Thor Industries(THO) - 2025 Q1 - Quarterly Results

Fiscal First Quarter 2025 Highlights & Guidance The company presents its fiscal first quarter 2025 financial performance and reiterates its full-year fiscal 2025 guidance for sales, gross margin, and EPS Fiscal First Quarter 2025 Financial Highlights | Metric | Q1 FY2025 ($ thousands) | Q1 FY2024 ($ thousands) | | :--- | :--- | :--- | | Net Sales | $2,142,784 | $2,500,759 | | Gross Profit | $281,442 | $357,932 | | Gross Profit Margin % | 13.1% | 14.3% | | Net Income (Loss) Attributable to THOR | $(1,832) | $53,565 | | Diluted Earnings (Loss) Per Share | $(0.03) | $0.99 | | Cash Flows from Operations | $30,740 | $59,668 | | Adjusted EBITDA | $107,782 | $166,918 | Full-Year Fiscal 2025 Guidance (Unchanged) | Metric | Range | | :--- | :--- | | Consolidated net sales | $9.0 billion to $9.8 billion | | Consolidated gross profit margin | 14.7% to 15.2% | | Diluted earnings per share | $4.00 to $5.00 | Q&A This section covers updates on market outlook, operational status, strategic developments, and financial performance Market Update & Outlook North American dealer sentiment shows cautious optimism for a stronger second half of fiscal 2025, while the European market demonstrates relative strength, and the company prepares for regulatory and policy changes - North American independent dealers express increased optimism, and with recent interest rate cuts, THOR is cautiously optimistic about a return of consumer confidence, which could strengthen the outlook for the second half of fiscal 2025[3] RVIA North American Wholesale Shipment Forecasts | Calendar Year | Forecast Range | Median Point | | :--- | :--- | :--- | | 2024 | 311,600 - 336,600 units | 324,100 units | | 2025 | 329,900 - 362,300 units | 346,100 units | - The European retail market shows relative strength, with total retail registrations up 5.6% for the nine months ended September 30, 2024 THOR's European segment retail sales grew 20.6% in the same period, and its motorcaravan/campervan market share increased to 25.1% through Q3 2024[12][14] - The company expects minimal impact from the California ACT regulation due to strategic preparations, including the development of a plug-in hybrid Class A motorhome and securing access to ZEV credits[10][11] Operations Update North American dealer inventories remain low and stable, while European inventories are balanced, with recent interest rate cuts expected to stimulate demand despite a consolidated order backlog decrease of 26.6% year-over-year Global Independent Dealer Inventory Levels (as of Oct 31, 2024) | Region | Inventory (Units) | YoY Change | | :--- | :--- | :--- | | North America | ~75,000 | Down from 83,800 | | Europe | ~25,400 | Up from 21,900 | - Recent interest rate cuts by the Federal Reserve and ECB are expected to benefit the industry by boosting consumer disposable income, reducing dealer floorplan financing costs, and lowering THOR's own variable-rate debt expenses[23] Consolidated Order Backlog (as of Oct 31) | Segment | 2024 ($ in thousands) | 2023 ($ in thousands) | Change | | :--- | :--- | :--- | :--- | | North American Towable | $933,051 | $795,798 | 17.2% | | North American Motorized | $963,141 | $1,237,547 | (22.2)% | | Total North America | $1,896,192 | $2,033,345 | (6.7)% | | European | $2,043,636 | $3,331,171 | (38.7)% | | Total | $3,939,828 | $5,364,516 | (26.6)% | Strategic Update THOR advances strategic goals through innovation, including a new plug-in hybrid motorhome, revenue diversification via new service tools, and a strong commitment to sustainability in product development and operations - The revolutionary plug-in hybrid Class A motorhome, built on a Harbinger chassis, received a positive reception and is on schedule for commercial production to begin in calendar 2025[29] - THOR is expanding revenue streams outside its core RV segments by investing in the RV Partfinder service tool and broadening the product offerings of its Airxcel operating unit[30][31][33] - The company strategically provides financial support, such as incentives, to key dealers to bolster relationships and strengthen its market presence during the current down cycle[35] - Sustainability is integrated into the business strategy, leading to product innovations like aerodynamic travel trailers, a hybrid Class A motorhome, and an electric fifth wheel prototype, as well as improvements in production facilities[37][38][39] Financial Update The North American Towable segment maintained gross margin despite sales decline, while the Motorized segment saw significant sales and margin contraction, with overall SG&A costs increasing due to strategic initiatives, as