tho-20240131

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended January 31, 2024.

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from ____ to ____.

COMMISSION FILE NUMBER 001-09235

THOR INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Delaware

93-0768752

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

601 E. Beardsley Ave., Elkhart, IN

46514-3305

(Address of principal executive offices)

(Zip Code)

(574) 970-7460

(Registrant's telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange

Title of each class

Trading Symbol(s)

on which registered

Common stock (Par value $0.10 Per Share)

THO

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑ Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

As of February 29, 2024, 53,324,545 shares of the registrant’s common stock, par value $0.10 per share, were outstanding.

PART I – FINANCIAL INFORMATION (Unless otherwise indicated, amounts in thousands except share and per share data.)

ITEM 1. FINANCIAL STATEMENTS

THOR INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


	January 31, 2024		July 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	340,192	$	441,232

Accounts receivable, trade, net	534,402		543,865

Accounts receivable, other, net	91,216		99,354
Inventories, net	1,776,268		1,653,070
Prepaid income taxes, expenses and other	97,184		56,059

Total current assets	2,839,262		2,793,580
Property, plant and equipment, net	1,382,227		1,387,808
Other assets:
Goodwill	1,787,761		1,800,422
Amortizable intangible assets, net	925,515		996,979
Deferred income tax assets, net	9,455		5,770
Equity investments	128,572		126,909
Other	153,037		149,362
Total other assets	3,004,340		3,079,442
TOTAL ASSETS	$	7,225,829	$	7,260,830

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	762,095	$	736,275
Current portion of long-term debt	17,234		11,368
Short-term financial obligations	68,593		49,433
Accrued liabilities:
Compensation and related items	147,531		189,324
Product warranties	319,614		345,197
Income and other taxes	69,820		100,631
Promotions and rebates	132,948		163,410
Product, property and related liabilities	38,619		54,720


Other	70,007		66,124

Total current liabilities	1,626,461		1,716,482
Long-term debt, net	1,390,469		1,291,311
Deferred income tax liabilities, net	68,517		75,668
Unrecognized tax benefits	15,931		14,835
Other liabilities	181,856		179,136
Total long-term liabilities	1,656,773		1,560,950
Contingent liabilities and commitments
Stockholders’ equity:
Preferred stock – authorized 1,000,000 shares; none outstanding	—		—
Common stock – par value of $.10 per share; authorized 250,000,000 shares; issued 66,859,738 and 66,344,340 shares, respectively	6,686		6,634
Additional paid-in capital	560,365		539,032
Retained earnings	4,101,210		4,091,563
Accumulated other comprehensive loss, net of tax	(92,894)		(68,547)
Less: Treasury shares of 13,535,193 and 13,030,030, respectively, at cost	(638,949)		(592,667)
Stockholders’ equity attributable to THOR Industries, Inc.	3,936,418		3,976,015
Non-controlling interests	6,177		7,383
Total stockholders’ equity	3,942,595		3,983,398
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,225,829	$	7,260,830

See Notes to the Condensed Consolidated Financial Statements.

THOR INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)


	Three Months Ended January 31,				Six Months Ended January 31,
	2024		2023		2024		2023
Net sales	$	2,207,369	$	2,346,635	$	4,708,128	$	5,454,719
Cost of products sold	1,936,522		2,063,700		4,079,349		4,685,308
Gross profit	270,847		282,935		628,779		769,411
Selling, general and administrative expenses	220,125		208,743		438,021		450,367
Amortization of intangible assets	32,464		35,199		64,808		70,418


Interest expense, net	28,229		25,633		48,426		48,440
Other income, net	16,865		19,358		1,952		11,803
Income before income taxes	6,894		32,718		79,476		211,989
Income tax provision	1,568		6,912		19,117		48,760
Net income	5,326		25,806		60,359		163,229
Less: Net loss attributable to non-controlling interests	(1,891)		(1,274)		(423)		(36)
Net income attributable to THOR Industries, Inc.	$	7,217	$	27,080	$	60,782	$	163,265

Weighted-average common shares outstanding:
Basic	53,322,504		53,518,878		53,309,169		53,587,646
Diluted	53,650,583		53,810,910		53,752,150		53,869,830

Earnings per common share:
Basic	$	0.14	$	0.51	$	1.14	$	3.05
Diluted	$	0.13	$	0.50	$	1.13	$	3.03




Comprehensive income:
Net income	$	5,326	$	25,806	$	60,359	$	163,229
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment	35,627		128,377		(25,019)		85,048
Unrealized gain (loss) on derivatives, net of tax	—		(661)		—		143
Other loss, net of tax	(111)		(39)		(111)		(39)
Total other comprehensive income (loss), net of tax	35,516		127,677		(25,130)		85,152
Total Comprehensive income	40,842		153,483		35,229		248,381
Less: Comprehensive loss attributable to non-controlling interests	(1,952)		(1,249)		(1,206)		(445)
Comprehensive income attributable to THOR Industries, Inc.	$	42,794	$	154,732	$	36,435	$	248,826

See Notes to the Condensed Consolidated Financial Statements.

