Thor Industries(US:THO)2024-12-04 11:34Part I – Financial Information This section presents the company's financial statements, including balance sheets, income statements, cash flow statements, and related notes Item 1. Financial Statements For the quarter ended October 31, 2024, THOR Industries reported a net loss of $0.9 million compared to a net income of $55.0 million in the prior-year period, driven by a 14.3% decrease in net sales, with total assets slightly decreasing to $6.87 billion and operating cash flow remaining positive at $30.7 million Condensed Consolidated Balance Sheets This section provides a snapshot of the company's assets, liabilities, and equity as of October 31, 2024, and July 31, 2024 Condensed Consolidated Balance Sheets | Balance Sheet Items | Oct 31, 2024 ($ thousands) | July 31, 2024 ($ thousands) | | :--- | :--- | :--- | | Total Current Assets | 2,532,964 | 2,650,027 | | Cash and cash equivalents | 445,222 | 501,316 | | Inventories, net | 1,371,771 | 1,366,638 | | Total Assets | 6,873,181 | 7,020,823 | | Total Current Liabilities | 1,481,505 | 1,567,022 | | Long-term debt, net | 1,043,790 | 1,101,265 | | Total Liabilities | 2,811,225 | 2,946,770 | | Total Stockholders' Equity | 4,061,956 | 4,074,053 | Condensed Consolidated Statements of Income and Comprehensive Income This section details the company's revenues, expenses, and net income (loss) for the three months ended October 31, 2024, and 2023 Condensed Consolidated Statements of Income and Comprehensive Income | Income Statement Items | Three Months Ended Oct 31, 2024 ($ thousands) | Three Months Ended Oct 31, 2023 ($ thousands) | | :--- | :--- | :--- | | Net sales | 2,142,784 | 2,500,759 | | Gross profit | 281,442 | 357,932 | | Income (loss) before income taxes | (1,156) | 72,582 | | Net income (loss) | (873) | 55,033 | | Net income (loss) attributable to THOR | (1,832) | 53,565 | | Diluted EPS | ($0.03) | $0.99 | Condensed Consolidated Statements of Cash Flows This section outlines the cash inflows and outflows from operating, investing, and financing activities for the three months ended October 31, 2024, and 2023 Condensed Consolidated Statements of Cash Flows | Cash Flow Items | Three Months Ended Oct 31, 2024 ($ thousands) | Three Months Ended Oct 31, 2023 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | 30,740 | 59,668 | | Net cash used in investing activities | (25,342) | (51,062) | | Net cash used in financing activities | (64,620) | (19,153) | | Net decrease in cash and cash equivalents | (56,094) | (15,404) | Notes to the Condensed Consolidated Financial Statements This section provides additional details and explanations for the figures presented in the financial statements, including segment performance and significant events Net Sales by Segment (Three Months Ended Oct 31) | Segment | 2024 ($ thousands) | 2023 ($ thousands) | | :--- | :--- | :--- | | North American Towable | 898,778 | 945,454 | | North American Motorized | 505,208 | 711,159 | | European | 604,903 | 708,201 | | Total RV Sales | 2,008,889 | 2,364,814 | Income (Loss) Before Income Taxes by Segment (Three Months Ended Oct 31) | Segment | 2024 ($ thousands) | 2023 ($ thousands) | | :--- | :--- | :--- | | North American Towable | 46,821 | 49,249 | | North American Motorized | 9,081 | 37,052 | | European | 1,177 | 28,767 | | Corporate | (63,009) | (51,962) | | Total | (1,156) | 72,582 | - One dealer, FreedomRoads, LLC, accounted for approximately 12% of consolidated net sales for the three months ended October 31, 2024, and 15% of consolidated trade accounts receivable as of that date44 - On March 14, 2024, a hail event caused significant damage to a production facility and inventory, resulting in a $40.3 million receivable for probable insurance recovery against estimated losses of $64.2 million as of October 31, 20248082 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 14.3% decline in Q1 FY2025 consolidated net sales to softer consumer and dealer demand across all segments, particularly in North American Motorized and European RVs, with gross margin compressing from 14.3% to 13.1% YoY, while liquidity remains strong with $445.2 million in cash and $865 million available under its ABL facility Industry Outlook This section provides an overview of market conditions, dealer inventory levels, and backlogs for North American and European RV products - North America: Dealer inventory of THOR's North American RV products decreased 10.5% YoY to approximately 75,000 units as of October 31, 2024, with the backlog also decreasing by 6.7% to $1.90 billion due to reduced dealer orders amid lower retail sales and higher carrying costs9395 - Europe: Dealer inventory of European RV products increased 16.0% YoY to approximately 25,400 units, while the backlog saw a significant decrease of 38.7% to $2.04 billion, primarily