8-K
Thor Industries Inc (THO)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): December 8, 2020
Thor Industries, Inc.
(Exact Name of Registrant as Specified in Charter)
| Delaware<br><br><br>(State or Other Jurisdiction of Incorporation) | 1-9235<br><br><br>(Commission File Number) | 93-0768752<br><br><br>(IRS Employer Identification No.) |
|---|---|---|
| 601 East Beardsley Avenue,<br><br><br>Elkhart, Indiana<br><br><br>(Address of Principal Executive Offices) | 46514-3305<br><br><br>(Zip Code) | |
| --- | --- |
Registrant’s telephone number, including area code: (574) 970-7460
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock (Par value $.10 Per Share) | THO | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
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 pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02Results of Operations and Financial Condition
On December 8, 2020, THOR Industries, Inc. (the "Company") issued a press release announcing certain financial results for the first quarter ended October 31, 2020. A copy of the Company's press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein. The Company also posted an updated investor slide presentation and a list of investor questions and answers to the "Investors" section of its website. A copy of the Company's slide presentation and investor questions and answers are attached hereto as Exhibit 99.2 and 99.3, respectively, and are incorporated by reference herein.
Item 7.01Regulation FD Disclosure
The slide presentation attached hereto as Exhibit 99.2, and incorporated by reference herein, also provides updated information on industry wholesale shipments and retail market share. The Company also posted an updated list of investor questions and answers to the "Investors" section of its website. A copy of the Company's investor questions and answers is attached hereto as Exhibit 99.3 and is incorporated by reference herein.
In accordance with general instruction B.2 to Form 8-K, the information set forth in Items 2.02 and 7.01 of this Form 8-K (including Exhibits 99.1, 99.2 and 99.3) shall be deemed "furnished" and not "filed" with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference into any filing thereunder or under the Securities Act of 1933, as amended.
Item 9.01Financial Statements and Exhibits
| (d) | Exhibits | |
|---|---|---|
| Exhibit Number | Description | |
| 99.1 | Copy of press release, dated December 8, 2020, issued by the Company | |
| 99.2 | Copy of investor slide presentation, posted on the Company's website on December 8, 2020 | |
| 99.3 | Copy of investor questions and answers posted on the Company's website on December 8, 2020 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Thor Industries, Inc. | ||||
|---|---|---|---|---|
| Date: | December 08, 2020 | By: | /s/ Colleen Zuhl | |
| Name: | Colleen Zuhl | |||
| Title: | Senior Vice President, | |||
| General Counsel and Chief Financial Officer |
Exhibit 99.1
Thor Reports Strong Growth In Net Sales, Gross Profit Margin, And Earnings Per Share For The First Quarter Of Fiscal 2021
Net sales for the first quarter were $2.54 billion, an increase of 17.5%. First-quarter results include $1.89 billion in North American RV net sales and $602.5 million in European RV net sales.
Consolidated gross profit margin for the first quarter was 14.9%, a 60 basis point improvement over the prior-year period.
Net income attributable to THOR for the first quarter increased 122.8% to $113.8 million, or $2.05 per diluted share.
Consolidated RV backlog as of October 31, 2020 was $8.92 billion, an increase of 194.5% over October 31, 2019.
ELKHART, Ind., Dec. 8, 2020 /PRNewswire/ -- THOR Industries, Inc. (NYSE: THO) today announced strong growth for the first quarter of fiscal 2021 which ended October 31, 2020.
"We are pleased to report a solid start to our fiscal year with strong year-over-year growth across all of our major metrics, including net sales, gross margin and net income attributable to THOR. Our backlog continued to increase in the first quarter, setting a record, while dealer inventories continued to decline as many of our product shipments are going directly to fill existing end-customer orders. To address the increase in demand, we have increased production levels. Even with our higher production output and deliveries, demand and backlog for our RV products continue to grow," said Bob Martin, President and CEO of THOR Industries.
"We are working hard to manage through temporary supply chain issues, which are currently common across the entire RV industry. We are confident that once these temporary supply chain constraints are mitigated, our shipments will increase further. We also believe it will take a number of months of production to first fill dealer presold orders before we will begin a restocking cycle to help our dealers get their inventory back to a more historically normal level," added Martin.
First-Quarter Financial Results
First-quarter net sales were $2.54 billion, compared to $2.16 billion in the first quarter of fiscal 2020. This year's first quarter net sales includes $1.39 billion for the North American Towable RV segment, $493.9 million for the North American Motorized RV segment and $602.5 million for the European RV segment.
Consolidated gross profit margin was 14.9% for the first quarter of fiscal 2021, compared to 14.3% in the corresponding period a year ago. The improved gross profit margin is primarily due to the increase in net sales, resulting in a reduction of the manufacturing overhead percentage, and favorable warranty experience trends, partially offset by higher labor costs due to the current competitive RV labor market conditions in Northern Indiana.
Net income attributable to THOR and diluted earnings per share for the first quarter of fiscal 2021 were $113.8 million and $2.05, respectively, compared to net income attributable to THOR and diluted earnings per share of $51.1 million and $0.92, respectively, in the prior-year period.
The Company's effective income tax rate for the first quarter of fiscal 2021 was 21.0% compared with 24.5% for the first quarter of fiscal 2020. The primary driver of the decrease in the effective tax rate between comparable periods was additional income tax expense in the three months ended October 31, 2019 from the vesting of share-based compensation awards. The Company estimates its effective income tax rate for fiscal 2021 will be between 19% and 22% before consideration of any discrete tax items. The actual effective income tax rate will be dependent upon the mix of foreign and domestic pretax earnings and subject to the impact of foreign currency exchange rates.
Net cash used by operating activities for the first quarter of fiscal 2021 was $81.3 million compared to a use of $52.0 million in the first quarter of fiscal 2020. The Company's cash flow is seasonal, and the net cash used by operating activities in the first quarter of fiscal 2021 increased compared to the prior-year period, reflecting an increase in inventory and accounts receivable in the current period, partially offset by an increase in accounts payable. During the fiscal first quarter of 2021, the Company made payments of $59.7 million on its debt related to the acquisition of its European operations.
Segment Results
North American Towable RVs
- North American Towable RV net sales were $1.39 billion for the first quarter of fiscal 2021, compared to first-quarter net sales of $1.20 billion in the prior-year period. The increase was driven primarily by an increase in unit shipments, partially offset by a change in product mix.
- North American Towable RV gross profit margin was 15.8% for the first quarter of fiscal 2021, compared to 15.3% in the prior-year period. The improvement in gross profit margin for the first quarter was primarily the result of a reduction in sales discounts, which effectively lowered material costs as a percentage of net sales, and favorable warranty experience trends, partially offset by higher labor costs due to the current competitive RV labor market conditions in Northern Indiana.
