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 October 31, ~~2021.~~2022.

☐ 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 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~~$0.10 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 November ~~29, 2021, 55,618,549~~30, 2022, 53,518,735 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)


		October 31, 2021		July 31, 2021			October 31, 2022		July 31, 2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	336,237	$	445,852	Cash and cash equivalents	$	291,704	$	311,553
Restricted cash		3,060		2,854

Accounts receivable, trade, net	Accounts receivable, trade, net	1,095,970		796,489		Accounts receivable, trade, net	749,630		848,814

Accounts receivable, other, net	Accounts receivable, other, net	70,403		153,443		Accounts receivable, other, net	59,689		95,367
Inventories, net	Inventories, net	1,671,847		1,369,384		Inventories, net	1,852,872		1,754,773
Prepaid income taxes, expenses and other	Prepaid income taxes, expenses and other	36,194		35,501		Prepaid income taxes, expenses and other	39,718		51,972

Total current assets	Total current assets	3,213,711		2,803,523		Total current assets	2,993,613		3,062,479
Property, plant and equipment, net	Property, plant and equipment, net	1,218,023		1,185,131		Property, plant and equipment, net	1,268,883		1,258,159
Other assets:	Other assets:					Other assets:
Goodwill	Goodwill	1,915,388		1,563,255		Goodwill	1,783,954		1,804,151
Amortizable intangible assets, net	Amortizable intangible assets, net	1,298,289		937,171		Amortizable intangible assets, net	1,070,815		1,117,492
Deferred income tax assets, net	Deferred income tax assets, net	1,288		41,216		Deferred income tax assets, net	7,672		7,950

Other	Other	122,072		123,792		Other	156,328		157,901
Total other assets	Total other assets	3,337,037		2,665,434		Total other assets	3,018,769		3,087,494
TOTAL ASSETS	TOTAL ASSETS	$	7,768,771	$	6,654,088	TOTAL ASSETS	$	7,281,265	$	7,408,132

LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	1,055,342	$	915,045	Accounts payable	$	675,665	$	822,449
Current portion of long-term debt	Current portion of long-term debt	12,159		12,411		Current portion of long-term debt	10,173		13,190
Short-term financial obligations	Short-term financial obligations	19,398		25,720		Short-term financial obligations	23,333		21,403
Accrued liabilities:	Accrued liabilities:					Accrued liabilities:
Compensation and related items	Compensation and related items	289,127		249,761		Compensation and related items	236,216		254,772
Product warranties	Product warranties	290,617		267,620		Product warranties	325,713		317,908
Income and other taxes	Income and other taxes	126,320		85,789		Income and other taxes	83,812		57,391
Promotions and rebates	Promotions and rebates	105,209		128,869		Promotions and rebates	126,820		134,298
Product, property and related liabilities	Product, property and related liabilities	38,692		38,590		Product, property and related liabilities	59,570		61,700
Dividends payable	Dividends payable	23,917		—		Dividends payable	24,081		—

Other	Other	75,961		70,980		Other	56,433		72,805

Total current liabilities	Total current liabilities	2,036,742		1,794,785		Total current liabilities	1,621,816		1,755,916
Long-term debt	Long-term debt	2,232,266		1,594,821		Long-term debt	1,714,636		1,754,239
Deferred income tax liabilities, net	Deferred income tax liabilities, net	149,811		113,598		Deferred income tax liabilities, net	114,573		115,931
Unrecognized tax benefits	Unrecognized tax benefits	19,925		15,844		Unrecognized tax benefits	18,196		17,243
Other liabilities	Other liabilities	197,785		186,934		Other liabilities	161,085		164,149
Total long-term liabilities	Total long-term liabilities	2,599,787		1,911,197		Total long-term liabilities	2,008,490		2,051,562
Contingent liabilities and commitments	Contingent liabilities and commitments	0		0		Contingent liabilities and commitments
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock – authorized 1,000,000 shares; none outstanding	Preferred stock – authorized 1,000,000 shares; none outstanding	—		—		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
Common stock – par value of $.10 per share; authorized 250,000,000 shares; issued 66,326,135 and 66,059,403 shares, respectively						Common stock – par value of $.10 per share; authorized 250,000,000 shares; issued 66,326,135 and 66,059,403 shares, respectively	6,633		6,606
Additional paid-in capital	Additional paid-in capital	473,775		460,482		Additional paid-in capital	509,579		497,946
Retained earnings	Retained earnings	2,988,726		2,770,401		Retained earnings	3,925,365		3,813,261
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)
Accumulated other comprehensive loss, net of tax						Accumulated other comprehensive loss, net of tax	(223,698)		(181,607)
Less treasury shares of 12,813,019 and 12,382,441, respectively, at cost						Less treasury shares of 12,813,019 and 12,382,441, respectively, at cost	(575,516)		(543,344)
Stockholders’ equity attributable to THOR Industries, Inc.	Stockholders’ equity attributable to THOR Industries, Inc.	3,102,839		2,921,843		Stockholders’ equity attributable to THOR Industries, Inc.	3,642,363		3,592,862
Non-controlling interests	Non-controlling interests	29,403		26,263		Non-controlling interests	8,596		7,792
Total stockholders’ equity	Total stockholders’ equity	3,132,242		2,948,106		Total stockholders’ equity	3,650,959		3,600,654
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,768,771	$	6,654,088	TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	7,281,265	$	7,408,132

