UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended ~~April 30,~~October 31, 2021.

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

COMMISSION FILE NUMBER 001-09235

THOR INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Delaware

93-0768752

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

601 E. Beardsley Ave., Elkhart, IN

46514-3305

(Address of principal executive offices)

(Zip Code)

(574) 970-7460

(~~Registrant's~~Registrant’s telephone number, including area code)

None

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

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

Name of each exchange

Title of each class

Trading Symbol(s)

on which registered

Common stock (Par value $.10 Per Share)

THO

New York Stock Exchange

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

Yes ☑ No ☐

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

Yes ☑ No ☐

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

Large accelerated filer ☑ Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

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

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

Yes ☐ No ☑

As of ~~May 28,~~November 29, 2021, ~~55,366,241~~55,618,549 shares of the registrant’s common stock, par value $0.10 per share, were outstanding.

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

ITEM 1. FINANCIAL STATEMENTS

THOR INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

April 30, 2021 July 31, 2020
ASSETS
Current assets:
Cash and cash equivalents $ 294,562 $ 538,519
Restricted cash 2,900 2,844
Accounts receivable, trade, net 769,826 588,069
Factored accounts receivable 122,671 143,278
Accounts receivable, other, net 121,651 82,880
Inventories, net 1,484,054 716,305
Prepaid income taxes, expenses and other 50,124 30,382
Total current assets 2,845,788 2,102,277
Property, plant and equipment, net 1,158,380 1,107,649
Other assets:
Goodwill 1,577,828 1,476,541
Amortizable intangible assets, net 976,261 914,724
Deferred income tax assets, net 49,754 78,738
Other 105,956 91,531
Total other assets 2,709,799 2,561,534
TOTAL ASSETS $ 6,713,967 $ 5,771,460
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 1,033,026 $ 636,506
Current portion of long-term debt 12,559 13,817
Short-term financial obligations 34,654 35,939
Accrued liabilities:
Compensation and related items 246,680 160,083
Product warranties 261,965 252,869
Income and other taxes 44,254 83,893
Promotions and rebates 108,893 97,378
Product, property and related liabilities 21,292 15,440
Liabilities related to factored receivables 122,671 143,278
Other 65,927 76,078
Total current liabilities 1,951,921 1,515,281
Long-term debt 1,718,127 1,652,831
Deferred income tax liabilities, net 123,530 123,802
Unrecognized tax benefits 19,864 12,765
Other liabilities 142,603 121,212
Total long-term liabilities 2,004,124 1,910,610
Contingent liabilities and commitments 0 0
Stockholders’ equity:
Preferred stock – authorized 1,000,000 shares; NaN outstanding 0 0
Common stock – par value of $.10 per share; authorized 250,000,000 shares; issued 65,651,570 and 65,396,531 shares, respectively 6,565 6,540
Additional paid-in capital 454,327 436,828
Retained earnings 2,562,822 2,201,330
Accumulated other comprehensive income, net of tax 69,211 26,993
Less treasury shares of 10,285,329 and 10,197,775, respectively, at cost (360,226) (351,909)
Stockholders' equity attributable to THOR Industries, Inc. 2,732,699 2,319,782
Non-controlling interests 25,223 25,787
Total stockholders’ equity 2,757,922 2,345,569
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 6,713,967 $ 5,771,460


	October 31, 2021		July 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	336,237	$	445,852
Restricted cash	3,060		2,854
Accounts receivable, trade, net	1,095,970		796,489

Accounts receivable, other, net	70,403		153,443
Inventories, net	1,671,847		1,369,384
Prepaid income taxes, expenses and other	36,194		35,501

Total current assets	3,213,711		2,803,523
Property, plant and equipment, net	1,218,023		1,185,131
Other assets:
Goodwill	1,915,388		1,563,255
Amortizable intangible assets, net	1,298,289		937,171
Deferred income tax assets, net	1,288		41,216

Other	122,072		123,792
Total other assets	3,337,037		2,665,434
TOTAL ASSETS	$	7,768,771	$	6,654,088

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,055,342	$	915,045
Current portion of long-term debt	12,159		12,411
Short-term financial obligations	19,398		25,720
Accrued liabilities:
Compensation and related items	289,127		249,761
Product warranties	290,617		267,620
Income and other taxes	126,320		85,789
Promotions and rebates	105,209		128,869
Product, property and related liabilities	38,692		38,590
Dividends payable	23,917		—

Other	75,961		70,980

Total current liabilities	2,036,742		1,794,785
Long-term debt	2,232,266		1,594,821
Deferred income tax liabilities, net	149,811		113,598
Unrecognized tax benefits	19,925		15,844
Other liabilities	197,785		186,934
Total long-term liabilities	2,599,787		1,911,197
Contingent liabilities and commitments	0		0
Stockholders’ equity:
Preferred stock – authorized 1,000,000 shares; none outstanding	—		—
Common stock – par value of $.10 per share; authorized 250,000,000 shares; issued 66,058,290 and 65,651,570 shares, respectively	6,606		6,565
Additional paid-in capital	473,775		460,482
Retained earnings	2,988,726		2,770,401
Accumulated other comprehensive income, net of tax	11,969		44,621
Less treasury shares of 10,438,198 and 10,285,329, respectively, at cost	(378,237)		(360,226)
Stockholders’ equity attributable to THOR Industries, Inc.	3,102,839		2,921,843
Non-controlling interests	29,403		26,263
Total stockholders’ equity	3,132,242		2,948,106
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,768,771	$	6,654,088

See Notes to the Condensed Consolidated Financial Statements.

THOR INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)


		Three Months Ended April 30,				Nine Months Ended April 30,					Three Months Ended October 31,
		2021		2020		2021		2020				2021		2020
Net sales	Net sales	$	3,459,264	$	1,681,735	$	8,724,412	$	5,843,653	Net sales		$	3,958,224	$	2,537,360
Cost of products sold	Cost of products sold	2,953,984		1,476,102		7,425,403		5,072,803		Cost of products sold		3,302,800		2,158,508
Gross profit	Gross profit	505,280		205,633		1,299,009		770,850		Gross profit		655,424		378,852
Selling, general and administrative expenses	Selling, general and administrative expenses	231,834		128,147		619,786		478,968		Selling, general and administrative expenses		295,883		181,763
Amortization of intangible assets	Amortization of intangible assets	30,480		24,079		87,110		72,645		Amortization of intangible assets		33,214		27,427
Impairment charges		0		0		0		10,057

Interest income	Interest income	142		847		662		2,796		Interest income		193		318
Interest expense	Interest expense	26,808		26,868		75,248		82,127		Interest expense		20,913		24,276
Other income (expense), net		16,379		(6,157)		25,430		(5,123)
Other income, net										Other income, net		7,235		615
Income before income taxes	Income before income taxes	232,679		21,229		542,957		124,726		Income before income taxes		312,842		146,319
Income tax provision (benefit)		49,960		(1,555)		113,409		23,071
Income tax provision										Income tax provision		68,039		30,680
Net income	Net income	182,719		22,784		429,548		101,655		Net income		244,803		115,639
Less: Net (loss) attributable to non-controlling interests		(592)		(1,284)		(44)		(2,151)
Less: Net income attributable to non-controlling interests										Less: Net income attributable to non-controlling interests		2,561		1,882
Net income attributable to THOR Industries, Inc.	Net income attributable to THOR Industries, Inc.	$	183,311	$	24,068	$	429,592	$	103,806	Net income attributable to THOR Industries, Inc.		$	242,242	$	113,757

Weighted-average common shares outstanding:	Weighted-average common shares outstanding:									Weighted-average common shares outstanding:
Basic	Basic	55,366,241		55,198,756		55,323,080		55,163,943		Basic		55,422,854		55,238,164
Diluted	Diluted	55,723,378		55,392,982		55,615,107		55,337,665		Diluted		55,790,712		55,554,682

Earnings per common share:	Earnings per common share:									Earnings per common share:
Basic	Basic	$	3.31	$	0.44	$	7.77	$	1.88	Basic		$	4.37	$	2.06
Diluted	Diluted	$	3.29	$	0.43	$	7.72	$	1.88	Diluted		$	4.34	$	2.05

Comprehensive income (loss):
Comprehensive income:										Comprehensive income:
Net income	Net income	$	182,719	$	22,784	$	429,548	$	101,655	Net income		$	244,803	$	115,639
Other comprehensive income (loss), net of tax	Other comprehensive income (loss), net of tax									Other comprehensive income (loss), net of tax
Foreign currency translation adjustment	Foreign currency translation adjustment	(7,449)		(25,245)		33,691		(36,154)		Foreign currency translation adjustment		(35,167)		(18,993)
Unrealized gain (loss) on derivatives, net of tax		2,929		(7,763)		8,612		(11,709)
Unrealized gain on derivatives, net of tax										Unrealized gain on derivatives, net of tax		2,355		3,332

Total other comprehensive income (loss), net of tax	Total other comprehensive income (loss), net of tax	(4,520)		(33,008)		42,303		(47,863)		Total other comprehensive income (loss), net of tax		(32,812)		(15,661)
Total Comprehensive income (loss)		178,199		(10,224)		471,851		53,792
Less: Comprehensive income (loss) attributable to non-controlling interests		(647)		(1,483)		41		(2,794)
Comprehensive income (loss) attributable to THOR Industries, Inc.		$	178,846	$	(8,741)	$	471,810	$	56,586
Total Comprehensive income										Total Comprehensive income		211,991		99,978
Less: Comprehensive income attributable to non-controlling interests										Less: Comprehensive income attributable to non-controlling interests		2,401		1,995
Comprehensive income attributable to THOR Industries, Inc.										Comprehensive income attributable to THOR Industries, Inc.		$	209,590	$	97,983

See Notes to the Condensed Consolidated Financial Statements.

THOR INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


		Nine Months Ended April 30,					Three Months Ended October 31,
		2021		2020			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	429,548	$	101,655	Net income	$	244,803	$	115,639
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by (used in) operating activities:						Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation	Depreciation	82,533		71,966		Depreciation	31,739		26,812
Amortization of intangible assets	Amortization of intangible assets	87,110		72,645		Amortization of intangible assets	33,214		27,427
Amortization of debt issuance costs	Amortization of debt issuance costs	12,825		8,050		Amortization of debt issuance costs	2,424		2,723
Impairment charges		0		10,057

Deferred income tax (benefit) provision	Deferred income tax (benefit) provision	(4,499)		19,312		Deferred income tax (benefit) provision	(5,253)		4,601
(Gain) loss on disposition of property, plant and equipment	(Gain) loss on disposition of property, plant and equipment	(296)		1,524		(Gain) loss on disposition of property, plant and equipment	629		(79)
Stock-based compensation expense	Stock-based compensation expense	21,424		14,425		Stock-based compensation expense	6,027		5,768
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Accounts receivable	Accounts receivable	(175,635)		219,750		Accounts receivable	(167,685)		(36,495)
Inventories, net	Inventories, net	(632,506)		(62,475)		Inventories, net	(236,915)		(322,047)
Prepaid income taxes, expenses and other	Prepaid income taxes, expenses and other	(28,280)		(8,963)		Prepaid income taxes, expenses and other	4,729		(14,857)
Accounts payable	Accounts payable	341,535		(137,668)		Accounts payable	71,613		127,585

Accrued liabilities	Accrued liabilities	32,581		(73,621)		Accrued liabilities	50,016		(20,601)
Long-term liabilities and other	Long-term liabilities and other	8,733		612		Long-term liabilities and other	6,451		2,234
Net cash provided by operating activities		175,073		237,269
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	41,792		(81,290)
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(81,162)		(77,302)		Purchases of property, plant and equipment	(43,224)		(24,708)
Proceeds from dispositions of property, plant and equipment	Proceeds from dispositions of property, plant and equipment	1,742		26,854		Proceeds from dispositions of property, plant and equipment	141		975
Business acquisitions, net of cash acquired	Business acquisitions, net of cash acquired	(310,938)		0		Business acquisitions, net of cash acquired	(747,937)		(22,700)

Other		9,330		(5,239)

Net cash used in investing activities	Net cash used in investing activities	(381,028)		(55,687)		Net cash used in investing activities	(791,020)		(46,433)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:

Borrowings on revolving asset-based credit facilities	Borrowings on revolving asset-based credit facilities	225,676		379,222		Borrowings on revolving asset-based credit facilities	660,088		��
Payments on revolving asset-based credit facilities	Payments on revolving asset-based credit facilities	(114,836)		(74,776)		Payments on revolving asset-based credit facilities	(500,000)		—
Proceeds from issuance of senior unsecured notes						Proceeds from issuance of senior unsecured notes	500,000		—
Payments on term-loan credit facilities	Payments on term-loan credit facilities	(59,700)		(199,301)		Payments on term-loan credit facilities	—		(59,700)

Payments on other debt	Payments on other debt	(9,711)		(10,358)		Payments on other debt	(1,959)		(3,096)
Payments of debt issuance costs						Payments of debt issuance costs	(8,445)		—

Regular cash dividends paid		(68,100)		(66,239)
Payments on finance lease obligations	Payments on finance lease obligations	(492)		(324)		Payments on finance lease obligations	(262)		(119)
Payments related to vesting of stock-based awards		(8,317)		(3,763)

Short-term financial obligations and other, net	Short-term financial obligations and other, net	(7,323)		532		Short-term financial obligations and other, net	(5,825)		(5,580)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(42,803)		24,993		Net cash provided by (used in) financing activities	643,597		(68,495)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	Effect of exchange rate changes on cash and cash equivalents and restricted cash	4,857		(2,872)		Effect of exchange rate changes on cash and cash equivalents and restricted cash	(3,778)		(4,935)
Net increase (decrease) in cash and cash equivalents and restricted cash		(243,901)		203,703
Net decrease in cash and cash equivalents and restricted cash						Net decrease in cash and cash equivalents and restricted cash	(109,409)		(201,153)
Cash and cash equivalents and restricted cash, beginning of period	Cash and cash equivalents and restricted cash, beginning of period	541,363		451,262		Cash and cash equivalents and restricted cash, beginning of period	448,706		541,363
Cash and cash equivalents and restricted cash, end of period	Cash and cash equivalents and restricted cash, end of period	297,462		654,965		Cash and cash equivalents and restricted cash, end of period	339,297		340,210
Less: restricted cash	Less: restricted cash	2,900		3,480		Less: restricted cash	3,060		2,808
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	294,562	$	651,485	Cash and cash equivalents, end of period	$	336,237	$	337,402
Supplemental cash flow information:	Supplemental cash flow information:					Supplemental cash flow information:
Income taxes paid	Income taxes paid	$	172,397	$	51,281	Income taxes paid	$	17,956	$	48,788
Interest paid	Interest paid	$	62,048	$	75,709	Interest paid	$	16,868	$	18,207
Non-cash investing and financing transactions:	Non-cash investing and financing transactions:					Non-cash investing and financing transactions:
Capital expenditures in accounts payable	Capital expenditures in accounts payable	$	3,497	$	2,057	Capital expenditures in accounts payable	$	4,320	$	1,602
Quarterly dividends payable						Quarterly dividends payable	$	23,917	$	22,700

See Notes to the Condensed Consolidated Financial Statements.

THOR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
Three Months Ended April 30, 2021
Accumulated Stockholders'
Additional Other Equity Non- Total
Common Stock Paid-In Retained Comprehensive Treasury Stock Attributable controlling Stockholders'
Shares Amount Capital Earnings Income (Loss) Shares Amount to THOR Interests Equity
Balance at February 1, 2021 65,651,570 $ 6,565 $ 448,010 $ 2,402,211 $ 73,676 10,285,329 $ (360,226) $ 2,570,236 $ 26,475 $ 2,596,711
Net income (loss) — — — 183,311 — — — 183,311 (592) 182,719
Restricted stock unit activity — — (2,049) — — — — (2,049) — (2,049)
Dividends $0.41 per common share — — — (22,700) — — — (22,700) — (22,700)
Stock-based compensation expense — — 8,366 — — — — 8,366 — 8,366
Other comprehensive income (loss) — — — — (4,465) — — (4,465) (55) (4,520)
Dividend paid to non-controlling interest — — — — — — — — (605) (605)
Balance at April 30, 2021 65,651,570 $ 6,565 $ 454,327 $ 2,562,822 $ 69,211 10,285,329 $ (360,226) $ 2,732,699 $ 25,223 $ 2,757,922
Nine Months Ended April 30, 2021
Accumulated Stockholders'
Additional Other Equity Non- Total
Common Stock Paid-In Retained Comprehensive Treasury Stock Attributable controlling Stockholders'
Shares Amount Capital Earnings Income Shares Amount to THOR Interests Equity
Balance at August 1, 2020 65,396,531 $ 6,540 $ 436,828 $ 2,201,330 $ 26,993 10,197,775 $ (351,909) $ 2,319,782 $ 25,787 $ 2,345,569
Net income (loss) — — — 429,592 — — — 429,592 (44) 429,548
Restricted stock unit activity 255,039 25 (3,925) — — 87,554 (8,317) (12,217) — (12,217)
Dividends $1.23 per common share — — — (68,100) — — — (68,100) — (68,100)
Stock-based compensation expense — — 21,424 — — — — 21,424 — 21,424
Other comprehensive income — — — — 42,218 — — 42,218 85 42,303
Dividend paid to non-controlling interest — — — — — — — — (605) (605)
Balance at April 30, 2021 65,651,570 $ 6,565 $ 454,327 $ 2,562,822 $ 69,211 10,285,329 $ (360,226) $ 2,732,699 $ 25,223 $ 2,757,922


THOR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020 (UNAUDITED)

	Three Months Ended October 31, 2021
								Accumulated					Stockholders’
				Additional				Other					Equity		Non-		Total
	Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Attributable		controlling		Stockholders’
	Shares	Amount		Capital		Earnings		Income (Loss)		Shares	Amount		to THOR		Interests		Equity
Balance at August 1, 2021	65,651,570	$	6,565	$	460,482	$	2,770,401	$	44,621	10,285,329	$	(360,226)	$	2,921,843	$	26,263	$	2,948,106
Net income	—	—		—		242,242		—		—	—		242,242		2,561		244,803
Restricted stock unit activity	406,720	41		7,266		—		—		152,869	(18,011)		(10,704)		—		(10,704)
Dividends $0.43 per common share	—	—		—		(23,917)		—		—	—		(23,917)		—		(23,917)
Stock-based compensation expense	—	—		6,027		—		—		—	—		6,027		—		6,027
Other comprehensive income (loss)	—	—		—		—		(32,652)		—	—		(32,652)		(160)		(32,812)

Acquisitions	—	—		—		—		—		—	—		—		739		739
Balance at October 31, 2021	66,058,290	$	6,606	$	473,775	$	2,988,726	$	11,969	10,438,198	$	(378,237)	$	3,102,839	$	29,403	$	3,132,242

~~See Notes to the Condensed Consolidated Financial Statements.~~

THOR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
Three Months Ended April 30, 2020
Accumulated Stockholders'
Additional Other Equity Non- Total
Common Stock Paid-In Retained Comprehensive Treasury Stock Attributable controlling Stockholders'
Shares Amount Capital Earnings (Loss) Shares Amount to THOR Interests Equity
Balance at February 1, 2020 65,396,531 $ 6,540 $ 427,373 $ 2,102,253 $ (71,415) 10,197,775 $ (351,909) $ 2,112,842 $ 9,492 $ 2,122,334
Net income (loss) — — — 24,068 — — — 24,068 (1,284) 22,784
Restricted stock unit activity — — 297 — — — — 297 — 297
Dividends $0.40 per common share — — — (22,080) — — — (22,080) — (22,080)
Stock-based compensation expense — — 4,350 — — — — 4,350 — 4,350
Other comprehensive loss — — — — (32,809) — — (32,809) (199) (33,008)
Acquisitions — — — — — — — — 16,835 16,835
Balance at April 30, 2020 65,396,531 $ 6,540 $ 432,020 $ 2,104,241 $ (104,224) 10,197,775 $ (351,909) $ 2,086,668 $ 24,844 $ 2,111,512
Nine Months Ended April 30, 2020
Accumulated Stockholders'
Additional Other Equity Non- Total
Common Stock Paid-In Retained Comprehensive Treasury Stock Attributable controlling Stockholders'
Shares Amount Capital Earnings (Loss) Shares Amount to THOR Interests Equity
Balance at August 1, 2019 65,189,907 $ 6,519 $ 416,382 $ 2,066,674 $ (57,004) 10,126,434 $ (348,146) $ 2,084,425 $ 10,803 $ 2,095,228
Net income (loss) — — — 103,806 — — — 103,806 (2,151) 101,655
Restricted stock unit activity 206,624 21 1,213 — — 71,341 (3,763) (2,529) — (2,529)
Dividends $1.20 per common share — — — (66,239) — — — (66,239) — (66,239)
Stock-based compensation expense — — 14,425 — — — — 14,425 — 14,425
Other comprehensive loss — — — — (47,220) — — (47,220) (643) (47,863)
Acquisitions — — — — — — — — 16,835 16,835
Balance at April 30, 2020 65,396,531 $ 6,540 $ 432,020 $ 2,104,241 $ (104,224) 10,197,775 $ (351,909) $ 2,086,668 $ 24,844 $ 2,111,512






	Three Months Ended October 31, 2020
								Accumulated					Stockholders’
				Additional				Other					Equity		Non-		Total
	Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Attributable		controlling		Stockholders’
	Shares	Amount		Capital		Earnings		Income (Loss)		Shares	Amount		to THOR		Interests		Equity
Balance at August 1, 2020	65,396,531	$	6,540	$	436,828	$	2,201,330	$	26,993	10,197,775	$	(351,909)	$	2,319,782	$	25,787	$	2,345,569
Net income	—	—		—		113,757		—		—	—		113,757		1,882		115,639
Restricted stock unit activity	255,039	25		198		—		—		87,554	(8,317)		(8,094)		—		(8,094)
Dividends $0.41 per common share	—	—		—		(22,700)		—		—	—		(22,700)		—		(22,700)
Stock-based compensation expense	—	—		5,768		—		—		—	—		5,768		—		5,768
Other comprehensive income (loss)	—	—		—		—		(15,774)		—	—		(15,774)		113		(15,661)


Balance at October 31, 2020	65,651,570	$	6,565	$	442,794	$	2,292,387	$	11,219	10,285,329	$	(360,226)	$	2,392,739	$	27,782	$	2,420,521

See Notes to the Condensed Consolidated Financial Statements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

1. Nature of Operations and Accounting Policies

Nature of Operations

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

The July 31, ~~2020~~2021 amounts are derived from the annual audited financial statements of THOR. The interim financial statements are unaudited. In the opinion of management, all adjustments (which consist of normal, recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented have been made. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, ~~2020.~~2021. Due to seasonality within the recreational vehicle industry, and the impact of the ongoing COVID-19 pandemic and supply constraints on our industry, among other factors, annualizing the results of operations for the ~~nine~~three months ended ~~April 30,~~October 31, 2021 would not necessarily be indicative of the results expected for the full fiscal year.

~~Recently Adopted Accounting Standards~~

2. Acquisitions

In January 2017, the FASB issued Accounting Standards Update ("ASU") No. 2017-04, "Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge (referred to as Step 2 in the goodwill impairment test). Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment charge equal to that excess shall be recognized, not to exceed the amount of goodwill allocated to the reporting unit. This ASU is effective for annual and any interim impairment tests for periods beginning after December 15, 2019. The Company adopted ASU 2017-04, effective August 1, 2020. The adoption of this ASU did not have a material impact on the Company's consolidated financial statements.Airxcel

On September 1, 2021, the Company acquired Wichita, Kansas-based AirX Intermediate, Inc. (“Airxcel”). Airxcel manufactures a comprehensive line of high-quality component products which are sold primarily to original equipment RV manufacturers as well as consumers via aftermarket sales through dealers and retailers. Airxcel provides industry-leading products in recreational vehicle heating, cooling, ventilation, cooking, window coverings, sidewalls and roofing materials, among others. The purchase price of $750,000 in cash is subject to standard post-closing adjustments and was funded through a combination of cash-on-hand and $625,000 of borrowings from the Company’s asset-based credit facility (“ABL”). In conjunction with the Airxcel acquisition, the Company expanded its existing ABL facility from $750,000 to $1,000,000, favorably amended certain terms of the ABL agreement and extended the term of the ABL as discussed in Note 12 to the Condensed Consolidated Financial Statements. The interest rate remains unchanged.

~~2. Acquisitions~~

The Company acquired Airxcel as part of its long-term, strategic growth plan and the acquisition is expected to provide numerous benefits, including strengthening the RV supply chain, diversifying its revenue sources and expanding Airxcel's supply chain business in North American and Europe. Airxcel will operate as an independent operation in the same manner as the Company's other subsidiaries.

