience in future periods, significant variability in quarterly production rates, sales and net income as a result of annual seasonality in our business.
Continued consolidation within our major supplier base may also inhibit our ability to source components from alternative suppliers and could result in increased component costs, which may result in decreased margins or higher wholesale product costs, which could, ultimately, result in decreased demand for our products and adversely impact our sales and operating results.
Continued consolidation within our key component supplier base inhibits our ability to source components from alternative suppliers and could result in increased component costs and/or a lack of adequate supply, which in turn may result in decreased margins, higher wholesale product costs or limited production output, which could, ultimately, result in lower demand for our products, decreased sales and reduced operating results.
A key driver in our historical performance and growth is our ability to maintain our strong brands and to continuously develop and introduce innovative new and improved products at a reasonable cost that are desired by consumers.
Our long-term success and competitiveness depends on the successful execution of our innovation initiatives. A key driver in our historical performance and growth has been our ability to maintain our strong brands and to continuously develop and introduce innovative new and improved products at a reasonable cost that are desired by consumers.
Such inappropriate risk taking or misconduct could have a material adverse effect on our results of operations and/or our financial condition. We could incur asset impairment charges for goodwill, intangible assets or other long-lived assets. We have a material amount of goodwill, intangible assets and other long-lived assets. At least annually, we review goodwill for impairment.
We could incur asset impairment charges for goodwill, intangible assets or other long-lived assets. We have a material amount of goodwill, intangible assets and other long-lived assets. At least annually, we review goodwill for impairment.
In Europe, we generally fully insure similar risks with insurance offering relatively low deductibles or premiums. Not all risks which we face may be covered by insurance nor can we be certain that our insurance coverage will be sufficient to cover all future claims against us.
In Europe, we generally fully insure similar risks with insurance offering relatively low deductibles and premiums. Not all risks we face are covered by insurance, nor can we be certain that our insurance coverage will be sufficient to cover all future claims against us. Any material change in the aforementioned factors could have an adverse impact on our operating results.
Conversely, as raw material costs decline, we may not be able to maintain selling prices consistent with higher-cost raw materials in our inventory, which could adversely affect our operating results. 15 Additionally, our business depends on our ability to source raw materials and components in a timely and cost-efficient manner.
Conversely, as raw material costs decline, we may not be able to maintain selling prices consistent with higher-cost raw materials in our inventory, which could adversely affect our operating results. 15 We rely on a small number of suppliers for certain key components, including chassis, and we may not be able to source these key components from alternative suppliers.
The cost of recall and customer satisfaction actions to remedy defects in products that have been sold could be substantial and could have a material adverse effect on our earnings and harm our reputation.
The cost of certain recall and customer satisfaction actions have been substantial in the past and future recalls or customer satisfaction actions to remedy issues in products that have been sold could also be substantial and could have a material adverse effect on our financial condition and results of operations.
We are subject, in the ordinary course of business, to litigation involving product liability and other claims against us, including, without limitation, wrongful death, personal injury and warranties. In North America, we generally self-insure a portion of our product liability and certain other claims and also purchase product liability and other insurance in the commercial insurance market.
We are subject, in the ordinary course of business, to litigation involving product liability, consumer protection and other claims against us. In North America, we generally self-insure a portion of our exposure to product liability and certain other claims and also purchase product liability coverage above our self-insured retention.
Our estimated effective income tax rate could also be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in statutory rates, changes in the valuation of deferred tax assets and liabilities or changes in tax laws or their interpretation.
Further, the outcome of future elections and the associated political party with power to enact legislation could make tax increases more likely and more severe. 22 Our effective income tax rate could also be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in statutory rates, changes in the valuation of deferred tax assets and liabilities or changes in tax laws or their interpretation.
We must make mandatory prepayments of principal under the term loan agreement upon the occurrence of certain specified events, including certain asset sales, debt issuance and receipt of annual cash flows in excess of certain amounts.
Our loan documents contain restrictions which could prevent or restrict, in certain circumstances, operations, payment of dividends or incurrence of additional debt. In addition, we must make mandatory prepayments of principal under the term loan agreement upon the occurrence of certain specified events, including certain asset sales, debt issuance and generation of annual cash flows in excess of certain amounts.
MACROECONOMIC, MARKET AND STRATEGIC RISKS With a global footprint, our business could be adversely affected by macroeconomic and geopolitical factors. Industry sales volume in any of our key markets can be volatile and could decline if there is a financial crisis, recession or significant geopolitical event.
RV industry sales volume in our key markets can be volatile and could decline if there is a financial crisis, recession or significant geopolitical event.
In addition to direct competition from other RV manufacturers, we also compete against consumer demand for used recreational vehicles, particularly during periods of economic downturn.
Not only does our Company compete against numerous existing RV manufacturers, but a number of our operating subsidiaries directly compete with each other. In addition to direct competition from other RV manufacturers, we also continuously compete against consumer demand for used recreational vehicles, particularly during periods of economic downturn.
In accordance with customary practice in the recreational vehicle industry, upon the request of a lending institution financing an independent dealer’s purchase of our products, we will generally execute a repurchase agreement with the lending institution.
FINANCIAL RISKS As is customary, we have executed repurchase agreements with numerous lending institutions who finance certain of our independent dealers' purchases of our products. In accordance with customary practice in the RV industry, upon the request of a lending institution financing an independent dealer’s purchase of our products, we will generally execute a repurchase agreement with the lending institution.
Climate change regulation combined with public sentiment could result in reduced demand for our products, higher energy and fuel prices or carbon taxes, limitations on where we can produce or sell our products, limitations on where our products can be used or other restrictions or costs, all of which could materially adversely affect our business and results of operations.
Concerns regarding climate change at numerous levels of government in various jurisdictions may lead to additional and potentially more stringent international, national, regional and local legislative and regulatory responses, and compliance with any new rules could be difficult and costly. 20 Climate change regulation combined with public sentiment could result in reduced demand for our products, higher energy and fuel prices or carbon taxes, limitations on where we can produce or sell our products, limitations on where our products can be used or other restrictions or costs, all of which could materially adversely affect our business and results of operations.
Competitive pressures have, from time to time, resulted in a reduction of our profit margins and/or a reduction in our market share. Sustained increases in these competitive pressures could have a material adverse effect on our results of operations.
Competition within the industry is based upon price, design, value, quality, service, brand awareness and reputation, as well as other factors. Competitive pressures have, from time to time, resulted in a reduction of our profit margins and/or a reduction in our market share. Sustained increases in these competitive pressures could have a material adverse effect on our results of operations.
Recently, certain raw materials and components that are used in manufacturing our products, have become unavailable, interrupted or delayed. We also rely on the free flow of goods through open and operational ports on a consistent basis for a portion of our raw materials and components.
We rely on the free flow of goods through open and operational ports on a consistent basis for a portion of our raw materials and components.
A decrease in the availability of this type of wholesale financing, more restrictive lending practices or an increase in the cost of such wholesale financing could limit or prevent independent dealers from carrying adequate levels of inventory, which may limit product offerings and could lead to reduced demand for our products.
A decrease in the availability of this type of wholesale financing, more restrictive lending practices or an increase in the cost of such wholesale financing has historically limited or prevented independent dealers from carrying normalized levels of inventory, which led to reduced demand for our products, lower sales, higher discounts to entice sales and an adverse impact to our results of operations.
If the Company fails to meet expectations related to future growth, profitability, dividends, share repurchases or other market expectations, the Company might miss investor expectations or analysts or investors could change their opinions and/or recommendations regarding our stock and our stock price may decline, which could have a material adverse impact on investor confidence.