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 October 31,						Three Months Ended October 31,
			2021		2020				2022		2021
Net sales	Net sales		$	3,958,224	$	2,537,360	Net sales		$	3,108,084	$	3,958,224
Cost of products sold	Cost of products sold		3,302,800		2,158,508		Cost of products sold		2,621,608		3,302,800
Gross profit	Gross profit		655,424		378,852		Gross profit		486,476		655,424
Selling, general and administrative expenses	Selling, general and administrative expenses		295,883		181,763		Selling, general and administrative expenses		241,624		295,883
Amortization of intangible assets	Amortization of intangible assets		33,214		27,427		Amortization of intangible assets		35,219		33,214

Interest income			193		318
Interest expense			20,913		24,276
Other income, net			7,235		615
Interest expense, net							Interest expense, net		22,807		20,720
Other income (expense), net							Other income (expense), net		(7,555)		7,235
Income before income taxes	Income before income taxes		312,842		146,319		Income before income taxes		179,271		312,842
Income tax provision	Income tax provision		68,039		30,680		Income tax provision		41,848		68,039
Net income	Net income		244,803		115,639		Net income		137,423		244,803
Less: Net income attributable to non-controlling interests	Less: Net income attributable to non-controlling interests		2,561		1,882		Less: Net income attributable to non-controlling interests		1,238		2,561
Net income attributable to THOR Industries, Inc.	Net income attributable to THOR Industries, Inc.		$	242,242	$	113,757	Net income attributable to THOR Industries, Inc.		$	136,185	$	242,242

Weighted-average common shares outstanding:	Weighted-average common shares outstanding:						Weighted-average common shares outstanding:
Basic	Basic		55,422,854		55,238,164		Basic		53,656,415		55,422,854
Diluted	Diluted		55,790,712		55,554,682		Diluted		53,928,751		55,790,712

Earnings per common share:	Earnings per common share:						Earnings per common share:
Basic	Basic		$	4.37	$	2.06	Basic		$	2.54	$	4.37
Diluted	Diluted		$	4.34	$	2.05	Diluted		$	2.53	$	4.34

Comprehensive income:	Comprehensive income:						Comprehensive income:
Net income	Net income		$	244,803	$	115,639	Net income		$	137,423	$	244,803
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		(35,167)		(18,993)		Foreign currency translation adjustment		(43,329)		(35,167)
Unrealized gain on derivatives, net of tax	Unrealized gain on derivatives, net of tax		2,355		3,332		Unrealized gain on derivatives, net of tax		804		2,355

Total other comprehensive income (loss), net of tax	Total other comprehensive income (loss), net of tax		(32,812)		(15,661)		Total other comprehensive income (loss), net of tax		(42,525)		(32,812)
Total Comprehensive income	Total Comprehensive income		211,991		99,978		Total Comprehensive income		94,898		211,991
Less: Comprehensive income attributable to non-controlling interests	Less: Comprehensive income attributable to non-controlling interests		2,401		1,995		Less: Comprehensive income attributable to non-controlling interests		804		2,401
Comprehensive income attributable to THOR Industries, Inc.	Comprehensive income attributable to THOR Industries, Inc.		$	209,590	$	97,983	Comprehensive income attributable to THOR Industries, Inc.		$	94,094	$	209,590

See Notes to the Condensed Consolidated Financial Statements.