The results of Airxcel are included in the Company’s Condensed Consolidated Statements of Income and Comprehensive Income since the September 1, 2021 acquisition date. Airxcel recorded net sales of $88,778, net of intercompany sales, and net income before income taxes, net of intercompany profit elimination, was not material for the three months ended October 31, 2021. Net income before income taxes included a charge of $6,791 related to the step-up in assigned value of acquired Airxcel inventory that was included in cost of products sold in the current period, and also includes $2,184 in amortization expense related to the acquired intangible assets.

The following table summarizes the preliminary estimated fair values of the Airxcel net assets acquired on the acquisition date. The Company is in the process of conducting a fair value analysis. While all amounts remain subject to adjustment, the areas subject to the most significant potential adjustment are intangible assets, deferred income tax liabilities and certain accrued expenses. The Company expects to finalize these values as soon as practical and no later than one year from the acquisition date.


Cash	$	23,404
Inventory	71,150
Other assets	61,921
Property, plant and equipment	40,853
Amortizable intangible assets:
Customer relationships	284,000
Trademarks	56,900
Design technology assets	60,600
Backlog	700
Goodwill	368,639
Current liabilities	(109,336)
Deferred income tax liabilities	(79,115)
Other liabilities	(10,494)
Non-controlling interest	(739)
Total fair value of net assets acquired	768,483
Less cash acquired	(23,404)
Total cash consideration for acquisition, less cash acquired	$	745,079

On the acquisition date, amortizable intangible assets had a weighted-average useful life of 18.3 years. The customer relationships were valued based on the Discounted Cash Flow Method and will be amortized on an accelerated basis over 20 years. The trademarks were valued on the Relief from Royalty Method and will be amortized on a straight-line basis over 20 years. The design technology assets were valued on the Relief from Royalty Method and will be amortized on a straight-line basis over 10 years. Backlog was valued based on the Discounted Cash Flow Method and will be amortized on a straight-line basis over 2 months. The vast majority of the goodwill recognized as a result of this transaction is not deductible for tax purposes.

Tiffin Group

On December 18, 2020, the Company ~~closed on a Stock Purchase Agreement (“Tiffin Group SPA”) for the acquisition of~~acquired all of the issued and outstanding capital stock of luxury motorized recreational vehicle manufacturer Tiffin Motorhomes, Inc., including fifth wheel towable recreational vehicle manufacturer Vanleigh RV, and certain other associated operating and supply companies, which primarily supply component parts and services to Tiffin Motorhomes, Inc. and Vanleigh RV (collectively, the “Tiffin Group”). Tiffin Group, LLC, a wholly-owned subsidiary of the Company, owns the Tiffin Group. Tiffin Motorhomes, Inc. operates out of various locations in Alabama while Vanleigh RV operates out of Mississippi.

The initial cash consideration for the acquisition of the Tiffin Group was approximately $300,000, subject to adjustment, and was funded through existing cash-on-hand as well as $165,000 in borrowings from the Company’s existing asset-based credit facility. The total cash consideration to be paid is subject to the final determination of the actual acquired net working capital, as defined in the Tiffin Group SPA, as of the close of business on December 18, 2020, which determination was finalized in the fourth quarter of fiscal 2021 and the true-up was not material. The Tiffin Group operates as an independent operation in the same manner as the Company’s other recreational vehicle subsidiaries, and its motorized operations are aggregated within the Company’s motorized recreational vehicle reportable segment and its towable operations are aggregated within the Company’s towable recreational vehicle reportable segment. The Company purchased the Tiffin Group to complement its existing motorized and towable RV product offerings and North American independent dealer base.

The results of the Tiffin Group are included in the Company’s Condensed Consolidated Statements of Income and Comprehensive Income since the December 18, 2020 acquisition date. The Tiffin Group recorded net sales of $253,636 and net income before income taxes of $8,847 for the period from the date of acquisition through April 30, 2021. Net income before income taxes included a charge of $4,272 related to the step-up in assigned value of acquired Tiffin Group inventory that was included in cost of products sold in the current period, and also includes a charge of $4,248 for the amortization expense related to the acquired backlog and the other acquired amortizable intangible assets.

~~The~~ following table summarizes the ~~estimated~~final fair values of the Tiffin Group net assets acquired on the acquisition date. The Company is in the process of finalizing a fair value analysis, but this analysis has not been fully completed. The provisional amounts related to deferred income tax liabilities and certain accrued expenses remain subject to potential adjustment. The Company expects to finalize these values as soon as practical and no later than one year from the acquisition date.


Cash	$	13,074
Inventory	116,441
Other assets	53,860
Property, plant and equipment	48,262
Amortizable intangible assets:
Dealer network	92,200
Trademarks	32,100
Non-compete agreements	1,400
Backlog	4,800
Goodwill	~~62,905~~65,064
Current liabilities	(81,423)
Deferred income tax liabilities	~~(35,104)~~(37,263)
Other liabilities	(7,203)
Total fair value of net assets acquired	301,312
Less cash acquired	(13,074)
Total cash consideration for acquisition, less cash acquired	$	288,238

On the acquisition date, amortizable intangible assets had a weighted-average useful life of 18.8 years. The dealer network was valued based on the Discounted Cash Flow Method and ~~will be~~is being amortized on an accelerated basis over 18 to 20 years. The trademarks were valued on the Relief from Royalty Method and ~~will be~~is being amortized on a straight-line basis over 20 years. ~~Backlog was~~Backlogs were valued based on the Discounted Cash Flow Method and ~~will be~~were amortized on a straight-line basis over five to seven months. Generally, the goodwill recognized as a result of this transaction ~~will be~~is not deductible for tax purposes.

~~Togo Group~~

~~In February 2018, the Company formed a 50/50 joint venture, originally called TH2connect, LLC, with Tourism Holdings Limited ("thl~~"). In July 2019, this joint venture was rebranded as "Togo Group." Togo Group was formed to own, improve and sell innovative and comprehensive digital applications through a platform designed for the global RV industry.

~~Effective March 23, 2020, the Company and~~ ~~thl~~ reached an agreement (the “2020 Agreement”) whereby the Company obtained additional ownership interest in Togo Group. THOR obtained a 73.5% controlling interest in Togo Group and the power to direct the activities of Togo Group. Since the effective date of the 2020 Agreement, the operating results, balance sheet accounts and cash flow activity of Togo Group have been consolidated within the Company's Condensed Consolidated Financial Statements.

The operations of Togo Group are focused on digital solutions primarily for the North American market related to travel and RV use, with expansion into other regions anticipated in future periods. The Togo Group is managed as a stand-alone operating entity and represents a non-reportable segment and a separate reporting unit for goodwill assessment purposes.

~~The table below summarizes the final estimated fair value of the Togo Group assets acquired and liabilities assumed as of the 2020 Agreement effective date.~~


~~Cash~~	$	~~326~~
~~Accounts receivable~~	~~466~~
~~Other assets~~	~~749~~
~~Property, plant and equipment~~	~~362~~
~~Amortizable intangible assets~~
~~Trade names and trademarks~~	~~1,130~~
~~Developed technology~~	~~5,700~~
~~Other~~	~~1,350~~
~~Goodwill~~	~~61,955~~
~~Liabilities~~	~~(2,595)~~
~~Non-controlling interest~~	~~(16,835)~~
~~Total fair value of net assets acquired~~	$	~~52,608~~

Amortizable intangible assets have a weighted-average useful life of approximately eight years and are amortized on a straight-line basis. The developed technology was valued using the Multi-Period Excess Earnings method, which is a form of the income approach. Trade names and trademarks were valued using the Relief from Royalty method. The majority of the goodwill is expected to be deductible for tax purposes.

Prior to the March 23, 2020 effective date of the 2020 Agreement, the Company accounted for the investment in Togo Group under the equity method of accounting, and the Company's share of the losses of this investment were included in Other income (expense), net in the Condensed Consolidated Statements of Income and Comprehensive Income. The Company's share of the losses from this investment recognized in the three and nine-month periods ended April 30, 2020 were $2,137 and $6,884, respectively.

The following unaudited pro forma information represents the Company’s results of operations as if the fiscal 2022 acquisition of Airxcel had occurred at the beginning of fiscal 2021 and the fiscal 2021 acquisition of the Tiffin Group had occurred at the beginning of fiscal ~~2020 and the fiscal 2020 acquisition of the Togo Group had occurred at the beginning of fiscal 2019.~~2020. These ~~performance~~pro forma results may not be indicative of the actual results that would have occurred under the ownership and management of the Company.

Three Months Ended Nine Months Ended
April 30, 2021 April 30, 2021
Net sales $ 3,459,264 $ 8,988,314
Net income attributable to THOR Industries, Inc. $ 183,104 $ 436,817
Basic earnings per common share $ 3.31 $ 7.90
Diluted earnings per common share $ 3.29 $ 7.85

Three Months Ended Nine Months Ended
April 30, 2020 April 30, 2020
Net sales $ 1,826,765 $ 6,403,792
Net income attributable to THOR Industries, Inc. $ 20,966 $ 103,623
Basic earnings per common share $ 0.38 $ 1.88
Diluted earnings per common share $ 0.38 $ 1.87


	Three Months Ended		Three Months Ended
	October 31, 2021		October 31, 2020
Net sales	$	4,005,682	$	2,813,236
Net income attributable to THOR Industries, Inc.	$	249,055	$	117,489
Basic earnings per common share	$	4.49	$	2.13
Diluted earnings per common share	$	4.46	$	2.11

3. Business Segments

The Company has 3 reportable segments, all related to recreational vehicles: (1) North American Towables, (2) North American Motorized and (3) European. The operations of the Company's Postle, ~~and~~ Togo Group (rebranded as Roadpass Digital in November 2021) and recently acquired Airxcel subsidiaries are included in Other. Net sales included in Other related primarily to the sale of component parts and aluminum extrusions. Intercompany eliminations adjust for Postle and Airxcel sales to the Company’s North American towable and North American motorized segments, which ~~is a non-reportable segment.~~are consummated at established transfer prices generally consistent with the selling prices of products to third parties.

The following tables reflect certain financial information by reportable segment:


		Three Months Ended April 30,				Nine Months Ended April 30,					Three Months Ended October 31,
NET SALES:	NET SALES:	2021		2020		2021		2020		NET SALES:		2021		2020
Recreational vehicles	Recreational vehicles									Recreational vehicles
North American Towables	North American Towables	$	1,726,102	$	773,391	$	4,491,327	$	2,958,186	North American Towables		$	2,240,834	$	1,392,044
North American Motorized	North American Motorized	775,393		264,037		1,846,243		1,023,606		North American Motorized		925,028		493,855
Total North America	Total North America	2,501,495		1,037,428		6,337,570		3,981,792		Total North America		3,165,862		1,885,899
European	European	894,240		615,343		2,230,191		1,745,465		European		632,997		602,488
Total recreational vehicles	Total recreational vehicles	3,395,735		1,652,771		8,567,761		5,727,257		Total recreational vehicles		3,798,859		2,488,387
Other	Other	106,960		45,632		262,381		176,943		Other		257,830		80,707
Intercompany eliminations	Intercompany eliminations	(43,431)		(16,668)		(105,730)		(60,547)		Intercompany eliminations		(98,465)		(31,734)
Total	Total	$	3,459,264	$	1,681,735	$	8,724,412	$	5,843,653	Total		$	3,958,224	$	2,537,360


		Three Months Ended April 30,				Nine Months Ended April 30,					Three Months Ended October 31,
INCOME (LOSS) BEFORE INCOME TAXES:	INCOME (LOSS) BEFORE INCOME TAXES:	2021		2020		2021		2020		INCOME (LOSS) BEFORE INCOME TAXES:		2021		2020

Recreational vehicles	Recreational vehicles									Recreational vehicles
North American Towables	North American Towables	$	167,693	$	49,261	$	456,752	$	207,009	North American Towables		$	266,282	$	141,179
North American Motorized	North American Motorized	54,780		10,915		139,768		47,606		North American Motorized		88,898		41,567
Total North America	Total North America	222,473		60,176		596,520		254,615		Total North America		355,180		182,746
European	European	43,993		(242)		48,703		(18,576)		European		(17,976)		(5,506)
Total recreational vehicles	Total recreational vehicles	266,466		59,934		645,223		236,039		Total recreational vehicles		337,204		177,240
Other, net	Other, net	16,667		3,996		37,801		24,356		Other, net		23,529		11,490
Corporate	Corporate	(50,454)		(42,701)		(140,067)		(135,669)		Corporate		(47,891)		(42,411)
Total	Total	$	232,679	$	21,229	$	542,957	$	124,726	Total		$	312,842	$	146,319

TOTAL ASSETS: April 30, 2021 July 31, 2020
Recreational vehicles
North American Towables $ 1,802,162 $ 1,529,913
North American Motorized 1,149,043 480,225
Total North America 2,951,205 2,010,138
European 3,206,221 3,102,071
Total recreational vehicles 6,157,426 5,112,209
Other, net 258,531 212,378
Corporate 298,010 446,873
Total $ 6,713,967 $ 5,771,460


TOTAL ASSETS:	October 31, 2021		July 31, 2021
Recreational vehicles
North American Towables	$	2,137,149	$	1,870,577
North American Motorized	1,244,251		1,073,506
Total North America	3,381,400		2,944,083
European	2,872,828		2,975,821
Total recreational vehicles	6,254,228		5,919,904
Other	1,223,899		272,350
Corporate	290,644		461,834
Total	$	7,768,771	$	6,654,088

109


DEPRECIATION AND INTANGIBLE AMORTIZATION EXPENSE:	DEPRECIATION AND INTANGIBLE AMORTIZATION EXPENSE:	Three Months Ended April 30,				Nine Months Ended April 30,				DEPRECIATION AND INTANGIBLE AMORTIZATION EXPENSE:	Three Months Ended October 31,
		2021		2020		2021		2020				2021		2020
Recreational vehicles	Recreational vehicles									Recreational vehicles
North American Towables	North American Towables	$	16,904	$	16,696	$	49,029	$	49,398	North American Towables		$	16,302	$	15,807
North American Motorized	North American Motorized	7,008		3,600		16,112		10,608		North American Motorized		7,022		3,770
Total North America	Total North America	23,912		20,296		65,141		60,006		Total North America		23,324		19,577
European	European	31,251		22,049		94,182		75,552		European		34,713		31,323
Total recreational vehicles	Total recreational vehicles	55,163		42,345		159,323		135,558		Total recreational vehicles		58,037		50,900
Other	Other	3,108		2,676		9,058		7,710		Other		6,480		2,911
Corporate	Corporate	418		438		1,262		1,343		Corporate		436		428
Total	Total	$	58,689	$	45,459	$	169,643	$	144,611	Total		$	64,953	$	54,239


		Three Months Ended April 30,				Nine Months Ended April 30,					Three Months Ended October 31,
CAPITAL ACQUISITIONS:	CAPITAL ACQUISITIONS:	2021		2020		2021		2020		CAPITAL ACQUISITIONS:		2021		2020
Recreational vehicles	Recreational vehicles									Recreational vehicles
North American Towables	North American Towables	$	9,750	$	5,192	$	26,071	$	23,888	North American Towables		$	13,134	$	9,408
North American Motorized	North American Motorized	6,716		2,160		12,191		10,588		North American Motorized		8,629		1,745
Total North America	Total North America	16,466		7,352		38,262		34,476		Total North America		21,763		11,153
European	European	14,889		15,880		38,105		38,057		European		14,802		9,894
Total recreational vehicles	Total recreational vehicles	31,355		23,232		76,367		72,533		Total recreational vehicles		36,565		21,047
Other	Other	1,427		517		4,087		1,445		Other		4,417		1,444
Corporate	Corporate	358		121		747		1,049		Corporate		34		361
Total	Total	$	33,140	$	23,870	$	81,201	$	75,027	Total		$	41,016	$	22,852

4. Earnings Per Common Share

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


		Three Months Ended April 30,		Nine Months Ended April 30,			Three Months Ended October 31,
		2021	2020	2021	2020			2021	2020
Weighted-average common shares outstanding for basic earnings per share	Weighted-average common shares outstanding for basic earnings per share	55,366,241	55,198,756	55,323,080	55,163,943	Weighted-average common shares outstanding for basic earnings per share		55,422,854	55,238,164
Unvested restricted stock units		357,137	194,226	292,027	173,722
Unvested restricted stock units and performance stock units						Unvested restricted stock units and performance stock units		367,858	316,518
Weighted-average common shares outstanding assuming dilution	Weighted-average common shares outstanding assuming dilution	55,723,378	55,392,982	55,615,107	55,337,665	Weighted-average common shares outstanding assuming dilution		55,790,712	55,554,682

~~For the three months ended April 30, 2021~~The Company excluded 30,333 and ~~2020, the Company had 86,946 and 140,481~~96,809 unvested restricted stock units and performance stock units that have an antidilutive effect from its calculation of weighted average shares outstanding ~~respectively, which were excluded from this calculation as their effect would be antidilutive. For the nine months ended April 30,~~assuming dilution at October 31, 2021 and October 31, 2020, ~~the Company had 81,557 and 189,090 unvested restricted stock units outstanding, respectively, which were excluded from this calculation as their effect would have been antidilutive.~~respectively.

1110

5. Derivatives and Hedging

The fair value of our derivative instruments designated as cash flow hedges and the associated notional amounts, presented on a pre-tax basis, were as follows:


	October 31, 2021		July 31, 2021
			Fair Value in				Fair Value in
			Other Current				Other Current
Cash Flow Hedges	Notional		Liabilities		Notional		Liabilities
Foreign currency forward contracts	$	20,674	$	282	$	41,899	$	88
Interest rate swap agreements	432,250		8,033		482,138		11,420
Total derivative financial instruments	$	452,924	$	8,315	$	524,037	$	11,508

April 30, 2021 July 31, 2020
Fair Value in Fair Value in Fair Value in
Other Current Other Current Other Current
Cash Flow Hedges Notional Assets Liabilities Notional Liabilities
Foreign currency forward contracts $ 75,110 $ 494 $ 0 $ 0 $ 0
Interest rate swap agreements 532,025 0 14,008 673,400 24,840
Total derivative financial instruments $ 607,135 $ 494 $ 14,008 $ 673,400 $ 24,840

Foreign currency forward contracts ~~accounted~~outstanding at October 31, 2021 are used to exchange British Pounds Sterling (“GBP”) for ~~as cash flow~~Euro. The total notional value of these contracts, including designated hedges and other contracts not designated, at October 31, 2021 is 15,000 GBP ($20,674), and these contracts have various maturity dates through January 31, 2022.

The Company entered into interest rate swaps to convert a portion of the Company’s long-term debt from floating rate to fixed rate debt. As of October 31, 2021, the outstanding swaps had notional contract values of $432,250, partially hedging the interest rate risk related to the Company’s U.S. dollar term loan tranche that matures in February 2026. The Company’s other interest rate swaps not designated as hedging instruments had a notional contract value of $31,168 at ~~April 30, 2021 mature over the next nine months.~~October 31, 2021.

Net Investment Hedges

The foreign currency transaction gains and losses on the Euro-denominated portion of the term loan, which is designated and effective as a hedge of the Company’s net investment in its Euro-denominated functional currency subsidiaries, are included as a component of the foreign currency translation adjustment. Gains for the three months ended ~~April 30,~~October 31, 2021, net of tax, were ~~$1,984 and losses for the nine months ended April 30, 2021, net of tax, were $8,969.~~$9,240. Gains for the three ~~and nine~~ months ended ~~April 30,~~October 31, 2020, net of tax, were ~~$6,293 and $9,136, respectively.~~$5,482.

There were 0no amounts reclassified out of accumulated other comprehensive income ~~("AOCI"~~(“AOCI”) pertaining to the net investment hedge during the ~~three and nine-month~~three-month periods ended ~~April 30,~~October 31, 2021 and ~~April 30,~~October 31, 2020, respectively.

Derivatives Not Designated as Hedging Instruments

The Company has certain other derivative instruments which have not been designated as hedges. These other derivative instruments had a notional amount totaling approximately ~~$33,634~~$31,168 and a fair value of ~~$1,774,~~$1,786, which is included in Other current liabilities in the Condensed Consolidated Balance Sheet as of ~~April 30,~~October 31, 2021. These other derivative instruments had a notional amount totaling approximately ~~$34,862~~$32,466 and a fair value of ~~$1,824,~~$1,948, as of July 31, ~~2020.~~2021. For these derivative instruments, changes in fair value are recognized in earnings.

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

Three Months Ended April 30,
2021 2020
Gain (Loss) on Derivatives Designated as Cash Flow Hedges
Gain (Loss) recognized in Other Comprehensive Income, net of tax
Foreign currency forward contracts $ 422 $ 856
Interest rate swap agreements 2,507 (8,619)
Total gain (loss) $ 2,929 $ (7,763)


	Three Months Ended October 31,
	2021		2020
Gain (Loss) on Derivatives Designated as Cash Flow Hedges

Gain (Loss) recognized in Other Comprehensive Income, net of tax
Foreign currency forward contracts	$	(141)	$	—
Interest rate swap agreements (1)	2,496		3,332
Total gain (loss)	$	2,355	$	3,332

Nine Months Ended April 30,
2021 2020
Gain (Loss) on Derivatives Designated as Cash Flow Hedges
Gain (Loss) recognized in Other Comprehensive Income, net of tax
Foreign currency forward contracts $ 356 $ (159)
Interest rate swap agreements 8,256 (11,550)
Total gain (loss) $ 8,612 $ (11,709)
(1)Other comprehensive income (loss), net of tax, before reclassification from AOCI was $607 and $558 for the three months ended October 31, 2021 and 2020, respectively.

1211


		Three Months Ended April 30,									Three Months Ended October 31,
		2021				2020					2021				2020
				Interest					Interest							Interest				Interest
		Sales		Expense			Sales		Expense				Sales			Expense		Sales		Expense
Gain (Loss) Reclassified from AOCI, Net of Tax	Gain (Loss) Reclassified from AOCI, Net of Tax											Gain (Loss) Reclassified from AOCI, Net of Tax
Foreign currency forward contracts	Foreign currency forward contracts	$	(429)	$	0		$	(121)	$	0		Foreign currency forward contracts	$	(13)		$	—	$	—	$	—
Interest rate swap agreements	Interest rate swap agreements	0		(2,353)			0		(1,383)			Interest rate swap agreements	—			(1,889)		—		(2,774)
Gain (Loss) on Derivatives Not Designated as Hedging Instruments	Gain (Loss) on Derivatives Not Designated as Hedging Instruments											Gain (Loss) on Derivatives Not Designated as Hedging Instruments
Amount of loss recognized in income, net of tax	Amount of loss recognized in income, net of tax											Amount of loss recognized in income, net of tax

Interest rate swap agreements	Interest rate swap agreements	0		108			0		(107)			Interest rate swap agreements	—			87		—		(38)
Total gain (loss)	Total gain (loss)	$	(429)	$	(2,245)		$	(121)	$	(1,490)		Total gain (loss)	$	(13)		$	(1,802)	$	—	$	(2,812)

Nine Months Ended April 30,
2021 2020
Interest Interest
Sales Expense Sales Expense
Gain (Loss) Reclassified from AOCI, Net of Tax
Foreign currency forward contracts $ (422) $ 0 $ (555) $ 0
Interest rate swap agreements 0 (7,750) 0 (2,897)
Gain (Loss) on Derivatives Not Designated as Hedging Instruments
Amount of loss recognized in income, net of tax
Interest rate swap agreements 0 62 0 (275)
Total gain (loss) $ (422) $ (7,688) $ (555) $ (3,172)

6. Inventories

Major classifications of inventories are as follows:


		April 30, 2021		July 31, 2020			October 31, 2021		July 31, 2021
Finished goods – RV	Finished goods – RV	$	129,030	$	152,297	Finished goods – RV	$	124,858	$	114,843
Finished goods – other	Finished goods – other	59,369		44,779		Finished goods – other	93,452		57,810
Work in process	Work in process	370,402		128,181		Work in process	432,513		376,594
Raw materials	Raw materials	534,965		302,813		Raw materials	706,689		602,106
Chassis	Chassis	445,697		135,194		Chassis	392,575		292,921
Subtotal	Subtotal	1,539,463		763,264		Subtotal	1,750,087		1,444,274
Excess of FIFO costs over LIFO costs	Excess of FIFO costs over LIFO costs	(55,409)		(46,959)		Excess of FIFO costs over LIFO costs	(78,240)		(74,890)
Total inventories, net	Total inventories, net	$	1,484,054	$	716,305	Total inventories, net	$	1,671,847	$	1,369,384

Of the ~~$1,539,463~~$1,750,087 and ~~$763,264~~$1,444,274 of inventories at ~~April 30,~~October 31, 2021 and July 31, ~~2020, $527,670~~2021, $1,086,598 and ~~$251,099,~~$946,767, respectively, were valued on the first-in, first-out (“FIFO”) method, and $663,489 and $497,507, respectively, were valued on the last-in, first-out ~~(LIFO) method, and $1,011,793 and $512,165, respectively, were valued on the first-in, first-out (FIFO)~~(“LIFO”) method.