If we fail to meet expectations related to future growth, profitability, dividends, share repurchases or other market expectations, analysts or investors could change their opinions and/or recommendations regarding our stock and our stock price may decline, which could have a material adverse impact on investor confidence. 13 With our global footprint, our business could be adversely affected by macroeconomic and geopolitical developments as well as actual or potential public health emergencies.
In addition, certain RV components are sourced from countries where we do not currently have operations. Changes in trade policy and resulting tariffs that have or may be imposed, along with port, production or other delays, have, in the past, and could, again in the future, cause increased costs for, or shortages of, certain RV components or sub-components.
Changes in trade policy and resulting tariffs that have or may be imposed, along with port, production or other delays, have, in the past, and could, in the future, cause increased costs for, or shortages of, certain raw materials and components. We may not be able to source alternative supplies as necessary without increased costs or at all.
Any material change in the aforementioned factors could have an adverse impact on our operating results. Any increase in the frequency and size of claims, as compared to our experience in prior years, may cause the premium that we are required to pay for insurance to increase significantly and may negatively impact future self-insured retention levels.
Any increase in the frequency and/or size of claims, as compared to our experience in prior years, may cause the premiums that we are required to pay for insurance to increase significantly, may negatively impact future self-insured retention levels and may also increase the amounts we pay in punitive damages, not all of which are covered by our insurance policies.
In addition, deterioration in the liquidity or credit worthiness of FreedomRoads, LLC could negatively impact our sales and accounts receivable and could trigger repurchase obligations under our repurchase agreements.
In addition, deterioration in the liquidity or creditworthiness of FreedomRoads, LLC could negatively impact our sales and accounts receivable and could, in the event of a financing default, trigger repurchase obligations under our repurchase agreements, which would have a significant adverse effect on our liquidity and results of operations.
An increase in actual warranty claim costs as compared to our estimates could result in increased warranty liabilities and expense which could have an adverse impact on our earnings. Our business and results of operations may be harmed if the frequency and size of product liability or other claims against us increase.
An increase in actual warranty claim costs as compared to our estimates could result in increased warranty liabilities and expense which could have an adverse impact on our earnings.
Our domestic and international tax liabilities are dependent upon the location of earnings among, and the applicable tax rates in, these different jurisdictions.
Our domestic and international tax liabilities are dependent upon the location of earnings among, and the applicable tax rates in, these different jurisdictions. Tax rates in various jurisdictions in which we operate or sell our products may increase to fund past or future governmental programs.
The United States or other governmental authorities may adjust tax rates, impose new income taxes or indirect taxes, or revise interpretations of existing tax rules and regulations. Further, the outcome of future elections and the associated political party with power to enact legislation could make tax increases more likely and more severe.
The United States or other governmental authorities may adjust tax rates, impose new income taxes or indirect taxes, or revise interpretations of existing tax rules and regulations.
If a work stoppage occurs, it could delay the manufacture, sale and distribution of our products and have a material adverse effect on our business, prospects, operating results, or financial condition. Our U.S.-based operations are primarily centered in northern Indiana.
Work stoppages or strikes organized by such third-party unions have in the past and could again in the future have a material adverse impact on our business. If a work stoppage occurs, it could delay the manufacture, sale and distribution of our products and have a material adverse effect on our business, operating results or financial condition.
Government, media or activist pressure to limit emissions could negatively impact consumers’ perceptions of our products which could have a material adverse effect on our business, and the actions taken by governments and other actors to reduce emissions could impose costs that could materially affect our results of operation and financial condition. 23 Additionally, while THOR strives to create an inclusive culture and a diverse workforce where everyone feels valued and respected, a failure, or perceived failure, to properly address inclusivity and diversity matters could result in reputational harm, reduced sales or an inability to attract and retain a talented workforce.
Government, media or activist pressure to limit emissions could negatively impact consumers’ perceptions of our products which could have a material adverse effect on our business, and the actions taken by governments and other actors to reduce emissions could impose costs that could materially affect our results of operation and financial condition.
In times of economic uncertainty, consumers may have less discretionary income and may defer spending on high-cost, discretionary products such as RVs which may in turn adversely affect our financial performance.
Historically, we have seen that in times of economic uncertainty, consumers who have less discretionary income generally defer spending on high-cost, discretionary products, such as RVs.
Our policies, procedures, controls and oversight to monitor and manage our enterprise risks may not be fully effective in achieving their purpose and may leave exposure to identified or unidentified risks. Past or future misconduct by our employees or vendors could result in violations of law by us, regulatory sanctions and/or serious reputational or financial harm.
Past or future misconduct by our employees or vendors could result in violations of law by us, regulatory sanctions and/or serious reputational or financial harm. The Company monitors its policies, procedures and controls; however, our policies, procedures and controls may not be sufficient to prevent all forms of misconduct.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table describes the location, number and size of our principal manufacturing plants and other materially important physical properties as of July 31, 2022: Locations – Applicable Segment(s) Owned or Leased No. of Buildings Approximate Building Area Square Feet United States: Indiana – North American Towable Segment Owned 87 6,210,000 Indiana – North American Towable Segment Leased 2 143,000 Indiana – North American Towable and Motorized Segments Owned 38 2,782,000 Indiana – North American Towable and Motorized Segments Leased 2 28,000 Indiana – North American Motorized Segment Owned 18 1,200,000 Indiana – Corporate, North American Towable and Motorized Segments Owned 24 1,465,000 Indiana – Other Owned 4 341,000 Indiana – Other Leased 10 728,000 Indiana Subtotal 185 12,897,000 Ohio – North American Towable and Motorized Segments Owned 12 1,319,000 Michigan – Towables Leased 1 88,000 Michigan – Other Owned 1 10,000 Michigan – Other Leased 5 300,000 Idaho – North American Towable Segment Owned 5 661,000 Oregon – North American Towable Segment Owned 5 371,000 Alabama – North American Motorized Segment Owned 30 1,195,000 Alabama – North American Motorized Segment Leased 8 90,000 Mississippi – North American Towable Segment Owned 12 345,000 Mississippi – North American Motorized Segment Leased 7 339,000 Other United States – Other Owned 3 486,000 Other United States – Other Leased 5 183,000 Other Subtotal 94 5,387,000 United States Subtotal 279 18,284,000 Europe: Germany – European Segment Owned 84 3,968,000 Germany – European Segment Leased 45 1,552,000 Italy – European Segment Owned 3 568,000 Italy – European Segment Leased 6 256,000 Italy – Other Leased 1 118,000 France – European Segment Owned 6 330,000 Poland – European Segment Owned 1 318,000 United Kingdom – European Segment Owned 1 269,000 Europe Subtotal 147 7,379,000 Total 426 25,663,000 28
Biggest changeThe following table describes the location, number and size of our principal manufacturing plants and other materially important physical properties as of July 31, 2023: Locations – Applicable Segment(s) Owned or Leased No. of Buildings Approximate Building Area Square Feet United States: Indiana – North American Towable Segment Owned 88 6,470,000 Indiana – North American Towable Segment Leased 3 267,000 Indiana – North American Towable and Motorized Segments Owned 40 2,856,000 Indiana – North American Motorized Segment Owned 18 1,200,000 Indiana – Corporate, North American Towable and Motorized Segments Owned 24 1,465,000 Indiana – Corporate, North American Towable and Motorized Segments Leased 1 1,000 Indiana – Other Owned 4 341,000 Indiana – Other Leased 9 779,000 Indiana Subtotal 187 13,379,000 Ohio – North American Towable and Motorized Segments Owned 13 1,336,000 Alabama – North American Motorized Segment Owned 29 1,120,000 Alabama – North American Motorized Segment Leased 4 32,000 Mississippi – North American Motorized Segment Owned 8 240,000 Mississippi – North American Motorized Segment Leased 6 330,000 Michigan – North American Towable Segment Leased 1 88,000 Michigan – Other Owned 1 10,000 Michigan – Other Leased 5 300,000 Idaho – North American Towable Segment Owned 5 661,000 Oregon – North American Towable Segment Owned 5 371,000 Other United States – Other Owned 3 486,000 Other United States – Other Leased 5 183,000 Other Subtotal 85 5,157,000 United States Subtotal 272 18,536,000 Europe: Germany – European Segment Owned 82 3,941,000 Germany – European Segment Leased 39 1,457,000 Italy – European Segment Owned 3 568,000 Italy – European Segment Leased 6 256,000 Italy – Other Leased 1 118,000 France – European Segment Owned 6 330,000 Poland – European Segment Owned 1 328,000 United Kingdom – European Segment Owned 1 269,000 Europe Subtotal 139 7,267,000 Total 411 25,803,000 25
ITEM 2. PROPERTIES As of July 31, 2022, worldwide we owned or leased approximately 25,663,000 square feet of total manufacturing plant and office space. We believe that our present facilities, consisting primarily of steel clad, steel or wood frame and masonry construction, and the machinery and equipment contained in these facilities, are generally well maintained and in good condition.
