Thor Industries(THO) - 2025 Q4 - Annual Results

Financial Highlights Key financial metrics for the quarter and fiscal year ended July 31, 2025, show mixed performance in sales, profit, and cash flow Financial Highlights ($ in thousands, except for per share data) | | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Change (QoQ) | Fiscal Years Ended July 31, 2025 | Fiscal Years Ended July 31, 2024 | Change (YoY) | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------- | :------------------------------- | :------------------------------- | :----------- | | Net Sales | $2,523,783 | $2,534,167 | (0.4)% | $9,579,490 | $10,043,408 | (4.6)% | | Gross Profit | $370,883 | $401,331 | (7.6)% | $1,340,641 | $1,451,962 | (7.7)% | | Gross Profit Margin % | 14.7% | 15.8% | (110) bps | 14.0% | 14.5% | (50) bps | | Net Income Attributable to THOR | $125,757 | $90,015 | 39.7% | $258,559 | $265,308 | (2.5)% | | Diluted Earnings Per Share | $2.36 | $1.68 | 40.5% | $4.84 | $4.94 | (2.0)% | | Cash Flows from Operations | $258,674 | $338,016 | (23.5)% | $577,923 | $545,548 | 5.9% | | EBITDA | $224,804 | $219,025 | 2.6% | $615,839 | $714,655 | (13.8)% | | Adjusted EBITDA | $209,506 | $218,392 | (4.1)% | $659,126 | $730,095 | (9.7)% | Market Update & Outlook This section provides an overview of North American and European market trends, dealer sentiment, consumer financial health, and affordability challenges, along with the company's outlook North American Retail Demand Trends North American retail trends strengthened during the spring selling season, leading to fiscal 2025 net sales slightly above guidance, but a low- to mid-single digit decline is anticipated for fiscal 2026 due to interest rates, product transition, and dealer relationships - Strengthening retail trends in the spring selling season led to fiscal 2025 consolidated net sales slightly above guidance[5] - Fiscal 2026 guidance assumes a low- to mid-single digit decline in North American retail[5] - Key considerations for fiscal 2026 retail include: lapping lower interest rates from calendar 2024, an 'air pocket' during the Heartland product transition, and expected improvements from enhanced independent dealer relationships[5] European Retail Environment & Outlook The European market is expected to be relatively flat in fiscal 2026, despite encouraging signs like double-digit retail growth at the 2025 Caravan Salon, with challenges including a shift towards premium and entry-level brands and declining retail registrations, though ECB interest rate cuts are expected to aid future sales - Anticipate a relatively flat sell-through environment in Europe for fiscal 2026[6] - European retail registrations for the first half of calendar year 2025 decreased 2.7% compared to the prior-year period[6] European Retail Registrations (H1 2025 vs H1 2024) | Product Segment | Change (%) | | :-------------- | :----- | | Motorcaravans & Campervans | -0.2% | | Caravans | -9.8% | | Total Retail Registrations | -2.7% | - ECB interest rate cuts through June 2025 are expected to aid sales channel throughput by reducing carrying costs for dealers and moderating costs for retail customers[8] North American Independent Dealers Sentiment & Industry Outlook North American independent dealers are cautiously optimistic despite a volatile fiscal 2025, maintaining conservative inventory levels, while the RVIA forecasts approximately 337,000 wholesale shipments for calendar 2025, implying a 6% decline in H2 2025 - North American independent dealers' sentiment is cautiously optimistic, despite a volatile fiscal 2025[7] - Dealers are expected to place orders closer to need and adopt a conservative inventory stance[7] - RVIA forecast for calendar 2025 North American wholesale shipments is 320,400 to 353,500 units, with a most likely scenario of approximately 337,000 units[7] - This forecast implies an approximately 6% decline of industry wholesale shipments in the second half of calendar 2025 compared to the second half of calendar 2024[7] Consumer Financial Health & Sentiment Consumer financial health is varied, with resilient spending and wage growth offset by mounting household debt and a weakening labor market, leading to volatile sentiment and inflation expectations, as the company plans for a challenging operating environment in fiscal 2026 - Consumer spending and wage growth have been resilient, but there is mounting household debt and signs of a weakening labor market[10] - Consumer sentiment and inflation expectations remain volatile[10] - The company plans for a challenging operating environment in fiscal 