7. Property, Plant and Equipment

Property, plant and equipment consists of the following:


		April 30, 2021		July 31, 2020			October 31, 2021		July 31, 2021
Land	Land	$	141,166	$	136,200	Land	$	149,202	$	142,746
Buildings and improvements	Buildings and improvements	815,802		760,986		Buildings and improvements	847,315		837,065
Machinery and equipment	Machinery and equipment	509,924		438,985		Machinery and equipment	568,617		523,714
Rental vehicles	Rental vehicles	64,992		83,534		Rental vehicles	69,748		75,449
Lease right-of-use assets – operating	Lease right-of-use assets – operating	38,545		33,609		Lease right-of-use assets – operating	47,335		42,601
Lease right-of-use assets – finance	Lease right-of-use assets – finance	7,196		3,672		Lease right-of-use assets – finance	6,823		7,010
Total cost	Total cost	1,577,625		1,456,986		Total cost	1,689,040		1,628,585
Less accumulated depreciation	Less accumulated depreciation	(419,245)		(349,337)		Less accumulated depreciation	(471,017)		(443,454)
Property, plant and equipment, net	Property, plant and equipment, net	$	1,158,380	$	1,107,649	Property, plant and equipment, net	$	1,218,023	$	1,185,131

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

8. Intangible Assets and Goodwill

The components of amortizable intangible assets are as follows:

April 30, 2021 July 31, 2020
Accumulated Accumulated
Cost Amortization Cost Amortization
Dealer networks/customer relationships $ 867,483 $ 309,523 $ 766,198 $ 252,320
Trademarks 313,309 59,037 275,775 47,743
Design technology and other intangibles 219,012 57,537 213,468 40,654
Backlog 4,800 3,471 0 0
Non-compete agreements 1,400 175 0 0
Total amortizable intangible assets $ 1,406,004 $ 429,743 $ 1,255,441 $ 340,717



	October 31, 2021				July 31, 2021
			Accumulated				Accumulated
	Cost		Amortization		Cost		Amortization
Dealer networks/customer relationships	$	1,139,935	$	347,875	$	861,562	$	327,751
Trademarks	366,152		66,670		311,208		62,675
Design technology and other intangibles	273,370		67,615		215,956		62,237

Non-compete agreements	1,400		408		1,400		292
Total amortizable intangible assets	$	1,780,857	$	482,568	$	1,390,126	$	452,955

Estimated future amortization expense is as follows:

For the remainder of the fiscal year ending July 31, 2021 $ 30,178
For the fiscal year ending July 31, 2022 125,339
For the fiscal year ending July 31, 2023 106,759
For the fiscal year ending July 31, 2024 96,863
For the fiscal year ending July 31, 2025 88,655
For the fiscal year ending July 31, 2026 and thereafter 528,467
$ 976,261


For the remainder of the fiscal year ending July 31, 2022	$	126,544
For the fiscal year ending July 31, 2023	147,390
For the fiscal year ending July 31, 2024	134,611
For the fiscal year ending July 31, 2025	122,120
For the fiscal year ending July 31, 2026	110,251
For the fiscal year ending July 31, 2027 and thereafter	657,373
	$	1,298,289

Changes in the carrying amount of goodwill ~~by reportable segment~~ for the ~~nine~~three months ended ~~April 30,~~October 31, 2021 are summarized as follows:

North American Towables North American Motorized European Other Total
Net balance as of August 1, 2020 $ 333,786 $ 0 $ 1,037,929 $ 104,826 $ 1,476,541
Fiscal 2021 activity:
Goodwill acquired 18,845 43,491 0 17,882 80,218
Measurement period adjustments (7,656) 8,225 0 0 569
Foreign currency translation 0 0 20,500 0 20,500
Net balance as of April 30, 2021 $ 344,975 $ 51,716 $ 1,058,429 $ 122,708 $ 1,577,828


	North American Towables		North American Motorized		European		Other		Total
Net balance as of August 1, 2021	$	344,975	$	53,875	$	1,041,697	$	122,708	$	1,563,255
Fiscal 2022 activity:
Goodwill acquired	—		—		—		373,685		373,685

Foreign currency translation	—		—		(21,552)		—		(21,552)

Net balance as of October 31, 2021	$	344,975	$	53,875	$	1,020,145	$	496,393	$	1,915,388

Changes in the carrying amount of goodwill for the three months ended October 31, 2020 are summarized as follows:


	North American Towables		North American Motorized		European		Other		Total
Net balance as of August 1, 2020	$	333,786	$	—	$	1,037,929	$	104,826	$	1,476,541
Fiscal 2021 activity:
Goodwill acquired	—		—		—		17,882		17,882

Foreign currency translation	—		—		(13,140)		—		(13,140)

Net balance as of October 31, 2020	$	333,786	$	—	$	1,024,789	$	122,708	$	1,481,283

1413

~~Changes in the carrying amount of goodwill by reportable segment for the nine months ended April 30, 2020 are summarized as follows:~~

North American Towables North American Motorized European Other Total
Net balance as of August 1, 2019 $ 334,822 $ 0 $ 980,339 $ 42,871 $ 1,358,032
Fiscal 2020 activity:
Goodwill acquired 0 0 — 62,366 62,366
Measurement period adjustments 0 0 1,282 0 1,282
Foreign currency translation 0 0 (24,243) 0 (24,243)
Impairment charge (1,036) 0 0 0 (1,036)
Net balance as of April 30, 2020 $ 333,786 $ 0 $ 957,378 $ 105,237 $ 1,396,401

During the fiscal quarter ended January 31, 2020, there was an interim impairment assessment performed related to two groups of tangible and intangible assets within the North American Towables reportable segment using Level 3 inputs as defined by ASC 820. The Company recognized an aggregate impairment charge of $10,057 related to these assets during the fiscal year-to-date period ended April 30, 2020, which included a goodwill impairment charge of $1,036.

9. Concentration of Risk

One dealer, FreedomRoads, LLC, accounted for ~~13%~~14% of the ~~Company's~~Company’s consolidated net sales for both the three-month ~~period~~periods ended ~~April 30,~~October 31, 2021 and ~~15%~~October 31, 2020. The vast majority of the ~~Company's consolidated net~~ sales ~~for the three-month period ended April 30, 2020, and 13% for the nine-month period ended April 30, 2021 and 15% for the nine-month period ended April 30, 2020, respectively. Sales~~ to this dealer are reported within ~~both~~ the North American Towables and North American Motorized reportable segments. This dealer also accounted for ~~15%~~16% and ~~18%~~15% of the Company’s consolidated trade accounts receivable at ~~April 30,~~October 31, 2021 and July 31, ~~2020,~~2021, respectively. The loss of this dealer could have a material effect on the Company’s business.

10. Fair Value Measurements

The financial assets and liabilities that are accounted for at fair value on a recurring basis at ~~April 30,~~October 31, 2021 and July 31, ~~2020~~2021 are as follows:


		Input Level	April 30, 2021		July 31, 2020			Input Level	October 31, 2021		July 31, 2021
Cash equivalents	Cash equivalents	Level 1	$	211	$	227,154	Cash equivalents	Level 1	$	204	$	204
Deferred compensation plan mutual fund assets	Deferred compensation plan mutual fund assets	Level 1	$	46,931	$	47,327	Deferred compensation plan mutual fund assets	Level 1	$	55,269	$	51,085
Deferred compensation plan liabilities		Level 1	$	77,289	$	61,290
Foreign currency forward contract asset		Level 2	$	494	$	0

Foreign currency forward contract liability							Foreign currency forward contract liability	Level 2	$	282	$	88
Interest rate swap liabilities	Interest rate swap liabilities	Level 2	$	15,782	$	26,664	Interest rate swap liabilities	Level 2	$	9,820	$	13,369

Cash equivalents represent investments in government and other money market funds traded in an active market and are reported as a component of Cash and cash equivalents in the Condensed Consolidated Balance Sheets.

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

Foreign currency forward contracts outstanding at April 30, 2021 are used to exchange British Pounds Sterling ("GBP") for Euro. The total notional value of these contracts, including designated hedges and other contracts not designated, at April 30, 2021 is 54,000 GBP ($75,110), and these contracts have various maturity dates through January 31, 2022.

The Company entered into interest rate swaps to convert a portion of the Company's long-term debt from floating rate to fixed rate debt. As of April 30, 2021, the outstanding swaps had notional contract values of $532,025, partially hedging the interest rate risk related to the Company's U.S. dollar term loan tranche that matures in February 2026. The Company's other interest rate swaps not designated as hedging instruments had a notional contract value of $33,634 at April 30, 2021.

The fair value of foreign currency forward contracts is estimated by discounting the difference between the contractual forward price and the current available forward price for the residual maturity of the contract using observable market rates. The fair value of interest rate swaps is determined by discounting the estimated future cash flows based on the applicable observable yield curves.

11. Product Warranties

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

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


		Three Months Ended April 30,				Nine Months Ended April 30,					Three Months Ended October 31,
		2021		2020		2021		2020				2021		2020
Beginning balance	Beginning balance	$	251,009	$	282,065	$	252,869	$	289,679	Beginning balance		$	267,620	$	252,869
Provision	Provision	84,805		35,780		188,546		157,453		Provision		84,539		50,872
Payments	Payments	(73,767)		(59,956)		(191,706)		(189,254)		Payments		(70,253)		(57,575)
Acquisition	Acquisition	0		0		11,032		0		Acquisition		9,828		—
Foreign currency translation	Foreign currency translation	(82)		(12)		1,224		(1)		Foreign currency translation		(1,117)		(612)

Ending balance	Ending balance	$	261,965	$	257,877	$	261,965	$	257,877	Ending balance		$	290,617	$	245,554

12. Long-Term Debt

The components of long-term debt are as follows:

April 30, 2021 July 31, 2020
Term loan $ 1,549,621 $ 1,597,091
Asset-based credit facility 110,000 0
Unsecured notes 30,205 29,620
Other debt 76,358 84,500
Gross long-term debt 1,766,184 1,711,211
Debt issuance costs, net of amortization (35,498) (44,563)
Total long-term debt, net of debt issuance costs 1,730,686 1,666,648
Less: current portion of long-term debt (12,559) (13,817)
Total long-term debt, net, less current portion $ 1,718,127 $ 1,652,831


	October 31, 2021		July 31, 2021
Term loan	$	1,527,639	$	1,540,013
Asset-based credit facility	159,935		—
Senior unsecured notes	500,000		—
Unsecured notes	29,113		29,728
Other debt	67,536		70,952
Gross long-term debt	2,284,223		1,640,693
Debt issuance costs, net of amortization	(39,798)		(33,461)
Total long-term debt, net of debt issuance costs	2,244,425		1,607,232
Less: current portion of long-term debt	(12,159)		(12,411)
Total long-term debt, net, less current portion	$	2,232,266	$	1,594,821

~~On February 1, 2019, the~~The Company ~~entered into~~is a party to a seven-year term loan (“term loan”) agreement, which ~~consists~~originally consisted of both a United States Dollar-denominated term loan tranche and a Euro-denominated term loan tranche, and a $750,000 revolving asset-based credit facility (“ABL”). Subject to earlier termination, the term loan matures on February 1, 2026 and the ABL ~~matures~~originally matured on February 1, 2024. In connection with the Airxcel acquisition discussed in Note 2 to the Condensed Consolidated Financial Statements, effective September 1, 2021, the Company expanded its existing ABL facility from $750,000 to $1,000,000, favorably amended certain terms of the ABL agreement and extended the maturity date of the ABL from February 1, 2024 to September 1, 2026, subject to a springing maturity at an earlier date if the maturity date of the Company's term loans have not been extended or refinanced. The ABL interest rate remains unchanged.

As of ~~April 30,~~October 31, 2021, the entire outstanding U.S. term loan tranche balance of $941,900 was subject to a LIBOR-based rate totaling 3.125%. The interest rate on ~~$532,025~~$432,250 of that balance, however, was fixed at 5.466% through an interest rate swap, dated March 18, 2019, by swapping the underlying 1-month LIBOR rate for a fixed rate of 2.466%. As of July 31, ~~2020,~~2021, the entire outstanding U.S. term loan tranche balance of $941,900 was subject to a LIBOR-based rate of ~~3.938%~~3.125%, but the interest rate on ~~$673,400~~$482,138 of that balance was fixed at ~~6.216%~~5.466% through an interest rate swap, dated March 18, 2019, by swapping the underlying 1-month LIBOR rate for a fixed rate of 2.466%. The total interest rate on the ~~April 30,~~October 31, 2021 outstanding Euro term loan tranche balance of ~~$607,721~~$585,739 was 3.00%, and the total interest rate on the July 31, ~~2020~~2021 outstanding Euro term loan tranche of ~~$655,191~~$598,113 was ~~4.00%~~3.00%.

As of ~~April 30,~~October 31, 2021, the total weighted average interest rate on the outstanding ABL borrowings of ~~$110,000~~$159,935 was ~~1.375%~~1.314%. The Company may, generally at its option, pay any borrowings under the ABL, in whole or in part, at any time and from time to time, without penalty or premium.

On October 14, 2021, the Company issued an aggregate principal amount of $500,000 of 4.000% Senior Unsecured Notes due 2029 (“Senior Unsecured Notes”). The Senior Unsecured Notes will mature on October 15, 2029 unless redeemed or repurchased earlier. Net proceeds from the Senior Unsecured Notes, along with cash-on-hand, were used to repay $500,000 of borrowings outstanding on the Company’s ABL and for certain transaction costs. Interest on the Senior Unsecured Notes is payable in semi-annual installments on April 15 and October 15 of each year, beginning with the first payment on April 15, 2022. The Senior Unsecured Notes will rank equally in right of payment with all of the Company’s existing and future senior indebtedness and senior to the Company’s future subordinated indebtedness, and effectively junior in right of payment to the Company’s existing and future secured indebtedness to the extent of the assets securing such indebtedness.

The Company must make mandatory prepayments of principal under the term loan agreement upon the occurrence of certain specified events, including certain asset sales, debt issuances and receipt of annual cash flows in excess of certain amounts. No such specified events occurred during the three ~~or nine~~ months ended ~~April 30,~~October 31, 2021 or 2020.

Availability under the ABL agreement is subject to a borrowing base based on a percentage of applicable eligible receivables and eligible inventory. The ABL carries interest at an annual base rate plus 0.25% to ~~0.75%~~0.50%, or LIBOR plus 1.25% to ~~1.75%~~1.50%, based on adjusted excess availability as defined in the ABL agreement. This agreement also includes a ~~0.25%~~0.20% unused facility fee.

The unused availability under the ABL is generally available to the Company for general operating purposes and, based on ~~April 30,~~October 31, 2021 eligible accounts receivable and inventory balances, net of amounts drawn, totaled approximately ~~$610,000.~~$810,000.

The unsecured notes of 25,000 Euro ($~~30,205)~~29,113) relate to long-term debt of our European segment. There are two series, 20,000 Euro ($~~24,164)~~23,290) with an interest rate of 1.945% maturing in March 2025, and 5,000 Euro ($~~6,041)~~5,823) with an interest rate of 2.534% maturing March 2028. Other debt relates primarily to real estate loans with varying maturity dates through September 2032 and interest rates ranging from ~~1.40%~~2.40% to 3.43%.

Total contractual gross debt maturities are as follows:


For the remainder of the fiscal year ending July 31, 2021		$	4,202
For the fiscal year ending July 31, 2022		12,264
For the remainder of the fiscal year ending July 31, 2022				For the remainder of the fiscal year ending July 31, 2022	$	12,159
For the fiscal year ending July 31, 2023	For the fiscal year ending July 31, 2023	12,390		For the fiscal year ending July 31, 2023	11,942
For the fiscal year ending July 31, 2024	For the fiscal year ending July 31, 2024	122,519		For the fiscal year ending July 31, 2024	12,066
For the fiscal year ending July 31, 2025	For the fiscal year ending July 31, 2025	36,557		For the fiscal year ending July 31, 2025	35,234
For the fiscal year ending July 31, 2026 and thereafter		1,578,252
For the fiscal year ending July 31, 2026				For the fiscal year ending July 31, 2026	1,690,691
For the fiscal year ending July 31, 2027 and thereafter				For the fiscal year ending July 31, 2027 and thereafter	522,131
		$	1,766,184		$	2,284,223

For the three ~~and nine~~ months ended ~~April 30,~~October 31, 2021, interest expense on the term loan, ABL, Senior Unsecured Notes and other debt facilities was ~~$18,361 and $59,612, respectively.~~$17,643. For the three ~~and nine~~ months ended ~~April 30,~~October 31, 2020, interest expense on the term loan, ABL and other debt facilities was ~~$22,825 and $71,037, respectively.~~

On March 25, 2021, the Company repriced its term loan debt, which resulted in reductions of the interest rate spread included in the overall interest rates on the Company’s U.S. term loan tranche and the Euro term loan tranche of 0.75% and 1.00%, respectively. This term loan debt repricing was evaluated on a creditor-by-creditor basis to determine whether modification or extinguishment accounting was required under the provisions of ASC 470-50. Extinguishment accounting was applied to a small percentage of the creditors that were deemed to have a substantial difference in terms based on an analysis of the present values of cash flows before and after the repricing. As a result, the Company recorded a debt extinguishment charge of $4,688 in the three months ended April 30, 2021. This charge was recognized through accelerated amortization of unamortized debt issuance costs that is classified as interest expense in the Company’s Condensed Consolidated Statements of Income and Comprehensive Income. For the majority of the creditors, the debt repricing was accounted for as a modification.$20,588.

In fiscal 2019, the Company incurred fees ~~("2019 fees")~~ to secure the term loan and ABL, and those amounts are being amortized ratably over the respective seven and five-year terms of those agreements. The Company also incurred and capitalized ~~an insignificant amount of~~certain creditor fees related to the March 25, 2021 repricing of its term loan noted above, to be amortized over the remaining life of the term ~~loan.~~loan, and certain creditor fees of $2,127 related to the September 1, 2021 expansion of the ABL, which are being amortized over the remaining life of the extended ABL. In addition, the Company incurred fees of $8,445 relative to the $500,000 Senior Unsecured Notes issued October 14, 2021 discussed above, and those debt issuance costs are being amortized over the eight-year term of those notes. The Company recorded total charges related to the amortization of these term loan, ABL and Senior Unsecured Note fees, which are classified as interest expense, of $2,424 for the three months ended October 31, 2021. The Company recorded total charges related to the amortization of these term loan and ABL fees, which are classified as interest expense, of ~~$7,365 and $12,825~~$2,723 for ~~the three and nine months ended April 30, 2021, respectively, which included $4,688 of accelerated amortization of the 2019 fees recorded in~~ the three months ended April 30, 2021 as a result of the debt repricing. The Company recorded total charges related to the amortization of these term loan and ABL fees, which are classified as interest expense, of $2,679 and $8,050 for the three and nine months ended April 30, 2020, respectively.October 31, 2020. The unamortized balance of the ABL facility fees was ~~$7,705~~$6,304 at ~~April 30,~~October 31, 2021 and ~~$9,807~~$7,005 as of July 31, ~~2020~~2021 and is included in Other long-term assets in the Condensed Consolidated Balance Sheets.

The fair value of the Company’s ~~term-loan~~term loan debt at ~~April 30,~~October 31, 2021 and July 31, ~~2020~~2021 was $1,526,176 and $1,551,141, respectively, and ~~$1,565,866, respectively.~~the fair value of the Company’s Senior Unsecured Notes at October 31, 2021 was $496,250. The carrying value of the Company’s term-loan debt, excluding debt issuance costs, was ~~$1,549,621~~$1,527,639 and ~~$1,597,091~~$1,540,013 at ~~April 30,~~October 31, 2021 and July 31, ~~2020, respectively. The fair~~2021, respectively, and the carrying value of the ~~Company's debt is~~Company’s Senior Unsecured Notes was $500,000 at October 31, 2021. The fair values of the Company’s term loan and Senior Unsecured Notes are primarily estimated using Level 2 inputs as defined by ASC 820, primarily based on quoted market ~~prices for the term loan debt.~~prices. The fair value of other debt held by the Company approximates fair value.

13. Provision for Income Taxes

The overall effective income tax rate for the three months ended ~~April 30,~~October 31, 2021 was ~~21.5%, and the effective income tax~~21.7%. This rate ~~for the nine months ended April 30, 2021~~ was ~~20.9%. These rates were both~~ favorably impacted by certain foreign tax rate differences which include certain interest income not subject to corporate income tax. The Company also recognized a tax benefit from the vesting of share-based compensation awards during the three months ended October 31, 2021. The overall effective income tax rate for the three months ended ~~April 30,~~October 31, 2020 was ~~(7.3)%, and the effective income tax~~21.0%. This rate ~~for the nine months ended April 30, 2020~~ was ~~18.5%. These rates were both~~ favorably impacted by certain foreign tax rate differences, ~~the mix of earnings between foreign and domestic operations,~~ which include certain interest income not subject to corporate income ~~tax, and, with respect to the three months ended April 30, 2020, a reduction in forecasted, full-year income before income taxes.~~tax.

Within the next 12 months, the Company anticipates a decrease of approximately ~~$7,900~~$3,900 in unrecognized tax benefits, and ~~$2,000~~$670 in accrued interest related to unrecognized tax benefits recorded as of ~~April 30,~~October 31, 2021, from expected settlements or payments of uncertain tax positions and lapses of the applicable statutes of limitations. Actual results may differ from these estimates.

The Company files income tax returns in the U.S. federal jurisdiction and in many U.S. state and foreign jurisdictions. For U.S. federal income tax purposes, fiscal years ~~2017~~2018 through ~~2019~~2020 remain open and could be subject to examination. In major state ~~and major foreign~~ jurisdictions, fiscal years ~~2017~~2018 through ~~2019~~2020 generally remain open and could be subject to examination. ~~The Company is currently under exam by certain U.S. state tax authorities for the~~In major foreign jurisdictions, fiscal years ~~ended July 31,~~ 2015 through ~~2017.~~2020 remain open and subject to examination. The Company believes it has adequately reserved for its exposure to additional payments for uncertain tax positions in its liability for unrecognized tax benefits.

14. Contingent Liabilities, Commitments and Legal Matters

The Company’s total commercial commitments under standby repurchase obligations on global dealer inventory financing were ~~$2,149,930~~$2,322,610 and ~~$1,876,922~~$1,821,012 as of ~~April 30,~~October 31, 2021 and July 31, ~~2020,~~2021, respectively. The commitment term is generally up to 18 months.

The Company accounts for the guarantee under repurchase agreements of dealers’ financing by deferring a portion of the related product sale that represents the estimated fair value of the guarantee at inception. This deferred amount is included in the repurchase and guarantee reserve balances of ~~$7,302~~$6,980 and ~~$7,747~~$6,023 as of ~~April 30,~~October 31, 2021 and July 31, ~~2020,~~2021, respectively, which is included in Other current liabilities in the Condensed Consolidated Balance Sheets.

Losses incurred related to repurchase agreements that were settled during the three ~~and nine~~ months ended ~~April 30,~~October 31, 2021 and ~~April 30,~~October 31, 2020 were not material. Based on current market conditions, the Company believes that any future losses under these agreements will not have a material effect on the Company’s consolidated financial position, results of operations or cash flows.

The Company is also involved in certain litigation arising out of its operations in the normal course of its business, most of which is based upon state “lemon laws,” warranty claims and vehicle accidents (for which the Company carries insurance above a specified self-insured retention or deductible amount). The outcomes of legal proceedings and claims brought against the Company are subject to significant uncertainty. There is significant judgment required in assessing both the probability of an adverse outcome and the determination as to whether an exposure can be reasonably estimated. Based on current conditions, and in management’s opinion, the ultimate disposition of any current legal proceedings or claims against the Company will not have a material effect on the Company’s financial condition, operating results or cash flows. Litigation is, however, inherently uncertain and an adverse outcome from such litigation could have a material effect on the operating results of a particular reporting period.

The Company issued a product recall in the fourth quarter of fiscal 2021 related to certain purchased parts utilized in certain of our North American towable products. The Company believes that it is legally entitled to full reimbursement of costs related to this recall from the applicable vendor suppliers. However, based on a current assessment, the Company has recorded an additional expense of $22,000 in the first quarter of fiscal 2022 as a component of sales, general and administrative costs due to collection uncertainties.

1817

15. Leases

The Company has operating leases principally for land, buildings and equipment and has various finance leases for certain land and buildings expiring through 2035.

Certain of the ~~Company's~~Company’s leases include options to extend or terminate the leases, and these options have been included in the relevant lease term to the extent that they are reasonably certain to be exercised.

The Company does not include significant restrictions or covenants in our lease agreements, and residual value guarantees are not generally included within our operating leases.