THOR INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended October 31,
2021 2020
Cash flows from operating activities:
Net income $ 244,803 $ 115,639
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation 31,739 26,812
Amortization of intangible assets 33,214 27,427
Amortization of debt issuance costs 2,424 2,723
Deferred income tax (benefit) provision (5,253) 4,601
(Gain) loss on disposition of property, plant and equipment 629 (79)
Stock-based compensation expense 6,027 5,768
Changes in assets and liabilities:
Accounts receivable (167,685) (36,495)
Inventories, net (236,915) (322,047)
Prepaid income taxes, expenses and other 4,729 (14,857)
Accounts payable 71,613 127,585
Accrued liabilities 50,016 (20,601)
Long-term liabilities and other 6,451 2,234
Net cash provided by (used in) operating activities 41,792 (81,290)
Cash flows from investing activities:
Purchases of property, plant and equipment (43,224) (24,708)
Proceeds from dispositions of property, plant and equipment 141 975
Business acquisitions, net of cash acquired (747,937) (22,700)
Net cash used in investing activities (791,020) (46,433)
Cash flows from financing activities:
Borrowings on revolving asset-based credit facilities 660,088 ��
Payments on revolving asset-based credit facilities (500,000) —
Proceeds from issuance of senior unsecured notes 500,000 —
Payments on term-loan credit facilities — (59,700)
Payments on other debt (1,959) (3,096)
Payments of debt issuance costs (8,445) —
Payments on finance lease obligations (262) (119)
Short-term financial obligations and other, net (5,825) (5,580)
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 (3,778) (4,935)
Net decrease in cash and cash equivalents and restricted cash (109,409) (201,153)
Cash and cash equivalents and restricted cash, beginning of period 448,706 541,363
Cash and cash equivalents and restricted cash, end of period 339,297 340,210
Less: restricted cash 3,060 2,808
Cash and cash equivalents, end of period $ 336,237 $ 337,402
Supplemental cash flow information:
Income taxes paid $ 17,956 $ 48,788
Interest paid $ 16,868 $ 18,207
Non-cash investing and financing transactions:
Capital expenditures in accounts payable $ 4,320 $ 1,602
Quarterly dividends payable $ 23,917 $ 22,700


	Three Months Ended October 31,
	2022		2021
Cash flows from operating activities:
Net income	$	137,423	$	244,803
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	31,774		31,739
Amortization of intangible assets	35,219		33,214
Amortization of debt issuance costs	2,835		2,424


Deferred income tax benefit	(1,920)		(5,253)
(Gain) loss on disposition of property, plant and equipment	(141)		629
Stock-based compensation expense	8,392		6,027
Changes in assets and liabilities:
Accounts receivable	131,483		(167,685)
Inventories	(116,151)		(236,915)
Prepaid income taxes, expenses and other	17,345		4,729
Accounts payable	(141,934)		71,613

Accrued liabilities	(8,047)		50,016
Long-term liabilities and other	(2,262)		6,451
Net cash provided by operating activities	94,016		41,792
Cash flows from investing activities:
Purchases of property, plant and equipment	(55,883)		(43,224)
Proceeds from dispositions of property, plant and equipment	2,935		141
Business acquisitions, net of cash acquired	—		(747,937)


Other	(5,000)		—
Net cash used in investing activities	(57,948)		(791,020)
Cash flows from financing activities:

Borrowings on revolving asset-based credit facilities	—		660,088
Payments on revolving asset-based credit facilities	(15,000)		(500,000)
Proceeds from issuance of senior unsecured notes	—		500,000
Payments on term-loan credit facilities	(12,355)		—

Payments on other debt	(2,714)		(1,959)
Payments of debt issuance costs	—		(8,445)

Payments on finance lease obligations	(310)		(262)
Purchases of treasury shares	(25,407)		—

Short-term financial obligations and other, net	2,537		(5,825)
Net cash provided by (used in) financing activities	(53,249)		643,597
Effect of exchange rate changes on cash and cash equivalents and restricted cash	(2,668)		(3,778)
Net decrease in cash and cash equivalents and restricted cash	(19,849)		(109,409)
Cash and cash equivalents and restricted cash, beginning of period	311,553		448,706
Cash and cash equivalents and restricted cash, end of period	291,704		339,297
Less: restricted cash	—		3,060
Cash and cash equivalents, end of period	$	291,704	$	336,237
Supplemental cash flow information:
Income taxes paid	$	17,174	$	17,956
Interest paid	$	25,786	$	16,868
Non-cash investing and financing transactions:
Capital expenditures in accounts payable	$	2,940	$	4,320
Quarterly dividends payable	$	24,081	$	23,917

See Notes to the Condensed Consolidated Financial Statements.