- North American Towable RV income before income tax for the first quarter of fiscal 2021 was $141.2 million, compared to $104.3 million in the first quarter last year, driven by the increase in North American towables net sales.
- North American Towable RV backlog was $4.40 billion at October 31, 2020, an increase of $3.33 billion, or 312.1%, compared to $1.07 billion as of October 31, 2019.
North American Motorized RVs
- North American Motorized RV net sales were $493.9 million for the first quarter of fiscal 2021, compared to $415.9 million in the prior-year period. The increase in motorized net sales for the quarter was driven primarily by higher unit sales in our Class B and Class C motorhomes.
- North American Motorized RV gross profit margin was 13.8% for the first quarter of fiscal 2021, compared to 10.8% in the prior-year period. The improvement in gross profit margin for the first quarter was primarily the result of a reduction in sales discounts, which effectively lowered material costs as a percentage of net sales, and favorable warranty experience trends, partially offset by higher labor costs due to the current competitive RV labor market conditions in Northern Indiana.
- North American Motorized RV income before income tax for the first quarter of fiscal 2021 increased to $41.6 million compared to $21.8 million a year ago, driven by the increase in North American motorized net sales.
- North American Motorized RV backlog was $2.22 billion at October 31, 2020, an increase of $1.55 billion, or 230.6%, compared to $670.0 million as of October 31, 2019.
European RVs
- European RV net sales were $602.5 million for the first quarter of fiscal 2021, compared to $493.0 million in the prior-year period. European net sales increased by 22.2%, driven primarily by an increase in unit shipments, an increase in the overall net price per unit due to the impact of changes in product mix, and a favorable impact from year-over-year changes in foreign currency exchange rates.
- European RV gross profit margin was 12.0% of net sales for the first quarter compared to 13.1% in the prior-year period. Gross profit margin was impacted by product mix with a higher concentration of the motorcaravan and campervan motorized product sales in the current year, which have a higher material cost percentage than caravan products.
- European RV net loss before income tax for the first quarter of fiscal 2021 was $5.5 million, compared to net loss before income tax of $23.0 million during the first quarter of fiscal 2020. The decrease in loss before income taxes was driven by an increase in European recreational vehicle net sales and a decrease in selling, general and administrative expenses.
- European RV backlog was $2.31 billion as of October 31, 2020, an increase of $1.02 billion, or 78.7%, compared to $1.29 billion as of October 31, 2019.
"Each of our business segments delivered stronger operating results in the first quarter as compared to the prior-year first quarter. Our improved financial performance demonstrates our ability to successfully ramp up production volumes in response to surging demand while managing our expenses to achieve improved margins and net income in an unusually complex operating environment," said Colleen Zuhl, THOR's Senior Vice President and Chief Financial Officer.
"Historically, our cash flow tends to be seasonal as we build inventory during our first and second fiscal quarters in preparation for the typical demand cycle for our products. This is true again this year, with the added complexity of carrying additional chassis and inventory due to increased production and higher work-in-process levels as a result of temporary supply chain constraints. We expect overall working capital levels to remain elevated given strong market demand but expect our work-in-process to normalize to appropriate levels during the fiscal year as the supply chain stabilizes and we ship completed work-in-process units. We continue to have strong liquidity with $337.4 million of cash and cash equivalents as of October 31, 2020, and approximately $720 million currently available for borrowing under our ABL. Our cash utilization priorities remain consistent with our historical priorities, namely, we will invest in our businesses, grow our dividend over time, further reduce our acquisition-related debt obligations, and support opportunistic strategic investments, including acquisitions, to enhance long-term shareholder value," concluded Zuhl.
Outlook
"Our financial results were very strong for the first quarter, despite the continued challenges we faced as a result of the pandemic. Our teams have done a great job of managing through what continues to be an uncertain operating environment. We view the current chain constraints to be temporary in nature, and expect to achieve continued growth in fiscal 2021 supported by our October 31st backlog of $8.92 billion," said Bob Martin, President and CEO of THOR Industries.
"We believe the long-term growth potential for the RV industry remains very positive. While it is certainly true that the impact of COVID-19 has brought new buyers into our industry, both THOR, specifically, and the industry, generally, were attracting new buyers and saw strong demand independent of the pandemic. People have shown that they appreciate the long-term value proposition RVs offer – affordability, a vacation in a controlled environment, freedom, and outdoor fun. We also believe that the desire by consumers to 'control their own destiny' and have safer, socially distanced vacation activities has been a key factor in driving recent RV demand and will continue to be a factor for the foreseeable future.
"On December 1, 2020, the RVIA updated their most-likely forecast and now expects an increase of 18.7% in calendar 2021 shipments over their most-likely estimate for calendar 2020 shipments. We support their forecast and believe there is potential for upside to this forecast based on current industry conditions," concluded Martin.
Supplemental Earnings Release Materials
THOR has provided a comprehensive question and answer document, as well as a PowerPoint presentation, relating to its quarterly results and other topics. To view these materials, go to http://ir.thorindustries.com.
About THOR Industries, Inc.
THOR is the sole owner of operating subsidiaries that, combined, represent the world's largest manufacturer of recreational vehicles. For more information on the Company and its products, please go to www.thorindustries.com.
Forward-Looking Statements
This release includes certain statements that are "forward-looking" statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are made based on management's current expectations and beliefs regarding future and anticipated developments and their effects upon THOR, and inherently involve uncertainties and risks. These forward-looking statements are not a guarantee of future performance. We cannot assure you that actual results will not differ materially from our expectations. Factors which could cause materially different results include, among others: the extent and impact from the continuation of the COVID-19 pandemic, along with the responses to contain the spread of the virus by various governmental entities or other actors, which may have negative effects on retail customer demand, our independent dealers, our supply chain, our production or other aspects of our business and which may have a negative impact on our consolidated results of operations, financial position, cash flows and liquidity; the ability to ramp production up or down quickly in response to rapid changes in demand while also managing costs and market share; the effect of raw material and commodity price fluctuations, and/or raw material, commodity or chassis supply constraints; the impact of tariffs on material or other input costs; the level and magnitude of warranty claims incurred; legislative, regulatory and tax law and/or policy developments including their potential impact on our dealers and their retail customers or on our suppliers; the costs of compliance with governmental regulation; 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; interest rate fluctuations and their potential impact on the general economy and specifically on our dealers and consumers; 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 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 to attract production personnel in times of high demand; the loss or reduction of sales to key dealers; disruption of the delivery of units to dealers; increasing costs for freight and transportation; asset impairment charges; cost structure changes; competition; the impact of potential losses under repurchase or financed receivable agreements; the potential 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 regulatory standards in the various jurisdictions in which our products are produced and/or sold; changes to our investment and capital allocation strategies or other facets of our strategic plan; and changes in market liquidity conditions, credit ratings and other factors that may impact our access to future funding and the cost of debt.