THOR INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Six Months Ended January 31,
	2024		2023
Cash flows from operating activities:
Net income	$	60,359	$	163,229
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation	70,589		64,257
Amortization of intangible assets	64,808		70,418
Amortization of debt issuance costs and extinguishment charges	11,864		5,697


Deferred income tax benefit	(11,858)		(6,149)
Gain on disposition of property, plant and equipment	(7,807)		(371)
Stock-based compensation expense	19,698		16,935
Changes in assets and liabilities:
Accounts receivable, net	15,188		301,269
Inventories, net	(149,742)		(83,564)
Prepaid income taxes, expenses and other	(24,312)		(14,572)
Accounts payable	33,813		(209,557)

Accrued liabilities	(133,798)		(125,590)
Long-term liabilities and other	6,998		3,319
Net cash provided by (used in) operating activities	(44,200)		185,321
Cash flows from investing activities:
Purchases of property, plant and equipment	(78,901)		(100,985)
Proceeds from dispositions of property, plant and equipment	12,872		3,832
Business acquisitions, net of cash acquired	(3,814)		(6,184)


Other	(11,100)		(10,411)
Net cash used in investing activities	(80,943)		(113,748)
Cash flows from financing activities:
Borrowings on term-loan credit facilities	186,723		—
Payments on term-loan credit facilities	(127,626)		(12,355)
Borrowings on revolving asset-based credit facilities	113,502		—
Payments on revolving asset-based credit facilities	(51,925)		(15,000)


Payments on other debt	(5,574)		(6,383)
Payments of debt issuance costs	(10,480)		—
Cash dividends paid	(51,135)		(48,165)
Payments on finance lease obligations	(365)		(604)
Purchases of treasury shares	(30,037)		(25,407)
Payments related to vesting of stock-based awards	(16,245)		(6,765)
Short-term financial obligations and other, net	19,916		12,937
Net cash provided by (used in) financing activities	26,754		(101,742)
Effect of exchange rate changes on cash and cash equivalents	(2,651)		172
Net decrease in cash and cash equivalents	(101,040)		(29,997)
Cash and cash equivalents, beginning of period	441,232		311,553


Cash and cash equivalents, end of period	$	340,192	$	281,556

Supplemental cash flow information:
Income taxes paid	$	90,528	$	110,662
Interest paid	$	41,414	$	44,981
Non-cash investing and financing transactions:
Capital expenditures in accounts payable	$	3,098	$	5,183

See Notes to the Condensed Consolidated Financial Statements.


THOR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE AND SIX MONTHS ENDED JANUARY 31, 2024 AND 2023 (UNAUDITED)

	Three Months Ended January 31, 2024
								Accumulated					Stockholders’
				Additional				Other					Equity		Non-		Total
	Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Attributable		controlling		Stockholders’
	Shares	Amount		Capital		Earnings		Income (Loss)		Shares	Amount		to THOR		Interests		Equity
Balance at November 1, 2023	66,686,498	$	6,669	$	551,491	$	4,119,589	$	(128,471)	13,480,026	$	(633,817)	$	3,915,461	$	8,129	$	3,923,590
Net income (loss)	—	—		—		7,217		—		—	—		7,217		(1,891)		5,326
Purchases of treasury shares	—	—		—		—		—		—	—		—		—		—
Restricted stock unit activity	173,240	17		(372)		—		—		55,167	(5,132)		(5,487)		—		(5,487)
Dividends $0.48 per common share	—	—		—		(25,596)		—		—	—		(25,596)		—		(25,596)
Stock-based compensation expense	—	—		9,246		—		—		—	—		9,246		—		9,246
Other comprehensive income (loss)	—	—		—		—		35,577		—	—		35,577		(61)		35,516


Balance at January 31, 2024	66,859,738	$	6,686	$	560,365	$	4,101,210	$	(92,894)	13,535,193	$	(638,949)	$	3,936,418	$	6,177	$	3,942,595

	Six Months Ended January 31, 2024
								Accumulated					Stockholders’
				Additional				Other					Equity		Non-		Total
	Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Attributable		controlling		Stockholders’
	Shares	Amount		Capital		Earnings		Income (Loss)		Shares	Amount		to THOR		Interests		Equity
Balance at August 1, 2023	66,344,340	$	6,634	$	539,032	$	4,091,563	$	(68,547)	13,030,030	$	(592,667)	$	3,976,015	$	7,383	$	3,983,398
Net income (loss)	—	—		—		60,782		—		—	—		60,782		(423)		60,359
Purchases of treasury shares	—	—		—		—		—		327,876	(30,037)		(30,037)		—		(30,037)
Restricted stock unit activity	515,398	52		1,635		—		—		177,287	(16,245)		(14,558)		—		(14,558)
Dividends $0.96 per common share	—	—		—		(51,135)		—		—	—		(51,135)		—		(51,135)
Stock-based compensation expense	—	—		19,698		—		—		—	—		19,698		—		19,698
Other comprehensive income (loss)	—	—		—		—		(24,347)		—	—		(24,347)		(783)		(25,130)


Balance at January 31, 2024	66,859,738	$	6,686	$	560,365	$	4,101,210	$	(92,894)	13,535,193	$	(638,949)	$	3,936,418	$	6,177	$	3,942,595

See Notes to the Condensed Consolidated Financial Statements.