THOR INDUSTRIES, INC. AND SUBSIDIARIES	THOR INDUSTRIES, INC. AND SUBSIDIARIES																			THOR INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY	CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY																			CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED OCTOBER 31, 2021 AND 2020 (UNAUDITED)
FOR THE THREE MONTHS ENDED OCTOBER 31, 2022 AND 2021 (UNAUDITED)																				FOR THE THREE MONTHS ENDED OCTOBER 31, 2022 AND 2021 (UNAUDITED)

		Three Months Ended October 31, 2021																			Three Months Ended October 31, 2022
									Accumulated					Stockholders’														Accumulated					Stockholders’
					Additional				Other					Equity		Non-		Total						Additional				Other					Equity		Non-		Total
		Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Attributable		controlling		Stockholders’			Common Stock			Paid-In		Retained		Comprehensive		Treasury Stock			Attributable		controlling		Stockholders’
		Shares	Amount		Capital		Earnings		Income (Loss)		Shares	Amount		to THOR		Interests		Equity			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
Balance at August 1, 2022																				Balance at August 1, 2022	66,059,403	$	6,606	$	497,946	$	3,813,261	$	(181,607)	12,382,441	$	(543,344)	$	3,592,862	$	7,792	$	3,600,654
Net income	Net income	—	—		—		242,242		—		—	—		242,242		2,561		244,803		Net income	—	—		—		136,185		—		—	—		136,185		1,238		137,423
Purchase of treasury shares																				Purchase of treasury shares	—	—		—		—		—		338,733	(25,407)		(25,407)		—		(25,407)
Restricted stock unit activity	Restricted stock unit activity	406,720	41		7,266		—		—		152,869	(18,011)		(10,704)		—		(10,704)		Restricted stock unit activity	266,732	27		3,241		—		—		91,845	(6,765)		(3,497)		—		(3,497)
Dividends $0.43 per common share		—	—		—		(23,917)		—		—	—		(23,917)		—		(23,917)
Dividends $0.45 per common share																				Dividends $0.45 per common share	—	—		—		(24,081)		—		—	—		(24,081)		—		(24,081)
Stock-based compensation expense	Stock-based compensation expense	—	—		6,027		—		—		—	—		6,027		—		6,027		Stock-based compensation expense	—	—		8,392		—		—		—	—		8,392		—		8,392
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—		—		(32,652)		—	—		(32,652)		(160)		(32,812)		Other comprehensive income (loss)	—	—		—		—		(42,091)		—	—		(42,091)		(434)		(42,525)

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

Balance at October 31, 2022																				Balance at October 31, 2022	66,326,135	$	6,633	$	509,579	$	3,925,365	$	(223,698)	12,813,019	$	(575,516)	$	3,642,363	$	8,596	$	3,650,959

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






	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.

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”), 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, ~~2021~~2022 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, ~~2021.~~2022. Due to seasonality within the recreational vehicle industry, and the impact of the ongoing ~~COVID-19 pandemic~~supply chain disruptions, inflation and ~~supply constraints~~shifting consumer demand on our industry, among other factors, annualizing the results of operations for the three months ended October 31, ~~2021~~2022 would not necessarily be indicative of the results expected for the full fiscal year.

Certain immaterial amounts from the prior year have been reclassified to conform with current-year presentation.

2. Acquisitions

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~~total cash isconsideration paid was subject to ~~standard post-closing adjustments and~~the final determination of the actual acquired net working capital as of the close of business on September 1, 2021, which was ~~funded through a combination~~finalized in the second quarter of ~~cash-on-hand and $625,000~~fiscal 2022. The final cash consideration was $745,279, net of ~~borrowings from the Company’s asset-based credit facility (“ABL”).~~cash acquired. In conjunction with the Airxcel acquisition, the Company expanded its existing ~~ABL~~asset-based credit facility (“ABL”) 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.~~ABL.

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~~America and Europe. Airxcel ~~will operate~~operates 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.

Subsequent to the acquisition date, the Company made immaterial measurement period adjustments to better reflect the facts and circumstances that existed at the acquisition date. The following table summarizes the ~~preliminary estimated~~final 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~~62,657
Property, plant and equipment	~~40,853~~40,518
Amortizable intangible assets:
Customer relationships	284,000
Trademarks	56,900
Design technology assets	60,600
Backlog	700
Goodwill	~~368,639~~372,608
Current liabilities	~~(109,336)~~(115,535)
Deferred income tax liabilities	~~(79,115)~~(77,086)
Other liabilities	(10,494)
Non-controlling interest	(739)
Total fair value of net assets acquired	~~768,483~~768,683
Less cash acquired	(23,404)
Total cash consideration for acquisition, less cash acquired	$	~~745,079~~745,279