The components of lease costs for the ~~three and nine-month~~three-month periods ended ~~April 30,~~October 31, 2021 and ~~April 30,~~October 31, 2020 were as follows:

Three Months Ended April 30, Nine Months Ended April 30,
2021 2020 2021 2020
Operating lease cost $ 5,075 $ 2,920 $ 12,833 $ 9,063
Finance lease cost
Amortization of right-of-use assets 164 136 475 408
Interest on lease liabilities 134 131 391 402
Total lease cost $ 5,373 $ 3,187 $ 13,699 $ 9,873


	Three Months Ended October 31,
		2021		2020
Operating lease cost		$	6,308	$	3,877
Finance lease cost:
Amortization of right-of-use assets		186		136
Interest on lease liabilities		125		126
Total lease cost		$	6,619	$	4,139

Other information related to leases was as follows:

Nine Months Ended April 30,
Supplemental Cash Flows Information 2021 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 12,767 $ 8,992
Right-of-use assets obtained in exchange for lease obligations:
Operating leases $ 9,842 $ 3,777
Finance leases $ 4,000 $ 0


	Three Months Ended October 31,
Supplemental Cash Flows Information	2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,309	$	3,855
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	8,401	$	2,348

Supplemental Balance Sheet Information April 30, 2021 July 31, 2020
Operating leases:
Operating lease right-of-use assets $ 38,545 $ 33,609
Operating lease liabilities:
Other current liabilities $ 7,672 $ 5,343
Other long-term liabilities 31,126 28,456
Total operating lease liabilities $ 38,798 $ 33,799
Finance leases:
Finance lease right-of-use assets $ 7,196 $ 3,672
Finance lease liabilities
Other current liabilities $ 1,014 $ 505
Other long-term liabilities 5,018 4,743
Total finance lease liabilities $ 6,032 $ 5,248


Supplemental Balance Sheet Information	October 31, 2021		July 31, 2021
Operating leases:
Operating lease right-of-use assets	$	47,335	$	42,601

Operating lease liabilities:
Other current liabilities	$	10,257	$	8,944
Other long-term liabilities	37,389		33,923
Total operating lease liabilities	$	47,646	$	42,867

Finance leases:
Finance lease right-of-use assets	$	6,823	$	7,010

Finance lease liabilities
Other current liabilities	$	1,106	$	1,081
Other long-term liabilities	4,407		4,694
Total finance lease liabilities	$	5,513	$	5,775

1918

April 30, 2021

July 31, 2020

October 31, 2021

July 31, 2021

Weighted-average remaining lease term:

Operating leases

11.8 years

13.6 years

Operating leases

10.4 years

11.1 years

Finance leases

5.3 years

6.8 years

Finance leases

4.9 years

5.1 years

Weighted-average discount rate:

Operating leases

3.2

3.4

Operating leases

3.4

3.2

Finance leases

8.9

9.7

Finance leases

9.0

8.9

Future minimum rental payments required under operating and finance leases as of ~~April 30,~~October 31, 2021 were as follows:

Operating Leases Financing Leases
For the remainder of the fiscal year ending July 31, 2021 $ 3,517 $ 387
For the fiscal year ending July 31, 2022 12,025 1,555
For the fiscal year ending July 31, 2023 9,187 1,578
For the fiscal year ending July 31, 2024 6,449 1,059
For the fiscal year ending July 31, 2025 4,426 1,083
For the fiscal year ending July 31, 2026 and thereafter 19,616 2,062
Total future lease payments 55,220 7,724
Less: amount representing interest (16,422) (1,692)
Total reported lease liability $ 38,798 $ 6,032


	Operating Leases		Finance Leases
For the remainder of the fiscal year ending July 31, 2022	$	12,309	$	1,169
For the fiscal year ending July 31, 2023	12,524		1,578
For the fiscal year ending July 31, 2024	9,464		1,059
For the fiscal year ending July 31, 2025	6,565		1,083
For the fiscal year ending July 31, 2026	4,693		1,107
For the fiscal year ending July 31, 2027 and thereafter	19,808		954
Total future lease payments	65,363		6,950
Less: amount representing interest	(17,717)		(1,437)
Total reported lease liability	$	47,646	$	5,513

16. Stockholders’ Equity

Total stock-based compensation expense recognized in the three-month periods ended ~~April 30,~~October 31, 2021 and ~~April 30,~~October 31, 2020 for stock-based awards totaled ~~$8,366~~$6,027 and ~~$4,350, respectively. Total stock-based compensation expense recognized in the nine-month periods ended April 30, 2021 and April 30, 2020 for stock-based awards totaled $21,424 and $14,425,~~$5,768, respectively.

2019

17. Revenue Recognition

The table below disaggregates revenue to the level that the Company believes best depicts how the nature, amount, timing and uncertainty of the Company’s revenue and cash flows are affected by economic factors. Other RV-related revenues shown below in the European segment include sales related to accessories and services, used vehicle sales at owned dealerships and RV rentals. All material revenue streams are considered ~~point in time.~~point-in-time. Other sales relate primarily to component part sales to RV original equipment manufacturers and aftermarket sales through dealers and retailers, as well as aluminum extruded components.


		Three Months Ended April 30,				Nine Months Ended April 30,					Three Months Ended October 31,
NET SALES:	NET SALES:	2021		2020		2021		2020		NET SALES:		2021		2020
Recreational vehicles	Recreational vehicles									Recreational vehicles
North American Towables	North American Towables									North American Towables
Travel Trailers	Travel Trailers	$	1,060,058	$	455,434	$	2,729,317	$	1,748,220	Travel Trailers		$	1,409,624	$	837,900
Fifth Wheels	Fifth Wheels	666,044		317,957		1,762,010		1,209,966		Fifth Wheels		831,210		554,144
Total North American Towables	Total North American Towables	1,726,102		773,391		4,491,327		2,958,186		Total North American Towables		2,240,834		1,392,044
North American Motorized	North American Motorized									North American Motorized
Class A	Class A	323,547		96,849		704,230		384,055		Class A		409,499		158,555
Class C	Class C	342,425		144,826		912,124		561,424		Class C		360,006		275,399
Class B	Class B	109,421		22,362		229,889		78,127		Class B		155,523		59,901
Total North American Motorized	Total North American Motorized	775,393		264,037		1,846,243		1,023,606		Total North American Motorized		925,028		493,855
Total North America	Total North America	2,501,495		1,037,428		6,337,570		3,981,792		Total North America		3,165,862		1,885,899
European	European									European
Motorcaravan	Motorcaravan	489,702		380,023		1,227,182		1,044,178		Motorcaravan		316,264		318,343
Campervan	Campervan	236,988		104,486		529,500		280,006		Campervan		177,783		143,400
Caravan	Caravan	84,074		65,790		210,923		196,731		Caravan		60,680		55,195
Other RV-related	Other RV-related	83,476		65,044		262,586		224,550		Other RV-related		78,270		85,550
Total European	Total European	894,240		615,343		2,230,191		1,745,465		Total European		632,997		602,488
Total recreational vehicles	Total recreational vehicles	3,395,735		1,652,771		8,567,761		5,727,257		Total recreational vehicles		3,798,859		2,488,387
Other, primarily aluminum extruded components		106,960		45,632		262,381		176,943
Other										Other		257,830		80,707
Intercompany eliminations	Intercompany eliminations	(43,431)		(16,668)		(105,730)		(60,547)		Intercompany eliminations		(98,465)		(31,734)
Total	Total	$	3,459,264	$	1,681,735	$	8,724,412	$	5,843,653	Total		$	3,958,224	$	2,537,360

2120

18. Accumulated Other Comprehensive Income (Loss)

The components of other comprehensive income (loss) ~~("OCI"~~(“OCI”) and the changes in the Company's accumulated other comprehensive income (loss) ~~("AOCI"~~(“AOCI”) by component were as follows:

Three Months Ended April 30,
2021 2020
Foreign Currency Unrealized Foreign Currency Unrealized
Translation Gain (Loss) on Translation Gain (Loss) on
Adjustment Derivative Other Total Adjustment Derivative Other Total
Balance at beginning of period $ 86,797 $ (13,140) $ (696) $ 72,961 $ (57,987) $ (13,418) $ (1,048) $ (72,453)
OCI before reclassifications (7,449) 193 0 (7,256) (25,245) (12,059) 0 (37,304)
Income taxes associated with OCI before reclassifications 0 (46) 0 (46) 0 2,792 0 2,792
Amounts reclassified from AOCI 0 3,703 0 3,703 0 1,979 0 1,979
Income taxes associated with amounts reclassified from AOCI 0 (921) 0 (921) 0 (475) 0 (475)
AOCI, net of tax 79,348 (10,211) (696) 68,441 (83,232) (21,181) (1,048) (105,461)
Less: AOCI attributable to noncontrolling interest (770) 0 0 (770) (1,237) 0 0 (1,237)
AOCI, net of tax, attributable to THOR Industries, Inc. $ 80,118 $ (10,211) $ (696) $ 69,211 $ (81,995) $ (21,181) $ (1,048) $ (104,224)


	Three Months Ended October 31, 2021
	Foreign Currency Translation Adjustment		Unrealized Gain (Loss) on Derivatives		Other		AOCI, net of tax, Attributable to THOR		Non-controlling Interests		Total AOCI
Balance at beginning of period, net of tax	$	54,152	$	(8,655)	$	(876)	$	44,621	$	(772)	$	43,849
OCI before reclassifications	(35,007)		585		—		(34,422)		(160)		(34,582)
Income taxes associated with OCI before reclassifications (1)	—		(132)		—		(132)		—		(132)
Amounts reclassified from AOCI	—		2,528		—		2,528		—		2,528
Income taxes associated with amounts reclassified from AOCI	—		(626)		—		(626)		—		(626)
OCI, net of tax for the fiscal year	(35,007)		2,355		—		(32,652)		(160)		(32,812)
AOCI, net of tax	$	19,145	$	(6,300)	$	(876)	$	11,969	$	(932)	$	11,037

	Three Months Ended October 31, 2020
	Foreign Currency Translation Adjustment		Unrealized Gain (Loss) on Derivatives		Other		AOCI, net of tax, Attributable to THOR		Non-controlling Interests		Total AOCI
Balance at beginning of period, net of tax	$	46,512	$	(18,823)	$	(696)	$	26,993	$	(855)	$	26,138
OCI before reclassifications	(19,106)		732		—		(18,374)		113		(18,261)
Income taxes associated with OCI before reclassifications (1)	—		(174)		—		(174)		—		(174)
Amounts reclassified from AOCI	—		3,639		—		3,639		—		3,639
Income taxes associated with amounts reclassified from AOCI	—		(865)		—		(865)		—		(865)
OCI, net of tax for the fiscal year	(19,106)		3,332		—		(15,774)		113		(15,661)
AOCI, net of tax	$	27,406	$	(15,491)	$	(696)	$	11,219	$	(742)	$	10,477

(1)

Nine Months Ended April 30,
2021 2020
Foreign Currency Unrealized Foreign Currency Unrealized
Translation Gain (Loss) on Translation Gain (Loss) on
Adjustment Derivative Other Total Adjustment Derivative Other Total
Balance at beginning of period $ 45,657 $ (18,823) $ (696) $ 26,138 $ (47,078) $ (9,472) $ (1,048) $ (57,598)
OCI before reclassifications 33,691 573 0 34,264 (36,154) (19,885) 0 (56,039)
Income taxes associated with OCI before reclassifications 0 (133) 0 (133) 0 4,724 0 4,724
Amounts reclassified from AOCI 0 10,752 0 10,752 0 4,561 0 4,561
Income taxes associated with amounts reclassified from AOCI 0 (2,580) 0 (2,580) 0 (1,109) 0 (1,109)
AOCI, net of tax 79,348 (10,211) (696) 68,441 (83,232) (21,181) (1,048) (105,461)
Less: AOCI attributable to noncontrolling interest (770) 0 0 (770) (1,237) 0 0 (1,237)
AOCI, net of tax, attributable to THOR Industries, Inc. $ 80,118 $ (10,211) $ (696) $ 69,211 $ (81,995) $ (21,181) $ (1,048) $ (104,224)

~~The Company does~~We do not recognize deferred taxes for a majority of the foreign currency translation gains and losses because ~~the Company does~~we do not anticipate reversal in the foreseeable future.

2321

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless otherwise indicated, all U.S. Dollar, Euro and British Pound Sterling amounts are presented in thousands except share and per share data.

Forward-Looking Statements

This report 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, or its variants, by various governmental entities or other actors, which may have negative effects on retail customer demand, our independent dealers, our supply chain, our labor force, 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;~~business;

•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~~dependence on a small group of ~~tariffs on material or other input costs;~~suppliers for certain components used in production;

•the level and magnitude of warranty and recall claims incurred;

•the ability of our suppliers to financially support any defects in their products;

•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;

•public perception of and the costs related to environmental, social and governance matters;

•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 maintain strong brands and develop innovative products that meet consumer demands;

•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;~~

2422

•asset impairment charges;

•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 related climate change regulations in the various jurisdictions in which our products are produced, used 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 Item 1A of our Annual Report on Form 10-K for the year ended July 31, ~~2020.~~2021.

We disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this report 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.

Executive Overview

We were founded in 1980 and have grown to become the largest manufacturer of recreational vehicles ~~("RVs"~~(“RVs”) in the world. We are also the largest manufacturer of RVs in North America, and one of the largest manufacturers of RVs in Europe. In North America, according to Statistical Surveys, Inc. (“Stat Surveys”), for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, THOR’s combined U.S. and Canadian market share was approximately ~~40.6%~~41.9% for travel trailers and fifth wheels combined and approximately ~~48.9%~~47.6% for motorhomes. In Europe, according to the European Caravan Federation and based on unit registrations for Europe's original equipment manufacturer ~~("OEM"~~(“OEM”) reporting countries, our European market share for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 was approximately ~~23.2%~~24.9% for motorcaravans and campervans combined and approximately ~~16.2%~~18.1% for caravans.

Our business model includes decentralized operating units, and our RV products are primarily sold to independent, non-franchise dealers who, in turn, retail those products. The Company also sells component parts to both RV and original equipment manufacturers, including aluminum extruded components, and sells aftermarket component parts through dealers and retailers. Our growth has been achieved both organically and through acquisition, and our strategy is designed to increase our profitability by driving innovation, servicing our customers, manufacturing quality products, improving the efficiencies of our facilities and making strategic growth acquisitions.

The COVID-19 pandemic, including its wide-reaching impact on nearly all facets of our operations and the RV industry, as well as related governmental actions ~~has~~and labor shortages throughout the supply chain and within THOR, have impacted and ~~continues~~continue to impact our business and our financial results and financial position. In particular, the pandemic has, directly or indirectly, contributed to chassis and certain other supply-side constraints, as described below. Additional impacts could be incurred in future periods, including negative impacts to our results of operations, liquidity and financial position, as a direct or indirect result of the pandemic. Should the rate of COVID-19 infections escalate, or the virus mutate into new, uncontrolled strains, those developments and the resulting impacts could exacerbate risks to our business, financial results and financial position. Refer also to the COVID-19 related risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2020.~~2021.

~~Recent Events~~

On March 11, 2021, the American Rescue Plan Act was signed into law. The Act includes several changes impacting businesses, including but not limited to insurance premium subsidies effective from April 2021 through September 2021, extension of employee retention tax credits through the end of 2021 and amendments to deductible compensation for tax years beginning in 2027. The Company is evaluating the impacts of the Act, which are currently not expected to be significant.

2523

Recent Events

On ~~December 18, 2020,~~October 14, 2021, the Company ~~closed~~issued an aggregate principal amount of $500,000 of 4.000% Senior Unsecured Notes due 2029 (“Senior Unsecured Notes”). The Senior Unsecured Notes will mature on ~~a Stock Purchase Agreement (“Tiffin Group SPA”)~~October 15, 2029 unless redeemed or repurchased earlier. Net proceeds from the Senior Unsecured Notes, along with cash-on-hand, were used to repay $500,000 of borrowings outstanding on the Company’s ABL and for certain transaction costs. Interest on the ~~acquisition~~Senior Unsecured Notes is payable in semi-annual installments on October 15 and April 15 of each year, beginning with the first payment on April 15, 2022. The Senior Unsecured Notes will rank equally in right of payment with all of the ~~issued~~Company's existing and ~~outstanding capital stock~~future senior indebtedness and senior to the Company’s future subordinated indebtedness, and effectively junior in right of ~~luxury motorized~~payment to the Company’s existing and future secured indebtedness to the extent of the assets securing such indebtedness.

On September 1, 2021, the Company acquired Wichita, Kansas-based AirX Intermediate, Inc. (“Airxcel”). Airxcel manufactures a comprehensive line of high-quality products which they sell primarily to RV original equipment manufacturers as well as consumers via aftermarket sales through dealers and retailers. Airxcel provides industry-leading products in recreational vehicle ~~manufacturer Tiffin Motorhomes, Inc., including fifth wheel towable recreational vehicle manufacturer Vanleigh RV,~~heating, cooling, ventilation, cooking, window coverings, sidewalls and roofing materials, among others. The purchase price of $750,000 in cash is subject to standard post-closing adjustments, and was funded through a combination of cash-on-hand and $625,000 in borrowings from the Company’s ABL. In conjunction with the Airxcel acquisition, the Company expanded its existing ABL facility from $750,000 to $1,000,000, favorably amended certain other associated operating and supply companies, which primarily supply component parts and services to Tiffin Motorhomes, Inc. and Vanleigh RV, (collectively, the “Tiffin Group”). Tiffin Group, LLC, a wholly-owned subsidiaryterms of the ~~Company, owns~~ABL agreement and extended the ~~Tiffin Group. Tiffin Motorhomes, Inc. operates out~~term of ~~various locations~~the ABL as discussed in ~~Alabama, while Vanleigh RV operates out of Mississippi.~~Note 12 to the Condensed Consolidated Financial Statements. The interest rate remains unchanged.

The ~~initial cash consideration for~~Company acquired Airxcel as part of its long-term, strategic growth plan and the acquisition ~~of the Tiffin Group was approximately $300,000,~~is expected to provide numerous benefits, including strengthening its supply chain, diversifying its revenue sources and ~~is subject to the final determination of the actual acquired net working capital, as defined~~expanding Airxcel’s supply chain business in ~~the Tiffin Group SPA, as of the close of business on December 28, 2020, which determination was finalized in the fourth quarter of fiscal 2021~~North American and ~~the true-up was not material. The Tiffin Group operates~~Europe. Airxcel will operate as an independent operation in the same manner as the Company’s other ~~recreational vehicle~~ subsidiaries. ~~The Company purchased the Tiffin Group to complement its existing towable and motorized RV product offerings and North American independent dealer base.~~

Industry Outlook — North America

The Company monitors industry conditions in the North American RV market using a number of resources including its own performance tracking and modeling. The Company also considers monthly wholesale shipment data as reported by the Recreation Vehicle Industry Association (“RVIA”), which is typically issued on a one-month lag and represents manufacturers’ North American RV production and delivery to dealers. In addition, we monitor monthly North American retail sales trends as reported by Stat Surveys, whose data is typically issued on a month-and-a-half lag. The Company believes that monthly RV retail sales data is important as consumer purchases impact future dealer orders and ultimately our ~~production.~~production and net sales.

North American RV independent dealer inventory of our North American RV products as of ~~April 30,~~October 31, 2021 ~~decreased 29.2%~~increased 36.9% to approximately ~~75,000~~82,400 units, compared to approximately ~~105,900~~60,200 units as of ~~April 30,~~October 31, 2020. The acquisition of Tiffin Group since the prior-year period accounted for approximately ~~600~~550 of the ~~75,000~~82,400 units as of ~~April 30,~~October 31, 2021.

As of October 31, 2021, North American dealer inventory levels continue to be well below optimal stocking levels, which has led to ongoing record backlogs. THOR’s North American RV backlog as of October 31, 2021 increased $8,109,294, or 122.6%, to $14,722,076 compared to $6,612,782 as of October 31, 2020, with Tiffin Group's backlog included in the October 31, 2021 totals accounting for $781,427, or 9.6%, of the $8,109,294 increase. Dealer inventory levels ~~have decreased materially based on~~remain low due to the continuing strong retail demand for RVs, given 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. As of April 30, 2021, North American dealer inventory levels were~~cruises, as well ~~below optimal stocking levels, which has led~~as an underlying desire by many to ~~increased dealer orders~~get back to nature and ~~backlog. THOR’s North American RV backlog as of April 30, 2021 increased $9,574,197, or 681.0%, to $10,980,015 compared to $1,405,818 as of April 30, 2020,~~relax with ~~Tiffin Group's backlog included in the April 30, 2021 totals accounting for $711,701, or 7.4%, of the $9,574,197 increase.~~family and friends.

North American Industry Wholesale Statistics

Key wholesale statistics for the North American RV industry, as reported by RVIA for the periods indicated, are as follows:


		U.S. and Canada Wholesale Unit Shipments					U.S. and Canada Wholesale Unit Shipments
		Calendar Quarter Ended March 31,		Increase	%		Nine Months Ended September 30,		Increase	%
		2021	2020	(Decrease)	Change		2021	2020	(Decrease)	Change
North American Towable Units	North American Towable Units	134,199	90,327	43,872	48.6	North American Towable Units	410,215	271,770	138,445	50.9
North American Motorized Units	North American Motorized Units	14,308	10,077	4,231	42.0	North American Motorized Units	42,422	28,330	14,092	49.7
Total	Total	148,507	100,404	48,103	47.9	Total	452,637	300,100	152,537	50.8

The changes in wholesale shipments noted above in the towable and motorized units were both impacted by the COVID-19 pandemic. Shipments were significantly limited for both ~~towables~~towable and motorized products during the period from March to June 2020, as most RV manufacturers and dealers were shut down for a number of weeks during that time period. Since then, demand for both towable and motorized products has been robust, resulting in strong levels of wholesale shipments in the current calendar 2021 year-to-date period.

In ~~June~~December 2021, RVIA issued a ~~second~~ revised forecast for calendar year 2021 wholesale unit shipments. ~~In the most-likely~~Under a most likely scenario, towable and motorized unit shipments are projected to increase to approximately ~~520,400~~545,400 units and ~~55,700~~56,800 units, respectively, for an annual total of ~~576,100~~approximately 602,200 units, ~~or 33.8% higher than~~up 39.9% from the 2020 calendar year ~~2020~~wholesale shipments. ~~According to RVIA, this~~The most likely forecast for calendar year 2021 ~~most-likely~~could range from a lower estimate of approximately 593,600 total units to an upper estimate of approximately 610,800 units.

As part of their December 2021 forecast, RVIA also revised their estimates for calendar year 2022 wholesale unit shipments. In the most likely scenario, towable and motorized unit shipments are projected to increase to an approximated annual total of 613,700 units, or 1.9% higher than the most likely scenario for calendar year 2021 wholesale shipments. This calendar year 2022 most likely forecast could range from a lower estimate of ~~565,800~~approximately 599,600 total units to an upper estimate of approximately ~~586,300~~627,600 units.

North American Industry Retail Statistics

We believe that retail demand is the key to growth in the North American RV industry, and that annual North American RV industry wholesale shipments in calendar ~~year~~years 2021 and ~~early calendar~~ 2022 may not follow typical seasonal patterns as dealers respond to ongoing high ~~current~~ consumer demand and then rebuild their inventory to optimal stocking levels.

Key retail statistics for the North American RV industry, as reported by Stat Surveys for the periods indicated, are as follows:


		U.S. and Canada Retail Unit Registrations					U.S. and Canada Retail Unit Registrations
		Calendar Quarter Ended March 31,		Increase	%		Nine Months Ended September 30,		Increase	%
		2021	2020	(Decrease)	Change		2021	2020	(Decrease)	Change
North American Towable Units	North American Towable Units	111,305	76,475	34,830	45.5	North American Towable Units	431,754	376,667	55,087	14.6
North American Motorized Units	North American Motorized Units	12,464	10,166	2,298	22.6	North American Motorized Units	42,760	41,187	1,573	3.8
Total	Total	123,769	86,641	37,128	42.9	Total	474,514	417,854	56,660	13.6

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 year 2020 results and may also be impacting the completeness of such information.

We believe that North American retail consumer demand has grown in recent periods due to an increasing interest in the RV lifestyle and the ability to connect with nature and has further accelerated since the onset of the COVID-19 pandemic. Many consumers recognize the perceived benefits offered by the RV lifestyle, which provides people with a personal space to maintain social distance in a safe manner, the ability to connect with loved ones and the potential to get away for short, frequent breaks or longer adventures.