THOR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE AND SIX MONTHS ENDED JANUARY 31, 2024 AND 2023 (UNAUDITED)

	Three Months Ended January 31, 2023
								Accumulated					Stockholders’
				Additional				Other					Equity		Non-		Total
	Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Attributable		controlling		Stockholders’
	Shares	Amount		Capital		Earnings		Income (Loss)		Shares	Amount		to THOR		Interests		Equity
Balance at November 1, 2022	66,326,135	$	6,633	$	509,579	$	3,925,365	$	(223,698)	12,813,019	$	(575,516)	$	3,642,363	$	8,596	$	3,650,959
Net income (loss)	—	—		—		27,080		—		—	—		27,080		(1,274)		25,806

Restricted stock unit activity	7,937	—		(612)		—		—		2,080	(159)		(771)		—		(771)
Dividends $0.45 per common share	—	—		—		(24,084)		—		—	—		(24,084)		—		(24,084)
Stock-based compensation expense	—	—		8,543		—		—		—	—		8,543		—		8,543
Other comprehensive income (loss)	—	—		—		—		127,652		—	—		127,652		25		127,677


Balance at January 31, 2023	66,334,072	$	6,633	$	517,510	$	3,928,361	$	(96,046)	12,815,099	$	(575,675)	$	3,780,783	$	7,347	$	3,788,130

	Six Months Ended January 31, 2023
								Accumulated					Stockholders’
				Additional				Other					Equity		Non-		Total
	Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Attributable		controlling		Stockholders’
	Shares	Amount		Capital		Earnings		Income (Loss)		Shares	Amount		to THOR		Interests		Equity
Balance at August 1, 2022	66,059,403	$	6,606	$	497,946	$	3,813,261	$	(181,607)	12,382,441	$	(543,344)	$	3,592,862	$	7,792	$	3,600,654
Net income (loss)	—	—		—		163,265		—		—	—		163,265		(36)		163,229
Purchases of treasury shares	—	—		—		—		—		338,733	(25,407)		(25,407)		—		(25,407)
Restricted stock unit activity	274,669	27		2,629		—		—		93,925	(6,924)		(4,268)		—		(4,268)
Dividends $0.90 per common share	—	—		—		(48,165)		—		—	—		(48,165)		—		(48,165)
Stock-based compensation expense	—	—		16,935		—		—		—	—		16,935		—		16,935
Other comprehensive income (loss)	—	—		—		—		85,561		—	—		85,561		(409)		85,152


Balance at January 31, 2023	66,334,072	$	6,633	$	517,510	$	3,928,361	$	(96,046)	12,815,099	$	(575,675)	$	3,780,783	$	7,347	$	3,788,130

See Notes to the Condensed Consolidated Financial Statements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(All U.S. Dollar and Euro amounts presented in thousands except share and per share data or except as otherwise specified)

1. Nature of Operations and Accounting Policies

Nature of Operations

THOR Industries, Inc. was founded in 1980 and is the sole owner of operating subsidiaries (collectively, the “Company” or “THOR”), that, combined, represent the world's largest manufacturer of recreational vehicles (“RVs”). The Company manufactures a wide variety of RVs in the United States and Europe and sells those vehicles, as well as related parts and accessories, primarily to independent, non-franchise dealers throughout the United States, Canada and Europe. Unless the context requires or indicates otherwise, all references to “THOR,” the “Company,” “we,” “our” and “us” refer to THOR Industries, Inc. and its subsidiaries.

The July 31, 2023 amounts are derived from the annual audited financial statements of THOR. The interim financial statements are unaudited. In the opinion of management, all adjustments (which consist of normal, recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented have been made. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2023. Due to seasonality within the recreational vehicle industry, the impact of supply chain disruptions primarily in Europe, inflation and shifting consumer demand on our industry, among other factors, annualizing the results of operations for the six months ended January 31, 2024 would not necessarily be indicative of the results expected for the full fiscal year.

Recently Issued Accounting Standards Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update No. 2023-07 (“ASU 2023-07”) “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”, which requires additional disclosures about significant segment expenses regularly provided to the Chief Operating Decision Maker. ASU 2023-07 is effective for annual reporting periods beginning after December 15, 2023, or the annual report for fiscal 2025 for the Company, and interim periods within fiscal years beginning after December 15, 2024, or interim periods starting in fiscal 2026 for the Company. Early adoption is permitted. We are currently evaluating the impact of ASU 2023-07 on our consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, requiring enhancements and further transparency to certain income tax disclosures. Under this ASU, entities must disclose, on an annual basis, specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, ASU 2023-09 requires entities to disclose additional information about income taxes paid. The new standard also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. ASU 2023-09 is effective for financial statements for annual periods beginning after December 15, 2024. This ASU is effective for the Company in its fiscal year 2026 beginning on August 1, 2025. The Company is currently evaluating the potential impact of adopting this guidance on the consolidated financial statements.