ITEM 2. PROPERTIES As of July 31, 2023, worldwide we owned or leased approximately 25,803,000 square feet of total manufacturing plant and office space. We believe that our present facilities, consisting primarily of steel clad, steel or wood frame and masonry construction, and the machinery and equipment contained in these facilities, are generally well maintained and in good condition.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeDuring fiscal 2022, the accrual was adjusted quarterly based on developments involving the recall, including our expectations regarding the extent of vendor reimbursements and the estimated total cost of the recall. The Company has been, and will continue to be, reimbursed by the suppliers of the products for a portion of the costs it will incur related to this recall.
Biggest changeDuring fiscal 2022 and fiscal 2023, the accrual was adjusted quarterly based on developments involving the recall, including our expectations regarding the extent of vendor reimbursements and the estimated total cost of the recall.
Added
The Company has been, and will continue to be, reimbursed by the suppliers of the products for a portion of the costs it will incur related to this recall.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe 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. 30 Issuer Purchases of Equity Securities During the three months ended July 31, 2022, the Company used $66,786 to repurchase shares of common stock under its repurchase program.
Biggest changeThe 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 of Directors, and will be dependent upon future earnings, cash flows and other factors, in addition to compliance with any then-existing financing facilities.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s Common Stock, par value $0.10 per share (the “Common Stock”), is traded on the New York Stock Exchange (“NYSE”) under the symbol “THO.” Holders As of September 15, 2022, the number of holders of record of the Common Stock was 140.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s Common Stock, par value $0.10 per share (the “Common Stock”), is traded on the New York Stock Exchange (“NYSE”) under the symbol “THO.” Holders As of September 15, 2023, the number of holders of record of the Common Stock was 139.
Dividends In fiscal 2022, we paid a $0.43 per share dividend for each fiscal quarter. In fiscal 2021, we paid a $0.41 per share dividend for each fiscal quarter. The Company’s Board currently intends to continue regular quarterly cash dividend payments in the future.
Dividends In fiscal 2023, we paid a $0.45 per share dividend for each fiscal quarter. In fiscal 2022, we paid a $0.43 per share dividend for each fiscal quarter. The Company’s Board of Directors currently intends to continue regular quarterly cash dividend payments in the future.
Equity Compensation Plan Information – see Item 12. 31
Equity Compensation Plan Information – see Item 12. 27
Removed
The Company’s remaining authorization for common stock repurchases was $533,214 at July 31, 2022.
Removed
A summary of the Company’s share repurchases during the three months ended July 31, 2022 is set forth below: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs 5/1/22 – 5/31/22 — $ — — $ 151,679 6/1/22 – 6/30/22 — $ — — $ 600,000 7/1/22 – 7/31/22 854,176 $ 78.19 854,176 $ 533,214 854,176 854,176 (1) On December 21, 2021 the Company announced that the Board of Directors of the Company authorized Company management to utilize up to $250,000 to purchase shares of the Company’s common stock through December 21, 2024.
Removed
On June 24, 2022, the Board authorized Company management to utilize up to an additional $448,321 to repurchase shares of the Company’s common stock through July 31, 2025. Under the share repurchase program, the Company is authorized to acquire, from time-to-time, outstanding shares of its common stock in the open market or in privately negotiated transactions.
Removed
The timing and amount of share repurchases will be determined by the Company’s management team based upon its evaluation of market conditions and other factors. The share repurchase program may be suspended, modified or discontinued at any time, and the Company has no obligation to repurchase any amount of its common stock under the program.
Removed
During fiscal 2022, the Company purchased 1,944,243 shares of its common stock, at various times in the open market, at an aggregate purchase price of $165,107, all from the December 21, 2021 authorization.
Removed
As of July 31, 2022, the remaining amount of the Company's common stock that may be repurchased under the December 21, 2021 $250,000 authorization expiring on December 21, 2024 is $84,893.
Removed
As of July 31, 2022, the remaining amount of the Company’s common stock that may be repurchased under the June 24, 2022 authorization expiring on July 31, 2025 is $448,321. As of July 31, 2022, the total remaining amount of the Company's common stock that may be repurchased under these two authorizations is $533,214.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFISCAL 2021 FISCAL 2022 FISCAL 2021 Change Amount % Change NET SALES: Recreational vehicles North American Towables $ 8,661,945 $ 6,221,928 $ 2,440,017 39.2 North American Motorized 3,979,647 2,669,391 1,310,256 49.1 Total North America 12,641,592 8,891,319 3,750,273 42.2 European 2,887,453 3,200,079 (312,626) (9.8) Total recreational vehicles 15,529,045 12,091,398 3,437,647 28.4 Other 1,225,824 373,174 852,650 228.5 Intercompany eliminations (442,344) (147,192) (295,152) (200.5) Total $ 16,312,525 $ 12,317,380 $ 3,995,145 32.4 # OF UNITS: Recreational vehicles North American Towables 238,634 214,600 24,034 11.2 North American Motorized 29,731 25,008 4,723 18.9 Total North America 268,365 239,608 28,757 12.0 European 60,192 64,875 (4,683) (7.2) Total 328,557 304,483 24,074 7.9 % of Segment Net Sales % of Segment Net Sales GROSS PROFIT: Recreational vehicles North American Towables $ 1,512,298 17.5 $ 1,020,908 16.4 $ 491,390 48.1 North American Motorized 654,052 16.4 345,755 13.0 308,297 89.2 Total North America 2,166,350 17.1 1,366,663 15.4 799,687 58.5 European 409,987 14.2 440,855 13.8 (30,868) (7.0) Total recreational vehicles 2,576,337 16.6 1,807,518 14.9 768,819 42.5 Other, net 229,693 18.7 87,455 23.4 142,238 162.6 Total $ 2,806,030 17.2 $ 1,894,973 15.4 $ 911,057 48.1 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Recreational vehicles North American Towables $ 429,053 5.0 $ 330,138 5.3 $ 98,915 30.0 North American Motorized 206,613 5.2 134,315 5.0 72,298 53.8 Total North America 635,666 5.0 464,453 5.2 171,213 36.9 European 264,723 9.2 261,778 8.2 2,945 1.1 Total recreational vehicles 900,389 5.8 726,231 6.0 174,158 24.0 Other 75,731 6.2 26,113 7.0 49,618 190.0 Corporate 140,342 — 117,572 — 22,770 19.4 Total $ 1,116,462 6.8 $ 869,916 7.1 $ 246,546 28.3 42 FISCAL 2022 % of Segment Net Sales FISCAL 2021 % of Segment Net Sales Change Amount % Change INCOME (LOSS) BEFORE INCOME TAXES: Recreational vehicles North American Towables $ 1,050,536 12.1 $ 658,964 10.6 $ 391,572 59.4 North American Motorized 436,604 11.0 202,057 7.6 234,547 116.1 Total North America 1,487,140 11.8 861,021 9.7 626,119 72.7 European 87,116 3.0 116,576 3.6 (29,460) (25.3) Total recreational vehicles 1,574,256 10.1 977,597 8.1 596,659 61.0 Other, net 110,798 9.0 57,674 15.5 53,124 92.1 Corporate (225,190) — (190,690) — (34,500) (18.1) Total $ 1,459,864 8.9 $ 844,581 6.9 $ 615,283 72.9 As of July 31, 2022 As of July 31, 2021 Change Amount % Change ORDER BACKLOG: Recreational vehicles North American Towables $ 2,571,009 $ 9,284,229 $ (6,713,220) (72.3) North American Motorized 3,436,629 4,014,738 (578,109) (14.4) Total North America 6,007,638 13,298,967 (7,291,329) (54.8) European 2,753,602 3,559,097 (805,495) (22.6) Total $ 8,761,240 $ 16,858,064 $ (8,096,824) (48.0) CONSOLIDATED Consolidated net sales for fiscal 2022 increased $3,995,145, or 32.4%, compared to fiscal 2021.