the company reaffirmed its full-year fiscal 2025 guidance - The North American Towable segment maintained its gross profit margin at 12.5%, consistent with the prior year, despite a 4.9% sales decrease This was achieved through disciplined production aligned with market conditions and a favorable decrease in sales discounting[43][44] - The North American Motorized segment's net sales decreased 29.0% and gross profit margin fell to 8.5% from 11.2% in the prior year, driven by softer retail demand, increased sales discounting, and higher chassis costs[46][48] - Consolidated SG&A costs increased by $22.3 million, primarily due to strategic actions including headcount reductions and facility closures, which are expected to result in annual savings over $10 million Full-year SG&A is expected to be moderately over 9%[51] - The company reaffirmed its full-year fiscal 2025 guidance, forecasting consolidated net sales of $9.0-$9.8 billion, gross profit margin of 14.7%-15.2%, and diluted EPS of $4.00-$5.00[53][54] Segment Data This section provides detailed performance metrics for the North American Towable, North American Motorized, and European RV segments North American Towable RVs The North American Towable segment experienced a 4.9% decrease in net sales but saw a 6.8% increase in unit shipments and a 17.2% growth in order backlog for the first quarter of fiscal 2025 North American Towable RVs Performance (Three Months Ended Oct 31) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales ($ thousands) | $898,778 | $945,454 | (4.9)% | | of Units | 30,018 | 28,107 | 6.8% | North American Towable RVs Backlog & Market Share | Metric | As of Oct 31, 2024 | As of Oct 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Order Backlog ($ thousands) | $933,051 | $795,798 | 17.2% | | Market Share | CYTD Sep 30, 2024 | CYTD Sep 30, 2023 | | | Combined NA Market | 38.5% | 40.9% | | North American Motorized RVs The North American Motorized segment experienced a significant downturn in the first quarter of fiscal 2025, with net sales falling 29.0%, unit shipments dropping 33.0%, and order backlog decreasing 22.2% North American Motorized RVs Performance (Three Months Ended Oct 31) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales ($ thousands) | $505,208 | $711,159 | (29.0)% | | of Units | 3,741 | 5,582 | (33.0)% | North American Motorized RVs Backlog (As of Oct 31) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Order Backlog ($ thousands) | $963,141 | $1,237,547 | (22.2)% | European RVs The European segment's net sales decreased 14.6% and unit shipments fell 27.4% in the first quarter of fiscal 2025, with order backlog declining 38.7%, yet the segment significantly grew its motorcaravan and campervan market share to 25.1% European RVs Performance (Three Months Ended Oct 31) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Net Sales ($ thousands) | $604,903 | $708,201 | (14.6)% | | of Units | 8,635 | 11,892 | (27.4)% | European RVs Backlog & Market Share | Metric | As of Oct 31, 2024 | As of Oct 31, 2023 | Change | | :--- | :--- | :--- | :--- | | Order Backlog ($ thousands) | $2,043,636 | $3,331,171 | (38.7)% | | Market Share | CYTD Sep 30, 2024 | CYTD Sep 30, 2023 | | | Motorcaravan & Campervan | 25.1% | 21.0% | | Non-GAAP Reconciliation This section reconciles GAAP Net Income (Loss) to non-GAAP EBITDA and Adjusted EBITDA for the first quarter of fiscal 2025, with Adjusted EBITDA reported at $107.8 million, reflecting various strategic adjustments EBITDA Reconciliation ($ in thousands) | Line Item | Three Months Ended Oct 31, 2024 | Three Months Ended Oct 31, 2023 | | :--- | :--- | :--- | | Net income (loss) | $(873) | $55,033 | | Interest expense, net | $15,228 | $20,197 | | Income tax provision (benefit) | $(283) | $17,549 | | Depreciation and amortization | $67,661 | $67,278 | | EBITDA | $81,733 | $160,057 | | Employee & facility strategic initiatives | $15,459 | - | | Other Adjustments | $10,590 | $6,861 | | Adjusted EBITDA | $107,782 | $166,918 | Forward-Looking Statements This section outlines key risks and uncertainties that could cause actual results to differ materially from forward-looking statements, including inflation, supply chain issues, interest rate fluctuations, and regulatory changes - The company identifies several key risk factors that could impact future performance, including: - Inflation and raw material price fluctuations - Supply chain and chassis supply constraints - Interest rate fluctuations impacting dealers and consumers - Lower consumer confidence and discretionary spending - Legislative, regulatory, and tax policy changes - Financial health of independent dealers[71]