2. Business Segments

The Company has three reportable segments, all related to recreational vehicles: (1) North American Towable Recreational Vehicles, (2) North American Motorized Recreational Vehicles and (3) European Recreational Vehicles. The operations of the Company's Airxcel and Postle subsidiaries are included in “Other”. Net sales included in Other relate primarily to the sale of specialized component parts and aluminum extrusions. 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 products to third parties.

The following tables reflect certain financial information by reportable segment:


	Three Months Ended January 31,				Six Months Ended January 31,
NET SALES:	2024		2023		2024		2023
Recreational vehicles
North American Towable	$	730,968	$	829,751	$	1,676,422	$	2,147,557
North American Motorized	570,424		738,583		1,281,583		1,862,102
Total North America	1,301,392		1,568,334		2,958,005		4,009,659
European	782,294		646,938		1,490,495		1,151,240
Total recreational vehicles	2,083,686		2,215,272		4,448,500		5,160,899
Other	166,534		164,859		365,455		397,507
Intercompany eliminations	(42,851)		(33,496)		(105,827)		(103,687)
Total	$	2,207,369	$	2,346,635	$	4,708,128	$	5,454,719


	Three Months Ended January 31,				Six Months Ended January 31,
INCOME (LOSS) BEFORE INCOME TAXES:	2024		2023		2024		2023

Recreational vehicles
North American Towable	$	661	$	(7,119)	$	49,910	$	103,888
North American Motorized	26,460		61,544		63,512		185,977
Total North America	27,121		54,425		113,422		289,865
European	38,057		12,015		66,824		5,547
Total recreational vehicles	65,178		66,440		180,246		295,412
Other, net	7,343		8,289		16,819		13,034
Corporate	(65,627)		(42,011)		(117,589)		(96,457)
Total	$	6,894	$	32,718	$	79,476	$	211,989


TOTAL ASSETS:	January 31, 2024		July 31, 2023
Recreational vehicles
North American Towable	$	1,375,699	$	1,429,899
North American Motorized	1,226,909		1,268,109
Total North America	2,602,608		2,698,008
European	2,988,415		2,898,175
Total recreational vehicles	5,591,023		5,596,183
Other	1,023,371		1,048,076
Corporate	611,435		616,571
Total	$	7,225,829	$	7,260,830


DEPRECIATION AND INTANGIBLE ASSET AMORTIZATION EXPENSE:	Three Months Ended January 31,				Six Months Ended January 31,
	2024		2023		2024		2023
Recreational vehicles
North American Towable	$	13,788	$	15,028	$	27,552	$	30,465
North American Motorized	8,849		8,172		17,791		16,333
Total North America	22,637		23,200		45,343		46,798
European	31,136		28,713		61,533		56,015
Total recreational vehicles	53,773		51,913		106,876		102,813
Other	13,668		15,338		27,294		30,986
Corporate	678		431		1,227		876
Total	$	68,119	$	67,682	$	135,397	$	134,675


	Three Months Ended January 31,				Six Months Ended January 31,
CAPITAL ACQUISITIONS:	2024		2023		2024		2023
Recreational vehicles
North American Towable	$	4,443	$	16,820	$	11,373	$	37,994
North American Motorized	5,386		10,266		12,861		29,330
Total North America	9,829		27,086		24,234		67,324
European	16,116		12,151		30,876		21,071
Total recreational vehicles	25,945		39,237		55,110		88,395
Other	6,244		7,957		14,535		12,769
Corporate	4,172		151		6,907		271
Total	$	36,361	$	47,345	$	76,552	$	101,435

3. Earnings Per Common Share

The following table reflects the weighted-average common shares used to compute basic and diluted earnings per common share as included on the Condensed Consolidated Statements of Income and Comprehensive Income:


	Three Months Ended January 31,		Six Months Ended January 31,
	2024	2023	2024	2023
Weighted-average common shares outstanding for basic earnings per share	53,322,504	53,518,878	53,309,169	53,587,646
Unvested restricted and performance stock units	328,079	292,032	442,981	282,184
Weighted-average common shares outstanding assuming dilution	53,650,583	53,810,910	53,752,150	53,869,830

For the three months ended January 31, 2024 and 2023, the Company had 8,078 and 169,350 unvested restricted stock units and performance stock units outstanding, respectively, which were excluded from this calculation as their effect would have been antidilutive. For the six months ended January 31, 2024 and 2023, the Company had 29,688 and 186,895 unvested restricted stock units and performance stock units outstanding, respectively, which were excluded from this calculation as their effect would have been antidilutive.