These and other risks and uncertainties are discussed more fully in our Quarterly Report on Form 10-Q for the quarter ended October 31, 2020 and in Item 1A of our Annual Report on Form 10-K for the year ended July 31, 2020.
We disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this release or to reflect any change in our expectations after the date hereof or any change in events, conditions or circumstances on which any statement is based, except as required by law.
| THOR INDUSTRIES, INC. | |||||
|---|---|---|---|---|---|
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |||||
| FOR THE THREE MONTHS ENDED OCTOBER 31, 2020 and 2019 | |||||
| (000's except share and per share data) (Unaudited) | |||||
| % NetSales ^(1)^ | 2019 | % NetSales ^(1)^ | |||
| Net sales | 2,537,360 | $ | 2,158,785 | ||
| Gross profit | 378,852 | 14.9% | $ | 308,811 | 14.3% |
| Selling, general and administrative expenses | 7.2% | 188,464 | 8.7% | ||
| Amortization of intangible assets | 1.1% | 24,293 | 1.1% | ||
| Interest expense, net | 0.9% | 27,050 | 1.3% | ||
| Other income (expense), net | —% | (370) | —% | ||
| Income before income taxes | 5.8% | 68,634 | 3.2% | ||
| Income taxes | 1.2% | 16,789 | 0.8% | ||
| Net income | 4.6% | 51,845 | 2.4% | ||
| Less: net income attributable to non-controlling interests | 0.1% | 780 | —% | ||
| Net income attributable to THOR Industries, Inc. | 113,757 | 4.5% | $ | 51,065 | 2.4% |
| Earnings per common share | |||||
| Basic | 2.06 | $ | 0.93 | ||
| Diluted | 2.05 | $ | 0.92 | ||
| Weighted-avg. common shares outstanding – basic | 55,095,074 | ||||
| Weighted-avg. common shares outstanding – diluted | 55,224,655 | ||||
| (1) Percentages may not add due to rounding differences |
All values are in US Dollars.
| SUMMARY CONDENSED CONSOLIDATED BALANCE SHEETS (000) (Unaudited) | ||||||||
|---|---|---|---|---|---|---|---|---|
| July 31, 2020 | October 31, 2020 | July 31, 2020 | ||||||
| Cash and equivalents | 340,210 | $ | 541,363 | Current liabilities | $ | 1,596,690 | $ | 1,515,281 |
| Accounts receivable, net | 814,227 | Long-term debt | 1,585,019 | 1,652,831 | ||||
| Inventories, net | 716,305 | Other long-term liabilities | 258,692 | 257,779 | ||||
| Prepaid expenses and other | 30,382 | Stockholders' equity | 2,420,521 | 2,345,569 | ||||
| Total current assets | 2,102,277 | |||||||
| Property, plant & equipment, net | 1,107,649 | |||||||
| Goodwill | 1,476,541 | |||||||
| Amortizable intangible assets, net | 914,724 | |||||||
| Deferred income taxes and other, net | 170,269 | |||||||
| Total | 5,860,922 | $ | 5,771,460 | $ | 5,860,922 | $ | 5,771,460 |
All values are in US Dollars.
Contact
Investor Relations:
Mark Trinske, Vice President of Investor Relations
mtrinske@thorindustries.com
(574) 970-7912
tho-ex992_6.pptx.htm
FIRST QUARTER OF FISCAL 2021 FINANCIAL RESULTS Exhibit 99.2
Forward-Looking Statements This presentation includes certain statements that are “forward-looking” statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are made based on management’s current expectations and beliefs regarding future and anticipated developments and their effects upon THOR, and inherently involve uncertainties and risks. These forward-looking statements are not a guarantee of future performance. We cannot assure you that actual results will not differ materially from our expectations. Factors which could cause materially different results include, among others: the extent and impact from the continuation of the COVID-19 pandemic, along with the responses to contain the spread of the virus by various governmental entities or other actors, which may have negative effects on retail customer demand, our independent dealers, our supply chain, our production or other aspects of our business and which may have a negative impact on our consolidated results of operations, financial position, cash flows and liquidity; the ability to ramp production up or down quickly in response to rapid changes in demand while also managing costs and market share; the effect of raw material and commodity price fluctuations, and/or raw material, commodity or chassis supply constraints; the impact of tariffs on material or other input costs; the level and magnitude of warranty claims incurred; legislative, regulatory and tax law and/or policy developments including their potential impact on our dealers and their retail customers or on our suppliers; the costs of compliance with governmental regulation; 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; interest rate fluctuations and their potential impact on the general economy and specifically on our dealers and consumers; 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 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 to attract production personnel in times of high demand; the loss or reduction of sales to key dealers; disruption of the delivery of units to dealers; increasing costs for freight and transportation; asset impairment charges; cost structure changes; competition; the impact of potential losses under repurchase or financed receivable agreements; the potential 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 regulatory standards in the various jurisdictions in which our products are produced and/or sold; changes to our investment and capital allocation strategies or other facets of our strategic plan; and changes in market liquidity conditions, credit ratings and other factors that may impact our access to future funding and the cost of debt. These and other risks and uncertainties are discussed more fully in our Quarterly Report on Form 10-Q for the quarter ended October 31, 2020 and in Item 1A of our Annual Report on Form 10-K for the year ended July 31, 2020. We disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this presentation or to reflect any change in our expectations after the date hereof or any change in events, conditions or circumstances on which any statement is based, except as required by law.