2026, similar to fiscal 2025, with any upside likely driven by idiosyncratic business initiatives[10] Affordability Concerns & Tariff Impacts Affordability remains a significant market challenge, with efforts to mitigate cost pass-through to consumers, while the full impact of tariffs in fiscal 2026 is difficult to quantify, and the company addresses affordability through innovative private label products and strong entry-level volume - Affordability is a significant challenge, with efforts to prevent incremental costs from being passed to consumers[11] - The full impact of tariffs in fiscal 2026 is difficult to quantify due to the shifting environment and influencing factors on product mix[11] - Strong volume in entry-level single axle trailers is expected to generate future sales growth of larger travel trailers and fifth wheels as customers progress through the trade-in cycle[9] - Innovative private label products in the Motorized segment are resonating in the market by hitting key price points for customers[9] Operations Update This section details updates on dealer inventory levels, the Heartland product consolidation, and strategic initiatives at Keystone to improve operational efficiency and market position Dealer Inventory Levels North American dealer inventory ended fiscal Q4 2025 at approximately 73,300 units, a decrease from prior periods, with improved dealer turns, while European dealer inventory also declined, positioning the company for market share growth - North American dealer inventory ended fiscal Q4 2025 at approximately 73,300 units, down from 91,800 units as of April 30, 2025, and 75,000 units as of July 31, 2024[12] - North American dealer turns finished at 1.9x in fiscal Q4 2025, correcting a slip in Q3[12] - European dealer inventory levels approximated 22,200 units at the end of fiscal Q4 2025, a modest decline from 23,000 units in April 2025 and significantly lower than 26,200 units in July 2024[12] - Current inventory levels in both North America and Europe are deemed appropriate to grow market share[12] Heartland Product Consolidation & Other Opportunities The consolidation of Heartland products under Jayco is expected to cause inefficiencies in H1 FY2026 but will lead to positive impacts on both top and bottom lines in H2 FY2026, driving profitable volume and multi-year share gains, while the company continuously seeks opportunities to streamline functions and right-size capacities - Heartland product consolidation under Jayco will cause inefficiencies in H1 FY2026, but is expected to lead to positive impacts on top and bottom lines in H2 FY2026[13] - The new Heartland product is expected to be a driver of profitable volume and has the potential for multi-year share gains[13] - The company is satisfied with its current structure and product portfolio, but will streamline functions or right-size capacities when opportunities arise[13] Keystone Initiatives Keystone, the highest volume operating company, underwent a comprehensive review and rebranding in June 2025 to regain market share lost post-COVID-19, with planned product refreshes, new entry-level lines, and a redesign of the Montana line, all aimed at market share recovery despite execution risks - Keystone, the highest volume operating company, lost market share post-COVID-19 and has undergone a comprehensive review and rebranding in June 2025[14] - A product refresh, including full body paint on trailers, new content, and a geographically diverse portfolio, is being showcased at the September 2025 Open House[14] - New entry-level lines and a frame-up redesign of the Montana line are planned, with more product introductions leading up to Keystone's 30th anniversary in 2026[14] - The company is confident in Keystone's ability to regain market share, despite execution risks[14] Strategic Update This section outlines strategic efforts to improve North American market share, the economic rationale behind private label brands, and the introduction of innovative electrified products North American Market Share Improvement THOR's North American market share has steadily improved through June 2025, driven by effective initiatives to gain lot share with key dealer partners and a robust product portfolio at competitive price points, with future gains expected from refreshed lineups and tailored products - THOR's North American market share improved in recent months through June 2025 due to effective initiatives to gain lot share with key dealer partners[18] - Teams have worked to offer a more robust product portfolio at price levels consumers demand, leading