4. Derivatives and Hedging

The total amounts presented in the Condensed Consolidated Statements of Income and Comprehensive Income due to changes in the fair value of the derivative instruments are as follows:


	Three Months Ended January 31,
	2024		2023
Gain (Loss) on Derivatives Designated as Cash Flow Hedges

Gain (Loss) recognized in Other Comprehensive Income, net of tax

Interest rate swap agreements (1)	$	—	$	(661)
Total gain (loss)	$	—	$	(661)

(1)Other comprehensive income (loss), net of tax, before reclassification from accumulated other comprehensive income (“AOCI”) was $0 and $(136) for the three months ended January 31, 2024 and 2023, respectively.


	Six Months Ended January 31,
	2024		2023
Gain (Loss) on Derivatives Designated as Cash Flow Hedges

Gain (Loss) recognized in Other Comprehensive Income, net of tax

Interest rate swap agreements (2)	$	—	$	85
Total gain (loss)	$	—	$	85

(2)Other comprehensive income (loss), net of tax, before reclassification from AOCI was $0 and $718 for the six months ended January 31, 2024 and 2023, respectively.


	Three Months Ended January 31,
	2024				2023
			Interest					Interest
	Sales		Expense			Sales		Expense
Gain (Loss) Reclassified from AOCI, Net of Tax

Interest rate swap agreements	$	—	$	—		$	—	$	525
Gain (Loss) on Derivatives Not Designated as Hedging Instruments
Gain (loss) recognized in income, net of tax
Foreign currency forward contracts	(236)		—			1,118		—
Commodities swap agreements	—		—			(1,567)		—
Interest rate swap agreements	—		(205)			—		(83)
Total gain (loss)	$	(236)	$	(205)		$	(449)	$	442


	Six Months Ended January 31,
	2024				2023
			Interest					Interest
	Sales		Expense			Sales		Expense
Gain (Loss) Reclassified from AOCI, Net of Tax
Foreign currency forward contracts	$	—	$	—		$	(58)	$	—
Interest rate swap agreements	—		—			—		633
Gain (Loss) on Derivatives Not Designated as Hedging Instruments
Gain (loss) recognized in income, net of tax
Foreign currency forward contracts	(75)		—			1,946		—
Commodities swap agreements	—		—			(2,229)		—
Interest rate swap agreements	—		(139)			—		171
Total gain (loss)	$	(75)	$	(139)		$	(341)	$	804

As of January 31, 2024 and July 31, 2023 there were no derivative instruments designated as cash flow hedges. The Company has certain other derivative instruments which have not been designated as hedges. These other derivative instruments had a notional amount totaling approximately $78,772 and a fair value liability of $1,509 as of January 31, 2024. These other derivative instruments had a notional amount totaling approximately $25,248 and a fair value liability of $932 as of July 31, 2023. For these derivative instruments, changes in fair value are recognized in earnings.

Net Investment Hedges

The foreign currency transaction gains and losses on the Euro-denominated portion of the term loan, which is designated and effective as a hedge of the Company’s net investment in its Euro-denominated functional currency subsidiaries, are included as a component of the foreign currency translation adjustment. A loss, net of tax, was included in the foreign currency translation adjustment of $6,237 for the three months ended January 31, 2024 and a gain of $7,172 was included for the six months ended January 31, 2024. Losses, net of tax, included in the foreign currency translation adjustments were $30,297 for the three months ended January 31, 2023 and $20,912 for the six months ended January 31, 2023.

There were no amounts reclassified out of AOCI pertaining to the net investment hedge during the three and six-month periods ended January 31, 2024 and January 31, 2023, respectively.

5. Inventories

Major classifications of inventories are as follows:


	January 31, 2024		July 31, 2023
Finished goods – RV	$	283,273	$	164,456
Finished goods – other	87,933		93,476
Work in process	330,193		313,006
Raw materials	494,791		563,614
Chassis	739,682		681,122
Subtotal	1,935,872		1,815,674
Excess of FIFO costs over LIFO costs	(159,604)		(162,604)
Total inventories, net	$	1,776,268	$	1,653,070

Of the $1,935,872 and $1,815,674 of inventories at January 31, 2024 and July 31, 2023, $1,344,893 and $1,224,069, respectively, were valued on the first-in, first-out (“FIFO”) method, and $590,979 and $591,605, respectively, were valued on the last-in, first-out (“LIFO”) method.

6. Property, Plant and Equipment

Property, plant and equipment consists of the following:


	January 31, 2024		July 31, 2023
Land	$	155,021	$	147,633
Buildings and improvements	1,045,796		1,038,394
Machinery and equipment	691,731		672,499
Rental vehicles	111,686		99,360
Lease right-of-use assets – operating	43,741		47,969
Lease right-of-use assets – finance	5,145		5,518
Total cost	2,053,120		2,011,373
Less: Accumulated depreciation	(670,893)		(623,565)
Property, plant and equipment, net	$	1,382,227	$	1,387,808

See Note 15 to the Condensed Consolidated Financial Statements for further information regarding the lease right-of-use assets.