Quarterly Highlights European 23.7% $0.60 bn NA Motorized 19.5% $0.49 bn NA Towables 54.9% $1.39 bn Other 1.9% $0.05 bn 14.9% Gross Margin $2.05 Diluted EPS $59.7 million Paid on debt related to the acquisition of its European operations in the first fiscal quarter North American Independent Dealer Inventory of THOR Products at Historically Low Levels RV Backlog $8.92 billion +194.5% Net Sales $2.54 billion First Fiscal Quarter 2021
Net Sales Net sales increased 17.5% to $2.54 billion in the first quarter of fiscal 2021, due to increased unit shipments across the business segments Gross Profit Margin Gross profit increased 22.7% to $378.9 million in the first quarter of fiscal 2021 Gross profit margin improved to 14.9% in the first quarter of fiscal 2021 from 14.3% in the prior-year period, primarily driven by the impact of higher net sales, resulting in a reduction of the manufacturing overhead percentage, and favorable warranty experience trends, partially offset by higher labor costs Financial Results First Quarter of Fiscal 2021
Net Sales Net sales of North American Towable RVs increased 15.9% in the first quarter of fiscal 2021 compared to the prior-year period due to stronger demand for travel trailer and fifth wheel units Gross Profit Margin Gross profit margin increased 50 basis points in the fiscal first quarter, driven by reduced sales discounts, which effectively lowered material costs as a percentage of sales, as well as favorable warranty experience trends, partially offset by an increase in labor costs $4.4 billion in Backlog North American Towable backlog at October 31, 2020 increased approximately 312% compared to October 31, 2019 As of October 31, 2020, dealer inventory levels were well below optimal stocking levels, which has increased dealer orders and the backlog First Quarter of Fiscal 2021 North American Towable Segment
Net Sales Fiscal 2021 first quarter net sales of North American Motorized RVs increased 18.7% compared to the prior-year period due to higher unit sales in our Class B and Class C motorhomes Gross Profit Margin Gross profit margin increased 300 basis points in the fiscal first quarter, driven by reduced sales discounts, which effectively lowered material costs as a percentage of sales, as well as favorable warranty experience trends, partially offset by an increase in labor costs $2.2 billion in Backlog North American Motorized backlog at October 31, 2020 increased approximately $1.55 billion, or over 230%, compared to October 31, 2019 North American Motorized Segment First Quarter of Fiscal 2021
Net Sales European RV segment net sales for the fiscal first quarter increased 22.2% from the prior-year period, driven primarily by an increase in unit shipments, an increase in the overall net price per unit due to the impact of changes in product mix, and a favorable impact from year-over-year changes in foreign currency exchange rates First Quarter of Fiscal 2021 Gross Profit Margin Gross profit margin decreased by 110 basis points in the fiscal first quarter, reflecting a change in product mix, including a higher concentration of the motorcaravan and campervan motorized products in the current year as compared to the prior-year period, which carry a higher material percentage than caravan products $2.3 billion in Backlog THOR’s European RV backlog at October 31, 2020 increased $1.02 billion, or over 78%, compared to October 31, 2019 European Segment
(1) Source: Statistical Surveys, Inc., U.S. and Canada; CYTD through September 30, 2020 and 2019 (2) Source: Recreation Vehicle Industry Association, CYTD through October 2020 (3) Source: The Conference Board, Consumer Confidence Survey®, through September 2020 2020 Industry Wholesale Shipments by Type (2) Consumer Confidence vs. RV Retail Registrations Calendar Year-to-Date RV Retail Market Share (1) RV Industry Overview North America THOR Forest River Winnebago Grand Design REV Group Gulfstream All Others 2020 Towable 369,066 units 2020 Motorized 40,595 units 2019 Motorized 42,144 units 2019 Towable 343,723 units 38.5% 42.1% 37.4% 45.6% 39.4% 20.4% 8.3% 1.3% 7.5% 1.4% 20.8% 7.3% 13.0% 7.6% 7.2% 37.1% 1.1% 1.4% 14.3% 22.3% 19.1% 6.9% Note: 2020 represented above includes the trailing twelve months of registrations ended September
RV Wholesale Market Trends (Units 000's) Towable RV Wholesale Market Trends (Units 000's) YTD Shipments (Units) Sept. 2020 Sept. 2019 Unit Change % Change 300,100 309,938 (9,838) (3.2)% YTD Shipments (Units) Sept. 2020 Sept. 2019 Unit Change % Change 271,770 273,629 (1,859) (0.7)% Motorized RV Wholesale Market Trends (Units 000's) YTD Shipments (Units) Sept. 2020 Sept. 2019 Unit Change % Change 28,330 36,309 (7,979) (22.0)% Historical Data: Recreation Vehicle Industry Association (RVIA) (e) Calendar year 2020 and 2021 represent the most recent RVIA most likely estimates from their November 2020, Winter 2020 issue of Roadsigns 5-year CAGR: 2.6% 5-year CAGR: 2.8% 5-year CAGR: 1.2% RV Industry Overview North America
(1) Source: European Caravan Federation; CYTD period: September 30, 2020 and 2019; European retail registration data available at www.CIVD.de (2) Source: Statistical Surveys (www.statisticalsurveys.com) Country Caravans Motorcaravans Total CYTD Sept. 30, % CYTD Sept. 30, % CYTD Sept. 30, % 2020 2019 Change 2020 2019 Change 2020 2019 Change Germany 24,650 23,769 3.7 % 63,638 47,543 33.9 % 88,288 71,312 23.8 % France 5,043 5,840 (13.6) % 21,279 20,804 2.3 % 26,322 26,644 (1.2) % U.K. 11,433 14,388 (20.5) % 9,415 12,988 (27.5) % 20,848 27,376 (23.8) % Netherlands 6,281 6,234 0.8 % 2,234 1,916 16.6 % 8,515 8,150 4.5 % Switzerland 1,327 1,427 (7.0) % 5,252 4,851 8.3 % 6,579 6,278 4.8 % Sweden 3,160 2,891 9.3 % 3,434 3,492 (1.7) % 6,594 6,383 3.3 % Italy 509 686 (25.8) % 5,563 5,245 6.1 % 6,072 5,931 2.4 % Belgium 1,015 1,086 (6.5) % 4,680 4,490 4.2 % 5,695 5,576 2.1 % Spain 1,446 1,894 (23.7) % 4,787 5,062 (5.4) % 6,233 6,956 (10.4) % All Others 7,969 7,903 0.8 % 10,715 9,493 12.9 % 18,684 17,396 7.4 % Total 62,833 66,118 (5.0) % 130,997 115,884 13.0 % 193,830 182,002 6.5 % European Industry Unit Registrations by Country (1) The Company monitors retail trends in the European RV market as reported by the European Caravan Federation, whose industry data is reported to the public quarterly, typically issued on a one-to-two month lag, continually updated and often impacted by delays in reporting by various countries Industry wholesale shipment data for the European RV market is not available CYTD Registrations Full-Year Comparison of New Vehicle Registrations by Continent (Units 000's) (1) (2) RV Industry Overview Europe
Capital Management ($ millions) Cash Priorities Support opportunistic strategic investments, including acquisitions, to enhance long-term shareholder value Repurchase of shares on a strategic and opportunistic basis, and payment of special dividends as determined by our Board of Directors Reduce our acquisition-related debt obligations Grow our dividend over time Invest in our businesses Annual FY21 Capital Expenditures projected to be between $140mm – $150mm
INVESTOR RELATIONS CONTACT: Mark Trinske Vice President of Investor Relations mtrinske@thorindustries.com (574) 970-7912
tho-ex993_132.htm
Exhibit 99.3
FIRST QUARTER OF FISCAL 2021
INVESTOR QUESTIONS & ANSWERS
Published December 8, 2020
Forward-Looking Statements
Reference is made to the forward-looking statements disclosure provided at the end of this document.