to positive retail market share inflection[18] - Future share gains are expected from the refreshed Keystone lineup, revamped Heartland portfolio by Jayco, and Thor Motor Coach products tailored to consumer preferences[18] Private Label Brands Economics & Strategy While THOR's established brands are foundational, private label products serve a role for growing dealership groups, offering advantageous upstream pricing through supply chain leverage and improved operational efficiencies from larger order quantities, largely offsetting lower wholesale prices - Private label products serve a place for growing dealership groups, complementing THOR's best-in-class brands[16] - Larger order quantities for private label products enable advantageous upstream pricing through supply chain leverage[16] - Increased operational efficiencies from larger, more uniform production batches largely offset the impact of lower wholesale prices for private label brands[16] Jayco Entegra Embark Hybrid Motorhome Jayco has unveiled the Entegra Embark hybrid Class A motorhome, a significant first step towards electrified offerings, featuring a quiet driving experience, European-inspired design, reduced emissions, and improved fuel usage, reinforcing THOR's industry leadership and attracting sustainability-focused customers - Jayco unveiled the Entegra Embark hybrid Class A motorhome, a significant first step towards electrified product offerings[17] - The hybrid motorhome offers an exceptionally quiet driving experience, European-inspired interior design, reduced emissions, and improved fuel usage[17] - This development reinforces THOR's industry leadership in technology and aims to attract new customers focused on sustainability and a sharper driving experience[17] Financial Update This section provides a detailed financial review, including segment gross profit margins, effective tax rate, other income drivers, and the company's fiscal 2026 guidance North American Towable Gross Profit Margin North American Towable gross profit margin increased by 70 basis points to 13.3% in Q4 FY2025, driven by cost savings and reduced warranty/promotional expenses, despite a 4.6% decline in net sales, with further margin growth expected as promotional activity subsides - North American Towable gross profit margin increased to 13.3% in Q4 FY2025, up 70 basis points from 12.6% in Q4 FY2024[19] - Improvement was driven by ongoing cost savings initiatives and reduced warranty and promotional expenses[19] - Net sales for the North American Towable segment declined 4.6% in Q4 FY2025, primarily due to a 10.1% decline in Company wholesale shipments[19] - Additional margin growth is achievable as promotional activity to clear discontinued models subsides[19] North American Motorized Segment Performance & Gross Profit Margin The North American Motorized segment outperformed the market for two consecutive quarters, with net sales increasing 7.8% in Q4 FY2025 driven by a 15.9% increase in unit shipments, though gross profit margin decreased to 11.3% due to a prior-year LIFO adjustment, aggressive promotions, and a product mix shift - North American Motorized segment net sales increased 7.8% in Q4 FY2025 compared to the prior-year period[20] - This growth was driven by a 15.9% increase in Company unit shipments, with Class B and Class C product lines seeing 17.8% and 28.0% year-over-year improvements, respectively[20] - North American Motorized gross profit margin decreased to 11.3% in Q4 FY2025 from 12.8% in Q4 FY2024[21] - Margin decline was primarily due to a favorable LIFO adjustment in the prior year, more aggressive promotional activity, and a shift in product mix towards lower-priced Class B and C units[21] European Segment Profitability Decline The European segment experienced a decline in income before income taxes in both Q4 and full-year fiscal 2025 due to shifting consumer preferences towards premium and entry-level products, increased promotional activity, and elevated discounting by industry peers, though restructuring and product refreshes are expected to drive longer-term results - European segment income before income taxes declined in both Q4 and full-year fiscal 2025[23] - Profitability pressures stemmed from shifting consumer preferences towards premium and entry-level products, increased promotional activity, and elevated discounting by industry peers[23] - Restructuring initiatives and product refreshes in the mainstream category are expected to position the segment for meaningful longer-term results[23] Effective Tax Rate The effective tax rate in fiscal 2025 was