Thor Industries(THO) - 2025 Q2 - Quarterly Report

North American Market Performance - THOR's North American market share for travel trailers and fifth wheels was approximately 39.0%, and for motorhomes, it was approximately 47.2% as of December 31, 2024[79]. - North American RV backlog increased by $289,604, or 15.2%, to$ 2,198,493 as of January 31, 2025, compared to $1,908,889 a year earlier[82]. - North American RV independent dealer inventory decreased by 1.8% to approximately 86,200 units as of January 31, 2025, from approximately 87,800 units a year prior[81]. - Total North American wholesale unit shipments for 2024 were 333,733, an increase of 6.6% from 313,174 in 2023[83]. - North American towable units retail registrations decreased by 6.4% to 315,179 in 2024 from 336,601 in 2023[84]. - THOR's North American wholesale RV shipments for towable units increased by 14.5% to 116,913 in 2024, while motorized units decreased by 24.8% to 16,099[86]. - The RVIA projects a total of approximately 350,100 wholesale unit shipments for 2025, representing a 4.9% increase from 2024[83]. - The company anticipates long-term growth in the North American RV industry driven by consumer interest in the RV lifestyle[89]. Economic Factors and Challenges - Economic factors such as inflation, interest rates, and consumer confidence are expected to impact retail sales in fiscal 2025[88]. - The company is closely monitoring potential increases in raw material and labor costs, which could negatively impact profit margins[90]. European Market Performance - European RV backlog decreased by$ 1,102,292, or 40.1%, to $1,644,015 as of January 31, 2025, compared to$ 2,746,307 as of January 31, 2024[96]. - Independent dealer inventory of European RV products increased by 3.6% to approximately 25,700 units as of January 31, 2025, compared to approximately 24,800 units as of January 31, 2024[95]. - Total European unit registrations for motorcaravans and campervans increased by 7.3% to 138,743 in 2024 from 129,269 in 2023[97]. - Total European unit registrations for caravans decreased by 2.3% to 46,628 in 2024 from 47,740 in 2023[97]. - European net sales for recreational vehicles decreased by $169,829, or 21.7%, to$ 612,465 for the three months ended January 31, 2025, compared to $782,294 for the same period in 2024[109]. - European unit sales decreased by 27.8% to 9,442 units for the three months ended January 31, 2025, compared to 13,080 units for the same period in 2024[110]. - Gross profit for European recreational vehicles decreased by$ 38,396, or 32.2%, to $80,929 for the three months ended January 31, 2025, compared to$ 119,325 for the same period in 2024[110]. - The company anticipates a long-term positive outlook for European RV retail sales as more consumers seek RVs for lifestyle independence and outdoor exploration[102]. Financial Performance - Consolidated net sales for the three months ended January 31, 2025 decreased by $189,262, or 8.6%, compared to the same period in 2024[113]. - Consolidated gross profit for the three months ended January 31, 2025 decreased by$ 25,650, or 9.5%, with a gross profit margin of 12.1% compared to 12.3% in the prior year[114]. - Selling, general and administrative expenses decreased by $13,903, or 6.3%, primarily due to lower sales commissions and incentive compensation[115]. - Income (loss) before income taxes decreased by$ 8,494, or 123.2%, primarily driven by the decrease in consolidated net sales[117]. - The effective income tax rate for the three months ended January 31, 2025 was (93.1)%, compared to 22.7% in the prior year, influenced by the jurisdictional mix of earnings[118]. North American Towable Segment - North American Towable net sales increased by 13.3% to $828,266, driven by a 27.6% increase in unit shipments[123]. - The cost of products sold for North American Towable increased to$ 736,620, or 88.9% of net sales, but the percentage decreased from 92.6% in the prior year[125]. - North American Towable gross profit increased by $37,749, attributed to higher net sales and improved gross profit percentage[127]. - North American Towable income before income taxes increased by$ 27,491, reflecting the rise in net sales and improved cost structure[129]. - Order backlog for North American Towable increased by $237,556, or 28.4%, from the previous year[112]. North American Motorized Segment - North American Motorized net sales decreased by 21.8% to$ 446,298,000 for the three months ended January 31, 2025, compared to $570,424,000 for the same period in 2024[131]. - Total unit shipments for North American Motorized