Biggest changeFISCAL 2022 FISCAL 2023 FISCAL 2022 Change Amount % Change NET SALES: Recreational vehicles North American Towable $ 4,202,628 $ 8,661,945 $ (4,459,317) (51.5) North American Motorized 3,314,170 3,979,647 (665,477) (16.7) Total North America 7,516,798 12,641,592 (5,124,794) (40.5) European 3,037,147 2,887,453 149,694 5.2 Total recreational vehicles 10,553,945 15,529,045 (4,975,100) (32.0) Other 777,639 1,225,824 (448,185) (36.6) Intercompany eliminations (209,979) (442,344) 232,365 52.5 Total $ 11,121,605 $ 16,312,525 $ (5,190,920) (31.8) # OF UNITS: Recreational vehicles North American Towable 106,504 238,634 (132,130) (55.4) North American Motorized 24,832 29,731 (4,899) (16.5) Total North America 131,336 268,365 (137,029) (51.1) European 55,679 60,192 (4,513) (7.5) Total 187,015 328,557 (141,542) (43.1) % of Segment Net Sales % of Segment Net Sales GROSS PROFIT: Recreational vehicles North American Towable $ 503,487 12.0 $ 1,512,298 17.5 $ (1,008,811) (66.7) North American Motorized 442,715 13.4 654,052 16.4 (211,337) (32.3) Total North America 946,202 12.6 2,166,350 17.1 (1,220,148) (56.3) European 505,344 16.6 409,987 14.2 95,357 23.3 Total recreational vehicles 1,451,546 13.8 2,576,337 16.6 (1,124,791) (43.7) Other, net 144,807 18.6 229,693 18.7 (84,886) (37.0) Total $ 1,596,353 14.4 $ 2,806,030 17.2 $ (1,209,677) (43.1) SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Recreational vehicles North American Towable $ 243,616 5.8 $ 429,053 5.0 $ (185,437) (43.2) North American Motorized 175,509 5.3 206,613 5.2 (31,104) (15.1) Total North America 419,125 5.6 635,666 5.0 (216,541) (34.1) European 271,038 8.9 264,723 9.2 6,315 2.4 Total recreational vehicles 690,163 6.5 900,389 5.8 (210,226) (23.3) Other 65,955 8.5 75,731 6.2 (9,776) (12.9) Corporate 113,936 — 140,342 — (26,406) (18.8) Total $ 870,054 7.8 $ 1,116,462 6.8 $ (246,408) (22.1) 37 FISCAL 2023 % of Segment Net Sales FISCAL 2022 % of Segment Net Sales Change Amount % Change INCOME (LOSS) BEFORE INCOME TAXES: Recreational vehicles North American Towable $ 237,123 5.6 $ 1,050,536 12.1 $ (813,413) (77.4) North American Motorized 255,207 7.7 436,604 11.0 (181,397) (41.5) Total North America 492,330 6.5 1,487,140 11.8 (994,810) (66.9) European 179,625 5.9 87,116 3.0 92,509 106.2 Total recreational vehicles 671,955 6.4 1,574,256 10.1 (902,301) (57.3) Other, net 36,965 4.8 110,798 9.0 (73,833) (66.6) Corporate (209,567) — (225,190) — 15,623 6.9 Total $ 499,353 4.5 $ 1,459,864 8.9 $ (960,511) (65.8) As of July 31, 2023 As of July 31, 2022 Change Amount % Change ORDER BACKLOG: Recreational vehicles North American Towable $ 756,047 $ 2,571,009 $ (1,814,962) (70.6) North American Motorized 1,242,936 3,436,629 (2,193,693) (63.8) Total North America 1,998,983 6,007,638 (4,008,655) (66.7) European 3,549,660 2,753,602 796,058 28.9 Total $ 5,548,643 $ 8,761,240 $ (3,212,597) (36.7) CONSOLIDATED Consolidated net sales for fiscal 2023 decreased $5,190,920, or 31.8%, compared to fiscal 2022.
This information is subject to adjustment, is continuously updated, and is often impacted by delays in reporting by various states or provinces.
This information is subject to adjustment, is continuously updated and is often impacted by delays in reporting by various states or provinces.
Investing Activities Net cash used in investing activities for fiscal 2022 was $1,049,257, primarily due to $781,967 used in business acquisitions, primarily for the Airxcel acquisition discussed in Note 2 to the Consolidated Financial Statements, and capital expenditures of $242,357.
Net cash used in investing activities for fiscal 2022 was $1,049,257, primarily due to $781,967 used in business acquisitions, primarily for the Airxcel acquisition discussed in Note 2 to the Consolidated Financial Statements, and capital expenditures of $242,357.
Financing Activities Net cash used in financing activities for fiscal 2022 was $47,841, consisting primarily of borrowings of $660,088 on the revolving asset-based credit facilities, which included $625,000 borrowed in connection with the acquisition of Airxcel and $35,088 for temporary working capital needs, in addition to $500,000 in proceeds from the issuance of Senior Unsecured Notes in October 2021, which were then used as part of the $559,035 in payments on the ABL facility.
Net cash used in financing activities for fiscal 2022 was $47,841, consisting primarily of borrowings of $660,088 on the revolving asset-based credit facilities, which included $625,000 borrowed in connection with the acquisition of Airxcel and $35,088 for temporary working capital needs, in addition to $500,000 in proceeds from the issuance of Senior Unsecured Notes in October 2021, which were then used as part of the $559,035 in payments on the ABL facility.
European RV Industry The Company monitors retail trends in the European RV market as reported by the European Caravan Federation (“ECF”), whose industry data is reported to the public quarterly and typically issued on a one-to-two-month lag. Additionally, on a monthly basis the Company receives OEM-specific reports from most of the individual member countries that make up the ECF.
European RV Industry The Company monitors retail trends in the European RV market as reported by the European Caravan Federation (“ECF”), whose industry data is reported to the public quarterly and typically issued on a one-to-two-month lag. Additionally, the Company receives monthly OEM-specific reports from most of the individual member countries that make up the ECF.
European Outlook Our European operations offer a full lineup of leisure vehicles including caravans and motorized products including urban campers, campervans and small-to-large motorcaravans. Our product offerings are not limited to vehicles only but also include accessories and services, including vehicle rentals.
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.