unusually low due to a foreign tax law change and a favorable jurisdictional mix of earnings, with an expectation to return to a more typical rate in fiscal 2026 and beyond - The decrease in the annual effective income tax rate in fiscal 2025 was largely due to a foreign tax law change and a favorable jurisdictional mix of earnings[24] - This rate is considered much lower than usual, with an expectation to return to a more typical effective income tax rate in fiscal 2026 and beyond[24] Other Income Other income for fiscal 2025 was approximately $45.6 million, significantly higher than fiscal 2024, primarily driven by gains from property sales, increased investment valuations, and an insurance settlement Other Income (Fiscal Years) | Fiscal Year | Amount (approx.) | | :---------- | :--------------- | | 2025 | $45.6 million | | 2024 | $13.6 million | - Main drivers of elevated other income in fiscal 2025 were gains from property sales (Heartland facilities), increased investment valuations, and gains from an insurance settlement (Airstream weather event)[25] Fiscal 2026 Guidance THOR's initial guidance for fiscal 2026 assumes a continuation of the challenging retail market from fiscal 2025, with a conservative macroeconomic outlook, stable market share, flat to moderately higher average sale prices, and a normalized tax rate, without assuming meaningful financial impact from realignment or refresh initiatives - Fiscal 2026 guidance assumes a continuation of the challenging retail market from fiscal 2025, with a cautious macroeconomic outlook[26] - Key assumptions include: wholesale and retail volumes roughly balanced, low- to mid-single digit North American retail decline, stable retail market share, average sale prices flat to moderately higher, steady European market, stable gross margin with upside in a stronger market, and a normalized tax rate[26] Fiscal 2026 Full-Year Guidance | Metric | Range | | :---------------------- | :--------------------- | | Consolidated Net Sales | $9.0 billion to $9.5 billion | | Diluted Earnings Per Share | $3.75 to $4.25 | | Gross Margin | Stable at midpoint, with upside in a stronger market | - Guidance does not assume a meaningful net financial impact related to the Heartland realignment, Keystone model refresh, or other restructuring initiatives[26] Segment Data This section presents detailed quarterly segment data for North American Towable, North American Motorized, and European RVs, including net sales, unit shipments, order backlog, and market share Summary of Key Quarterly Segment Data – North American Towable RVs North American Towable RVs experienced a 4.6% decline in total net sales for Q4 FY2025, driven by a 14.2% decrease in Travel Trailers sales, partially offset by an 11.5% increase in Fifth Wheels, with total units shipped decreasing by 10.1% and order backlog declining by 5.0%, resulting in a slight market share decrease to 38.2% North American Towable RVs - Net Sales (Q4 FY2025 vs Q4 FY2024) | Product Segment | 2025 ($ thousands) | 2024 ($ thousands) | Change | | :-------------- | :----------------- | :----------------- | :----- | | Travel Trailers | $500,931 | $584,031 | (14.2)% | | Fifth Wheels | $387,813 | $347,825 | 11.5% | | Total | $888,744 | $931,856 | (4.6)% | North American Towable RVs - of Units (Q4 FY2025 vs Q4 FY2024) | Product Segment | 2025 Units | 2024 Units | Change | | :-------------- | :--------- | :--------- | :----- | | Travel Trailers | 19,666 | 22,831 | (13.9)% | | Fifth Wheels | 6,016 | 5,741 | 4.8% | | Total | 25,682 | 28,572 | (10.1)% | North American Towable RVs - Order Backlog (as of July 31) | Year | Amount ($ thousands) | | :--- | :------------------- | | 2025 | $525,014 | | 2024 | $552,379 | | Change | (5.0)% | North American Towable RV Market Share (CYTD June 30) | Market | 2025 | 2024 | | :-------------- | :---- | :---- | | U.S. Market | 38.3% | 39.0% | | Canadian Market | 37.3% | 39.3% | | Combined North American Market | 38.2% | 39.1% | Summary of Key Quarterly Segment Data – North American Motorized RVs North American Motorized RVs saw a 7.8% increase in total net sales for Q4 FY2025, driven by strong growth in Class C (+20.7%) and Class B (+16.0%) sales, despite a decline in Class A sales (-14.1%), with total units shipped increasing by 15.9% and order backlog significantly increasing by 29.3%, leading to an improved combined North American market share of 48.3% North American Motorized RVs - Net Sales (Q4 FY2025 vs Q4 FY2024) | Product Segment | 2025 ($ thousands) | 2024 ($ thousands) | Change | | :-------------- | :----------------- | :----------------- | :----- | | Class