7. Intangible Assets and Goodwill

The components of Amortizable intangible assets, net are as follows:



	January 31, 2024				July 31, 2023
			Accumulated				Accumulated
	Cost		Amortization		Cost		Amortization
Dealer networks/customer relationships	$	1,106,507	$	567,048	$	1,112,273	$	526,327
Trademarks	353,500		104,621		355,560		96,087
Design technology and other intangibles	255,892		118,715		258,868		107,483

Non-compete agreements	1,400		1,400		1,400		1,225
Total amortizable intangible assets	$	1,717,299	$	791,784	$	1,728,101	$	731,122

Estimated future amortization expense is as follows:


For the remainder of the fiscal year ending July 31, 2024	$	64,729
For the fiscal year ending July 31, 2025	117,739
For the fiscal year ending July 31, 2026	106,480
For the fiscal year ending July 31, 2027	97,769
For the fiscal year ending July 31, 2028	90,398
For the fiscal year ending July 31, 2029 and thereafter	448,400
	$	925,515

Changes in the carrying amount of Goodwill by reportable segment for the six months ended January 31, 2024 are summarized as follows:


	North American Towable		North American Motorized		European		Other		Total
Net balance as of August 1, 2023	$	337,883	$	65,064	$	965,758	$	431,717	$	1,800,422
Fiscal 2024 activity:
Goodwill acquired	—		—		—		3,635		3,635

Foreign currency translation	—		—		(16,296)		—		(16,296)

Net balance as of January 31, 2024	$	337,883	$	65,064	$	949,462	$	435,352	$	1,787,761

Changes in the carrying amount of Goodwill by reportable segment for the six months ended January 31, 2023 are summarized as follows:


	North American Towable		North American Motorized		European		Other		Total
Net balance as of August 1, 2022	$	344,975	$	53,875	$	893,383	$	511,918	$	1,804,151
Fiscal 2023 activity:
Goodwill acquired	4,097		—		—		—		4,097
Measurement period adjustments	—		—		—		4,682		4,682
Foreign currency translation	—		—		55,729		—		55,729
Deconsolidation of Roadpass Digital	—		—		—		(84,883)		(84,883)
Net balance as of January 31, 2023	$	349,072	$	53,875	$	949,112	$	431,717	$	1,783,776

8. Equity Investments

As discussed in Note 8 to the Company’s Consolidated Financial Statements included in the Fiscal 2023 Form 10-K, effective December 30, 2022, the Company formed a joint venture with TechNexus Holdings LLC (“TechNexus”), whereby the Company transferred TH2Connect, LLC d/b/a Roadpass Digital and its associated legal entities to TN-RP Holdings, LLC (“TN-RP”), following which the Company and TechNexus own 100% of the Class A-RP units and Class C-RP units, respectively, issued by TN-RP.

TN-RP is a variable interest entity (“VIE”), in which both the Company and TechNexus each have a variable interest. The Company’s equity interest, which entitles the Company to a share of future distributions from TN-RP, represents a variable interest. The Company has significant influence due to its Class A-RP unit ownership interest, non-majority seats on the TN-RP advisory board and certain protective rights, and therefore the Company’s investment in TN-RP is accounted for under the equity method of accounting and reported as a component of Equity investments in the Condensed Consolidated Balance Sheets. Similarly, the Company holds an additional investment that is also a VIE over which the Company has significant influence. This is also reported as a component of Equity investments in the Condensed Consolidated Balance Sheets.

The Company had the following aggregate investment and maximum exposure to loss related to these VIEs:


	January 31, 2024		July 31, 2023
Carrying amount of investments	$	128,572	$	126,909
Maximum exposure to loss	$	145,622	$	161,459

The Company’s share of gains and losses accounted for under the equity method of accounting are included in Other income, net in the Condensed Consolidated Statements of Income and Comprehensive Income. The losses recognized in the three and six months ended January 31, 2024 were $3,502 and $9,437, respectively, and the amounts recognized in the three and six months ended January 31, 2023 were not material.

9. Concentration of Risk

One dealer, FreedomRoads, LLC, accounted for 15% of the Company’s consolidated net sales for the three-month period ended January 31, 2024 and 14% of the Company’s consolidated net sales for the three-month period ended January 31, 2023, and accounted for 14% of the Company’s consolidated net sales for both the six-month periods ended January 31, 2024 and January 31, 2023. The majority of the sales to this dealer are reported within the North American Towable and North American Motorized segments. This dealer also accounted for 17% of the Company’s consolidated trade accounts receivable at January 31, 2024 and 13% at July 31, 2023. The loss of this dealer could have a material effect on the Company’s business.

10. Fair Value Measurements

The financial assets and liabilities that are accounted for at fair value on a recurring basis at January 31, 2024 and July 31, 2023 are as follows:


	Input Level	January 31, 2024		July 31, 2023
Cash equivalents	Level 1	$	194,454	$	286,984
Deferred compensation plan mutual fund assets	Level 1	$	42,042	$	40,220
Equity investments	Level 1	$	704	$	4,105

Foreign currency forward contract liability	Level 2	$	399	$	—

Interest rate swap liability	Level 2	$	1,110	$	932

Cash equivalents represent investments in short-term money market instruments that are direct obligations of the U.S. Treasury and/or repurchase agreements backed by U.S. Treasury obligations. These investments are reported as a component of Cash and cash equivalents in the Condensed Consolidated Balance Sheets.