Executive Overview
| • | Net sales for the first quarter were $2.54 billion, an increase of 17.5%. First-quarter results include $1.89 billion in North American RV net sales and $602.5 million in European RV net sales. |
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| • | Consolidated gross profit margin for the first quarter was 14.9%, a 60 basis point improvement over the prior year period. |
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| • | Net income attributable to THOR for the first quarter increased 122.8% to $113.8 million, or $2.05 per diluted share. |
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| • | Consolidated RV backlog as of October 31, 2020 was $8.92 billion, an increase of 194.5% over October 31, 2019. |
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Quick Reference to Contents
| Current Market Conditions and Outlook Assumptions | 2 | |
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| Q&A | 4 | |
| Segment Data | ||
| Summary of Key Quarterly Segment Data - North American Towable RVs | 9 | |
| Summary of Key Quarterly Segment Data - North American Motorized RVs | 10 | |
| Summary of Key Quarterly Segment Data - European RVs | 11 | |
| Forward Looking Statements | 12 |
Current Market Conditions and Outlook Assumptions
Absent a significant long-term economic impact to the United States or Europe as a direct or indirect result of COVID-19 or other events, our long-term outlook for the RV industry is one of optimism based on:
| ▪ | Positive near-term and long-term RV industry fundamentals in both North America and Europe. Confident outlook is supported by favorable demographics, favorable perception of RVing as promoting a healthy lifestyle and adequate availability of dealer and consumer credit at historically low rates in both North America and Europe. |
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| ▪ | Independent dealer outlook in North America and Europe. Independent dealer optimism remains high in North America and Europe for both the near term and the long term. Even prior to the onset of COVID-19, demand was being driven by favorable demographic and lifestyle growth trends. We believe these trends have been strengthened since the onset of COVID-19. Many dealers, particularly larger dealers in North America, continue to invest heavily in their businesses with new or expanded locations, added service facilities and other amenities to serve RV consumers. |
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| ▪ | Market conditions in North America. Currently, dealer inventories are at historically low levels in North America given the recent strong retail demand for RVs due to the perceived safety of RV travel during the COVID-19 pandemic, a strong desire to socially distance and the reduction in commercial air travel and cruises. We believe consumers are likely to continue to prefer vacations that RVs are uniquely positioned to provide, where they can continue practicing social distancing while also allowing them to explore or unwind, often close to home and on short notice. Minimal-contact vacation options like road trips and camping are ideal for people who want to keep their risk factors low. |
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Demand in the market remains very high, such that our recent deliveries to dealers are being sold at retail very quickly and are not yet adding to dealer lot inventory levels. As a result, our order backlog at the end of our fiscal first quarter was at a new all-time high value of $8.92 billion. The growth in backlog, combined with the low level of current dealer inventory, speaks to the longer-term nature of the current demand cycle. We expect this cycle of robust retail sales, followed by a restocking cycle, will last at least through the end of our fiscal year 2021.
On December 1^st^, RVIA issued its updated forecast for calendar years 2020 and 2021 wholesale unit shipments. RVIA estimates total North American shipments in calendar year 2021 will likely be 502,900 units, an increase of approximately 19% over the most-likely estimate of unit shipments for calendar year 2020. Towable RV shipments are anticipated to reach 453,700 units in calendar year 2021, an increase of approximately 18% over anticipated calendar year 2020 shipments. Motorhome shipments are projected to finish at 49,200 units in calendar year 2021, an increase of approximately 26% over anticipated calendar year 2020 shipments.
| ▪ | Market conditions in Europe. The European outlook for future growth in retail sales depends upon the various economic conditions in the respective countries we sell into. Germany is the largest RV market in Europe and is performing well, and, as in North America, dealer inventories in Germany are below normal stocking levels. Our long-term outlook for future growth in European retail sales remains positive as more and more people discover RVs as a way to support their lifestyle in search of independence and individuality, as well as using the RV as a multi-purpose vehicle to escape urban life and explore outdoor activities and nature. |
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We are seeing many of the themes that we are experiencing in North America also play out in Europe, although the magnitude varies country by country. Total retail registrations in Europe for the third calendar quarter of 2020 increased 56% compared to the same time period in 2019, drawing dealer inventories down to below normal stocking levels. Germany, our largest European market, saw an increase in retail registrations of 80% in the third calendar quarter of 2020 compared to the prior year period. Registrations in Germany, calendar year-to-date through September, are up 24% in 2020 versus 2019. The UK, which is the third largest European market and among the hardest hit countries during the pandemic, also saw third calendar quarter retail unit sales increase 34% year-over-year. UK calendar year-to-date registrations through September, however, are still down 24%.
Due to the COVID-19 pandemic and ongoing efforts to limit its spread, we have cancelled our participation in all trade fairs and major events planned for the remainder of calendar 2020, and are evaluating the level of our trade fair participation for fiscal year 2021. In place of the trade fairs, 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. With over 1,000 active independent dealers in Germany and throughout Europe, we have one of the strongest and most professionally structured dealer and service networks, and we are optimistic about long-term future growth.
| ▪ | Supply chain constraints. Given the high RV retail demand, historically low dealer inventory levels and a global supply chain ramping up to meet the higher demand, while also continuing to manage the impacts of COVID-19 to their own production schedules, we, and the industry, are experiencing various constraints and disruptions within the supply chain in both North America and, to a lesser extent, Europe. This situation is fluid, with specific shortages changing frequently. Managing through peaks and valleys of demand and supply chain constraints are part of the history of our business, and our teams are very experienced in managing through these challenges. Today we are working closely with our supply chain partners to manage production and delivery of the components we need and, where necessary, seeking alternative supply solutions. We are committed to quickly resolving any temporary supply chain issues but also recognize that in the short term we may experience impacts to our production schedules. As we work through these constraints, we have also identified long-term opportunities to work with our supply chain partners to increase efficiencies through initiatives such as stock-keeping unit (SKU) reductions, as well as the ability to expand our supplier base as we help new suppliers recognize the growth potential the RV industry has to offer. |
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| ▪ | COVID-19 operational impacts. THOR has always prioritized employee health and safety and will continue to maintain COVID-19 safety protocols that are in place at every one of our facilities worldwide for as long as necessary. THOR has invested in equipment that disinfects our plants and offices on a regular basis and in personal safety equipment – not only for our employees, but for first responders in many of the communities where are facilities are located. The Company is also supporting and working closely with various health agencies to stay abreast of current developments and support safety protocols and messaging to our employees and the communities where our team members live and work. |
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During the quarter, our operations were impacted by COVID-19 primarily by the related supply chain constraints noted above, which led to certain production interruptions.