Company North American Wholesale Statistics

The Company's North American wholesale RV shipments, for the ~~calendar quarters~~nine-month periods ended ~~March 31,~~September 30, 2021 and 2020 to correspond to the North American industry wholesale periods noted above, were as follows (2021 period includes Tiffin Group shipments):

U.S. and Canada Wholesale Unit Shipments
Calendar Quarter Ended March 31, Increase %
2021 2020 (Decrease) Change
North American Towable Units 58,858 38,778 20,080 51.8
North American Motorized Units 6,990 4,058 2,932 72.3
Total 65,848 42,836 23,012 53.7


	U.S. and Canada Wholesale Unit Shipments
	Nine Months Ended September 30,		Increase	%
	2021	2020	(Decrease)	Change
North American Towable Units	178,249	116,323	61,926	53.2
North American Motorized Units	21,229	11,426	9,803	85.8
Total	199,478	127,749	71,729	56.1

Company North American Retail Statistics

Retail statistics of the ~~Company's~~Company’s North American RV products, as reported by Stat Surveys, for the ~~calendar quarters~~nine-month periods ended ~~March 31,~~September 30, 2021 and 2020 to correspond to the North American industry retail periods noted above, were as follows (2021 period includes Tiffin Group registrations):


		U.S. and Canada Retail Unit Registrations					U.S. and Canada Retail Unit Registrations
		Calendar Quarter Ended March 31,		Increase	%		Nine Months Ended September 30,		Increase	%
		2021	2020	(Decrease)	Change		2021	2020	(Decrease)	Change
North American Towable Units	North American Towable Units	44,217	31,243	12,974	41.5	North American Towable Units	176,997	157,867	19,130	12.1
North American Motorized Units	North American Motorized Units	6,098	3,881	2,217	57.1	North American Motorized Units	20,349	15,757	4,592	29.1
Total	Total	50,315	35,124	15,191	43.2	Total	197,346	173,624	23,722	13.7

North American Outlook

The extent to which the COVID-19 pandemic may continue to impact our business in future periods remains uncertain and unpredictable. Nonetheless, our outlook for future growth in North American retail sales in both the short term and the long term remains optimistic as there are many factors driving the current demand that we believe will continue even after the pandemic ~~officially~~ ends. In the near-term, we believe consumers are likely to continue altering their future vacation and travel plans, opting for fewer vacations via air travel, cruise ships and hotels, and preferring vacations that RVs are uniquely positioned to provide, where they can continue practicing social distancing while also allowing them the ability to explore or unwind, often close to home. Minimal-contact vacation options like road trips and camping may prove ideal for people who want to limit pandemic-related risks involved with close personal interactions. We will, however, need to continue to manage through ~~temporary~~anticipated supply chain issues noted below, which may limit the level to which we can increase output in the near term.

~~Longer-term,~~

Longer term, a positive outlook for the North American RV segment is supported by surveys conducted by THOR, RVIA and others, which show that Americans love the freedom of the outdoors and the enrichment that comes with living an active lifestyle. RVs allow people to be in control of their travel experiences, going where they want, when they want and with the people they want. The RV units we design, produce and sell allow people to spend time outdoors pursuing their favorite activities, creating cherished moments and deeply connecting with family and friends. Based on the increasing value consumers place on these factors, we expect to see long-term growth in the North American RV industry. Longer term, we also believe retail sales will be dependent upon various economic conditions faced by consumers, such as the rate of unemployment, the level of consumer confidence, the disposable income of consumers, changes in interest rates, credit availability, the health of the housing market, changes in tax rates and fuel availability and prices. In addition, we believe that the availability of camping and RV parking facilities will be an important factor in the future growth of the industry and view both the significant recent investments and the future committed investments by campground owners, states and the federal government in camping facilities and accessibility to state and federal parks and forests to be positive long-term factors.

Economic and industry-wide factors that have historically affected, and we believe will continue to affect, our RV business, include the costs of commodities, the availability of critical supply components, the impact of actual or threatened tariffs on commodity costs and labor costs incurred in the production of our products. Material and labor costs are the primary factors determining our cost of products sold, and any future increases in raw material or labor costs ~~would~~will impact our profit margins negatively if we are unable to offset those cost increases through a combination of product decontenting, material sourcing strategies, efficiency improvements or raising the selling prices for our products by corresponding amounts. Historically, we have generally been able to offset net cost increases over time.

~~Recently, we have been~~We continue to be alerted by a number of our North American chassis suppliers that supply constraints of key components that they require for the manufacturing of chassis, particularly semiconductor chips, will limit their production of chassis, and hence, our production and sales of motorized RVs will also be ~~impacted, particularly in the near term.~~impacted. The North American ~~recreational vehicle~~RV industry has, from time to time in the past and ~~during~~continuing into the quarter ended ~~April 30,~~October 31, 2021, experienced shortages of chassis for various other reasons, including component shortages, production delays and intermittent work stoppages at the chassis manufacturers. If these shortages ~~of chassis were to recur or~~ continue for a prolonged period for any reason, it would have a negative impact on our sales and earnings.

The North American RV industry is also facing continuing cost increases, supply shortages orand delivery delays of other, non-chassis, raw material components. While our supply chain has been resilient enough to support us during our recent growth in sales and production, these shortages and constraints have negatively impacted our ability to further ramp up production rates and sales during the current fiscal year and has caused an increase in ~~unfinished units~~work in process inventory as of ~~April 30,~~October 31, 2021. We believe these shortages and delays ~~are temporary, however, in the near term they may~~will continue to result in production delays or adjusted production rates, which ~~may~~will limit our ability to ramp up production to meet existing demand and could have a negative impact on our ~~sales and earnings.~~results of operations. If shortages of chassis or other component parts were to become more significant or longer term in nature, or if other factors were to impact our ~~suppliers'~~suppliers’ ability to fully supply our needs for key components, our costs of such components and our production output could be adversely affected. Where possible, we continue to work closely with our suppliers on various supply chain strategies to minimize these constraints, and we continue to identify alternative suppliers. The geographic centrality of the North American RV industry in northern Indiana, where the majority of our facilities and many of our suppliers are located, could exacerbate supply chain and other COVID-19 related risks, should northern Indiana, or any of the other areas in which we, our suppliers or our customers operate, become disproportionately impacted by the pandemic or other factors.

Industry Outlook — Europe

The Company monitors retail trends in the European RV market as reported by the European Caravan Federation (“ECF”), whose industry data is reported to the public quarterly and typically issued on a one-to-two-month lag. Additionally, on a monthly basis, the Company receives OEM-specific reports from most of the individual member countries that make up the ECF. As these reports are coming directly from the ECF member countries, timing and content vary, but typically the reports are issued on a one-to-two-month lag as well. While most countries provide OEM-specific information, the United Kingdom, which made up ~~16.9%~~22.0% and ~~5.1%~~7.8% of the caravan and motorcaravan (including campervans) European market for the ~~three~~nine months ended ~~March 31,~~September 30, 2021, respectively, does not provide OEM-specific information. Industry wholesale shipment data for the European RV market is not available.

Within Europe, over 90% of our sales are made to dealers within 13 different European countries. The market conditions, as well as the operating status of our independent dealers within each country, vary based on the various local economic conditions, the current impact of COVID-19 and the local responses and restrictions in place to manage the pandemic. It is inherently difficult to generalize about the operating conditions within the entire European region. However, independent RV dealer inventory levels of our European products are generally below ~~prior-year~~historic levels in the various countries we serve. Within Germany, which accounts for approximately 60% of our European product sales, independent dealer inventory levels are currently below historical norms, with dealers submitting higher levels of orders than typical due to continued high end-consumer demand, as discussed further below.

THOR’s European RV backlog as of ~~April 30,~~October 31, 2021 increased ~~$2,540,511,~~$1,039,883, or ~~316.2%~~45.0%, to ~~$3,344,033~~$3,348,355 compared to ~~$803,522~~$2,308,472 as of ~~April 30, 2020. We believe this~~October 31, 2020, with the increase is attributable to a number of causes, including the perceived safety of RV travel during the COVID-19 pandemic, a strong desire to socially distance, ~~the~~a reduction in commercial air travel and cruises as compared to historic levels, an increase in various marketing campaigns to promote sales, and the ~~lower levels of~~low independent European RV dealer inventory levels noted ~~above, which has led to increased dealer orders and backlog.~~above.

European Industry Retail Statistics

Key retail statistics for the European RV industry, as reported by the ECF for the periods indicated, are as follows:

European Unit Registrations
Motorcaravan and Campervan (2)
Caravan
Calendar Quarter Ended March 31, % Calendar Quarter Ended March 31, %
2021 2020 Change 2021 2020 Change
OEM Reporting Countries (1)
38,092 27,722 37.4 12,532 12,237 2.4
Non-OEM Reporting Countries (1)
2,923 3,062 (4.5) 3,238 4,400 (26.4)
Total 41,015 30,784 33.2 15,770 16,637 (5.2)


	European Unit Registrations
	Motorcaravan and Campervan (2)			Caravan
	Nine Months Ended September 30,		%	Nine Months Ended September 30,		%
	2021	2020	Change	2021	2020	Change
OEM Reporting Countries (1)	136,627	119,220	14.6	50,525	49,956	1.1
Non-OEM Reporting Countries (1)	14,904	12,605	18.2	16,481	13,100	25.8
Total	151,531	131,825	14.9	67,006	63,056	6.3

(1)Industry retail registration statistics have been compiled from individual countries reporting of retail sales, and include the following countries: Germany, France, Sweden, Netherlands, Norway, Italy, Spain and others, collectively the ~~"OEM~~“OEM Reporting Countries."” The ~~"Non-OEM~~“Non-OEM Reporting ~~Countries"~~Countries” are primarily the United Kingdom and others. Note: the decrease in the ~~"Non-OEM~~“Non-OEM Reporting ~~Countries"~~Countries” is primarily related to the United Kingdom, as a result of both extended shutdowns due to the COVID-19 pandemic and BREXIT. Total European unit registrations are reported quarterly by ECF.

(2)The ECF reports motorcaravans and campervans together.

Note: Data from the ECF is subject to adjustment, is continuously updated and is often impacted by delays in reporting by various countries. (The ~~"Non-OEM~~“Non-OEM Reporting ~~Countries"~~Countries” either do not report OEM-specific data to the ECF or do not have it available for the entire time period covered.)

Company European Retail Statistics (1)

European Unit Registrations (1)
Calendar Quarter Ended March 31, Increase %
2021 2020 (Decrease) Change
Motorcaravan and Campervan 8,827 6,507 2,320 35.7
Caravan 2,026 2,397 (371) (15.5)
Total OEM-Reporting Countries 10,853 8,904 1,949 21.9


	European Unit Registrations (1)
	Nine Months Ended September 30,		Increase	%
	2021	2020	(Decrease)	Change
Motorcaravan and Campervan	33,999	31,295	2,704	8.6
Caravan	9,170	10,307	(1,137)	(11.0)
Total OEM-Reporting Countries	43,169	41,602	1,567	3.8

(1)Company retail registration statistics have been compiled from individual countries reporting of retail sales, and include the following countries: Germany, France, Sweden, Netherlands, Norway, Italy, Spain and others, collectively the ~~"OEM~~“OEM Reporting Countries."”

Note: Data from the ECF is subject to adjustment, is continuously updated and is often impacted by delays in reporting by various countries.

European Outlook

Our European operations offer a full lineup of leisure vehicles including caravans, urban campers, campervans and small-to-large motorcaravans. Our product offering is not limited to vehicles only but also includes accessories and services, including vehicle rentals. In addition, we address our European end customers through a sophisticated brand management approach based on consumer segmentation according to target group, core values and emotions. With the help of data-based and digital marketing, we intend to ~~expand~~continue expanding our customer reach, in particular, to new and younger consumer segments.

The extent to which the COVID-19 pandemic may impact our business in future periods remains uncertain and unpredictable. Our outlook for future growth in European RV retail sales depends upon various economic conditions in the respective countries in which we sell, and also depends on our ability to manage through ~~temporary~~ supply chain issues ~~in the near term~~ that ~~could~~will limit the level to which we can increase ~~output.~~output in the near term. End-customer demand for RVs depends strongly on consumer confidence. Factors such as the rate of unemployment, private consumption and investments, growth in disposable income of consumers, changes in interest rates, the health of the housing market, changes in tax rates and, most recently, travel safety considerations all influence retail sales. We believe our long-term outlook for future growth in 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.

Historically, we and our independent European dealers have marketed our European recreational vehicles through numerous RV fairs at the country and regional levels which occur throughout the calendar year. These fairs have historically been well-attended events that allow retail consumers the ability to see the newest products, features and designs and to talk with product experts in addition to being able to purchase or order an RV. The protection of the health of our employees, customers and dealer-partners is our top priority. As a result, we have cancelled our participation in most European trade fairs and major events through the end of calendar ~~2021.~~2021 and currently plan on limited participation in calendar 2022.

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 dealer-partners in Germany and throughout Europe, we believe our European brands have one of the strongest and most professionally structured dealer and service ~~networks.~~networks in Europe.

Economic or industry-wide factors affecting our European RV business include the costs of commodities and the labor used in the manufacture of our products. Material and labor costs are the primary factors determining our cost of products sold and any future increases in these costs ~~would~~will impact our profit margins negatively if we ~~were~~are unable to offset those cost increases through a combination of product decontenting, material sourcing strategies, efficiency improvements or raising the selling prices for our products by corresponding amounts.

~~Recently, we have been~~We continue to be alerted by a number of our European chassis suppliers that supply constraints of key components that they require for the manufacturing of chassis, including, but not limited to, semiconductor chips, will limit their production of RV chassis. ~~During~~Continuing in the quarter ended ~~April 30,~~October 31, 2021, we ~~also~~ experienced delays in the receipt of, and a reduction in the volume of, chassis from our European chassis suppliers, limiting our ability to further increase production. ~~In the short term, we~~We expect these challenges to persist and, in particular, anticipate continued delays in receipt of chassis in ~~Europe.~~Europe as well as a reduction in the number of chassis to be received in fiscal 2022. As a result, limitations in the availability of chassis will limit our ability to consistently maintain our planned production levels and will limit our ability to ramp up production of certain products despite dealer demand for those ~~products, and our production and sales of motorized RVs will also be negatively impacted, particularly in the near term.~~products.

In Europe, we continue to experience cost increases, supply shortages orand delivery delays of other, non-chassis, raw material components which negatively impacted our ability to further ramp up production and sales in the current fiscal year and has caused an increase in ~~unfinished units~~our work in process inventory as of ~~April 30,~~October 31, 2021. We believe these shortages and delays ~~are temporary, however, in the near term they may~~will continue to result in production delays or adjusted production rates in the near term, which ~~may~~will limit our ability to ramp up production to meet existing demand and could have a negative impact on our ~~sales and earnings.~~operating results.

Where possible, to minimize the impact of these supply chain constraints, we have identified a second-source supplier base for ~~most~~certain component parts. However, due to engineering requirements, it is generally not possible to quickly change the chassis our various units are built upon.

If shortages of chassis or other component parts were to become more significant or longer term in nature, or if other factors were to impact our ~~suppliers'~~suppliers’ ability to ~~fully~~ supply our needs for key components, our costs of such components and our production output could be adversely affected. In addition, if the impact of COVID-19 on our vendors increases or is prolonged, the limited availability of key components, including chassis, will have a further negative impact on our production output during fiscal ~~2021.~~2022. Uncertainties related to changing emission standards, such as the Euro 6d standard which became effective as of January 2020 for new models and became effective for certain vehicles starting January 2021 and will become effective for other vehicles starting January 2022, may also impact the availability of chassis used in our production of certain European motorized RVs and could also impact consumer buying patterns.

In addition to material supply constraints, labor shortages may also impact our European ~~operations, especially in light of the ongoing COVID-19 pandemic.~~operations. Currently, a number of the employees of our production facilities in Europe reside in one country while working in another, and therefore travel restrictions imposed by certain countries within Europe may negatively impact the availability of our labor force and therefore our production output.

3130

Three Months Ended ~~April 30,~~October 31, 2021 Compared to the Three Months Ended ~~April 30,~~October 31, 2020


NET SALES:	NET SALES:	Three Months Ended April 30, 2021		Three Months Ended April 30, 2020		Change Amount		% Change	NET SALES:	Three Months Ended October 31, 2021		Three Months Ended October 31, 2020		Change Amount		% Change
Recreational vehicles	Recreational vehicles								Recreational vehicles
North American Towables	North American Towables	$	1,726,102	$	773,391	$	952,711	123.2	North American Towables	$	2,240,834	$	1,392,044	$	848,790	61.0
North American Motorized	North American Motorized	775,393		264,037		511,356		193.7	North American Motorized	925,028		493,855		431,173		87.3
Total North America	Total North America	2,501,495		1,037,428		1,464,067		141.1	Total North America	3,165,862		1,885,899		1,279,963		67.9
European	European	894,240		615,343		278,897		45.3	European	632,997		602,488		30,509		5.1
Total recreational vehicles	Total recreational vehicles	3,395,735		1,652,771		1,742,964		105.5	Total recreational vehicles	3,798,859		2,488,387		1,310,472		52.7
Other	Other	106,960		45,632		61,328		134.4	Other	257,830		80,707		177,123		219.5
Intercompany eliminations	Intercompany eliminations	(43,431)		(16,668)		(26,763)		(160.6)	Intercompany eliminations	(98,465)		(31,734)		(66,731)		(210.3)
Total	Total	$	3,459,264	$	1,681,735	$	1,777,529	105.7	Total	$	3,958,224	$	2,537,360	$	1,420,864	56.0


# OF UNITS:
Recreational vehicles
North American Towables	68,437	50,341	18,096	35.9
North American Motorized	7,337	5,167	2,170	42.0
Total North America	75,774	55,508	20,266	36.5
European	12,327	12,226	101	0.8
Total	88,101	67,734	20,367	30.1


# OF UNITS:
GROSS PROFIT:						GROSS PROFIT:			% of Segment Net Sales			% of Segment Net Sales	Change Amount		% Change
Recreational vehicles	Recreational vehicles					Recreational vehicles
North American Towables	North American Towables	60,147	28,233	31,914	113.0	North American Towables	$	408,539	18.2	$	219,848	15.8	$	188,691	85.8
North American Motorized	North American Motorized	7,162	2,885	4,277	148.2	North American Motorized	139,721		15.1	68,102		13.8	71,619		105.2
Total North America	Total North America	67,309	31,118	36,191	116.3	Total North America	548,260		17.3	287,950		15.3	260,310		90.4
European	European	18,288	13,668	4,620	33.8	European	67,444		10.7	72,381		12.0	(4,937)		(6.8)
Total recreational vehicles						Total recreational vehicles	615,704		16.2	360,331		14.5	255,373		70.9
Other, net						Other, net	39,720		15.4	18,521		22.9	21,199		114.5
Total	Total	85,597	44,786	40,811	91.1	Total	$	655,424	16.6	$	378,852	14.9	$	276,572	73.0

GROSS PROFIT: % of
Segment
Net Sales % of
Segment
Net Sales Change
Amount %
Change
Recreational vehicles
North American Towables $ 264,476 15.3 $ 108,757 14.1 $ 155,719 143.2
North American Motorized 96,288 12.4 26,671 10.1 69,617 261.0
Total North America 360,764 14.4 135,428 13.1 225,336 166.4
European 120,159 13.4 62,559 10.2 57,600 92.1
Total recreational vehicles 480,923 14.2 197,987 12.0 282,936 142.9
Other, net 24,357 22.8 7,646 16.8 16,711 218.6
Total $ 505,280 14.6 $ 205,633 12.2 $ 299,647 145.7

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Recreational vehicles
North American Towables $ 89,015 5.2 $ 49,590 6.4 $ 39,425 79.5
North American Motorized 38,391 5.0 14,437 5.5 23,954 165.9
Total North America 127,406 5.1 64,027 6.2 63,379 99.0
European 65,943 7.4 49,597 8.1 16,346 33.0
Total recreational vehicles 193,349 5.7 113,624 6.9 79,725 70.2
Other 6,876 6.4 2,819 6.2 4,057 143.9
Corporate 31,609 — 11,704 — 19,905 170.1
Total $ 231,834 6.7 $ 128,147 7.6 $ 103,687 80.9


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Recreational vehicles
North American Towables	$	133,812	6.0	$	70,338	5.1	$	63,474	90.2
North American Motorized	48,081		5.2	25,152		5.1	22,929		91.2
Total North America	181,893		5.7	95,490		5.1	86,403		90.5
European	67,516		10.7	60,421		10.0	7,095		11.7
Total recreational vehicles	249,409		6.6	155,911		6.3	93,498		60.0
Other	15,127		5.9	5,436		6.7	9,691		178.3
Corporate	31,347		—	20,416		—	10,931		53.5
Total	$	295,883	7.5	$	181,763	7.2	$	114,120	62.8

3231


INCOME (LOSS) BEFORE INCOME TAXES:	INCOME (LOSS) BEFORE INCOME TAXES:	Three Months Ended April 30, 2021		% of Segment Net Sales	Three Months Ended April 30, 2020		% of Segment Net Sales	Change Amount		% Change	INCOME (LOSS) BEFORE INCOME TAXES:	Three Months Ended October 31, 2021		% of Segment Net Sales	Three Months Ended October 31, 2020		% of Segment Net Sales	Change Amount		% Change
Recreational vehicles	Recreational vehicles										Recreational vehicles
North American Towables	North American Towables	$	167,693	9.7	$	49,261	6.4	$	118,432	240.4	North American Towables	$	266,282	11.9	$	141,179	10.1	$	125,103	88.6
North American Motorized	North American Motorized	54,780		7.1	10,915		4.1	43,865		401.9	North American Motorized	88,898		9.6	41,567		8.4	47,331		113.9
Total North America	Total North America	222,473		8.9	60,176		5.8	162,297		269.7	Total North America	355,180		11.2	182,746		9.7	172,434		94.4
European	European	43,993		4.9	(242)		—	44,235		18,278.9	European	(17,976)		(2.8)	(5,506)		(0.9)	(12,470)		(226.5)
Total recreational vehicles	Total recreational vehicles	266,466		7.8	59,934		3.6	206,532		344.6	Total recreational vehicles	337,204		8.9	177,240		7.1	159,964		90.3
Other, net	Other, net	16,667		15.6	3,996		8.8	12,671		317.1	Other, net	23,529		9.1	11,490		14.2	12,039		104.8
Corporate	Corporate	(50,454)		—	(42,701)		—	(7,753)		(18.2)	Corporate	(47,891)		—	(42,411)		—	(5,480)		(12.9)
Total	Total	$	232,679	6.7	$	21,229	1.3	$	211,450	996.0	Total	$	312,842	7.9	$	146,319	5.8	$	166,523	113.8


ORDER BACKLOG:	ORDER BACKLOG:	As of April 30, 2021		As of April 30, 2020		Change Amount		% Change	ORDER BACKLOG:	As of October 31, 2021		As of October 31, 2020		Change Amount		% Change
Recreational vehicles	Recreational vehicles								Recreational vehicles
North American Towables	North American Towables	$	7,429,729	$	857,866	$	6,571,863	766.1	North American Towables	$	10,444,698	$	4,397,713	$	6,046,985	137.5
North American Motorized	North American Motorized	3,550,286		547,952		3,002,334		547.9	North American Motorized	4,277,378		2,215,069		2,062,309		93.1
Total North America	Total North America	10,980,015		1,405,818		9,574,197		681.0	Total North America	14,722,076		6,612,782		8,109,294		122.6
European	European	3,344,033		803,522		2,540,511		316.2	European	3,348,355		2,308,472		1,039,883		45.0
Total	Total	$	14,324,048	$	2,209,340	$	12,114,708	548.3	Total	$	18,070,431	$	8,921,254	$	9,149,177	102.6

CONSOLIDATED

Consolidated net sales for the three months ended ~~April 30,~~October 31, 2021 increased ~~$1,777,529,~~$1,420,864, or ~~105.7%~~56.0%, compared to the three months ended ~~April 30,~~October 31, 2020. The increase in consolidated net sales is primarily due to ~~both~~ the continuing increase in ~~current~~ consumer demand for RVs and ~~the negative impact the start of the COVID-19 pandemic had on net sales during the latter half of the prior-year quarter.~~recent acquisitions. The addition of the Tiffin Group, acquired on December 18, 2020, accounted for ~~$171,203~~$228,284 of the ~~$1,777,529~~$1,420,864 increase in net sales, or ~~10.2%~~9.0% of the ~~105.7%~~56.0% increase, while the addition of Airxcel, acquired on September 1, 2021, accounted for $88,778 of the $1,420,864 increase, or 3.5% of the 56.0% increase. Approximately ~~25.9%~~16.0% of the ~~Company's~~Company’s net sales for the quarter ended ~~April 30,~~October 31, 2021 were transacted in a currency other than the U.S. dollar. The ~~Company's~~Company’s most material exchange rate exposure is sales in Euros. OfRegarding the ~~$1,777,529,~~$1,420,864, or ~~105.7%~~56.0%, increase in consolidated net sales, ~~$76,683, or 4.6% of the 105.7% increase, reflects~~ the impact of the change in currency exchange rates between the two ~~periods.~~periods was not material. To determine this ~~information,~~impact, net sales transacted in currencies other than U.S. dollars have been translated to U.S. dollars using the average exchange rates that were in effect during the comparative period.

Consolidated gross profit for the three months ended ~~April 30,~~October 31, 2021 increased ~~$299,647,~~$276,572, or ~~145.7%~~73.0%, compared to the three months ended ~~April 30,~~October 31, 2020. Consolidated gross profit was ~~14.6%~~16.6% of consolidated net sales for the three months ended ~~April 30,~~October 31, 2021 and ~~12.2%~~14.9% for the three months ended ~~April 30,~~October 31, 2020. The increases in consolidated gross profit and the consolidated gross profit percentage were both primarily due to the impact of the increase in net sales in the current-year period compared to the prior-year period and gross margin cost percentage improvements noted below.