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~~are being amortized on an accelerated basis over 20 years. The trademarks were valued on the Relief from Royalty Method and ~~will be~~are being amortized on a straight-line basis over 20 years. The design technology assets were valued on the Relief from Royalty Method and ~~will be~~are being amortized on a straight-line basis over 10 years. Backlog was valued based on the Discounted Cash Flow Method and ~~will be~~was 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 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 following table summarizes the final fair values of the Tiffin Group net assets acquired on 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~~	~~65,064~~
~~Current liabilities~~	~~(81,423)~~
~~Deferred income tax liabilities~~	~~(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 is being amortized on an accelerated basis over 18 to 20 years. The trademarks were valued on the Relief from Royalty Method and is being amortized on a straight-line basis over 20 years. Backlogs were valued based on the Discounted Cash Flow Method and were amortized on a straight-line basis over ~~five~~ ~~to seven months. Generally, the goodwill recognized as a result of this transaction is not deductible for tax purposes.~~

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.~~2021. These 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 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


	Three Months Ended
	October 31, 2021
Net sales	$	4,005,682
Net income attributable to THOR Industries, Inc.	$	249,055
Basic earnings per common share	$	4.49
Diluted earnings per common share	$	4.46

3. Business Segments

The Company has 3three reportable segments, all related to recreational vehicles: (1) North American ~~Towables,~~towables, (2) North American ~~Motorized~~motorized and (3) European. The operations of the Company's Postle, ~~Togo Group (rebranded as~~ Roadpass Digital ~~in November 2021)~~ and ~~recently acquired~~ Airxcel subsidiaries are included in ~~Other.~~“Other”. Net sales included in Other related primarily to the sale of specialized component parts and aluminum extrusions. Intercompany eliminations adjust for Postle and Airxcel sales to the Company’s North American ~~towable~~towables and North American motorized segments, which 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 October 31,						Three Months Ended October 31,
NET SALES:	NET SALES:		2021		2020		NET SALES:		2022		2021
Recreational vehicles	Recreational vehicles						Recreational vehicles
North American Towables	North American Towables		$	2,240,834	$	1,392,044	North American Towables		$	1,317,806	$	2,240,834
North American Motorized	North American Motorized		925,028		493,855		North American Motorized		1,123,519		925,028
Total North America	Total North America		3,165,862		1,885,899		Total North America		2,441,325		3,165,862
European	European		632,997		602,488		European		504,302		632,997
Total recreational vehicles	Total recreational vehicles		3,798,859		2,488,387		Total recreational vehicles		2,945,627		3,798,859
Other	Other		257,830		80,707		Other		232,648		257,830
Intercompany eliminations	Intercompany eliminations		(98,465)		(31,734)		Intercompany eliminations		(70,191)		(98,465)
Total	Total		$	3,958,224	$	2,537,360	Total		$	3,108,084	$	3,958,224


		Three Months Ended October 31,						Three Months Ended October 31,
INCOME (LOSS) BEFORE INCOME TAXES:	INCOME (LOSS) BEFORE INCOME TAXES:		2021		2020		INCOME (LOSS) BEFORE INCOME TAXES:		2022		2021

Recreational vehicles	Recreational vehicles						Recreational vehicles
North American Towables	North American Towables		$	266,282	$	141,179	North American Towables		$	111,007	$	266,282
North American Motorized	North American Motorized		88,898		41,567		North American Motorized		124,433		88,898
Total North America	Total North America		355,180		182,746		Total North America		235,440		355,180
European	European		(17,976)		(5,506)		European		(6,468)		(17,976)
Total recreational vehicles	Total recreational vehicles		337,204		177,240		Total recreational vehicles		228,972		337,204
Other, net	Other, net		23,529		11,490		Other, net		4,745		23,529
Corporate	Corporate		(47,891)		(42,411)		Corporate		(54,446)		(47,891)
Total	Total		$	312,842	$	146,319	Total		$	179,271	$	312,842


TOTAL ASSETS:	TOTAL ASSETS:	October 31, 2021		July 31, 2021		TOTAL ASSETS:	October 31, 2022		July 31, 2022
Recreational vehicles	Recreational vehicles					Recreational vehicles
North American Towables	North American Towables	$	2,137,149	$	1,870,577	North American Towables	$	1,836,534	$	2,040,841
North American Motorized	North American Motorized	1,244,251		1,073,506		North American Motorized	1,449,353		1,239,476
Total North America	Total North America	3,381,400		2,944,083		Total North America	3,285,887		3,280,317
European	European	2,872,828		2,975,821		European	2,397,580		2,449,270
Total recreational vehicles	Total recreational vehicles	6,254,228		5,919,904		Total recreational vehicles	5,683,467		5,729,587
Other	Other	1,223,899		272,350		Other	1,251,852		1,272,829
Corporate	Corporate	290,644		461,834		Corporate	345,946		405,716
Total	Total	$	7,768,771	$	6,654,088	Total	$	7,281,265	$	7,408,132