Deferred compensation plan assets accounted for at fair value are investments in securities (primarily mutual funds) traded in an active market held for the benefit of certain employees of the Company as part of a deferred compensation plan, which are reported within Other assets in the Condensed Consolidated Balance Sheets. Additional plan investments in corporate-owned life insurance are recorded at their cash surrender value, not fair value, and therefore are not included above.

Equity investments represent stock investments that are publicly traded in an active market and are reported within Other assets in the Condensed Consolidated Balance Sheets.

The fair value of foreign currency forward contracts is estimated by discounting the difference between the contractual forward price and the current available forward price for the residual maturity of the contract using observable market rates.

The fair value of interest rate swaps is determined by discounting the estimated future cash flows based on the applicable observable yield curves.

11. Product Warranties

The Company generally provides retail customers of its products with a one-year or two-year warranty covering defects in material or workmanship, with longer warranties on certain structural components.

Changes in our product warranty liability during the indicated periods are as follows:


	Three Months Ended January 31,				Six Months Ended January 31,
	2024		2023		2024		2023
Beginning balance	$	333,274	$	325,713	$	345,197	$	317,908
Provision	66,478		72,356		140,913		161,781
Payments	(81,355)		(75,503)		(165,526)		(155,644)

Foreign currency translation	1,217		4,099		(970)		2,620

Ending balance	$	319,614	$	326,665	$	319,614	$	326,665

12. Long-Term Debt

The components of long-term debt are as follows:


	January 31, 2024		July 31, 2023
Term loan	$	807,621	$	758,094
Asset-based credit facility	59,604		—
Senior unsecured notes	500,000		500,000
Unsecured notes	27,093		27,558
Other debt	35,468		41,753
Total long-term debt	1,429,786		1,327,405
Debt issuance costs, net of amortization	(22,083)		(24,726)
Total long-term debt, net of debt issuance costs	1,407,703		1,302,679
Less: Current portion of long-term debt	(17,234)		(11,368)
Total long-term debt, net, less current portion	$	1,390,469	$	1,291,311

As discussed in Note 13 to the Company’s Consolidated Financial Statements included in the Fiscal 2023 Form 10-K, the Company is a party to a term loan (“term loan”) agreement, which consists of a U.S. dollar-denominated term loan tranche and a Euro-denominated term loan tranche, and a $1,000,000 revolving asset-based credit facility (“ABL”).

On November 15, 2023, the Company entered into amendments to both its term loan and ABL agreements to extend maturities and lower the applicable margins used to determine the interest rate on the U.S. dollar-denominated term loan tranche. Pursuant to the term loan amendments, the applicable margin used to determine the interest rate on U.S. dollar-denominated loans was reduced by 0.25% so that the applicable margin for Alternate Base Rate ("ABR")-based loans is 1.75% and 2.75% for Secured Overnight Financing Rate (“SOFR”)-based loans. The SOFR credit spread adjustment applicable to U.S. dollar-denominated SOFR-based loans was eliminated. The applicable margin for Euro-denominated EURIBOR-based loans was unchanged. The maturity date for the term loan was extended from February 1, 2026 to November 15, 2030. Covenants and other material provisions of the term loan agreement remain materially unchanged. Following the amendments, the principal amounts outstanding under the term loan agreement were $450,000 on the U.S. dollar-denominated term loan tranche and 330,000 Euro on the Euro-denominated term loan tranche. Under the provisions of the amended term loan, both the U.S. and Euro tranches require annual principal payments of 1.0% of the new term loan balance, payable quarterly in 0.25% installments starting on May 1, 2024. Pursuant to the ABL amendment, the maturity date for loans under the ABL agreement was extended from September 1, 2026 to November 15, 2028. Maximum availability under the ABL remains at $1,000,000 and there were no borrowings outstanding as of the November 15, 2023 amendment date. The applicable margin, covenants and other material provisions of the ABL remain materially unchanged.

The November 15, 2023 debt amendments noted above were evaluated on a creditor-by-creditor basis pursuant to the requirements in ASC 470-50 related to syndicated loan arrangements. Extinguishment accounting was applied to the creditors that were deemed to have a substantial difference in terms based on an analysis of the present values of cash flows before and after the amendments. As a result of this analysis, the Company recorded expense of $14,741 in the second quarter of fiscal 2024. $7,566 of this $14,741 expense is classified as interest expense in the Company’s Condensed Consolidated Statements of Income and Comprehensive Income and primarily represents extinguishment charges, while the remaining $7,175 is classified as administrative expense and primarily represents third-party costs attributed to the modified loans. In addition, during the second quarter of fiscal 2024 the Company capitalized qualifying financing-related costs of $10,480 related to these amendments which will be amortized over the remaining term of the amended agreements subject to acceleration for early term loan principal payments.