A | $154,050 | $179,277 | (14.1)% | | Class C | $289,303 | $239,752 | 20.7% | | Class B | $114,059 | $98,290 | 16.0% | | Total | $557,412 | $517,319 | 7.8% | North American Motorized RVs - of Units (Q4 FY2025 vs Q4 FY2024) | Product Segment | 2025 Units | 2024 Units | Change | | :-------------- | :--------- | :--------- | :----- | | Class A | 707 | 843 | (16.1)% | | Class C | 2,700 | 2,109 | 28.0% | | Class B | 972 | 825 | 17.8% | | Total | 4,379 | 3,777 | 15.9% | North American Motorized RVs - Order Backlog (as of July 31) | Year | Amount ($ thousands) | | :--- | :------------------- | | 2025 | $1,004,620 | | 2024 | $776,903 | | Change | 29.3% | North American Motorized RV Market Share (CYTD June 30) | Market | 2025 | 2024 | | :-------------- | :---- | :---- | | U.S. Market | 48.3% | 47.0% | | Canadian Market | 47.7% | 51.0% | | Combined North American Market | 48.3% | 47.3% | Summary of Key Quarterly Segment Data – European RVs European RVs experienced a 2.2% decline in total net sales for Q4 FY2025, with significant decreases in Campervan (-20.1%) and Caravan (-22.2%) sales, partially offset by an 8.1% increase in Motorcaravan sales, while total units shipped decreased by 14.1% and order backlog saw a substantial 21.8% decline, resulting in mixed market share changes European RVs - Net Sales (Q4 FY2025 vs Q4 FY2024) | Product Segment | 2025 ($ thousands) | 2024 ($ thousands) | Change | | :-------------- | :----------------- | :----------------- | :----- | | Motorcaravan | $522,500 | $483,477 | 8.1% | | Campervan | $246,402 | $308,510 | (20.1)% | | Caravan | $43,415 | $55,835 | (22.2)% | | Other | $110,734 | $95,602 | 15.8% | | Total | $923,051 | $943,424 | (2.2)% | European RVs - of Units (Q4 FY2025 vs Q4 FY2024) | Product Segment | 2025 Units | 2024 Units | Change | | :-------------- | :--------- | :--------- | :----- | | Motorcaravan | 6,699 | 6,586 | 1.7% | | Campervan | 4,492 | 6,145 | (26.9)% | | Caravan | 1,682 | 2,251 | (25.3)% | | Total | 12,873 | 14,982 | (14.1)% | European RVs - Order Backlog (as of July 31) | Year | Amount ($ thousands) | | :--- | :------------------- | | 2025 | $1,525,992 | | 2024 | $1,950,793 | | Change | (21.8)% | European RV Market Share (CYTD June 30) | Product Segment | 2025 | 2024 | | :---------------------- | :---- | :---- | | Motorcaravan and Campervan | 26.1% | 25.3% | | Caravan | 17.3% | 18.3% | Non-GAAP Reconciliations This section provides a reconciliation of non-GAAP financial measures, including EBITDA and Adjusted EBITDA, to their most directly comparable GAAP financial measures EBITDA Reconciliations ($ in thousands) | | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Fiscal Years Ended July 31, 2025 | Fiscal Years Ended July 31, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income | $126,625 | $91,464 | $256,591 | $265,400 | | Add back: | | | | | | Interest expense, net | 10,058 | 18,410 | 48,441 | 88,666 | | Income tax provision | 16,742 | 35,554 | 39,600 | 83,444 | | Depreciation and amortization of intangible assets | 71,379 | 73,597 | 271,207 | 277,145 | | EBITDA | $224,804 | $219,025 | $615,839 | $714,655 | | Add back: | | | | | | Stock-based compensation expense | 4,074 | 8,852 | 30,872 | 37,901 | | Change in LIFO reserve, net | 3,602 | (6,494) | 702 | (14,494) | | Net expense (income) related to certain contingent liabilities | — | (1,079) | — | (17,979) | | Non-cash foreign currency loss (gain) | 1,944 | (1,380) | 9,255 | 940 | | Investment-related loss (gain) | (470) | 896 | 4,944 | 16,043 | | Weather-related loss (gain) | (12,153) | — | (13,653) | 2,500 | | Debt amendment expenses | — | — | — | 7,175 | | Strategic initiatives | 15,020 | — | 43,201 | — | | Other loss (gain), including sales of PP&E | (27,315) | (1,428) | (32,034) | (16,646) | | Adjusted EBITDA | $209,506 | $218,392 | $659,126 | $730,095 | Forward-Looking Statements This section highlights that forward-looking statements are subject to inherent uncertainties and risks, and actual results may differ materially from expectations - The release contains forward-looking statements based on management's current expectations and beliefs, which inherently involve uncertainties and risks[46] - Actual results may differ materially from expectations due to various factors, including inflation, raw material price fluctuations, supply constraints, interest rates, labor market conditions, warranty claims, dealer financial health, regulatory changes, and economic conditions[46] - The company disclaims any obligation to update or revise forward-looking statements unless required by law[47]