DEPRECIATION AND INTANGIBLE AMORTIZATION EXPENSE:	DEPRECIATION AND INTANGIBLE AMORTIZATION EXPENSE:	Three Months Ended October 31,			DEPRECIATION AND INTANGIBLE AMORTIZATION EXPENSE:				Three Months Ended October 31,
			2021			2020		DEPRECIATION AND INTANGIBLE AMORTIZATION EXPENSE:		2022		2021
Recreational vehicles	Recreational vehicles
North American Towables	North American Towables		$	16,302		$	15,807	North American Towables		$	15,437	$	16,302
North American Motorized	North American Motorized		7,022			3,770		North American Motorized		8,161		7,022
Total North America	Total North America		23,324			19,577		Total North America		23,598		23,324
European	European		34,713			31,323		European		27,302		34,713
Total recreational vehicles	Total recreational vehicles		58,037			50,900		Total recreational vehicles		50,900		58,037
Other	Other		6,480			2,911		Other		15,648		6,480
Corporate	Corporate		436			428		Corporate		445		436
Total	Total		$	64,953		$	54,239	Total		$	66,993	$	64,953


		Three Months Ended October 31,						Three Months Ended October 31,
CAPITAL ACQUISITIONS:	CAPITAL ACQUISITIONS:		2021		2020		CAPITAL ACQUISITIONS:		2022		2021
Recreational vehicles	Recreational vehicles						Recreational vehicles
North American Towables	North American Towables		$	13,134	$	9,408	North American Towables		$	21,174	$	13,134
North American Motorized	North American Motorized		8,629		1,745		North American Motorized		19,064		8,629
Total North America	Total North America		21,763		11,153		Total North America		40,238		21,763
European	European		14,802		9,894		European		8,920		14,802
Total recreational vehicles	Total recreational vehicles		36,565		21,047		Total recreational vehicles		49,158		36,565
Other	Other		4,417		1,444		Other		4,812		4,417
Corporate	Corporate		34		361		Corporate		120		34
Total	Total		$	41,016	$	22,852	Total		$	54,090	$	41,016

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 October 31,				Three Months Ended October 31,
			2021	2020			2022	2021
Weighted-average common shares outstanding for basic earnings per share	Weighted-average common shares outstanding for basic earnings per share		55,422,854	55,238,164	Weighted-average common shares outstanding for basic earnings per share		53,656,415	55,422,854
Unvested restricted stock units and performance stock units	Unvested restricted stock units and performance stock units		367,858	316,518	Unvested restricted stock units and performance stock units		272,336	367,858
Weighted-average common shares outstanding assuming dilution	Weighted-average common shares outstanding assuming dilution		55,790,712	55,554,682	Weighted-average common shares outstanding assuming dilution		53,928,751	55,790,712

The Company excluded ~~30,333~~204,441 and ~~96,809~~30,333 unvested restricted stock units and performance stock units that have an antidilutive effect from its calculation of ~~weighted average~~weighted-average common shares outstanding assuming dilution at October 31, ~~2021~~2022 and October 31, ~~2020,~~2021, respectively.

109

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

Foreign currency forward contracts outstanding at October 31, 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 October 31, 2021 is 15,000 GBP ($20,674), and these contracts have various maturity dates through January 31, 2022.


	October 31, 2022						July 31, 2022
			Fair Value in		Fair Value in				Fair Value in		Fair Value in
			Other Current		Other Current				Other Current		Other Current
Cash Flow Hedges	Notional		Assets		Liabilities		Notional		Assets		Liabilities
Foreign currency forward contracts	$	—	$	—	$	—	$	33,997	$	—	$	80
Interest rate swap agreements	220,350		1,831		—		273,325		850		—
Total derivative financial instruments	$	220,350	$	1,831	$	—	$	307,322	$	850	$	80

The Company previously 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,~~debt to partially ~~hedging~~hedge 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~~notional amounts hedged will decrease on a quarterly basis to zero by August 1, 2023.