While near-term demand will be influenced by many factors, including consumer confidence and the level of consumer spending on discretionary products, we believe future retail demand over the longer term will exceed historical, pre-pandemic levels as consumers continue to value the perceived benefits offered by the RV lifestyle, which provides people with a personal space to maintain social distance in a safe manner, the ability to connect with loved ones and the potential to get away for short, frequent breaks or longer adventures.
While we anticipate that near-term demand will be influenced by many factors, including consumer confidence and the level of consumer spending on discretionary products, we believe future retail demand over the longer term will exceed historical, pre-pandemic levels as consumers continue to value the perceived benefits offered by the RV lifestyle, which provides people with a personal space to maintain social distance in a safe manner, the ability to connect with loved ones and the potential to get away for short, frequent breaks or longer adventures.
In addition to our attendance at various strategic trade fairs going forward, we have and will continue to strengthen and expand our digital activities in order to reach high potential target groups, generate leads and steer customers directly to dealerships.
In addition to our attendance at various strategic trade fairs going forward, 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.
Application of Critical Accounting Estimates See Note 1 to the Consolidated Financial Statements for further information on the Company's most significant accounting policies. The Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America.
Application of Critical Accounting Estimates See Note 1 to the Consolidated Financial Statements for further information on the Company's significant accounting policies. The Consolidated Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America.
Throughout fiscal 2022, 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.
Throughout fiscal 2022 and 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.
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 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 may also consider strategic and opportunistic repurchases of shares of THOR stock under the share repurchase authorizations as discussed in Note 17 to the 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").
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 decontenting, material sourcing strategies, efficiency improvements or raising the selling prices for our products by corresponding amounts.
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.
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 decontenting, material sourcing strategies, efficiency improvements or raising the selling prices for our products by corresponding amounts.
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.
See Note 7 to the Consolidated Financial Statements for further information regarding goodwill and intangible assets. 52 Product Warranty We generally provide retail customers of our products with either a one-year or two-year warranty covering defects in material or workmanship, with longer warranties on certain structural components or other items.
See Note 7 to the Consolidated Financial Statements for further information regarding goodwill and intangible assets. 48 Product Warranty We generally provide retail customers of our products with either a one-year or two-year warranty covering defects in material or workmanship, with longer warranties on certain structural components or other items.
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Company’s Consolidated Financial Statements and Notes thereto included in Item 8 of this Report. The discussion below is a comparison of the results of operations and changes in financial condition for the fiscal years ended July 31, 2022 and 2021.
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Company’s Consolidated Financial Statements and Notes thereto included in Item 8 of this Report. The discussion below is a comparison of the results of operations and changes in financial condition for the fiscal years ended July 31, 2023 and 2022.
The comparison of, and changes between, the fiscal years ended July 31, 2021 and 2020 can be found within "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the fiscal year ended July 31, 2021, as filed with the SEC on September 28, 2021.
The comparison of, and changes between, the fiscal years ended July 31, 2022 and 2021 can be found within "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the fiscal year ended July 31, 2022, as filed with the SEC on September 28, 2022.
In estimating the expiration of the standby repurchase obligations, we used inventory reports as of July 31, 2022 from our independent dealers’ primary lending institutions and made an assumption for obligations for inventory aged 0-12 months that it was financed evenly over the twelve-month period.
In estimating the expiration of the standby repurchase obligations, we used inventory reports as of July 31, 2023 from our independent dealers’ primary lending institutions and made an assumption for obligations for inventory aged 0-12 months that it was financed evenly over the twelve-month period.
Changes in these estimates can have a significant impact on the determination of cash flows and fair value and could potentially result in future material impairments. The Company completed its annual goodwill impairment test as of May 31, 2022, and no impairment was identified.
Changes in these estimates can have a significant impact on the determination of cash flows and fair value and could potentially result in future material impairments. The Company completed its annual goodwill impairment test as of May 31, 2023, and no impairment was identified.
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 pandemic will become long-term RVers, resulting in future repeat and upgrade sales opportunities.
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 COVID-19 pandemic will become long-term RVers, resulting in future repeat and upgrade sales opportunities.
Subsequent changes to projections driven by actual results following the acquisition date could require the Company to record impairment charges. 51 Goodwill, Intangible and Long-Lived Assets Goodwill results from the excess of purchase price over the net assets of an acquired business.
Subsequent changes to projections driven by actual results following the acquisition date could require the Company to record impairment charges. 47 Goodwill, Intangible and Long-Lived Assets Goodwill results from the excess of purchase price over the net assets of an acquired business.
The fair value of the European reporting unit exceeded its carrying value by less than 10% in this test.
The fair value of this reporting unit exceeded its carrying value by less than 10% in this test.
Factors we use in estimating the warranty liability include a history of units sold, existing THOR units in dealer inventory, historical average repair costs per unit incurred and a profile of the distribution of warranty expenditures over the warranty period.
Factors we use in estimating the warranty liability include a history of retail sold units, existing THOR units in dealer inventory, historical average costs per unit incurred and a profile of the distribution of warranty expenditures over the warranty period.
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. These factors further negatively impact our production schedule and cost structure as we try to balance our production and personnel staffing levels and schedules to the available chassis, often with short notice.
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. These factors may continue to negatively impact our production schedule and cost structure as we try to balance our production and personnel staffing levels and schedules to the available chassis, often with short notice.
Share Repurchase Program On December 21, 2021, the Company’s Board of Directors authorized Company management to utilize up to $250,000 to repurchase shares of the Company’s common stock through December 21, 2024.
Fiscal 2022 Share Repurchase Program On December 21, 2021, the Company’s Board of Directors authorized Company management to utilize up to $250,000 to repurchase shares of the Company’s common stock through December 21, 2024.
Accounting Pronouncements Reference is made to Note 1 to the Consolidated Financial Statements in this report for a summary of recently adopted accounting pronouncements, which summary is hereby incorporated by reference. 53
Accounting Pronouncements Reference is made to Note 1 to the Consolidated Financial Statements in this report for a summary of recently adopted accounting pronouncements, which summary is hereby incorporated by reference. 49
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. The Company’s Board currently intends to continue regular quarterly cash dividend payments in the future.
We anticipate approximately two-thirds of our capital spend will be in North America and one-third in Europe, and 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.
Based on the increasing value consumers place on these factors, we expect to see long-term growth in the North American RV industry. The recent growth in industry-wide RV sales has also resulted in exposing a much wider range of consumers to the lifestyle.
Based on the increasing value consumers place on these factors, we expect to see long-term growth in the North American RV industry. The recent multi-year growth in industry-wide RV sales has also resulted in exposing a wider range of consumers to the RV lifestyle.
Economic and industry-wide factors that have historically affected, including fiscal 2022, 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.
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.
In addition to 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 we have manufacturing sites. 41 RESULTS OF OPERATIONS FISCAL 2022 VS.
In addition to 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 we have manufacturing sites. 36 RESULTS OF OPERATIONS FISCAL 2023 VS.
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. 49 Our current estimate of committed and internally approved capital spend for fiscal 2023 is $275,000, 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 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. 45 Our current estimate of committed and internally approved capital spend for fiscal 2024 is $260,000, 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 continue to receive communications from our European chassis suppliers that due to a number of factors, including (1) supply constraints of key components that they require for the manufacturing of chassis, such as semiconductor chips and engines, (2) demand outpacing their production capacity, and (3) personnel shortages, their production of chassis will be limited.
We continue to receive communications from our European chassis suppliers that due to a number of factors, including (1) supply constraints of key components that they require for the manufacturing of chassis, such as semiconductor chips and engines, (2) demand outpacing their production capacity and (3) personnel shortages, their production of chassis could be negatively impacted.
Executive Summary 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.
Executive Summary 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.
If shortages of chassis or other component parts were to become more significant or longer term in nature, or if other 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.