due to improved chassis supply availability111113 North American Industry Retail Unit Registrations (Nine Months Ended Sep 30) | Category | 2024 Units | 2023 Units | % Change | | :--- | :--- | :--- | :--- | | Towable Units | 256,906 | 281,045 | (8.6)% | | Motorized Units | 31,771 | 37,318 | (14.9)% | | Total | 288,677 | 318,363 | (9.3)% | Results of Operations This section analyzes the company's financial performance, focusing on net sales, gross profit margin, and segment-wise income before tax for the current and prior fiscal quarters - Consolidated net sales for Q1 FY2025 decreased 14.3% to $2.14 billion from $2.50 billion in Q1 FY2024, primarily driven by lower unit shipments across all segments136 - Consolidated gross profit margin declined to 13.1% from 14.3% in the prior-year quarter, mainly due to the impact of lower sales volume137 Segment Net Sales Performance (Q1 FY2025 vs Q1 FY2024) | Segment | Q1 2025 Net Sales ($M) | Q1 2024 Net Sales ($M) | % Change | | :--- | :--- | :--- | :--- | | North American Towable | 898.8 | 945.5 | (4.9)% | | North American Motorized | 505.2 | 711.2 | (29.0)% | | European | 604.9 | 708.2 | (14.6)% | Segment Income Before Tax Performance (Q1 FY2025 vs Q1 FY2024) | Segment | Q1 2025 Income ($M) | Q1 2024 Income ($M) | % Change | | :--- | :--- | :--- | :--- | | North American Towable | 46.8 | 49.2 | (4.9)% | | North American Motorized | 9.1 | 37.1 | (75.5)% | | European | 1.2 | 28.8 | (95.9)% | Liquidity and Capital Resources This section discusses the company's financial flexibility, including cash position, credit facilities, cash flow from operations, and capital spending plans - As of October 31, 2024, the company had $445.2 million in cash and cash equivalents and approximately $865 million available under its revolving asset-based credit facility177179 - Net cash from operating activities was $30.7 million for the quarter, a decrease from $59.7 million in the prior-year period183 - The company made term-loan payments of $60.0 million during the quarter and increased its quarterly dividend from $0.48 to $0.50 per share in October 2024188190 - Estimated capital spending for the remainder of fiscal 2025 is approximately $200 million, focused on building projects, automation, and equipment upgrades181 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from foreign currency exchange rates, primarily the Euro and British Pound, and interest rate fluctuations, with a hypothetical 10% change in the Euro/USD exchange rate impacting debt by approximately $38.6 million and a one-percentage-point interest rate increase reducing pre-tax income by an estimated $5.4 million - The company holds $386.4 million of debt denominated in Euros, where a hypothetical 10% change in the Euro/U.S. dollar exchange rate would alter this debt balance by approximately $38.6 million197 - A one-percentage-point increase in interest rates on floating-rate debt would result in an estimated $5.4 million reduction in income before income taxes over a one-year period198 Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of October 31, 2024, concluding they were effective at a reasonable assurance level, with no material changes to internal controls over financial reporting during the quarter - Based on an evaluation as of the end of the reporting period, the CEO and CFO concluded that the company's disclosure controls and procedures were effective199 - No changes in internal controls over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls200 Part II – Other Information This section covers legal proceedings, risk factors, other information, and a list of exhibits filed with the report Item 1. Legal Proceedings The company is involved in ordinary course litigation, primarily related to state "lemon laws," warranty claims, and vehicle accidents, which management believes will not materially affect the company's financial condition, operating results, or cash flows - The company is involved in routine litigation, but management does not expect the outcomes to have a material financial impact202 Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended July 31, 2024, and investors are advised to refer to that report for a comprehensive discussion of risks - The report refers investors to the risk factors discussed in the Annual Report on Form 10-K for the year ended July 31, 2024, indicating no material changes since that filing203 Item 5. Other Information During the three months ended October 31, 2024, no director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the quarter204 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including the company's articles of incorporation, by-laws, CEO and CFO certifications (Rule 13a-14(a) and Section 1350), and XBRL data files - Key exhibits filed include CEO/CFO certifications and XBRL interactive data files206