Effective August 1, 2022, the Company's foreign currency forward contracts used to exchange British Pounds Sterling ("GBP") for Euro were no longer designated as ~~hedging instruments had a notional contract value~~cash flow hedges and therefore excluded from the table above as of ~~$31,168 at~~ October 31, ~~2021.~~2022.

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, net of tax, included in the foreign currency translation adjustments were $9,385 for the three months ended October 31, ~~2021, net of tax, were $9,240. Gains~~2022 and $9,240 for the three months ended October 31, ~~2020, net of tax, were $5,482.~~2021.

There were no amounts reclassified out of accumulated other comprehensive income (“AOCI”) pertaining to the net investment hedge during the three-month periods ended October 31, ~~2021 and~~2022 or October 31, ~~2020, respectively.~~2021.

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 ~~$31,168~~$95,469 and a fair value liability of ~~$1,786, which is included in Other current liabilities in the Condensed Consolidated Balance Sheet~~$822, net, as of October 31, ~~2021.~~2022. These other derivative instruments had a notional amount totaling approximately ~~$32,466~~$25,628 and a fair value liability of ~~$1,948,~~$1,077, as of July 31, ~~2021.~~2022. 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 October 31,					Three Months Ended October 31,
		2021		2020			2022		2021
Gain (Loss) on Derivatives Designated as Cash Flow Hedges	Gain (Loss) on Derivatives Designated as Cash Flow Hedges					Gain (Loss) on Derivatives Designated as Cash Flow Hedges

Gain (Loss) recognized in Other Comprehensive Income, net of tax	Gain (Loss) recognized in Other Comprehensive Income, net of tax					Gain (Loss) recognized in Other Comprehensive Income, net of tax
Foreign currency forward contracts	Foreign currency forward contracts	$	(141)	$	—	Foreign currency forward contracts	$	—	$	(141)
Interest rate swap agreements (1)	Interest rate swap agreements (1)	2,496		3,332		Interest rate swap agreements (1)	746		2,496
Total gain (loss)	Total gain (loss)	$	2,355	$	3,332	Total gain (loss)	$	746	$	2,355

(1)Other comprehensive income (loss), net of tax, before reclassification from AOCI was ~~$607~~$854 and ~~$558~~$607 for the three months ended October 31, 2022 and 2021, ~~and 2020,~~ respectively.

1110


		Three Months Ended October 31,									Three Months Ended October 31,
		2021				2020					2022				2021
				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	$	(13)	$	—		$	—	$	—		Foreign currency forward contracts	$	(58)		$	—	$	(13)	$	—
Interest rate swap agreements	Interest rate swap agreements	—		(1,889)			—		(2,774)			Interest rate swap agreements	—			108		—		(1,889)
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 gain (loss) recognized in income, net of tax												Amount of gain (loss) recognized in income, net of tax

Foreign currency forward contracts												Foreign currency forward contracts	$	828		$	—	$	—	$	—
Commodities swap agreements												Commodities swap agreements	(662)			—		—		—
Interest rate swap agreements	Interest rate swap agreements	—		87			—		(38)			Interest rate swap agreements	—			254		—		87
Total gain (loss)	Total gain (loss)	$	(13)	$	(1,802)		$	—	$	(2,812)		Total gain (loss)	$	108		$	362	$	(13)	$	(1,802)

6. Inventories

Major classifications of inventories are as follows:


		October 31, 2021		July 31, 2021			October 31, 2022		July 31, 2022
Finished goods – RV	Finished goods – RV	$	124,858	$	114,843	Finished goods – RV	$	282,444	$	236,311
Finished goods – other	Finished goods – other	93,452		57,810		Finished goods – other	131,145		126,570
Work in process	Work in process	432,513		376,594		Work in process	363,275		397,495
Raw materials	Raw materials	706,689		602,106		Raw materials	779,410		838,474
Chassis	Chassis	392,575		292,921		Chassis	439,550		293,375
Subtotal	Subtotal	1,750,087		1,444,274		Subtotal	1,995,824		1,892,225
Excess of FIFO costs over LIFO costs	Excess of FIFO costs over LIFO costs	(78,240)		(74,890)		Excess of FIFO costs over LIFO costs	(142,952)		(137,452)
Total inventories, net	Total inventories, net	$	1,671,847	$	1,369,384	Total inventories, net	$	1,852,872	$	1,754,773

Of the ~~$1,750,087~~$1,995,824 and ~~$1,444,274~~$1,892,225 of inventories at October 31, ~~2021~~2022 and July 31, ~~2021, $1,086,598~~2022, $1,196,619 and ~~$946,767,~~$1,170,554, respectively, were valued on the first-in, first-out (“FIFO”) method, and ~~$663,489~~$799,205 and ~~$497,507,~~$721,671, respectively, were valued on the last-in, first-out (“LIFO”) method.