If shortages of chassis or other component parts were to become more significant, or if other 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.
Unrecognized income tax benefits in the amount of $20,197 have been excluded from the table because we are unable to determine a reasonably reliable estimate of the timing of future payment. We have no other material off-balance sheet commitments.
Unrecognized income tax benefits in the amount of $15,992 have been excluded from the table because we are unable to determine a reasonably reliable estimate of the timing of future payment. We have no other material off-balance sheet commitments.
(2) See Note 15 to the Consolidated Financial Statements for additional information. (3) Represent commitments to purchase specified quantities of raw materials at market prices. The dollar values above have been estimated based on July 31, 2022 market prices.
(2) See Note 16 to the Consolidated Financial Statements for additional information. (3) Represent commitments to purchase specified quantities of raw materials at market prices. The dollar values above have been estimated based on July 31, 2023 market prices.
Airxcel Acquisition On September 1, 2021, the Company acquired Wichita, Kansas-based AirX Intermediate, Inc. (“Airxcel”). Airxcel manufactures a comprehensive line of high-quality products which they sell primarily to RV original equipment manufacturers as well as consumers via aftermarket sales through dealers and retailers.
Airxcel Acquisition On September 1, 2021, the Company acquired Wichita, Kansas-based AirX Intermediate, Inc. (“Airxcel”). Airxcel manufactures a comprehensive line of high-quality component products which are sold primarily to RV original equipment manufacturers as well as consumers via aftermarket sales through dealers and retailers.
We generally have financed our growth through a combination of internally generated cash flows from operations and, when needed, outside credit facilities. Capital acquisitions of $240,561 in fiscal 2022 were made primarily for purchases of land, production building additions and improvements and replacing machinery and equipment used in the ordinary course of business.
We generally have financed our growth through a combination of internally generated cash flows from operations and, when needed, outside credit facilities. Capital acquisitions of $208,908 in fiscal 2023 were made primarily for purchases of land, production building additions and improvements and replacing machinery and equipment used in the ordinary course of business.
The decrease in the overall selling, general and administrative expense as a percentage of North American towable net sales is primarily due to the increase in North American towables net sales.
The increase in the overall selling, general and administrative expense as a percentage of North American Towable net sales was primarily due to the decrease in North American Towable net sales.
In addition, the unused availability under our revolving asset-based credit facility is generally available to the Company for general operating purposes, and approximated $874,000 at July 31, 2022.
In addition, the unused availability under our revolving asset-based credit facility is generally available to the Company for general operating purposes, and approximated $940,000 at July 31, 2023.
Where possible, we continue to work closely with our suppliers on various supply chain strategies to minimize these constraints, and we continue to identify alternative suppliers.
Where possible, we continue to work closely with our suppliers on various supply chain strategies to minimize any constraints, and we will continue to identify alternative suppliers where possible.
While most countries provide OEM-specific information, the United Kingdom, which made up 17.0% and 7.2% of the caravan and motorcaravan (including campervans) European market for the six months ended June 30, 2022, respectively, does not provide OEM-specific information. Industry wholesale shipment data for the European RV market is not available.
While most countries provide OEM-specific information, the United Kingdom, which made up 17.5% and 7.8% of the caravan and motorcaravan (including campervans) European market for the six months ended June 30, 2023, respectively, does not provide OEM-specific information. Industry wholesale shipment data for the European RV market is not available.
North American Industry Retail Statistics We believe that retail demand is the key to growth in the North American RV industry, and that annual North American RV industry wholesale shipments in calendar year 2023 will return to historical seasonal patterns as dealer inventory levels and consumer demand become more balanced.
North American Industry Retail Statistics We believe that retail demand is the key to growth in the North American RV industry, and that annual North American RV industry wholesale shipments will return to typical seasonal patterns as dealer inventory levels and consumer demand become more balanced.
Capital expenditures of $242,357 for fiscal 2022 were made primarily for land and 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.
Capital expenditures of $208,194 for fiscal 2023 were made primarily for land and 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.
As of July 31, 2022, the remaining amount of the Company’s common stock that may be repurchased under the June 24, 2022 authorization expiring on July 31, 2025 is $448,321. As of July 31, 2022, the total remaining amount of the Company’s common stock that may be repurchased under these two authorizations is $533,214.
As of July 31, 2023, the remaining amount of the Company’s common stock that may be repurchased under the June 24, 2022 authorization expiring on July 31, 2025 is $448,321. As of July 31, 2023, the total remaining amount of the Company’s common stock that may be repurchased under these two authorizations is $491,207.
We record a liability, which totaled $317,908 at July 31, 2022, based on our best estimate of the amounts necessary to settle unpaid existing claims and estimated future claims on products sold as of the balance sheet date.
We record a liability, which totaled $345,197 at July 31, 2023, based on our best estimate of the amounts necessary to settle unpaid existing claims and estimated future claims on products sold as of the balance sheet date.
Trademarks and design technology assets are both valued on a Relief of Royalty method and are both amortized on a straight-line basis, using lives of 15 to 25 years for trademarks and 10 to 15 years for design technology assets, respectively. Amortizable intangible assets, net as of July 31, 2022 totaled $1,117,492.
Trademarks and design technology assets are both valued on a Relief of Royalty method and are both amortized on a straight-line basis, using lives of 15 to 25 years for trademarks and 10 to 15 years for design technology assets, respectively. Amortizable intangible assets, net as of July 31, 2023 totaled $996,979.
According to statistics published by Stat Surveys, for the twelve-month periods ended June 30, 2022 and 2021, our market share for travel trailers and fifth wheels combined was 41.8% and 41.6%, respectively.
According to statistics published by Stat Surveys, for the twelve-month periods ended June 30, 2023 and 2022, our retail market share for travel trailers and fifth wheels combined was 42.4% and 41.8%, respectively.
The total carrying value of goodwill as of July 31, 2022 is $1,804,151. See Note 7 to the Consolidated Financial Statements for a summary of changes in carrying value by fiscal year and reportable segment.
The total carrying value of goodwill as of July 31, 2023 is $1,800,422. See Note 7 to the Consolidated Financial Statements for a summary of changes in carrying value by fiscal year and reportable segment.
Total Amounts Committed Amount of Commitment Expiration Per Period Other Commercial Commitments Less Than One Year (1) 1-3 Years 4-5 Years Over 5 Years Standby repurchase obligations (1) $ 4,308,524 $ 2,539,672 $ 1,768,852 $ — $ — (1) The standby repurchase totals above do not consider any curtailments that lower the eventual repurchase obligation totals, and these obligations generally extend up to eighteen months from the date of sale of the related product to the dealer.
Total Amounts Committed Amount of Commitment Expiration Per Period Other Commercial Commitments Less Than One Year (1) 1-3 Years 4-5 Years Over 5 Years Standby repurchase obligations (1) $ 3,893,048 $ 2,442,581 $ 1,450,467 $ — $ — (1) The standby repurchase totals above do not consider any curtailments that lower the eventual repurchase obligation totals, and these obligations generally extend up to eighteen months from the date of sale of the related product to the dealer.
As of July 31, 2022, the remaining amount of the Company's common stock that may be repurchased under the December 21, 2021 $250,000 authorization expiring on December 21, 2024 is $84,893.
As of July 31, 2023, the remaining amount of the Company's common stock that may be repurchased under the December 21, 2021 $250,000 authorization expiring on December 21, 2024 is $42,886.
In Europe, according to the European Caravan Federation (“ECF”), EHG’s current market share for the six months ended June 30, 2022 based on units was approximately 21.8% for motorcaravans and campervans combined and approximately 18.0% for caravans.