decreased by 20.5% to 3,526 units, down from 4,438 units in the prior-year quarter[131]. - North American Motorized cost of products sold decreased by$ 98,146,000 to $411,557,000, representing 92.2% of net sales[133]. - North American Motorized gross profit decreased by$ 25,980,000 due to lower net sales and increased cost of products sold[135]. - North American Motorized income before income taxes decreased by $22,162,000, attributed to lower net sales and increased expenses[137]. European Recreational Vehicle Segment - European Recreational Vehicle net sales decreased by 21.7% to$ 612,465,000 for the three months ended January 31, 2025, compared to $782,294,000 for the same period in 2024[139]. - Total unit shipments for European Recreational Vehicles decreased by 27.8% to 9,442 units, down from 13,080 units in the prior-year quarter[139]. - The overall net price per unit for European Recreational Vehicles increased by 6.1%, despite a 2.8% decrease due to foreign currency impacts[140]. - European Recreational Vehicle cost of products sold decreased by$ 131,433,000 to $531,536,000, representing 86.8% of net sales[143]. - European Recreational Vehicle gross profit decreased by$ 38,396,000, primarily due to decreased net sales and increased manufacturing overhead[145]. Consolidated Financial Overview - Consolidated net sales for the six months ended January 31, 2025 decreased by $547,237, or 11.6%, compared to the same period in 2024[153]. - Total North American recreational vehicle sales decreased by$ 279,455, or 9.4%, with North American motorized sales dropping by $330,077, or 25.8%[149]. - Gross profit for the six months ended January 31, 2025 decreased by$ 102,140, with a gross profit margin of 12.7% compared to 13.4% in the prior year[154]. - Selling, general and administrative expenses increased by $8,398, or 1.9%, despite a decrease in net sales[155]. - Income (loss) before income taxes decreased by$ 82,232, or 103.5%, primarily due to the decline in consolidated net sales[156]. - The effective income tax rate for the six months ended January 31, 2025 was (43.7)%, compared to 24.0% in the prior year, influenced by the jurisdictional mix of earnings[157]. Currency and Interest Rate Impact - Approximately 29.3% of consolidated net sales were transacted in currencies other than the U.S. dollar, with significant exposure to Euro sales[153]. - A hypothetical 10% change in the Euro/U.S. Dollar exchange rate would change the company's Euro-denominated debt balance by approximately $36,538[206]. - A one-percentage-point increase in interest rates would result in an estimated$ 5,030 reduction in income before income taxes over a one-year period[207]. Capital Expenditures and Cash Flow - Net cash provided by operating activities for the six months ended January 31, 2025, was $61,582, compared to a net cash used of$ 44,200 for the same period in 2024[194]. - Cash and cash equivalents decreased by $127,497 from$ 501,316 on July 31, 2024, to $373,819 as of January 31, 2025, primarily due to cash used in financing activities of$ 167,005[188]. - Net working capital at January 31, 2025, was $1,050,077, down from$ 1,083,005 at July 31, 2024[189]. - Capital expenditures for the six months ended January 31, 2025, were $51,538, primarily for production building additions and improvements[189]. - The company plans to spend approximately$ 125,000 on committed capital projects for the remainder of fiscal 2025, with two-thirds allocated to North America and one-third to Europe[192]. Dividend and Corporate Costs - The company increased its quarterly dividend from $0.48 to$ 0.50 per share in October 2024, following a previous increase from $0.45 to$ 0.48 in October 2023[200]. - Net cash used in financing activities for the six months ended January 31, 2025, was $167,005, primarily for term-loan payments of$ 85,000 and dividend payments totaling $53,153[198]. - Corporate costs in selling, general and administrative expenses increased by$ 16,304, primarily due to employee separation costs and deferred compensation expenses[159]. Pricing Trends - The overall net price per unit in the travel trailer product line decreased by 17.8% due to a shift towards more moderately-priced units compared to the prior-year period[164]. - North American Towable net sales increased by 3.0%, driven by a 15.9% increase in unit shipments, despite a 12.9% decrease in net price per unit[163]. - The overall net price per unit in the European Recreational Vehicle segment increased by 9.3%, with a constant-currency increase of 9.6% attributed to product mix and selling price increases[181].