The extent to which the COVID-19 pandemic may impact our business in future periods remains uncertain and unpredictable. Recently, the rate of COVID-19 infections has again begun to increase in the U.S., Europe and other markets in which we operate and sell our products. Negative impacts to our results of operations, liquidity and financial position, may occur in future periods as a direct or indirect result of the pandemic.
| ▪ | Post-COVID-19 outlook. Recently a number of COVID-19 vaccines were announced that show promise and may be available for use in the coming months. Currently, the timing and impact of these developments remain uncertain. Even when an approved vaccine does reach the market, the Company believes that the RV industry will continue to attract new and repeat consumers in part because the macroeconomic factors underlying the strong demand for RVs that were evident prior to the onset of COVID-19 have remained consistent. People have also shown that they appreciate the long-term value proposition RVs offer – affordability, a vacation in a controlled environment, freedom, quality time with family and friends and outdoor fun. |
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We also believe that the desires of consumers to "control their own destinies" and to have safer, socially distanced vacation activities have been factors in driving recent RV demand and will continue to be factors long after a vaccine is made available. In addition, historically, new RV owners that enjoy the RV lifestyle tend to trade in and trade up for a new RV every 3 to 5 years, and children that grow up RVing tend to continue the lifestyle once they have families of their own, so attracting and maintaining this first-time buyer now creates further opportunities for growth for years to come.
Q&A
| 1. | Can you comment on THOR’s North American market share in calendar year 2020? How should we think about THOR's North American market share going forward? |
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| a. | We carefully monitor and manage our market share, taking several factors into consideration, including the following: |
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| • | THOR's wholesale shipment share is improving. Both of our North American segments have gained wholesale shipment share quarter-over-quarter since the pandemic commenced. Our Motorized segment wholesale shipment share increased to 43.4% in the first quarter of fiscal 2021 compared to 38.7% in the fourth quarter of fiscal 2020, and our Towable wholesale segment shipment share increased to 43.6% in the first quarter of fiscal 2021 compared to 43.2% in the fourth quarter of fiscal 2020. |
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Given that current demand exceeds supply in the market and many state motor vehicle departments are behind in registering new RVs, we believe recent retail share indicators are not as meaningful as usual. Wholesale shipment share (as a percent of total wholesale shipments) is currently a more accurate proxy for market share growth.
| • | THOR is expanding production capacity to capture further wholesale shipment share gains. Since restarting production, we have retrofitted existing, and added new, production lines to increase capacity within our plant footprint. We will continue to bring additional capacity online in our second and third quarters of fiscal 2021, with modest capital investments, and expect to see continued shipment share gains as we further accelerate production throughput. |
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We believe prudent production management is critical in our cyclical industry. Overproducing leads to excess finished goods inventory and increased discounting and promotions which may temporarily increase share, but would also negatively impact the manufacturers' gross margin.
| • | Looking ahead, THOR expects continued wholesale shipment share growth in fiscal 2021. RVIA calendar year 2021 forecast projects an 18.7% increase in wholesale shipments over projected calendar year 2020 wholesale shipments. We agree with their forecast and are fortunate to have the leading portfolio of brands, great strategic relationships with our supplier and dealer base and a record order backlog of approximately $9 billion. |
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Through increased production capacity and throughput, superior product offerings, and continued operational excellence, we believe, absent a significant economic impact as a result of COVID-19 or other events, that THOR should meet or exceed RVIA’s forecasted growth and continue to increase its wholesale shipment share.
| 2. | Can you provide color on recent retail trends? |
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| a. | In North America, current demand is strong across each of our product categories, but we continue to see outsized demand for entry-level products within our Towable segment and smaller units within our Motorized segment, indicative of first-time buyer trends. We are also seeing demand growth across Europe, with Germany outperforming other European countries. Within Germany, we are seeing strong demand for our motorized campervan products. |
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| 3. | Do you think the increase in new units being sold in North America will lead to an overabundance of used units in the North American market space in the near future? How do used units impact wholesale sales? |
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| a. | We have consistently viewed a healthy used RV market in North America as an essential ingredient for creating a healthy new RV market. Typically, much of a dealer's used RV inventory is a result of a trade-in for a new unit. In addition, used unit sales are often made to new entrants to the RV lifestyle which will generate future sales of new units if they enjoy the lifestyle. |
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All of our independent North American dealers manage their product portfolios based on current market demand and their own internal metrics. Right now, used inventory is either nonexistent or very limited. Looking ahead, we believe any change in used inventory levels in the market space would not materially impact our sales, as we are now operating with an all-time record backlog and dealers are in need of inventory.
| 4. | THOR's consolidated gross profit margin increased 60 basis points in the first quarter on a year-over-year basis. What drove this improvement? How should we think about gross margins going forward? |
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| a. | The improvement in consolidated gross profit margin was primarily driven by our North American segments. Total North American gross profit margin increased 110 basis points, from 14.2% in the first quarter of fiscal 2020 to 15.3% in the first quarter of fiscal 2021. North American Towable RV and North American Motorized RV gross profit margins were positively impacted by 1) a reduction in sales discounts, 2) favorable warranty experience trends and 3) lower overhead costs as a percentage of sales as a result of higher production levels and overhead spending controls. These positive impacts were partially offset by higher labor costs due to the current competitive RV labor market conditions in Northern Indiana. |
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European recreational vehicle gross profit margin decreased from 13.1% in the first quarter of fiscal 2020 to 12.0% in the first quarter of fiscal 2021, impacted primarily by product mix, with a higher concentration of the motorcaravan and campervan motorized product sales in the current fiscal year. Motorcaravans and campervans carry a higher chassis and material percentage than caravan products and dilute gross profit margins, similar to the margin profile difference that exists between the North American Motorized and North American Towable segments.
Regarding future gross margins, we continue to operate in a complex and rapidly evolving environment due to COVID-19 and a high-volume production environment given the strong demand backdrop. As a result, absent significant direct or indirect impacts from COVID-19, including further supply constraints, we expect to see a continuation of 1) cost pressures as labor markets remain tight and competitive across the supply chain, 2) lower year-over-year discounting and promotional sales environment and 3) favorable operating leverage given the high production levels.
As a reminder, our business does not lend itself to meaningful sequential analysis because of varying seasonal demand and production. Due to seasonality within the RV industry and the current COVID-19 pandemic, among other factors, annualizing the results of operations for the three months ended October 31, 2020 would not necessarily be indicative of the results expected for the full fiscal year.
| 5. | Are you able to recapture higher input costs through selling price increases? |
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| a. | To the extent we face higher input costs, we have a number of levers available to offset the higher costs. Our flexible production model allows us to quickly respond in terms of decontenting, improving production efficiencies or implementing material sourcing strategies, before raising the selling prices of our units. Other options we can utilize include sourcing lower-cost substitute components, obtaining alternative supply sources or instituting temporary pricing surcharges. |
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| 6. | On a consolidated basis, THOR’s Selling, General and Administrative ("SG&A") expenses improved compared to the prior-year period. What were some of the key factors that led to this improvement during the quarter? How should we think about SG&A expenses going forward? |
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| a. | Selling, general and administrative expenses for the first quarter of fiscal 2021 decreased by $6.7 million, or 3.6%, compared to the prior-year period. This reduction was primarily due to reduced sales-related travel, advertising and promotional costs in the current year period, largely a result of the cancellation of the major RV shows in North America and in Europe along with travel restrictions due to the COVID-19 pandemic. These savings were partially offset by the impact of higher net sales and income before income taxes across our business segments in both North America and Europe, which caused related commissions, incentive and other compensation to increase. Looking forward, the magnitude of savings realized in the first fiscal quarter from sales-related travel, advertising and promotional costs will not carry forward into the remaining quarters of fiscal year 2021 as the majority of our RV show expenses, especially in Europe, are incurred in the first fiscal quarter. |
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We will continue to evaluate the level of SG&A expenses going forward (e.g. travel) in addition to how we allocate dollars (e.g. marketing and promotional costs shifting to digital) as we continually look to optimize our SG&A spend, leverage best practices across our global organization and adjust to current industry and market conditions.