In Europe, according to the European Caravan Federation (“ECF”), EHG’s current market share for the six months ended June 30, 2023 based on units was approximately 20.6% for motorcaravans and campervans combined and approximately 18.5% for caravans.
The Company increased its previous regular quarterly dividend of $0.40 per share to $0.41 per share in October 2020. 50 Principal Contractual Obligations and Commercial Commitments Our principal contractual obligations and commercial commitments at July 31, 2022 are summarized in the following charts.
The Company increased its previous regular quarterly dividend of $0.41 per share to $0.43 per share in October 2021. 46 Principal Contractual Obligations and Commercial Commitments Our principal contractual obligations and commercial commitments at July 31, 2023 are summarized in the following charts.
The final cash consideration for the acquisition of the Tiffin Group was $288,238, net of cash acquired, and was funded through existing cash-on-hand as well as $165,000 in borrowings from the Company’s existing asset-based credit facility.
Tiffin Motorhomes, Inc. operates out of various locations in Alabama and Mississippi. The cash consideration for the acquisition of the Tiffin Group was $288,238, net of cash acquired, and was funded through existing cash-on-hand as well as $165,000 in borrowings from the Company’s existing asset-based credit facility.
According to statistics published by RVIA, for the twelve months ended July 31, 2022, combined travel trailer and fifth wheel wholesale unit shipments increased 9.3% compared to the same period last year.
According to statistics published by RVIA, for the twelve months ended July 31, 2023, combined travel trailer and fifth wheel wholesale unit shipments decreased 51.0% compared to the same period last year.
Material, labor, freight-out and warranty costs as a combined percentage of European recreational vehicle net sales decreased to 76.0% for fiscal 2022 compared to 77.1% for fiscal 2021, primarily due to a decrease in the material cost percentage as a result of selling price increases and product mix changes.
Material, labor, freight-out and warranty costs as a combined percentage of European Recreational Vehicle net sales decreased to 73.4% for fiscal 2023 compared to 76.0% for fiscal 2022, with the decrease primarily due to a decrease in the material cost percentage due to net selling price increases and product mix changes. The labor cost percentages also improved.
The increase in the overall net price per unit within the Class C product line of 21.8% during fiscal 2022 was primarily due to product mix changes and net selling price increases since the prior year to offset rising material and other input costs.
The increase in the overall change in product mix and price per unit within the Class C product line of 6.2% during fiscal 2023 was primarily due to net selling price increases since the prior fiscal year to offset higher material and other input costs as well as product mix changes.
According to statistics published by RVIA, for the twelve months ended July 31, 2022, combined motorhome wholesale unit shipments increased 9.0% compared to the same period last year. According to statistics published by Stat Surveys, for the twelve-month periods ended June 30, 2022 and 2021, our market share for motorhomes was 48.9% and 43.2%, respectively.
According to statistics published by RVIA, for the twelve months ended July 31, 2023, combined motorhome wholesale unit shipments decreased 10.3% compared to the same period last year. According to statistics published by Stat Surveys, for the twelve-month periods ended June 30, 2023 and 2022, our retail market share for motorhomes was 48.1% and 48.5%, respectively.
The Inflation Reduction Act of 2022 was enacted following the end of our fiscal year. Among other provisions, this statute provides for a 1% tax to be imposed on the fair market value of shares repurchased by issuers whose shares are traded on an established securities market, subject to certain exceptions.
Among other provisions, this statute provides for a 1% tax to be imposed on the fair market value of shares repurchased by issuers whose shares are traded on an established securities market, subject to certain exceptions.
Net working capital at July 31, 2022 was $1,306,563 compared to $1,008,738 at July 31, 2021, with the increase primarily due to increases in inventory and accounts receivable as noted in the Operating Activities section below.
Net working capital at July 31, 2023 was $1,077,098 compared to $1,306,563 at July 31, 2022, with the decrease primarily due to decreases in inventory and accounts receivable as noted in the Operating Activities section below.
As a result, these limitations in the availability of chassis will inhibit our ability to consistently maintain our planned production levels, and will limit our ability to ramp up production and sales of certain products despite dealer demand for those products.
These chassis supply factors will inhibit our ability to consistently maintain our planned production levels and will limit our ability to ramp up production and sales of certain products despite dealer demand for those products.
The most likely forecast for calendar year 2022 could range from a lower estimate of approximately 487,300 total units to an upper estimate of approximately 510,300 units. 35 As part of their September 2022 forecast, RVIA also released their initial estimates for calendar year 2023 wholesale unit shipments.
The RVIA most likely forecast for calendar year 2023 could range from a lower estimate of approximately 287,200 total units to an upper estimate of approximately 307,000 units. As part of their August 2023 forecast, RVIA also released their initial estimates for calendar year 2024 wholesale unit shipments.
These fairs have historically been well-attended events that allowed 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. Since the start of the pandemic, the protection of the health of our employees, customers and dealers has been our top priority.
These fairs have historically been well-attended events that allowed 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.
See Note 3 to the Consolidated Financial Statements for capital acquisitions by segment. Ongoing supply chain constraints, and labor shortages throughout the supply chain and within THOR, have impacted and continue to impact our business and our consolidated financial results and financial position.
See Note 3 to the Consolidated Financial Statements for capital acquisitions by segment. Ongoing supply chain constraints, particularly chassis constraints within our European operations, have and could continue to impact our business and our consolidated financial results and financial position.
North American Outlook Historically, retail sales have been dependent upon various economic conditions faced by consumers, such as the rate of unemployment, the rate of inflation, the level of consumer confidence, the disposable income of consumers, changes in interest rates, credit availability, the health of the housing market, changes in tax rates and fuel availability and prices.
North American Outlook Historically, RV industry sales have been impacted by a number of economic conditions faced by our independent 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.
Payments of $332,907 were also made on the term-loan credit facilities. Additionally, the Company made regular quarterly cash dividend payments of $0.43 per share for each quarter of fiscal 2022 totaling $94,944, and $165,107 was used for treasury share repurchases. Net cash used in financing activities for fiscal 2021 was $188,438, including $59,700 in term loan debt payments.
Payments of $332,907 were also made on the term-loan credit facilities. Additionally, the Company made regular quarterly cash dividend payments of $0.43 per share for each quarter of fiscal 2022 totaling $94,944, and $165,107 was used for treasury share repurchases. The Company increased its previous regular quarterly dividend of $0.43 per share to $0.45 per share in October 2022.
Liquidity and Capital Resources As of July 31, 2022, we had $311,553 in cash and cash equivalents, of which $256,492 is held in the United States and the equivalent of $55,061, predominantly in Euros, is held in Europe, compared to $445,852 on July 31, 2021, of which $282,220 was held in the United States and the equivalent of $163,632, predominantly in Euros, was held in Europe.
Liquidity and Capital Resources As of July 31, 2023, we had $441,232 in cash and cash equivalents, of which $338,703 is held in the United States and the equivalent of $102,529, predominantly in Euros, is held in Europe, compared to $311,553 on July 31, 2022, of which $256,492 was held in the United States and the equivalent of $55,061, predominantly in Euros, was held in Europe.
Dealer networks are valued on a Discounted Cash Flow method and are amortized on an accelerated basis over 12 to 20 years, with amortization beginning after any applicable backlog amortization is completed.
The Company’s intangible assets are dealer networks, trademarks and design technology and other intangible assets acquired in business acquisitions. Dealer networks are valued on a Discounted Cash Flow method and are amortized on an accelerated basis over 12 to 20 years, with amortization beginning after any applicable backlog amortization is completed.
Material, labor, freight-out and warranty costs as a combined percentage of motorized net sales was 78.6% for fiscal 2022 compared to 81.9% for fiscal 2021, with the decrease primarily due to a decrease in the material cost percentage, partially offset by modest increases in the labor and warranty cost percentages.