Selling, general and administrative expenses for the three months ended ~~April 30,~~October 31, 2021 increased ~~$103,687,~~$114,120, or ~~80.9%~~62.8%, compared to the three months ended ~~April 30,~~October 31, 2020, primarily due to the 56.0% increase in net sales.

Amortization of intangible assets expense for the three months ended ~~April 30,~~October 31, 2021 increased ~~$6,401~~$5,787 compared to the three months ended ~~April 30,~~October 31, 2020, primarily due to ~~higher dealer network amortization in the European segment as compared to the prior-year period and~~ additional amortization of ~~$2,832~~$2,489 and $2,184 from the ~~acquisition~~acquisitions of the Tiffin Group and Airxcel, respectively, as discussed in Note 2 to the Condensed Consolidated Financial Statements.

Income before income taxes for the three months ended ~~April 30,~~October 31, 2021 was ~~$232,679,~~$312,842, as compared to ~~$21,229~~$146,319 for the three months ended ~~April 30,~~October 31, 2020, an increase of ~~$211,450~~$166,523, or ~~996.0%~~113.8%, primarily driven by the increase in net sales and the increase in the consolidated gross profit percentage noted above.

3332

Additional information concerning the changes in net sales, gross profit, selling, general and administrative expenses and income before income taxes are addressed below and in the segment reporting that follows.

Corporate costs included in selling, general and administrative expenses increased ~~$19,905~~$10,931 to ~~$31,609~~$31,347 for the three months ended ~~April 30,~~October 31, 2021 compared to ~~$11,704~~$20,416 for the three months ended ~~April 30,~~October 31, 2020, an increase of ~~170.1%~~53.5%. This increase ~~is primarily related to~~includes increased compensation costs, including an increase in deferred compensation expense of ~~$11,265,~~$2,135, which was effectively offset by the increase in other income related to the deferred compensation plan assets as noted below. In addition, incentive compensation increased ~~$4,070~~$1,556 due to the increase in income before income taxes compared to the prior-year period, and stock-based and other compensation increased $1,054. Charitable contributions also increased ~~$4,016.~~$1,319. Legal and professional fees also increased $1,076, primarily due to acquisition-related costs, and costs recorded at Corporate related to our standby repurchase obligations increased by $2,000 due to dealer inventory levels increasing in the current-year period as compared to dealer inventory decreasing in the prior-year period.

Corporate interest and other income and expense was ~~$18,845~~$16,544 of net expense for the three months ended ~~April 30,~~October 31, 2021 compared to ~~$30,997~~$21,995 of net expense for the three months ended ~~April 30,~~October 31, 2020. This decrease in net expense of ~~$12,152~~$5,451 was primarily due to a decrease in interest expense and fees of $3,278 on our debt due primarily to reduced interest rates compared to the prior-year period. This decrease also included the change in the fair value of the Company’s deferred compensation plan assets due to market fluctuations and investment income, which resulted in ~~income, net of $6,016 in the current year period as compared to expense, net of $5,316 in the prior-year period,~~ a ~~total net~~$2,087 increase in ~~other~~ income, of $11,332 compared to the prior-year period. The prior year total also included losses of $2,137 related to the Company's former equity investment as discussed in Note 2 to the Condensed Consolidated Financial Statements. Interest expense and fees on the debt facilities increased slightly by $121, in spite of the reduction in the outstanding debt balances and reduced interest rates compared to the prior-year period, due to the additional accelerated amortization of debt costs of $4,688 included in interest expensenet in the current-year period as ~~a result of the Company's term loan debt repricing as discussed in Note 12~~compared to the ~~Condensed Consolidated Financial Statements~~prior-year period.

The overall effective income tax rate for the three months ended ~~April 30,~~October 31, 2021 was ~~21.5%~~21.7% compared with ~~(7.3)%~~21.0% for the three months ended ~~April 30,~~October 31, 2020. The primary reason for the increase ~~results from~~relates to the ~~global spread~~jurisdictional mix of pre-tax income between foreign and domestic between the COVID-19 pandemic in the three months ended April 30, 2020 which negatively impacted the Company’s earnings while certain interest income not subject to corporate income tax had a significantly greater impact on the effective tax rate in relation to reduced pre-tax income.comparable periods.

3433

Segment Reporting

NORTH AMERICAN TOWABLE RECREATIONAL VEHICLES

Analysis of the change in net sales for the three months ended ~~April 30,~~October 31, 2021 compared to the three months ended ~~April 30,~~October 31, 2020:


		Three Months Ended April 30, 2021		% of Segment Net Sales	Three Months Ended April 30, 2020		% of Segment Net Sales	Change Amount		% Change		Three Months Ended October 31, 2021		% of Segment Net Sales	Three Months Ended October 31, 2020		% of Segment Net Sales	Change Amount		% Change
NET SALES:	NET SALES:										NET SALES:
North American Towables	North American Towables										North American Towables
Travel Trailers	Travel Trailers	$	1,060,058	61.4	$	455,434	58.9	$	604,624	132.8	Travel Trailers	$	1,409,624	62.9	$	837,900	60.2	$	571,724	68.2
Fifth Wheels	Fifth Wheels	666,044		38.6	317,957		41.1	348,087		109.5	Fifth Wheels	831,210		37.1	554,144		39.8	277,066		50.0
Total North American Towables	Total North American Towables	$	1,726,102	100.0	$	773,391	100.0	$	952,711	123.2	Total North American Towables	$	2,240,834	100.0	$	1,392,044	100.0	$	848,790	61.0

		Three Months Ended April 30, 2021		% of Segment Shipments	Three Months Ended April 30, 2020		% of Segment Shipments	Change Amount		% Change		Three Months Ended October 31, 2021		% of Segment Shipments	Three Months Ended October 31, 2020		% of Segment Shipments	Change Amount		% Change
# OF UNITS:	# OF UNITS:										# OF UNITS:
North American Towables	North American Towables										North American Towables
Travel Trailers	Travel Trailers	47,143		78.4	21,518		76.2	25,625		119.1	Travel Trailers	54,899		80.2	39,077		77.6	15,822		40.5
Fifth Wheels	Fifth Wheels	13,004		21.6	6,715		23.8	6,289		93.7	Fifth Wheels	13,538		19.8	11,264		22.4	2,274		20.2
Total North American Towables	Total North American Towables	60,147		100.0	28,233		100.0	31,914		113.0	Total North American Towables	68,437		100.0	50,341		100.0	18,096		35.9

IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES:	IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES:									% Change	IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES:									% Change
North American Towables	North American Towables										North American Towables
Travel Trailers	Travel Trailers									13.7	Travel Trailers									27.7
Fifth Wheels	Fifth Wheels									15.8	Fifth Wheels									29.8
Total North American Towables	Total North American Towables									10.2	Total North American Towables									25.1

The increase in total North American towables net sales of ~~123.2%~~61.0% compared to the prior-year quarter resulted from a ~~113.0%~~35.9% increase in unit shipments and a ~~10.2%~~25.1% increase in the overall net price per unit due to the impact of changes in product mix and price. The increase in North American towables net sales is due to ~~both~~ the continuing increase in ~~current~~ consumer ~~demand and the negative impact the start of the COVID-19 pandemic had on net sales during the latter half of the prior-year quarter.~~demand. The addition of the Tiffin Group, acquired on December 18, 2020, accounted for ~~$19,548~~$27,129 of the ~~$952,711~~$848,790 increase and for ~~2.1%~~1.9% of the ~~123.2%~~61.0% increase. According to statistics published by RVIA, for the three months ended ~~April 30,~~October 31, 2021, combined North American travel trailer and fifth wheel wholesale unit shipments increased ~~108.5%~~30.3% compared to the same period last year. According to the most recently published statistics from Stat Surveys, for the three months ended ~~March 31,~~September 30, 2021 and 2020, our North American market share for travel trailers and fifth wheels combined was ~~40.6%~~42.0% and ~~41.8%~~42.4%, respectively. Comparisons of Company shipments to industry shipments on a quarterly basis would not necessarily be indicative of the results expected for a full fiscal year.

The increase in the overall net price per unit within the travel trailer product line of ~~13.7%~~27.7% and the overall net price per unit within the fifth wheel product lines of ~~15.8%~~29.8% was primarily due to the combination of reduced sales discounts, product mix changes and selective net selling price increases, primarily to offset known and anticipated material cost increases, compared to the prior-year ~~quarter, with the fifth wheel product line increases also partially attributable to the addition of the Tiffin Group product lines, which generally carry a higher average net selling price.~~quarter.

3534

North American towables cost of products sold increased ~~$796,992~~$660,099 to ~~$1,461,626,~~$1,832,295, or ~~84.7%~~81.8% of North American towables net sales, for the three months ended ~~April 30,~~October 31, 2021 compared to ~~$664,634,~~$1,172,196, or ~~85.9%~~84.2% of North American towables net sales, for the three months ended ~~April 30,~~October 31, 2020. The changes in material, labor, freight-out and warranty costs comprised ~~$762,820~~$627,913 of the ~~$796,992~~$660,099 increase in cost of products sold. Material, labor, freight-out and warranty costs as a combined percentage of North American towables net sales ~~increased~~decreased to ~~78.9%~~76.8% for the three months ended ~~April 30,~~October 31, 2021 compared to ~~77.5%~~78.4% for the three months ended ~~April 30,~~October 31, 2020, primarily as a result of ~~an increase~~a decrease in the labor cost percentage, mainly due to ~~the current competitive RV labor market conditions in Northern Indiana~~increased volumes combined with a more stable and efficient workforce compared to the prior-year period. ~~In addition,~~The freight-out cost percentage also decreased due to a higher percentage of units being picked up by the dealers in the current-year period as opposed to being delivered. These reductions were partially offset by an increase in the material cost percentage ~~increased slightly~~ compared to the prior-year period, as the continued ~~benefits~~benefit from reduced sales discounts since the prior-year period, which effectively increases net selling prices and correspondingly decreases the material cost percentage, was more than offset by increasing material costs since the prior-year period. Total manufacturing overhead increased ~~$34,172~~$32,186 with the increase in sales, but decreased as a percentage of North American towables net sales from ~~8.4%~~5.8% to ~~5.8%~~5.0% as the significantly increased net sales levels resulted in lower overhead costs per unit sold.

North American towables gross profit increased ~~$155,719~~$188,691 to ~~$264,476,~~$408,539, or ~~15.3%~~18.2% of North American towables net sales, for the three months ended ~~April 30,~~October 31, 2021 compared to ~~$108,757,~~$219,848, or ~~14.1%~~15.8% of North American towables net sales, for the three months ended ~~April 30,~~October 31, 2020. The increase in gross profit was driven by the increase in net sales and the increase in the gross profit percentage is due to the decrease in the cost of products sold percentage noted above.

North American towables selling, general and administrative expenses were ~~$89,015,~~$133,812, or ~~5.2%~~6.0% of North American towables net sales, for the three months ended ~~April 30,~~October 31, 2021 compared to ~~$49,590,~~$70,338, or ~~6.4%~~5.1% of North American towables net sales, for the three months ended ~~April 30,~~October 31, 2020. This ~~$39,425~~$63,474 increase is primarily due to the impact of the increase in North American towables net sales and income before income taxes, which caused related commissions, incentive and other compensation to increase by ~~$39,554.~~$36,750. Product-related costs also increased by $22,052, primarily due to collection uncertainty on amounts due from applicable vendor suppliers for costs related to a product recall related to certain purchased parts utilized in certain of our North American towable products, as discussed in Note 14 to the Condensed Consolidated Financial Statements. Sales-related travel, advertising and promotional costs also increased by ~~$1,395, while legal, professional and related settlement costs decreased $2,105.~~$2,184. The ~~decrease~~increase in the overall selling, general and administrative expense as a percentage of North American towable net sales is primarily due to the ~~increase in net sales.~~increased product-related costs noted above.

North American towables income before income taxes was ~~$167,693,~~$266,282, or ~~9.7%~~11.9% of North American towables net sales, for the three months ended ~~April 30,~~October 31, 2021 compared to ~~$49,261~~$141,179 or ~~6.4%~~10.1% of North American towables net sales, for the three months ended ~~April 30,~~October 31, 2020. The primary reason for the increase in North American towables income before income taxes was the increase in North American towables net sales, and the primary ~~reasons~~reason for the increase in percentage ~~were~~was the decreases in the cost of products sold ~~and~~percentage noted above, partially offset by the increase in the selling, general and administrative expense ~~percentages~~percentage noted above.

3635

NORTH AMERICAN MOTORIZED RECREATIONAL VEHICLES

Analysis of the change in net sales for the three months ended ~~April 30,~~October 31, 2021 compared to the three months ended ~~April 30,~~October 31, 2020:


		Three Months Ended April 30, 2021		% of Segment Net Sales	Three Months Ended April 30, 2020		% of Segment Net Sales	Change Amount		% Change		Three Months Ended October 31, 2021		% of Segment Net Sales	Three Months Ended October 31, 2020		% of Segment Net Sales	Change Amount		% Change
NET SALES:	NET SALES:										NET SALES:
North American Motorized	North American Motorized										North American Motorized
Class A	Class A	$	323,547	41.7	$	96,849	36.7	$	226,698	234.1	Class A	$	409,499	44.3	$	158,555	32.1	$	250,944	158.3
Class C	Class C	342,425		44.2	144,826		54.9	197,599		136.4	Class C	360,006		38.9	275,399		55.8	84,607		30.7
Class B	Class B	109,421		14.1	22,362		8.4	87,059		389.3	Class B	155,523		16.8	59,901		12.1	95,622		159.6
Total North American Motorized	Total North American Motorized	$	775,393	100.0	$	264,037	100.0	$	511,356	193.7	Total North American Motorized	$	925,028	100.0	$	493,855	100.0	$	431,173	87.3

		Three Months Ended April 30, 2021		% of Segment Shipments	Three Months Ended April 30, 2020		% of Segment Shipments	Change Amount		% Change		Three Months Ended October 31, 2021		% of Segment Shipments	Three Months Ended October 31, 2020		% of Segment Shipments	Change Amount		% Change
# OF UNITS:	# OF UNITS:										# OF UNITS:
North American Motorized	North American Motorized										North American Motorized
Class A	Class A	2,059		28.7	795		27.6	1,264		159.0	Class A	2,164		29.5	1,168		22.6	996		85.3
Class C	Class C	3,983		55.6	1,910		66.2	2,073		108.5	Class C	3,645		49.7	3,464		67.0	181		5.2
Class B	Class B	1,120		15.7	180		6.2	940		522.2	Class B	1,528		20.8	535		10.4	993		185.6
Total North American Motorized	Total North American Motorized	7,162		100.0	2,885		100.0	4,277		148.2	Total North American Motorized	7,337		100.0	5,167		100.0	2,170		42.0

IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES:	IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES:									% Change	IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES:									% Change
North American Motorized	North American Motorized										North American Motorized
Class A	Class A									75.1	Class A									73.0
Class C	Class C									27.9	Class C									25.5
Class B	Class B									(132.9)	Class B									(26.0)
Total North American Motorized	Total North American Motorized									45.5	Total North American Motorized									45.3

The increase in total North American motorized net sales of ~~193.7%~~87.3% compared to the prior-year quarter resulted from a ~~148.2%~~42.0% increase in unit shipments and a ~~45.5%~~45.3% increase in the overall net price per unit due to the impact of changes in product mix and price. The increase in North American motorized net sales is due to both the continuing increase in ~~current~~ consumer demand and the ~~negative impact the start of the COVID-19 pandemic had on net sales during the latter half of the prior-year quarter. The~~ addition of the Tiffin Group, acquired on December 18, 2020, which accounted for ~~$151,655~~$201,154 of the ~~$511,356~~$431,173 increase, or ~~29.7%~~40.7% of the ~~193.7%~~87.3% increase. According to statistics published by RVIA, for the three months ended ~~April 30,~~October 31, 2021, combined North American motorhome wholesale unit shipments increased ~~106.0%~~19.6% compared to the same period last year. According to the most recently published statistics from Stat Surveys, for the three months ended ~~March 31,~~September 30, 2021 and 2020, our North American market share for motorhomes was ~~48.9%~~47.7% and ~~38.2%~~37.9%, respectively, including ~~6.7%~~5.0% attributable to the Tiffin Group for the three months ended ~~March~~October 31, 2021. Comparisons of Company shipments to industry shipments on a quarterly basis would not necessarily be indicative of the results expected for a full fiscal year.

The increase in the overall net price per unit within the Class A product line of ~~75.1%~~73.0% was predominately due to the impact of the addition of the higher-priced Tiffin Group product ~~lines.~~lines along with selective net selling price increases since the prior-year period to offset known and anticipated material and other input cost increases. The Tiffin Group Class A product lines are primarily higher-priced diesel units as opposed to the more moderately-priced gas ~~units.~~units, which represented the majority of the Class A units sold in the prior-year period. The increase in the overall net price per unit within the Class C product line of ~~27.9%~~25.5% was primarily due to ~~the impact of the addition of the higher-priced Tiffin Group Class C product lines,~~ product mix ~~changes within previously existing product lines~~change and selective net selling price ~~increases.~~increases since the prior-year period to offset rising material and other input costs. The decrease in the overall net price per unit within the Class B product line of ~~132.9%~~26.0% is primarily due to product mix changes as a result of a ~~much~~ higher concentration of sales of lower-priced Class B products in the current-year quarter, including increased sales of previously existing lower-priced models, and the introduction of several new lower-priced models as compared to the prior-year quarter.

3736

North American motorized cost of products sold increased ~~$441,739~~$359,554 to ~~$679,105,~~$785,307, or ~~87.6%~~84.9% of North American motorized net sales, for the three months ended ~~April 30,~~October 31, 2021 compared to ~~$237,366,~~$425,753, or ~~89.9%~~86.2% of North American motorized net sales, for the three months ended ~~April 30,~~October 31, 2020. The changes in material, labor, freight-out and warranty costs comprised ~~$418,588~~$332,847 of the ~~$441,739~~$359,554 increase primarily due to the increased net sales volume. Material, labor, freight-out and warranty costs as a combined percentage of North American motorized net sales decreased to ~~82.3%~~79.7% for the three months ended ~~April 30,~~October 31, 2021 compared to ~~83.2%~~81.9% for the three months ended ~~April 30,~~October 31, 2020, with the decrease primarily due to a decrease in the material cost percentage, partially offset by ~~an increase~~modest increases in the labor and warranty cost ~~percentage.~~percentages. The improvement in the material cost percentage is primarily due to ~~both~~ a reduction in sales discounts since the prior-year period, which effectively increases net selling prices and correspondingly decreases the material cost percentage, selective net selling price increases to cover known and anticipated material cost increases, and product mix changes, primarily due to the addition of the ~~recently acquired~~ Tiffin Group ~~products. These reductions to the material cost percentage were partially offset by the impact of increased material costs~~products since ~~the prior-year period. The labor cost percentage increase is primarily due to the current competitive RV labor market conditions in northern Indiana compared to~~ the prior-year period. Total manufacturing overhead increased ~~$23,151~~$26,707, primarily due to the net sales increase ~~but decreased~~and increased employee benefit and health insurance costs, and increased as a percentage of North American motorized net sales from ~~6.7%~~4.3% to ~~5.3% as~~5.2%, primarily due to the increased ~~net sales resulted in lower overhead~~employee benefit and health insurance costs ~~per unit sold.~~percentage.

North American motorized gross profit increased ~~$69,617~~$71,619 to ~~$96,288,~~$139,721, or ~~12.4%~~15.1% of North American motorized net sales, for the three months ended ~~April 30,~~October 31, 2021 compared to ~~$26,671,~~$68,102, or ~~10.1%~~13.8% of North American motorized net sales, for the three months ended ~~April 30,~~October 31, 2020. The increase in gross profit was driven by the increase in net sales, and the increase in the gross profit percentage is due to the decrease in the cost of products sold percentage noted above.

North American motorized selling, general and administrative expenses were ~~$38,391,~~$48,081, or ~~5.0%~~5.2% of North American motorized net sales, for the three months ended ~~April 30,~~October 31, 2021 compared to ~~$14,437,~~$25,152, or ~~5.5%~~5.1% of North American motorized net sales, for the three months ended ~~April 30,~~October 31, 2020. The primary reason for the ~~$23,954~~$22,929 increase was the increase in North American motorized net sales and income before income taxes, which caused related commissions, incentive and other compensation to increase by ~~$19,533.~~$17,753. Sales-related travel, advertising and promotional costs also increased by ~~$1,266. The decrease in overall selling, general and administrative expense as a percentage of North American motorized net sales was primarily due to the increased net sales volume.~~$1,632.

North American motorized income before income taxes was ~~$54,780,~~$88,898, or ~~7.1%~~9.6% of North American motorized net sales, for the three months ended ~~April 30,~~October 31, 2021 compared to ~~$10,915,~~$41,567, or ~~4.1%~~8.4% of motorized net sales, for the three months ended ~~April 30,~~October 31, 2020. The primary reason for the increase in North American motorized income before income taxes was the increase in North American motorized net ~~sales. The~~sales, and the primary reason for the increase in percentage ~~were~~was the ~~decreases~~decrease in the cost of products sold ~~and selling, general and administrative expense percentages~~percentage noted above.

3837

EUROPEAN RECREATIONAL VEHICLES

Analysis of the change in net sales for the three months ended ~~April 30,~~October 31, 2021 compared to the three months ended ~~April 30,~~October 31, 2020:


		Three Months Ended April 30, 2021		% of Segment Net Sales	Three Months Ended April 30, 2020		% of Segment Net Sales	Change Amount		% Change		Three Months Ended October 31, 2021		% of Segment Net Sales	Three Months Ended October 31, 2020		% of Segment Net Sales	Change Amount		% Change
NET SALES:	NET SALES:										NET SALES:
European	European										European
Motorcaravan	Motorcaravan	$	489,702	54.8	$	380,023	61.8	$	109,679	28.9	Motorcaravan	$	316,264	50.0	$	318,343	52.8	$	(2,079)	(0.7)
Campervan	Campervan	236,988		26.5	104,486		17.0	132,502		126.8	Campervan	177,783		28.1	143,400		23.8	34,383		24.0
Caravan	Caravan	84,074		9.4	65,790		10.7	18,284		27.8	Caravan	60,680		9.6	55,195		9.2	5,485		9.9
Other	Other	83,476		9.3	65,044		10.5	18,432		28.3	Other	78,270		12.3	85,550		14.2	(7,280)		(8.5)
Total European	Total European	$	894,240	100.0	$	615,343	100.0	$	278,897	45.3	Total European	$	632,997	100.0	$	602,488	100.0	$	30,509	5.1

		Three Months Ended April 30, 2021		% of Segment Shipments	Three Months Ended April 30, 2020		% of Segment Shipments	Change Amount		% Change		Three Months Ended October 31, 2021		% of Segment Shipments	Three Months Ended October 31, 2020		% of Segment Shipments	Change Amount		% Change
# OF UNITS:	# OF UNITS:										# OF UNITS:
European	European										European
Motorcaravan	Motorcaravan	8,177		44.7	6,905		50.5	1,272		18.4	Motorcaravan	5,080		41.2	5,383		44.0	(303)		(5.6)
Campervan	Campervan	6,306		34.5	3,320		24.3	2,986		89.9	Campervan	4,404		35.7	4,277		35.0	127		3.0
Caravan	Caravan	3,805		20.8	3,443		25.2	362		10.5	Caravan	2,843		23.1	2,566		21.0	277		10.8
Total European	Total European	18,288		100.0	13,668		100.0	4,620		33.8	Total European	12,327		100.0	12,226		100.0	101		0.8


IMPACT OF CHANGES IN FOREIGN CURRENCY, PRODUCT MIX AND PRICE ON NET SALES:	IMPACT OF CHANGES IN FOREIGN CURRENCY, PRODUCT MIX AND PRICE ON NET SALES:				IMPACT OF CHANGES IN FOREIGN CURRENCY, PRODUCT MIX AND PRICE ON NET SALES:

		Foreign Currency %	Mix and Price %	% Change		Foreign Currency %	Mix and Price %	% Change

European	European				European
Motorcaravan	Motorcaravan	12.5	(2.0)	10.5	Motorcaravan	(0.8)	5.7	4.9
Campervan	Campervan	12.5	24.4	36.9	Campervan	(0.8)	21.8	21.0
Caravan	Caravan	12.5	4.8	17.3	Caravan	(0.8)	(0.1)	(0.9)
Total European	Total European	12.5	(1.0)	11.5	Total European	(0.8)	5.1	4.3

The increase in total European recreational vehicle net sales of ~~45.3%~~5.1% compared to the prior-year quarter resulted from an ~~33.8%~~0.8% increase in unit shipments and a ~~11.5%~~4.3% increase in the overall net price per unit due to the total impact of changes in foreign currency, product mix and price. The increase in ~~European recreational vehicle~~ net sales is due to both the continuing increase in current consumer demand and the negative impact the start of the COVID-19 pandemic had on net sales during the latter half of the prior-year quarter. This increase reflects ~~the current heightened~~ongoing European market demand for ~~the Campervan product line, and demand for the Motorcaravan~~RV products as moderated by the negative impact of current chassis supply ~~constraints on the Motorcaravan product line.~~constraints. The sales increase of ~~$278,897 includes an increase~~$30,509, or 5.1%, is partially offset by a decrease of ~~$76,683,~~$4,688, or ~~12.5%~~(0.8)% of the ~~45.3%~~5.1% increase, due to the ~~increase~~decrease in foreign exchange rates since the prior-year period.