| 7. | What was THOR's adjusted EBITDA for the first quarter for both fiscal 2021 and 2020? | |
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| a. | Although we do not generally disclose non-GAAP numbers, we recognize that many of the users of our financial statements find a measure of EBITDA adjusted for non-cash or non-routine items to be useful. Below are some items within our financial statements that might be helpful in considering this question: | |
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| Three Months Ended<br>October 31, 2020 | ||
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| Income Before Income Taxes^(1)^ | $ | 146.3 million |
| Depreciation & Amortization ^(2)^ | 54.2 million | |
| Net Interest Expense^(1)^ | 24.0 million | |
| Stock-Based Compensation Expense^(3)^ | 5.8 million | |
| Change in LIFO Reserve^(4)^ | 1.0 million | |
| Three Months Ended<br>October 31, 2019 | ||
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| Income Before Income Taxes^(1)^ | $ | 68.6 million |
| Depreciation & Amortization ^(2)^ | 50.2 million | |
| Net Interest Expense^(1)^ | 27.1 million | |
| Stock-Based Compensation Expense^(3)^ | 5.0 million | |
| ^(1)^ From the Income Statement | ^(2)^ From the Business Segments footnote | |
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| ^(3)^ From the Statement of Cash Flows | ^(4)^ From the Inventories footnote | |
| 8. | What are your cash priorities? | |
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| a. | Our priorities remain consistent with our historical priorities, which are (1) funding our growth, (2) reducing our debt obligations, (3) growing our dividend over time and (4) supporting opportunistic strategic investments, including acquisitions. The Company's Board of Directors may also consider strategic and opportunistic repurchases of shares and special dividends. | |
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Each quarter of fiscal 2020, we made payments on our debt related to the acquisition of our European operations. During the first quarter of fiscal 2021, we paid approximately $59.7 million on debt related to the acquisition of our European operations. Life-to-date, we have paid approximately $678 million on debt related to the acquisition of our European operations in February of 2019.
| 9. | What level of capital expenditures do you anticipate in fiscal 2021? |
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| a. | Capital expenditures for the first quarter of fiscal 2021 amounted to $24.7 million. We anticipate capital expenditures during the remainder of fiscal 2021 to range between $115 million and $125 million. Approximately half of those expenditures are expected to be incurred in North America and half in Europe. Investments in capital expenditures for fiscal 2021 will primarily be for the completion of certain building projects and replacing and upgrading machinery, equipment and other assets throughout our facilities to be used in the ordinary course of business. |
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| 10. | What was THOR's effective tax rate in the first quarter of fiscal 2021? What do you expect THOR's fiscal 2021 effective income tax rate will be? |
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| a. | The Company's effective income tax rate for the first quarter of fiscal 2021 was 21.0% compared with 24.5% for the first quarter of fiscal 2020. The primary driver of the decrease in the effective tax rate between comparable periods was additional income tax expense in the three months ended October 31, 2019 from the vesting of share-based compensation awards. The Company estimates its effective income tax rate for fiscal 2021 will be between 19% and 22% before consideration of any discrete tax items. The actual effective income tax rate will be dependent upon the mix of foreign and domestic pretax earnings and subject to the impact of foreign currency exchange rates. |
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| 11. | What recent progress has THOR made on its Environmental, Social and Governance ("ESG") initiatives? |
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| a. | THOR has been making significant strides in our ESG initiatives. Early in our first fiscal quarter of 2021, we engaged Chandria Harris to serve as THOR's Chief People and Inclusion Consultant responsible for overseeing the inclusion strategies for THOR. In early November, we named William J. Kelley, Jr., to our Board of Directors. With his more than 30 years of executive-level experience, he personifies the significant value we place upon corporate governance and risk oversight expertise as well as board refreshment and diversity. Finally, during the quarter we issued our fiscal year 2020 sustainability report. This second annual report formalizes our comprehensive global approach to sustainability. The report is available for download from THOR's website. We believe these efforts to improve our inclusion strategies, diversify our Board of Directors and advance our ESG efforts will have very positive long-term impacts on our business, our shareholders and the broader communities we serve. |
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| 12. | In summary, what is THOR's outlook for fiscal 2021? |
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| a. | On December 1, 2020, the RVIA updated their most-likely forecast and now expects an increase of 18.7% in calendar 2021 shipments over their most-likely estimate for calendar 2020 shipments. We support their forecast and believe there is potential for upside to this forecast based on current industry conditions. |
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While we are optimistic about the outlook for our fiscal year 2021, we are cognizant of the uncertain operating environment due to the COVID-19 pandemic and that the extent to which the pandemic may impact our business in future periods remains uncertain and unpredictable.
Summary of Key Quarterly Segment Data – North American Towable RVs
| NET SALES: | Three Months Ended<br>October 31, 2020 | Three Months Ended<br>October 31, 2019 | % Change | |||||
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| North American Towables | ||||||||
| Travel Trailers and Other | $ | 837,900 | $ | 709,665 | 18.1 | % | ||
| Fifth Wheels | 554,144 | 491,223 | 12.8 | % | ||||
| Total North American Towables | $ | 1,392,044 | $ | 1,200,888 | 15.9 | % | ||
| # OF UNITS: | Three Months Ended<br>October 31, 2020 | Three Months Ended<br>October 31, 2019 | % Change | |||||
| North American Towables | ||||||||
| Travel Trailers and Other | 39,077 | 32,520 | 20.2 | % | ||||
| Fifth Wheels | 11,264 | 10,345 | 8.9 | % | ||||
| Total North American Towables | 50,341 | 42,865 | 17.4 | % | ||||
| ORDER BACKLOG | As of<br>October 31, 2020 | As of<br>October 31, 2019 | % Change | |||||
| North American Towables | $ | 4,397,713 | $ | 1,067,023 | 312.1 | % | ||
| TOWABLE RV MARKET SHARE SUMMARY ^(1)^ | CYTD September 30, | |||||||
| 2020 | 2019 | |||||||
| U.S. Market | 41.6 | % | 45.0 | % | ||||
| Canadian Market | 47.4 | % | 50.1 | % | ||||
| Combined North American Market | 42.1 | % | 45.6 | % |
(1) Source: Statistical Surveys, Inc. CYTD September 30, 2020 vs. CYTD September 30, 2019
Note: Data reported by Stat Surveys is based on official state and provincial records. This information is subject to adjustment, is continuously updated, and is often impacted by delays in reporting by various states or provinces. The COVID-19 pandemic has resulted in further delays in the submission of information reported by the various states or provinces beginning with calendar 2020 results, and may also be impacting the completeness of such information.