Material, labor, freight-out and warranty costs as a combined percentage of motorized net sales was 80.9% for fiscal 2023 compared to 78.6% for fiscal 2022, with the increase primarily due to an increase in the material cost percentage, primarily due to chassis cost increases, and an increase in the warranty cost percentage.
This calendar year 2023 most likely forecast could range from a lower estimate of approximately 409,000 total units to an upper estimate of approximately 429,000 units.
This calendar year 2024 most likely forecast could range from a lower estimate of approximately 363,700 total units to an upper estimate of approximately 375,700 units.
In Europe, we also continue to experience cost increases, supply shortages and delivery delays of other, non-chassis, raw material components which negatively impacted our ability to further ramp up production and sales in the current fiscal year and has caused an increase in our work in process inventory as of July 31, 2022.
In Europe, we also continue to experience cost increases, supply shortages and delivery delays of other, non-chassis, raw material components which negatively impacted our ability to further ramp up production and sales in fiscal 2023, and which resulted in the continuation of an elevated level of work in process inventory on hand.
During fiscal 2022, the Company purchased 1,944,243 shares of its common stock, at various times in the open market, at a weighted-average price of $84.92 and held them as treasury shares at an aggregate purchase price of $165,107, all from the December 21, 2021 authorization.
During fiscal 2023, the Company purchased 549,532 shares of its common stock, at various times in the open market, at a weighted-average price of $76.44 and held them as treasury shares at an aggregate purchase price of $42,007, all from the December 21, 2021 authorization.
Total manufacturing overhead increased $64,835 due to the net sales increase, but decreased slightly as a percentage of North American motorized net sales from 5.1% to 5.0%, as the increased net sales resulted in lower overhead costs per unit sold.
Total manufacturing overhead decreased $11,832 but increased as a percentage of North American Motorized net sales from 5.0% to 5.7%, as the decrease in net sales levels resulted in slightly higher overhead costs per unit sold.
The increase in the overall net price per unit due to product mix and price within the campervan product line of 12.8% was primarily due to the net impact of product mix changes and net selling price increases.
The constant-currency increases in the overall net price per unit within the Motorcaravan product line of 18.8% and the Campervan product line of 26.7% were primarily due to the impact of selling price increases and product mix changes.
Both North American towable and motorized unit registrations in the six months ended June 30, 2022 decreased from the comparable June 30, 2021 record levels, but both exceeded the comparable totals for the six months ended June 30, 2020.We believe that North American retail consumer demand has grown in recent years due to an increasing interest in the RV lifestyle and the ability to connect with nature, and has further accelerated since the onset of the COVID-19 pandemic, particularly in calendar 2021, which resulted in record retail sales during that period.
We believe that North American retail consumer demand has grown in recent years due to an increasing interest in the RV lifestyle and the ability to connect with nature, and further accelerated since the onset of the COVID-19 pandemic, particularly in calendar 2021, which resulted in record retail sales during that period.
Under a most likely scenario, towable and motorized unit shipments are projected to decrease to approximately 445,100 and 53,700, respectively, for an annual total of approximately 498,800 units, down 16.9% from the 2021 calendar year wholesale shipments.
Under a most likely scenario, towable and motorized unit shipments are projected to decrease to approximately 249,300 and 47,800, respectively, for an annual total of approximately 297,100 units, down 39.8% from the 2022 calendar year wholesale shipments.
The increase in gross profit was driven by the increase in North American towables 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 decrease of $1,008,811 in North American Towable gross profit for fiscal 2023 compared to fiscal 2022 was driven by the decrease in net sales and the decrease in the gross profit percentage was due to the increase in the cost of products sold percentage noted above.
The increase in gross profit was due primarily to the increase in net sales, and the increase in the gross profit percentage was due to the decrease in the cost of products sold percentage noted above.
The increase in the net income before income taxes percentage to net sales was primarily due to the improvement in the cost of products sold percentage noted above.
Operating Activities Net cash provided by operating activities for fiscal 2022 was $990,253 as compared to net cash provided by operating activities of $526,482 for fiscal 2021 and $540,941 for fiscal 2020. For fiscal 2022, net income adjusted for non-cash items (primarily depreciation, amortization of intangibles, deferred income tax benefit and stock-based compensation) provided $1,405,990 of operating cash.
Operating Activities Net cash provided by operating activities for fiscal 2023 was $981,633 as compared to net cash provided by operating activities of $990,116 for fiscal 2022. For fiscal 2023, net income adjusted for non-cash items (primarily depreciation, amortization of intangibles, deferred income tax benefit and stock-based compensation) provided $664,339 of operating cash.
Company European Retail Statistics European Unit Registrations (1) Six Months Ended June 30, Increase % 2022 2021 (Decrease) Change Motorcaravan and Campervan 17,540 23,880 (6,340) (26.5) Caravan 5,950 6,071 (121) (2.0) Total OEM-Reporting Countries 23,490 29,951 (6,461) (21.6) (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.
Company European Retail Statistics European Unit Registrations (1) Six Months Ended June 30, Increase % 2023 2022 (Decrease) Change Motorcaravan and Campervan 15,792 17,795 (2,003) (11.3) Caravan 5,142 5,978 (836) (14.0) Total OEM-Reporting Countries 20,934 23,773 (2,839) (11.9) (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.
The North American and European recreational vehicle industries have, from time to time in the past and during the fiscal year ended July 31, 2022, experienced shortages of chassis for various other reasons, including component shortages, production delays and work stoppages at the chassis manufacturers.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+1 added−4 removed0 unchanged
Biggest changeBased on our assumption of the Company’s floating-rate debt levels over the next 12 months, and after taking into consideration the impact of our interest rate swaps discussed above, a one-percentage-point increase in interest rates (approximately 19.3% of our weighted-average interest rate at July 31, 2022) would result in an estimated $10,656 reduction in income before income taxes over a one-year period. 54
Biggest changeINTEREST 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 13.3% of our weighted-average interest rate at July 31, 2023) would result in an estimated $7,626 reduction in income before income taxes over a one-year period. 50
The Company has used foreign currency forward contracts to manage certain foreign exchange rate exposure related to anticipated sales transactions in Pound 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 has used foreign currency forward contracts to manage certain foreign exchange rate exposure related to anticipated sales transactions in Pound 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 $555,506 of debt denominated in Euros at July 31, 2023.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risk from changes in foreign currency exchange rates and interest rates. The Company enters into various 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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 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.
CURRENCY EXCHANGE RISK – The Company’s principal currency exposures mainly relate to the Euro and British Pound Sterling.
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.
Removed
At July 31, 2022, the Company had foreign currency forward contracts outstanding to exchange Pound Sterling into Euros with a notional value of $33,997 and a fair value liability of $80.
Added
A hypothetical 10% change in the Euro/U.S. Dollar exchange rate would change our July 31, 2023 debt balance by an estimated $55,551.
Removed
At July 31, 2021, the Company had foreign currency forward contracts outstanding to exchange Pound Sterling into Euros with a notional value of $41,899 and a fair value liability of $88. The Company also holds $528,010 of debt denominated in Euros at July 31, 2022. A hypothetical 10% change in the Euro/U.S.
Removed
Dollar exchange rate would change our July 31, 2022 debt balance by an estimated $52,801. INTEREST RATE RISK – The Company uses pay-fixed, receive-floating interest rate swaps to convert a portion of the Company’s long-term debt from floating to fixed-rate debt.
Removed
As of July 31, 2022, the Company has approximately $273,325 as notional amounts hedged in relation to the floating-to-fixed interest rate swap. The notional amounts hedged will decrease on a quarterly basis to zero by August 1, 2023.

Other THO 10-K year-over-year comparisons