As of January 31, 2024, the outstanding U.S. term loan tranche balance of $450,000 was subject to a SOFR-based rate totaling 8.083%. As of July 31, 2023, the outstanding U.S. term loan tranche balance of $271,900 was subject to a SOFR-based rate totaling 8.433%. The interest rate on the January 31, 2024 outstanding Euro term loan tranche balance of $357,621 was 6.88%, and the interest rate on the July 31, 2023 outstanding Euro term loan tranche of $486,194 was 6.625%.

As of January 31, 2024, the weighted-average interest rate on the outstanding ABL borrowings of $59,604 was 5.108%. As of July 31, 2023, there were no outstanding ABL borrowings. The Company may, generally at its option, pay any borrowings under the ABL, in whole or in part, at any time and from time to time, without penalty or premium.

Availability under the ABL agreement is subject to a borrowing base based on a percentage of applicable eligible receivables and eligible inventory. The unused availability under the ABL is generally available to the Company for general operating purposes and, based on January 31, 2024 eligible receivables and inventory balances, net of amounts drawn, totaled approximately $938,000.

As discussed in Note 13 to the Company’s Consolidated Financial Statements included in the Fiscal 2023 Form 10-K, on October 14, 2021, the Company issued an aggregate principal amount of $500,000 of 4.000% Senior Unsecured Notes (“Senior Unsecured Notes”) that will mature on October 15, 2029 unless redeemed or repurchased earlier. Interest on the Senior Unsecured Notes is payable in semi-annual installments on April 15 and October 15 of each year.

The unsecured notes of 25,000 Euro ($27,093) relate to long-term debt of our European segment. There are two series, 20,000 Euro ($21,674) with an interest rate of 1.945% maturing in March 2025, and 5,000 Euro ($5,419) with an interest rate of 2.534% maturing in March 2028. Other debt relates primarily to real estate loans with varying maturity dates through September 2032 and interest rates ranging from 2.38% to 2.87%.

Total contractual gross debt maturities are as follows:


For the remainder of the fiscal year ending July 31, 2024	$	7,532
For the fiscal year ending July 31, 2025	40,626
For the fiscal year ending July 31, 2026	11,201
For the fiscal year ending July 31, 2027	10,731
For the fiscal year ending July 31, 2028	16,215
For the fiscal year ending July 31, 2029 and thereafter	1,343,481
	$	1,429,786

For the three and six months ended January 31, 2024, interest expense on the term loan, ABL, Senior Unsecured Notes and other debt facilities was $30,548 and $53,747, respectively, which includes amortization of capitalized debt issuance costs and the debt extinguishment charges noted above totaling $8,992 and $11,864, respectively. For the three and six months ended January 31, 2023, interest expense on the term loan, ABL and other debt facilities was $26,926 and $49,940, respectively, which includes amortization of debt issuance costs of $2,862 and $5,697, respectively.

The fair value of the Company’s Senior Unsecured Notes at January 31, 2024 and July 31, 2023 was $444,950 and $430,650, respectively. The fair value of all other debt held by the Company approximates carrying value. The fair values of the Company’s long-term debt are primarily estimated using Level 2 inputs as defined by ASC 820, based on quoted prices in markets that are not active.

13. Provision for Income Taxes

The overall effective income tax rate for the three months ended January 31, 2024 was 22.7%, and the effective income tax rate for the six months ended January 31, 2024 was 24.0%. These rates were both favorably impacted by certain foreign tax rate differences which include certain interest income not subject to corporate income tax.

The overall effective income tax rate for the three months ended January 31, 2023 was 21.1%, and the effective income tax rate for the six months ended January 31, 2023 was 23.0%. These rates were both favorably impacted by certain foreign rate differences and the mix of earnings between foreign and domestic operations which include certain interest income not subject to corporate income tax. The tax rate for this six-month period includes an unfavorable impact from the vesting of share-based compensation awards.

Within the next 12 months, the Company does not anticipate any material changes in its unrecognized tax benefits recorded as of January 31, 2024.

The Company files income tax returns in the U.S. federal jurisdiction and in many U.S. state and foreign jurisdictions. The Company is currently under exam by certain foreign jurisdictions for fiscal years ended 2016 through 2021. The Company believes it has adequately reserved for its exposure to additional payments for uncertain tax positions in its liability for unrecognized tax benefits.

14. Contingent Liabilities, Commitments and Legal Matters

The Company’s total commercial commitments under standby repurchase obligations on global dealer inventory financing were $3,949,915 and $3,893,048 as of January 31, 2024 and July 31, 2023, respectively. The commitment term is generally up to 18 months.

The Company accounts for the guarantee under repurchase agreements of dealers’ financing by deferring a portion of the related product sale that represents the estimated fair value of the guarantee at inception. This deferred amount is included in the repurchase and guarantee reserve balances of $