The overall net price per unit increase of ~~11.5%~~4.3% includes the impact of foreign currency exchange rate changes, which accounts for ~~12.5%~~(0.8)% of the ~~11.5%~~4.3% increase on a constant-currency basis.

The ~~decrease~~increase in the overall net price per unit ~~due to product mix and price~~ within the Motorcaravan product line of ~~2.0%~~5.7% was due to the impact of product mix changes ~~reflecting the trend toward the lower-priced models within this product category compared to the prior-year quarter.~~and selective net selling price increases. The increase in the overall net price per unit ~~due to product mix and price~~ within the Campervan product line of ~~24.4%~~21.8% was primarily due to the net impact of product mix changes, including more sales of units with higher chassis content compared to the prior-year quarter, in addition to selective net selling price increase. The increase in the overall net price per unit due to product mix and price within the Caravan product line of 4.8% was primarily due to product mix changes and selective net selling price increases compared to the prior-year quarter.increases.

European recreational vehicle cost of products sold increased ~~$221,297~~$35,446 to ~~$774,081,~~$565,553, or ~~86.6%~~89.3% of European recreational vehicle net sales, for the three months ended ~~April 30,~~October 31, 2021 compared to ~~$552,784,~~$530,107, or ~~89.8%~~88.0% of European recreational vehicle net sales, for the three months ended ~~April 30,~~October 31, 2020. The changes in material, labor, freight-out and warranty costs comprised ~~$199,798~~$27,412 of the ~~$221,297~~$35,446 increase primarily due to the increased net sales volume. Material, labor, freight-out and warranty costs as a combined percentage of European recreational vehicle net sales ~~decreased~~increased to ~~77.9%~~78.3% for the three months ended ~~April 30,~~October 31, 2021 compared to ~~80.7%~~77.8% for the three months ended ~~April 30,~~October 31, 2020, with the ~~decrease~~increase primarily due to a reduction in the material cost percentage, driven by net selective selling price increases, product mix changes and net material cost reductions due to higher volume levels compared to the prior-year period. This decrease was partially offset by an increase in the labor ~~percentage due to additional costs incurred from increasing employment levels to accommodate current production levels.~~percentage. Total manufacturing overhead increased ~~$21,499~~$8,034 with the increase in net sales, ~~but decreased~~and increased as a percentage of motorized net sales from ~~9.1%~~10.2% to ~~8.7% as the~~11.0% primarily due to increased ~~net sales levels resulted in lower overhead costs per unit sold.~~indirect labor and manufacturing employee benefit costs.

European recreational vehicle gross profit ~~increased $57,600~~decreased $4,937 to ~~$120,159,~~$67,444, or ~~13.4%~~10.7% of European recreational vehicle net sales, for the three months ended ~~April 30,~~October 31, 2021 compared to ~~$62,559,~~$72,381, or ~~10.2%~~12.0% of European recreational vehicle net sales, for the three months ended ~~April 30,~~October 31, 2020. The ~~increase~~decrease in gross profit ~~was driven by the increase in net sales~~ and the ~~increase~~decrease in the gross profit percentage is due to the ~~decrease~~increase in the cost of products sold percentage noted above.

European recreational vehicle selling, general and administrative expenses were ~~$65,943,~~$67,516, or ~~7.4%~~10.7% of European recreational vehicle net sales, for the three months ended ~~April 30,~~October 31, 2021 compared to ~~$49,597,~~$60,421, or ~~8.1%~~10.0% of European recreational vehicle net sales, for the three months ended ~~April 30,~~October 31, 2020. The ~~$16,346~~$7,095 increase includes the impact of the increase in European recreational vehicle net sales, ~~and income before income taxes,~~ which caused commissions ~~incentive~~ and other compensation and benefits to increase by ~~$9,695.~~$1,875. Depreciation expense also increased by ~~$3,631,~~$986, while ~~license and tax-related~~miscellaneous administrative costs ~~decreased $2,926,~~increased $1,785, primarily due to a favorable legal reserve settlement in the ~~favorable settlement of a previously accrued non-income German tax structure fee.~~prior-year period. The ~~decrease~~increase in the overall selling, general and administrative expense as a percentage of European recreational vehicle net sales is primarily due to the ~~increase in net sales.~~increased costs noted above.

European recreational vehicle ~~net income~~loss before income taxes was ~~$43,993,~~$17,976, or approximately ~~4.9%~~2.8% of European recreational vehicle net sales, for the three months ended ~~April 30,~~October 31, 2021 compared to ~~$242,~~a net loss of $5,506, or ~~0.0%~~0.9% of European recreational vehicle net sales, for the three months ended ~~April 30,~~October 31, 2020. The primary ~~reason~~reasons for the ~~increase~~increases in ~~income~~the loss before income taxes ~~was~~and the ~~increase in European recreational vehicle net sales. The increase in~~ percentage ~~was primarily due to~~loss were the ~~decreases~~increases in the cost of products sold and selling, general and administrative expense ~~percentages~~ noted above, ~~and~~as well as an increase of ~~0.6% in other income~~$2,162, or 0.2% as a percentage of ~~European recreational vehicle~~ net sales, in ~~the current-year period primarily from a non-recurring favorable settlement.~~

~~Nine Months Ended April 30, 2021 Compared to the Nine Months Ended April 30, 2020~~

NET SALES: Nine Months Ended
April 30, 2021 Nine Months Ended
April 30, 2020 Change
Amount %
Change
Recreational vehicles
North American Towables $ 4,491,327 $ 2,958,186 $ 1,533,141 51.8
North American Motorized 1,846,243 1,023,606 822,637 80.4
Total North America 6,337,570 3,981,792 2,355,778 59.2
European 2,230,191 1,745,465 484,726 27.8
Total recreational vehicles 8,567,761 5,727,257 2,840,504 49.6
Other 262,381 176,943 85,438 48.3
Intercompany eliminations (105,730) (60,547) (45,183) (74.6)
Total $ 8,724,412 $ 5,843,653 $ 2,880,759 49.3

# OF UNITS:
Recreational vehicles
North American Towables 158,891 106,664 52,227 49.0
North American Motorized 17,916 11,178 6,738 60.3
Total North America 176,807 117,842 58,965 50.0
European 45,095 39,251 5,844 14.9
Total 221,902 157,093 64,809 41.3

GROSS PROFIT: % of
Segment
Net Sales % of
Segment
Net Sales Change
Amount %
Change
Recreational vehicles
North American Towables $ 711,980 15.9 $ 423,472 14.3 $ 288,508 68.1
North American Motorized 239,508 13.0 105,647 10.3 133,861 126.7
Total North America 951,488 15.0 529,119 13.3 422,369 79.8
European 287,177 12.9 206,632 11.8 80,545 39.0
Total recreational vehicles 1,238,665 14.5 735,751 12.8 502,914 68.4
Other, net 60,344 23.0 35,099 19.8 25,245 71.9
Total $ 1,299,009 14.9 $ 770,850 13.2 $ 528,159 68.5

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Recreational vehicles
North American Towables $ 232,549 5.2 $ 178,738 6.0 $ 53,811 30.1
North American Motorized 93,184 5.0 54,040 5.3 39,144 72.4
Total North America 325,733 5.1 232,778 5.8 92,955 39.9
European 192,673 8.6 186,226 10.7 6,447 3.5
Total recreational vehicles 518,406 6.1 419,004 7.3 99,402 23.7
Other 18,561 7.1 7,596 4.3 10,965 144.4
Corporate 82,819 — 52,368 — 30,451 58.1
Total $ 619,786 7.1 $ 478,968 8.2 $ 140,818 29.4

INCOME (LOSS) BEFORE INCOME TAXES: Nine Months Ended
April 30, 2021 % of
Segment
Net Sales Nine Months Ended
April 30, 2020 % of
Segment
Net Sales Change
Amount %
Change
Recreational vehicles
North American Towables $ 456,752 10.2 $ 207,009 7.0 $ 249,743 120.6
North American Motorized 139,768 7.6 47,606 4.7 92,162 193.6
Total North America 596,520 9.4 254,615 6.4 341,905 134.3
European 48,703 2.2 (18,576) (1.1) 67,279 362.2
Total recreational vehicles 645,223 7.5 236,039 4.1 409,184 173.4
Other, net 37,801 14.4 24,356 13.8 13,445 55.2
Corporate (140,067) — (135,669) — (4,398) 3.2
Total $ 542,957 6.2 $ 124,726 2.1 $ 418,231 335.3

~~CONSOLIDATED~~

Consolidated net sales for the nine months ended April 30, 2021 increased $2,880,759, or 49.3%, compared to the nine months ended April 30, 2020. The addition of the Tiffin Group, acquired on December 18, 2020, accounted for $253,636 of the $2,880,759 increase in net sales or 4.3% of the 49.3% increase. Approximately 25.6% of the Company's net sales for the nine months ended April 30, 2021 were transacted in a currency other than the U.S. dollar. The Company's most material exchange rate exposure is sales in Euros. Of the $2,880,759, or 49.3%, increase in consolidated net sales, $172,569, or 3.0% of the 49.3% increase, reflects the impact of the change in currency exchange rates between the two periods. To determine this information, net sales transacted in currencies other than U.S. dollars have been translated to U.S. dollars using the average exchange rates that were in effect during the comparative period.

Consolidated gross profit for the nine months ended April 30, 2021 increased $528,159, or 68.5%, compared to the nine months ended April 30, 2020. Consolidated gross profit was 14.9% of consolidated net sales for the nine months ended April 30, 2021 and 13.2% for the nine months ended April 30, 2020. The increases in consolidated gross profit and the consolidated gross profit percentage were both primarily due to the impact of the increase in net sales in the current-year period compared to the prior-year period.

~~Selling, general and administrative expenses for the nine months ended April 30, 2021 increased $140,818, or 29.4%, compared to the nine months ended April 30, 2020.~~

~~Amortization of intangible assets expense for the nine months ended April 30, 2021 increased $14,465 compared to the nine months ended April 30, 2020, primarily due to higher dealer network~~ amortization in the European segment as compared to the prior-year period and additional amortization of $4,248 due to the acquisition of the Tiffin Group as discussed in Note 2 to the Condensed Consolidated Financial Statements.

The impairment charges for the nine months ended April 30, 2020 of $10,057 related to the North American Towables reportable segment as discussed in Note 8 to the Condensed Consolidated Financial Statements.

Income before income taxes for the nine months ended April 30, 2021 was $542,957, as compared to $124,726 for the nine months ended April 30, 2020, an increase of $418,231, or 335.3%, primarily driven by the increase in net sales.

Additional information concerning the changes in net sales, gross profit, selling, general and administrative expenses, impairment charges, acquisition-related costs and income before income taxes are addressed below and in the segment reporting that follows.

Corporate costs included in selling, general and administrative expenses increased $30,451 to $82,819 for the nine months ended April 30, 2021 compared to $52,368 for the nine months ended April 30, 2020, an increase of 58.1%. This increase is primarily related to increased compensation costs, including an increase in deferred compensation expense of $14,975, which was effectively offset by the increase in other income related to the deferred compensation plan assets as noted below. Incentive compensation increased $9,013 due to the increase in income before income taxes compared to the prior-year period, and stock-based compensation also increased $6,999. Costs related to workers' compensation and product liability reserves recorded at Corporate increased by a total of $3,806, primarily due to favorable adjustments in the prior-year period. These increases were partially offset by a decrease in donations of $1,890, primarily due to a significant contribution to the National Forest Foundation in the prior-year period, and a decrease in marketing costs of $2,421.

Corporate interest and other income and expense was $57,248 of net expense for the nine months ended April 30, 2021 compared to $83,301 of net expense for the nine months ended April 30, 2020. This decrease in net expense of $26,053 included a decrease in interest expense and fees on the debt facilities of $6,388 due primarily to the reduction in the outstanding debt balances and reduced interest rates compared to the prior-year period. In addition, the change in the fair value of the Company’s deferred compensation plan assets due to market fluctuations and investment income resulted in a net increase in other income of $14,888 compared to the prior-year period. The prior-year total also included losses of $6,884 related to the Company's former equity investment as discussed in Note 2 to the Condensed Consolidated Financial Statements.

The overall effective income tax rate for the nine months ended April 30, 2021 was 20.9% compared with 18.5% for the nine months ended April 30, 2020. The primary reason for the increase relates to the jurisdictional mix of pre-tax income between the comparable periods.

~~Segment Reporting~~

~~NORTH AMERICAN TOWABLE RECREATIONAL VEHICLES~~

~~Analysis of the change in net sales for the nine months ended April 30, 2021 compared to the nine months ended April 30, 2020:~~

Nine Months Ended
April 30, 2021 % of
Segment
Net Sales Nine Months Ended
April 30, 2020 % of
Segment
Net Sales Change Amount %
Change
NET SALES:
North American Towables
Travel Trailers $ 2,729,317 60.8 $ 1,748,220 59.1 $ 981,097 56.1
Fifth Wheels 1,762,010 39.2 1,209,966 40.9 552,044 45.6
Total North American Towables $ 4,491,327 100.0 $ 2,958,186 100.0 $ 1,533,141 51.8
Nine Months Ended
April 30, 2021 % of
Segment
Shipments Nine Months Ended
April 30, 2020 % of
Segment
Shipments Change Amount %
Change
# OF UNITS:
North American Towables
Travel Trailers 123,566 77.8 81,164 76.1 42,402 52.2
Fifth Wheels 35,325 22.2 25,500 23.9 9,825 38.5
Total North American Towables 158,891 100.0 106,664 100.0 52,227 49.0
IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES: %
Change
North American Towables
Travel Trailers 3.9
Fifth Wheels 7.1
Total North American Towables 2.8

The increase in total North American towables net sales of 51.8% compared to the prior-year period resulted from a 49.0% increase in unit shipments and a 2.8% increase in the overall net price per unit due to the impact of changes in product mix and price. According to statistics published by RVIA, for the nine months ended April 30, 2021, combined North American travel trailer and fifth wheel wholesale unit shipments increased 55.7% compared to the same period last year. According to statistics published by Stat Surveys, for the nine-month periods ended March 31, 2021 and 2020, our North American market share for travel trailers and fifth wheels combined was 41.4% and 43.7%, respectively. Comparisons of Company shipments to industry shipments on a quarterly basis would not necessarily be indicative of the results expected for a full fiscal year.

The increase in the overall net price per unit within the travel trailer product line of 3.9% and the increase in the overall net price per unit within the fifth wheel product lines of 7.1% were primarily due to the impacts of selective net price increases and product mix changes compared to the prior-year period.

North American towables cost of products sold increased $1,244,633 to $3,779,347, or 84.1% of North American towables net sales, for the nine months ended April 30, 2021 compared to $2,534,714, or 85.7% of North American towables net sales, for the nine months ended April 30, 2020. The changes in material, labor, freight-out and warranty costs comprised $1,187,719 of the $1,244,633 increase in cost of products sold. Material, labor, freight-out and warranty costs as a combined percentage of North American towables net sales decreased to 78.1% for the nine months ended April 30, 2021 compared to 78.5% for the nine months ended April 30, 2020, primarily as a result of improvements in the material and warranty cost percentages, partially offset by an increase in the labor cost percentage. The improvement in the material cost percentage is primarily due to a reduction in sales discounts since the prior-year period, which effectively increases net selling prices and correspondingly decreases the material cost percentage, partially offset by recently increasing material costs. The warranty cost percentage is lower due to favorable experience trends, while the labor cost percentage increase is due to the current competitive RV labor market conditions in northern Indiana compared to the prior-year period. Total manufacturing overhead increased $56,914 with the increase in sales, but decreased as a percentage of North American towables net sales from 7.2% to 6.0%, as the increased net sales levels resulted in lower overhead cost per units sold.

North American towables gross profit increased $288,508 to $711,980, or 15.9% of North American towables net sales, for the nine months ended April 30, 2021 compared to $423,472, or 14.3% of North American towables net sales, for the nine months ended April 30, 2020. The increase in the gross profit was driven by the increase in net sales, and the increase in the gross profit percentage is due to the decrease in the cost of products sold percentage noted above.

North American towables selling, general and administrative expenses were $232,549, or 5.2% of North American towables net sales, for the nine months ended April 30, 2021 compared to $178,738, or 6.0% of North American towables net sales, for the nine months ended April 30, 2020. The primary reason for the $53,811 increase was the impact of the increase in North American towables net sales and income before income taxes, which caused related commissions, incentive and other compensation to increase by $68,817. This increase was partially offset by the decrease in sales-related travel, advertising and promotional costs of $7,915, primarily due to the cancellation of the major North American RV shows, along with travel restrictions, in the current-year period due to the ongoing COVID-19 pandemic. Legal, professional and related settlement costs also decreased $6,560. The decrease in the overall selling, general and administrative expense as a percentage of North American towable net sales is primarily due to the reductions in sales-related travel, advertising and promotion costs and legal, professional and related settlement costs in tandem with the increase in net sales.

North American towables income before income taxes was $456,752, or 10.2% of North American towables net sales, for the nine months ended April 30, 2021 compared to $207,009 or 7.0% of North American towables net sales, for the nine months ended April 30, 2020. The primary reason for the increase in North American towables income before income taxes was the increase in North American towables net sales, and the primary reasons for the increase in percentage were the decreases in the cost of products sold and selling, general and administrative expense percentages noted above, and a 0.7% increase due to the combination of a lower amortization expense percentage this year and the impairment charges in the prior-year period as discussed in Note 8 to the Condensed Consolidated Financial Statements.

~~NORTH AMERICAN MOTORIZED RECREATIONAL VEHICLES~~

~~Analysis of the change in net sales for the nine months ended April 30, 2021 compared to the nine months ended April 30, 2020:~~

Nine Months Ended
April 30, 2021 % of
Segment
Net Sales Nine Months Ended
April 30, 2020 % of
Segment
Net Sales Change
Amount %
Change
NET SALES:
North American Motorized
Class A $ 704,230 38.1 $ 384,055 37.5 $ 320,175 83.4
Class C 912,124 49.4 561,424 54.8 350,700 62.5
Class B 229,889 12.5 78,127 7.7 151,762 194.3
Total North American Motorized $ 1,846,243 100.0 $ 1,023,606 100.0 $ 822,637 80.4
Nine Months Ended
April 30, 2021 % of
Segment
Shipments Nine Months Ended
April 30, 2020 % of
Segment
Shipments Change
Amount %
Change
# OF UNITS:
North American Motorized
Class A 4,727 26.4 3,111 27.8 1,616 51.9
Class C 10,928 61.0 7,434 66.5 3,494 47.0
Class B 2,261 12.6 633 5.7 1,628 257.2
Total North American Motorized 17,916 100.0 11,178 100.0 6,738 60.3
IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES: %
Change
North American Motorized
Class A 31.5
Class C 15.5
Class B (62.9)
Total North American Motorized 20.1

The increase in total North American motorized net sales of 80.4% compared to the prior-year period resulted from a 60.3% increase in unit shipments and a 20.1% increase in the overall net price per unit due to the impact of changes in product mix and price. The addition of the Tiffin Group, acquired on December 18, 2020, accounted for $226,275 of the $822,637 increase or 27.5% of the 80.4% increase. According to statistics published by RVIA, for the nine months ended April 30, 2021, combined North American motorhome wholesale unit shipments increased 36.0% compared to the same period last year. According to statistics published by Stat Surveys, for the nine-month periods ended March 31, 2021 and 2020, our North American market share for motorhomes was 41.7% and 37.7%, respectively, including 1.9% attributable to the Tiffin Group for the nine-month period ended March 31, 2021. Comparisons of Company shipments to industry shipments on a quarterly basis would not necessarily be indicative of the results expected for a full fiscal year.

The increase in the overall net price per unit within the Class A product line of 31.5% and the Class C product line of 15.5% were both primarily due to the net impact of the addition of the higher-priced Tiffin Group product lines and selective net price increases. The Tiffin Group Class A product lines are primarily in the higher-priced diesel units as opposed to the more moderately-priced gas units. The decrease in the overall net price per unit within the Class B product line of 62.9% is primarily due to product mix changes as a result of a much higher concentration of sales of lower-priced Class B products in the current-year period, including increased sales of previously existing lower-priced models and the introduction of several new lower-priced models, as compared to the prior-year period.

North American motorized cost of products sold increased $688,776 to $1,606,735, or 87.0% of motorized net sales, for the nine months ended April 30, 2021 compared to $917,959, or 89.7% of motorized net sales, for the nine months ended April 30, 2020. The changes in material, labor, freight-out and warranty costs comprised $652,417 of the $688,776 increase due to the increased sales volume. Material, labor, freight-out and warranty costs as a combined percentage of motorized net sales decreased to 82.0% for the nine months ended April 30, 2021 compared to 84.2% for the nine months ended April 30, 2020, with the decrease in percentage primarily due to decreases in both the material and warranty cost percentages, partially offset by an increase in the labor cost percentage. The improvement in the material cost percentage is primarily due to a reduction in sales discounts since the prior-year period, which effectively increases net selling prices and correspondingly decreases the material cost percentage and product mix changes, partially offset by recently increasing material costs. The warranty cost percentage is lower due to favorable experience trends, while the labor cost percentage increase is due to the current competitive RV labor market conditions in northern Indiana compared to the prior-year period. Total manufacturing overhead increased $36,359 due to the net sales increase, but decreased as a percentage of North American motorized net sales from 5.5% to 5.0%, as the increased net sales resulted in lower overhead costs per unit sold.

North American motorized gross profit increased $133,861 to $239,508, or 13.0% of motorized net sales, for the nine months ended April 30, 2021 compared to $105,647, or 10.3% of motorized net sales, for the nine months ended April 30, 2020. The increase in gross profit was due primarily to the increase in net sales, and the increase in the gross profit percentage was due to the decrease in the cost of products sold percentage noted above.

North American motorized selling, general and administrative expenses were $93,184, or 5.0% of motorized net sales, for the nine months ended April 30, 2021 compared to $54,040, or 5.3% of motorized net sales, for the nine months ended April 30, 2020. The primary reason for the $39,144 increase was the increase in North American motorized net sales and income before income taxes, which caused related commissions, incentive and other compensation to increase by $35,264. The decrease in the overall selling, general and administrative expense as a percentage of North American motorized net sales was primarily due to the increased net sales volumes.

North American motorized income before income taxes was $139,768, or 7.6% of motorized net sales, for the nine months ended April 30, 2021 compared to $47,606, or 4.7% of motorized net sales, for the nine months ended April 30, 2020. The primary reason for the increase in North American motorized income before income taxes was the increase in North American motorized net sales. The primary reason for the increase in percentage was the decrease in the cost of products sold and selling, general and administrative expense percentages noted above.

~~EUROPEAN RECREATIONAL VEHICLES~~

~~Analysis of the change in net sales for the nine months ended April 30, 2021 compared to the nine months ended April 30, 2020:~~

Nine Months Ended
April 30, 2021 % of
Segment
Net Sales Nine Months Ended
April 30, 2020 % of
Segment
Net Sales Change Amount %
Change
NET SALES:
European
Motorcaravan $ 1,227,182 55.0 $ 1,044,178 59.8 $ 183,004 17.5
Campervan 529,500 23.7 280,006 16.0 249,494 89.1
Caravan 210,923 9.5 196,731 11.3 14,192 7.2
Other 262,586 11.8 224,550 12.9 38,036 16.9
Total European $ 2,230,191 100.0 $ 1,745,465 100.0 $ 484,726 27.8
Nine Months Ended
April 30, 2021 % of
Segment
Shipments Nine Months Ended
April 30, 2020 % of
Segment
Shipments Change Amount %
Change
# OF UNITS:
European
Motorcaravan 20,586 45.7 19,787 50.4 799 4.0
Campervan 14,704 32.6 9,255 23.6 5,449 58.9
Caravan 9,805 21.7 10,209 26.0 (404) (4.0)
Total European 45,095 100.0 39,251 100.0 5,844 14.9

IMPACT OF CHANGES IN FOREIGN CURRENCY, PRODUCT MIX AND PRICE ON NET SALES:
Foreign Currency % Mix and Price % %
Change
European
Motorcaravan 9.9 3.6 13.5
Campervan 9.9 20.3 30.2
Caravan 9.9 1.3 11.2
Total European 9.9 3.0 12.9

The increase in total European recreational vehicle net sales of 27.8% compared to the prior-year period resulted from an 14.9% increase in unit shipments and a 12.9% increase in the overall net price per unit due to the total impact of changes in foreign currency, product mix and price. This increase includes the current heightened European market demand for the Campervan product line, and demand for Motorcaravan products, as moderated by the impact of current chassis supply constraints on the Motorcaravan product line. The sales increase of $484,726 includes an increase of $172,569, or 9.9% of the 27.8% increase, due to the increase in foreign exchange rates since the prior-year period.