Summary of Key Quarterly Segment Data – North American Motorized RVs
| NET SALES: | Three Months Ended<br>October 31, 2020 | Three Months Ended<br>October 31, 2019 | % Change | |||||
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| North American Motorized | ||||||||
| Class A | $ | 158,555 | $ | 161,732 | (2.0) | % | ||
| Class C | 275,399 | 229,837 | 19.8 | % | ||||
| Class B | 59,901 | 24,320 | 146.3 | % | ||||
| Total North American Motorized | $ | 493,855 | $ | 415,889 | 18.7 | % | ||
| # OF UNITS: | Three Months Ended<br>October 31, 2020 | Three Months Ended<br>October 31, 2019 | % Change | |||||
| North American Motorized | ||||||||
| Class A | 1,168 | 1,250 | (6.6) | % | ||||
| Class C | 3,464 | 3,041 | 13.9 | % | ||||
| Class B | 535 | 199 | 168.8 | % | ||||
| Total North American Motorized | 5,167 | 4,490 | 15.1 | % | ||||
| ORDER BACKLOG | As of<br>October 31, 2020 | As of<br>October 31, 2019 | % Change | |||||
| North American Motorized | $ | 2,215,069 | $ | 669,978 | 230.6 | % | ||
| MOTORIZED RV MARKET SHARE SUMMARY ^(1)^ | CYTD September 30, | |||||||
| 2020 | 2019 | |||||||
| U.S. Market | 38.2 | % | 37.3 | % | ||||
| Canadian Market | 44.3 | % | 39.2 | % | ||||
| Combined North American Market | 38.5 | % | 37.4 | % |
(1) Source: Statistical Surveys, Inc. CYTD September 30, 2020 vs. CYTD September 30, 2019
Note: Data reported by Stat Surveys is based on official state and provincial records. This information is subject to adjustment, is continuously updated and is often impacted by delays in reporting by various states or provinces. The COVID-19 pandemic has resulted in further delays in the submission of information reported by the various states or provinces beginning with calendar 2020 results, and may also be impacting the completeness of such information.
Summary of Key Quarterly Segment Data – European RVs
| NET SALES: | Three Months Ended<br>October 31, 2020 | Three Months Ended<br>October 31, 2019 | % Change | |||||
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| European | ||||||||
| Motorcaravan | $ | 318,343 | $ | 281,733 | 13.0 | % | ||
| Campervan | 143,400 | 77,597 | 84.8 | % | ||||
| Caravan | 55,195 | 61,032 | (9.6) | % | ||||
| Other | 85,550 | 72,645 | 17.8 | % | ||||
| Total European | $ | 602,488 | $ | 493,007 | 22.2 | % | ||
| # OF UNITS: | Three Months Ended<br>October 31, 2020 | Three Months Ended<br>October 31, 2019 | % Change | |||||
| European | ||||||||
| Motorcaravan | 5,383 | 5,510 | (2.3) | % | ||||
| Campervan | 4,277 | 2,631 | 62.6 | % | ||||
| Caravan | 2,566 | 3,146 | (18.4) | % | ||||
| Total European | 12,226 | 11,287 | 8.3 | % | ||||
| ORDER BACKLOG | As of<br>October 31, 2020 | As of<br>October 31, 2019 | % Change | |||||
| European | $ | 2,308,472 | $ | 1,292,063 | 78.7 | % | ||
| EUROPEAN RV MARKET SHARE SUMMARY ^(1)^ | CYTD September 30, | |||||||
| 2020 | 2019 ^(3)^ | |||||||
| Motorcaravan and Campervan ^(2)^ | 26.2 | % | 25.7 | % | ||||
| Caravan | 20.6 | % | 21.1 | % |
(1) Source: European Caravan Federation ("ECF"), CYTD September 30, 2020 vs. CYTD September 30, 2019. Data from the ECF is subject to adjustment, continuously updated and is often impacted by delays in reporting by various countries (some countries, including the United Kingdom, do not report OEM-specific data and are thus excluded from the market share calculation).
(2) The ECF reports motorcaravans and campervans together.
(3) For comparison purposes, the totals reflected above include the pre-acquisition results of Erwin Hymer Group for January 2019.
Note: Industry wholesale shipment data for the European RV market is not available.
Forward-Looking Statements
This release includes certain statements that are “forward-looking” statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are made based on management’s current expectations and beliefs regarding future and anticipated developments and their effects upon THOR, and inherently involve uncertainties and risks. These forward-looking statements are not a guarantee of future performance. We cannot assure you that actual results will not differ materially from our expectations. Factors which could cause materially different results include, among others: the extent and impact from the continuation of the COVID-19 pandemic, along with the responses to contain the spread of the virus by various governmental entities or other actors, which may have negative effects on retail customer demand, our independent dealers, our supply chain, our production or other aspects of our business and which may have a negative impact on our consolidated results of operations, financial position, cash flows and liquidity; the ability to ramp production up or down quickly in response to rapid changes in demand while also managing costs and market share; the effect of raw material and commodity price fluctuations, and/or raw material, commodity or chassis supply constraints; the impact of tariffs on material or other input costs; the level and magnitude of warranty claims incurred; legislative, regulatory and tax law and/or policy developments including their potential impact on our dealers and their retail customers or on our suppliers; the costs of compliance with governmental regulation; 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; interest rate fluctuations and their potential impact on the general economy and specifically on our dealers and consumers; 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 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 to attract production personnel in times of high demand; the loss or reduction of sales to key dealers; disruption of the delivery of units to dealers; increasing costs for freight and transportation; asset impairment charges; cost structure changes; competition; the impact of potential losses under repurchase or financed receivable agreements; the potential 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 regulatory standards in the various jurisdictions in which our products are produced and/or sold; changes to our investment and capital allocation strategies or other facets of our strategic plan; and changes in market liquidity conditions, credit ratings and other factors that may impact our access to future funding and the cost of debt.
These and other risks and uncertainties are discussed more fully in our Quarterly Report on Form 10-Q for the quarter ended October 31, 2020 and in Item 1A of our Annual Report on Form 10-K for the year ended July 31, 2020.
We disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this release or to reflect any change in our expectations after the date hereof or any change in events, conditions or circumstances on which any statement is based, except as required by law.
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