~~The overall net price per unit increase of 12.9% includes the impact of foreign currency exchange rate changes, which accounts for 9.9% of the 12.9% increase on a constant-currency basis.~~

The increase in the overall net price per unit due to product mix and price within the Motorcaravan product line of 3.6% was primarily due to product mix changes and selective net selling price increases since the prior-year period. The increase in the overall net price per unit due to product mix and price within the Campervan product line of 20.3% was primarily due to the net impact of product mix changes, including more sales of units with higher chassis content compared to the prior-year period. The increase in the overall net price per unit due to product mix and price within the Caravan product line of 1.3% was primarily due to the impact of product mix changes.

European recreational vehicle cost of products sold increased $404,181 to $1,943,014, or 87.1% of European recreational vehicle net sales, for the nine months ended April 30, 2021 compared to $1,538,833, or 88.2% of European recreational vehicle net sales, for the nine months ended April 30, 2020. The changes in material, labor, freight-out and warranty costs comprised $368,394 of the $404,181 increase primarily due to the increased net sales volume. Material, labor, freight-out and warranty costs as a combined percentage of European recreational vehicle net sales decreased to 77.8% for the nine months ended April 30, 2021 compared to 78.3% for the nine months ended April 30, 2020, with the decrease primarily due to a decrease in the material cost percentage due primarily to better material pricing due to the significant increase in volume. Total manufacturing overhead increased $35,787 with the volume increase but decreased as a percentage of motorized net sales from 9.9% to 9.3% as the increased net sales levels resulted in lower overhead costs per unit sold.

European recreational vehicle gross profit increased $80,545 to $287,177, or 12.9% of European recreational vehicle net sales, for the nine months ended April 30, 2021 compared to $206,632, or 11.8% of European recreational vehicle net sales, for the nine months ended April 30, 2020. The increase in gross profit is due to the increase in net sales, while the increase in gross profit as a percentage of European recreational vehicle net sales is due to the decrease in the cost of products sold percentage noted above.

European recreational vehicle selling, general and administrative expenses were $192,673, or 8.6% of European recreational vehicle net sales, for the nine months ended April 30, 2021 compared to $186,226, or 10.7% of European recreational vehicle net sales, for the nine months ended April 30, 2020. The primary reason for the $6,447 increase was the impact of the increase in European recreational vehicle net sales and income before income taxes, which caused commissions, incentive and other compensation and benefits to increase by $16,542. Professional fees also increased $7,375 and depreciation expense increased by $5,683. These increases were mostly offset by the decrease in sales-related travel, advertising and promotional costs of $21,551, primarily due to not participating in European trade shows, along with travel restrictions, in the current-year period due to the ongoing COVID-19 pandemic. The decrease in the overall selling, general and administrative expense as a percentage of European recreational vehicle net sales is primarily due to the increase in net sales.

European recreational vehicle net income before income taxes was $48,703, or 2.2% of European recreational vehicle net sales, for the nine months ended April 30, 2021 compared to a net loss of $18,576, or 1.1% of European recreational vehicle net sales, for the nine months ended April 30, 2020. The primary reason for the increase in income before income taxes was the increase in European recreational vehicle net sales. The increase in percentage was primarily due to the decreases in the cost of products sold and selling, general and administrative expense percentages noted above.expense.

Financial Condition and Liquidity

As of ~~April 30,~~October 31, 2021, we had ~~$294,562~~$336,237 in cash and cash equivalents, of which ~~$135,507~~$185,563 was held in the U.S. and the equivalent of ~~$159,055,~~$150,674, predominantly in Euros, was held in Europe, compared to ~~$538,519~~$445,852 on July 31, ~~2020,~~2021, of which ~~$276,841~~$282,220 was held in the U.S. and the equivalent of ~~$261,678,~~$163,632, predominantly in Euros, was held in Europe. Cash and cash equivalents held internationally may be subject to foreign withholding taxes if repatriated to the U.S. The components of this ~~$243,957~~$109,615 decrease in cash and cash equivalents are described in more detail below.

Net working capital at ~~April 30,~~October 31, 2021 was ~~$893,867~~$1,176,969 compared to ~~$586,996~~$1,008,738 at July 31, ~~2020.~~2021. This increase is primarily attributable to the seasonal increases in inventory and accounts receivable and the impact of ongoing supply constraints on inventory, partially offset by the decrease in cash and cash equivalents noted above and an increase in accounts payable. Capital expenditures of ~~$81,162~~$43,224 for the ~~nine~~three months ended ~~April 30,~~October 31, 2021 were made primarily for production building additions and improvements and replacing machinery and equipment used in the ordinary course of business.

We strive to maintain adequate cash balances to ensure we have sufficient resources to respond to opportunities and changing business conditions. We believe our on-hand cash and cash equivalents and funds generated from operations, along with funds available under the revolving asset-based credit facility, will be sufficient to fund expected operational requirements for the foreseeable future.

Our priorities for the use of current and future available cash generated from operations remain consistent with our history, and include reducing our indebtedness, maintaining and, over time, growing our dividend payments and funding our growth, both organically and opportunistically through acquisitions. We may also consider strategic and opportunistic repurchases of shares of THOR stock and special dividends based upon market and business conditions and excess cash availability, subject to ~~potential~~ customary limits and restrictions pursuant to our credit facilities, applicable legal limitations and determination by ~~the Company's~~our Board of Directors ~~("Board"~~(“Board”).

4839

We anticipate capital expenditures during the remainder of fiscal ~~2021~~2022 for the Company of ~~approximately $65,000,~~$230,000, primarily for certain building projects and replacing and upgrading machinery, equipment and other assets throughout our facilities to be used in the ordinary course of business.

The Company’s Board currently intends to continue regular quarterly cash dividend payments in the future. As is customary under credit facilities, certain actions, including our ability to pay dividends, are subject to the satisfaction of certain ~~payment~~ conditions prior to payment. The conditions for the payment of dividends under the existing debt facilities include a minimum level of adjusted excess cash availability and a fixed charge coverage ratio test, both as defined in the credit agreements. The declaration of future dividends and the establishment of the per share amounts, record dates and payment dates for any such future dividends are subject to the determination of the Board, and will be dependent upon future earnings, cash flows and other factors, in addition to compliance with any then-existing financing facilities.

Operating Activities

Net cash provided by operating activities for the ~~nine~~three months ended ~~April 30,~~October 31, 2021 was ~~$175,073~~$41,792 as compared to net cash ~~provided by~~used in operating activities of ~~$237,269~~$81,290 for the ~~nine~~three months ended ~~April 30,~~October 31, 2020.

For the ~~nine~~three months ended ~~April 30,~~October 31, 2021, net income adjusted for non-cash items (primarily depreciation, amortization of intangibles and stock-based compensation) provided ~~$628,645~~$313,583 of operating cash. The change in net working capital resulted in the use of ~~$453,572~~$271,791 of operating cash during that period, primarily due to an increase in inventory, as production levels have increased due to ~~the current~~continued heightened consumer demand, and ongoing supply constraints have caused work in process and other inventory categories to increase. In addition, there ~~has been~~was a seasonal increase in accounts receivable. These increases were partially offset by an increase in accounts payable primarily related to the inventory growth, and an increase in accrued liabilities, primarily due to tax provisions exceeding tax payments during the three months ended October 31, 2021.

For the three months ended October 31, 2020, net income adjusted for non-cash items (primarily depreciation, amortization of intangibles, impairment and stock-based compensation) provided $182,891 of operating cash. The change in working capital resulted in the use of $264,181 of operating cash during that period, primarily due to an increase in inventory, as production levels increased due to the heightened dealer demand and significantly increased dealer backlog levels, and an increase in production ~~lines and capacity. In addition, work in process inventory is higher than normal at April 30, 2021 due to elevated material component shortages on otherwise substantially completed units.~~lines. Accounts receivable also reflects a seasonal increase, and required income tax payments during the ~~nine~~three months ended ~~April 30, 2021~~October 31, 2020 exceeded the income tax provision for the period as well. These increases were partially offset by an increase in accounts payable primarily related to the inventory growth.

For the nine months ended April 30, 2020, net income adjusted for non-cash items (primarily depreciation, amortization of intangibles, impairment and stock-based compensation) provided $299,634 of operating cash. The change in working capital resulted in the use of $62,365 of operating cash during that period, primarily due to a reduction in accounts payable and accrued liabilities, partially offset by a reduction in accounts receivable as shipments in April 2020 were significantly reduced due to the impact of the COVID-19 pandemic.

Investing Activities

Net cash used in investing activities for the ~~nine~~three months ended ~~April 30,~~October 31, 2021 was ~~$381,028,~~$791,020, primarily due to ~~$310,938~~$747,937 used in business acquisitions, primarily for the Airxcel acquisition discussed in Note 2 to the Condensed Consolidated Financial Statements, and capital expenditures of ~~$81,162.~~$43,224.

Net cash used in investing activities for the ~~nine~~three months ended ~~April 30,~~October 31, 2020 was ~~$55,687,~~$46,433, primarily due to $22,700 used in a business acquisition and capital expenditures of ~~$77,302, partially offset by proceeds from the dispositions of property, plant and equipment of $26,854.~~$24,708.

4940

Financing Activities

Net cash ~~used in~~provided by financing activities for the ~~nine~~three months ended ~~April 30,~~October 31, 2021 was ~~$42,803,~~$643,597, consisting primarily of borrowings of ~~$225,676~~$660,088 on the revolving asset-based credit facilities, which included ~~$165,000~~$625,000 borrowed in connection with the acquisition of ~~Tiffin Group~~Airxcel and ~~$60,676~~$35,088 for temporary working capital needs, ~~partially offset by $184,247~~ in ~~debt~~addition to $500,000 in proceeds from the issuance of Senior Unsecured Notes in October 2021, which were then used to make $500,000 in payments on the ABL facility. During the first quarter of fiscal 2022, the Board approved and declared the payment of a regular quarterly dividend ~~payments~~payment of $0.43 per share for the first quarter of fiscal 2022, but this dividend, totaling $23,917, was not paid until the second quarter of fiscal 2022.

Net cash used in financing activities for the three months ended October 31, 2020 was $68,495, consisting primarily of $62,796 in debt payments. During the first quarter of fiscal 2021, the Company's Board approved and declared the payment of a regular quarterly dividend payment of $0.41 per share for ~~each of~~ the first ~~three quarters~~quarter of fiscal 2021, but this dividend, totaling ~~$68,100.~~

~~Net cash provided by financing activities for~~$22,700, was not paid until the nine months ended April 30, 2020 was $24,993, consisting primarily of $379,222 in borrowings on the revolving asset-based credit facilities, which included $250,000 of precautionary borrowings taken during the onset of the COVID-19 pandemic, mostly offset by $284,435 in debt payments. Additionally, the Company made regular quarterly dividend payments of $0.40 per share for each of the first three quarterssecond quarter of fiscal ~~2020 totaling $66,239.~~2021.

The Company increased its previous regular quarterly dividend of $0.41 per share to $0.43 per share in October 2021. In October 2020, the Company increased its previous regular quarterly dividend of $0.40 per share to $0.41 per ~~share in October 2020. In October 2019, the Company increased its previous regular quarterly dividend of $0.39 per share to $0.40 per~~ share.

Accounting Standards

~~Reference is made to Note 1 of our Condensed Consolidated Financial Statements contained in this report for a summary of recently issued accounting standards applicable to the Company.~~None.

5041

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to market risk from changes in foreign currency exchange rates and interest rates. The Company enters into various hedging transactions to mitigate certain of these risks in accordance with guidelines established by the Company's management. The Company does not use financial instruments for trading or speculative purposes.

CURRENCY EXCHANGE RISK – The ~~Company's~~Company’s principal currency exposures mainly relate to the Euro and British Pound Sterling. The Company periodically uses foreign currency forward contracts to manage certain foreign exchange rate exposure related to anticipated sales transactions in Pounds Sterling with financial instruments whose maturity date, along with the realized gain or loss, occurs on or near the execution of the anticipated transaction.

The Company also holds ~~$714,284~~$717,323 of debt denominated in Euros at ~~April 30,~~October 31, 2021. A hypothetical 10% change in the Euro/U.S. Dollar exchange rate would change our ~~April 30,~~October 31, 2021 debt balance by approximately ~~$71,428.~~$71,732.

INTEREST RATE RISK – The Company uses pay-fixed, receive-floating interest rate swaps to convert a portion of the Company’s long-term debt from floating to fixed-rate debt. As of ~~April 30,~~October 31, 2021, the Company has ~~$532,025~~$432,250 as notional amounts hedged in relation to the floating-to-fixed interest rate swap. The notional amounts hedged will decrease on a quarterly basis to zero by August 1, 2023.

Based on our interest rate exposure at ~~April 30,~~October 31, 2021, assumed floating-rate debt levels throughout the next 12 months and the effects of our existing derivative instruments, a one-percentage-point increase in interest rates (approximately ~~15.0%~~17.7% of our weighted-average interest rate at ~~April 30,~~October 31, 2021) would result in an estimated ~~$9,250~~$10,357 pre-tax reduction in net earnings over a one-year period.

ITEM 4. CONTROLS AND PROCEDURES

The Company maintains “disclosure controls and procedures,” as such term is defined under Exchange Act Rule 13a-15(e), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company has carried out an evaluation, as of the end of the period covered by this report, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at attaining the level of reasonable assurance noted above.

During the quarter ended ~~April 30,~~October 31, 2021, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

5142

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is involved in certain litigation arising out of its operations in the normal course of its business, most of which is based upon state “lemon ~~laws”,~~laws,” warranty claims and vehicle accidents (for which the Company carries insurance above a specified self-insured retention or deductible amount). The outcomes of legal proceedings and claims brought against the Company are subject to significant uncertainty. There is significant judgment required in assessing both the probability of an adverse outcome and the determination as to whether an exposure can be reasonably estimated. In management’s opinion, the ultimate disposition of any current legal proceedings or claims against the Company will not have a material effect on the Company’s financial condition, operating results or cash flows. Litigation is, however, inherently uncertain and an adverse outcome from such litigation could have a material effect on the operating results of a particular reporting period.

ITEM 1A. RISK FACTORS

Although risks specific to the COVID-19 pandemic are ongoing, including supply chain disruptions, there have been no material changes in those risks or any others from the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2020.~~2021.

ITEM 6. EXHIBITS


Exhibit			Description *
2.1			Purchase Agreement, dated as of September 1, 2021, by and among the Company, Airx Intermediate, Inc. and Airx Midco, LLC
4.1			Indenture, dated as of October 14, 2021, among the Company, the guarantors named therein and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Company ’s Current Report on Form 8-K filed October 14, 2021)
4.2			Form of certificate representing the 4.000% Senior Notes due 2029, included as Exhibit A to Exhibit 4.1 (incorporated by reference to Exhibit 4.2 to the Company ’s Current Report on Form 8-K filed October 14, 2021)
10.1			Amendment No. 1 to the ~~Term Loan~~ABL Credit Agreement ,dated as of ~~March 25,~~September 1 , 2021, by and among the Company, certain ~~certain~~ domes tic subsidiaries of the ~~Com~~Company pa, certain s ubsidiaries of EHG organ ized under the laws of Germa ny and a subsidiary of EHG organized under the laws of the Unit ed Kingdom, the several lenders from time to time parties thereto and JPMorgan Chase Bank, N.A., as A ~~dministrative~~ A ~~gent~~ ~~and Term B-1 Lender.~~Administrative Agent
31.1			Chief Executive Officer’s Rule 13a-14(a) Certification
31.2			Chief Financial Officer’s Rule 13a-14(a) Certification
32.1			Chief Executive Officer’s Section 1350 Certification
32.2			Chief Financial Officer’s Section 1350 Certification
101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document
101.SCH			Inline XBRL Taxonomy Extension Schema Document
101.CAL			Inline XBRL Taxonomy Calculation Linkbase Document
101.PRE			Inline XBRL Taxonomy Presentation Linkbase Document
101.LAB			Inline XBRL Taxonomy Label Linkbase Document
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document
104			Cover Page Interactive Data File (formatted in inline XBRL and contained in Exhibit 101)

Attached as Exhibits 101 to this report are the following financial statements from the ~~Company's~~Company’s Quarterly report on Form 10-Q for the quarter ended ~~April 30,~~October 31, 2021 formatted in ~~XBRL ("eXtensible~~iXBRL (Inline “eXtensible Business Reporting ~~Language"~~Language”):

(i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income and Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows, (iv) the Condensed Consolidated Statements of Changes in ~~Stockholders'~~Stockholders’ Equity and (v) related notes to these financial statements.

*Certain schedules and exhibits referenced in certain agreements filed as exhibits hereto have been omitted in accordance with Item 601 (b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished supplementally to the Securities and Exchange Commission upon request.

5244

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 thereunto duly authorized.

THOR INDUSTRIES, INC.

(Registrant)


DATE:	~~June~~December 8, 2021	/s/ Robert W. Martin
		Robert W. Martin
		President and Chief Executive Officer

DATE:	~~June~~December 8, 2021	/s/ Colleen Zuhl
		Colleen Zuhl
		Senior Vice President and Chief Financial Officer


THOR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)


	Three Months Ended April 30, 2021
								Accumulated					Stockholders'
				Additional				Other					Equity		Non-		Total
	Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Attributable		controlling		Stockholders'
	Shares	Amount		Capital		Earnings		Income (Loss)		Shares	Amount		to THOR		Interests		Equity
Balance at February 1, 2021	65,651,570	$	6,565	$	448,010	$	2,402,211	$	73,676	10,285,329	$	(360,226)	$	2,570,236	$	26,475	$	2,596,711
Net income (loss)	—	—		—		183,311		—		—	—		183,311		(592)		182,719
Restricted stock unit activity	—	—		(2,049)		—		—		—	—		(2,049)		—		(2,049)
Dividends $0.41 per common share	—	—		—		(22,700)		—		—	—		(22,700)		—		(22,700)
Stock-based compensation expense	—	—		8,366		—		—		—	—		8,366		—		8,366
Other comprehensive income (loss)	—	—		—		—		(4,465)		—	—		(4,465)		(55)		(4,520)
Dividend paid to non-controlling interest	—	—		—		—		—		—	—		—		(605)		(605)


Balance at April 30, 2021	65,651,570	$	6,565	$	454,327	$	2,562,822	$	69,211	10,285,329	$	(360,226)	$	2,732,699	$	25,223	$	2,757,922

	Nine Months Ended April 30, 2021
								Accumulated					Stockholders'
				Additional				Other					Equity		Non-		Total
	Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Attributable		controlling		Stockholders'
	Shares	Amount		Capital		Earnings		Income		Shares	Amount		to THOR		Interests		Equity
Balance at August 1, 2020	65,396,531	$	6,540	$	436,828	$	2,201,330	$	26,993	10,197,775	$	(351,909)	$	2,319,782	$	25,787	$	2,345,569
Net income (loss)	—	—		—		429,592		—		—	—		429,592		(44)		429,548
Restricted stock unit activity	255,039	25		(3,925)		—		—		87,554	(8,317)		(12,217)		—		(12,217)
Dividends $1.23 per common share	—	—		—		(68,100)		—		—	—		(68,100)		—		(68,100)
Stock-based compensation expense	—	—		21,424		—		—		—	—		21,424		—		21,424
Other comprehensive income	—	—		—		—		42,218		—	—		42,218		85		42,303
Dividend paid to non-controlling interest	—	—		—		—		—		—	—		—		(605)		(605)


Balance at April 30, 2021	65,651,570	$	6,565	$	454,327	$	2,562,822	$	69,211	10,285,329	$	(360,226)	$	2,732,699	$	25,223	$	2,757,922


THOR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)


	Three Months Ended April 30, 2020
								Accumulated					Stockholders'
				Additional				Other					Equity		Non-		Total
	Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Attributable		controlling		Stockholders'
	Shares	Amount		Capital		Earnings		(Loss)		Shares	Amount		to THOR		Interests		Equity
Balance at February 1, 2020	65,396,531	$	6,540	$	427,373	$	2,102,253	$	(71,415)	10,197,775	$	(351,909)	$	2,112,842	$	9,492	$	2,122,334
Net income (loss)	—	—		—		24,068		—		—	—		24,068		(1,284)		22,784
Restricted stock unit activity	—	—		297		—		—		—	—		297		—		297
Dividends $0.40 per common share	—	—		—		(22,080)		—		—	—		(22,080)		—		(22,080)
Stock-based compensation expense	—	—		4,350		—		—		—	—		4,350		—		4,350
Other comprehensive loss	—	—		—		—		(32,809)		—	—		(32,809)		(199)		(33,008)

Acquisitions	—	—		—		—		—		—	—		—		16,835		16,835

Balance at April 30, 2020	65,396,531	$	6,540	$	432,020	$	2,104,241	$	(104,224)	10,197,775	$	(351,909)	$	2,086,668	$	24,844	$	2,111,512

	Nine Months Ended April 30, 2020
								Accumulated					Stockholders'
				Additional				Other					Equity		Non-		Total
	Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Attributable		controlling		Stockholders'
	Shares	Amount		Capital		Earnings		(Loss)		Shares	Amount		to THOR		Interests		Equity
Balance at August 1, 2019	65,189,907	$	6,519	$	416,382	$	2,066,674	$	(57,004)	10,126,434	$	(348,146)	$	2,084,425	$	10,803	$	2,095,228
Net income (loss)	—	—		—		103,806		—		—	—		103,806		(2,151)		101,655
Restricted stock unit activity	206,624	21		1,213		—		—		71,341	(3,763)		(2,529)		—		(2,529)
Dividends $1.20 per common share	—	—		—		(66,239)		—		—	—		(66,239)		—		(66,239)
Stock-based compensation expense	—	—		14,425		—		—		—	—		14,425		—		14,425
Other comprehensive loss	—	—		—		—		(47,220)		—	—		(47,220)		(643)		(47,863)

Acquisitions	—	—		—		—		—		—	—		—		16,835		16,835

Balance at April 30, 2020	65,396,531	$	6,540	$	432,020	$	2,104,241	$	(104,224)	10,197,775	$	(351,909)	$	2,086,668	$	24,844	$	2,111,512


	Three Months Ended		Nine Months Ended
	April 30, 2021		April 30, 2021
Net sales	$	3,459,264	$	8,988,314
Net income attributable to THOR Industries, Inc.	$	183,104	$	436,817
Basic earnings per common share	$	3.31	$	7.90
Diluted earnings per common share	$	3.29	$	7.85


	Three Months Ended		Nine Months Ended
	April 30, 2020		April 30, 2020
Net sales	$	1,826,765	$	6,403,792
Net income attributable to THOR Industries, Inc.	$	20,966	$	103,623
Basic earnings per common share	$	0.38	$	1.88
Diluted earnings per common share	$	0.38	$	1.87


For the remainder of the fiscal year ending July 31, 2021	$	30,178
For the fiscal year ending July 31, 2022	125,339
For the fiscal year ending July 31, 2023	106,759
For the fiscal year ending July 31, 2024	96,863
For the fiscal year ending July 31, 2025	88,655
For the fiscal year ending July 31, 2026 and thereafter	528,467
	$	976,261


	Operating Leases		Financing Leases
For the remainder of the fiscal year ending July 31, 2021	$	3,517	$	387
For the fiscal year ending July 31, 2022	12,025		1,555
For the fiscal year ending July 31, 2023	9,187		1,578
For the fiscal year ending July 31, 2024	6,449		1,059
For the fiscal year ending July 31, 2025	4,426		1,083
For the fiscal year ending July 31, 2026 and thereafter	19,616		2,062
Total future lease payments	55,220		7,724
Less: amount representing interest	(16,422)		(1,692)
Total reported lease liability	$	38,798	$	6,032


NET SALES:	Nine Months Ended April 30, 2021		Nine Months Ended April 30, 2020		Change Amount		% Change
Recreational vehicles
North American Towables	$	4,491,327	$	2,958,186	$	1,533,141	51.8
North American Motorized	1,846,243		1,023,606		822,637		80.4
Total North America	6,337,570		3,981,792		2,355,778		59.2
European	2,230,191		1,745,465		484,726		27.8
Total recreational vehicles	8,567,761		5,727,257		2,840,504		49.6
Other	262,381		176,943		85,438		48.3
Intercompany eliminations	(105,730)		(60,547)		(45,183)		(74.6)
Total	$	8,724,412	$	5,843,653	$	2,880,759	49.3