7. Property, Plant and Equipment

Property, plant and equipment consists of the following:


		October 31, 2021		July 31, 2021			October 31, 2022		July 31, 2022
Land	Land	$	149,202	$	142,746	Land	$	139,062	$	142,221
Buildings and improvements	Buildings and improvements	847,315		837,065		Buildings and improvements	952,806		926,485
Machinery and equipment	Machinery and equipment	568,617		523,714		Machinery and equipment	605,807		601,480
Rental vehicles	Rental vehicles	69,748		75,449		Rental vehicles	70,207		67,414
Lease right-of-use assets – operating	Lease right-of-use assets – operating	47,335		42,601		Lease right-of-use assets – operating	44,158		44,407
Lease right-of-use assets – finance	Lease right-of-use assets – finance	6,823		7,010		Lease right-of-use assets – finance	6,077		6,264
Total cost	Total cost	1,689,040		1,628,585		Total cost	1,818,117		1,788,271
Less accumulated depreciation	Less accumulated depreciation	(471,017)		(443,454)		Less accumulated depreciation	(549,234)		(530,112)
Property, plant and equipment, net	Property, plant and equipment, net	$	1,218,023	$	1,185,131	Property, plant and equipment, net	$	1,268,883	$	1,258,159

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

1211

8. Intangible Assets and Goodwill

The components of amortizable intangible assets are as follows:


		October 31, 2021				July 31, 2021					October 31, 2022				July 31, 2022
				Accumulated				Accumulated					Accumulated				Accumulated
		Cost		Amortization		Cost		Amortization			Cost		Amortization		Cost		Amortization
Dealer networks/customer relationships	Dealer networks/customer relationships	$	1,139,935	$	347,875	$	861,562	$	327,751	Dealer networks/customer relationships	$	1,081,724	$	442,137	$	1,090,528	$	420,623
Trademarks	Trademarks	366,152		66,670		311,208		62,675		Trademarks	347,992		81,482		351,152		77,660
Design technology and other intangibles	Design technology and other intangibles	273,370		67,615		215,956		62,237		Design technology and other intangibles	249,374		85,181		253,918		80,465

Non-compete agreements	Non-compete agreements	1,400		408		1,400		292		Non-compete agreements	1,400		875		1,400		758
Total amortizable intangible assets	Total amortizable intangible assets	$	1,780,857	$	482,568	$	1,390,126	$	452,955	Total amortizable intangible assets	$	1,680,490	$	609,675	$	1,696,998	$	579,506

Estimated future amortization expense is as follows:


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 remainder of the fiscal year ending July 31, 2023				For the remainder of the fiscal year ending July 31, 2023	$	103,930
For the fiscal year ending July 31, 2024	For the fiscal year ending July 31, 2024	134,611		For the fiscal year ending July 31, 2024	127,009
For the fiscal year ending July 31, 2025	For the fiscal year ending July 31, 2025	122,120		For the fiscal year ending July 31, 2025	115,118
For the fiscal year ending July 31, 2026	For the fiscal year ending July 31, 2026	110,251		For the fiscal year ending July 31, 2026	103,770
For the fiscal year ending July 31, 2027 and thereafter		657,373
For the fiscal year ending July 31, 2027				For the fiscal year ending July 31, 2027	94,899
For the fiscal year ending July 31, 2028 and thereafter				For the fiscal year ending July 31, 2028 and thereafter	526,089
		$	1,298,289		$	1,070,815

Changes in the carrying amount of goodwill by reportable segment for the three months ended October 31, 2022 are summarized as follows:


	North American Towables		North American Motorized		European		Other		Total
Net balance as of August 1, 2022	$	344,975	$	53,875	$	893,383	$	511,918	$	1,804,151
Fiscal 2023 activity:

Measurement period adjustments	—		—		—		4,682		4,682
Foreign currency translation	—		—		(24,879)		—		(24,879)

Net balance as of October 31, 2022	$	344,975	$	53,875	$	868,504	$	516,600	$	1,783,954

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


	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

1312

9. Concentration of Risk

One dealer, FreedomRoads, LLC, accounted for 15% of the Company’s consolidated net sales for the three-month period ended October 31, 2022 and 14% of the Company’s consolidated net sales for ~~both~~ the three-month ~~periods~~period ended October 31, ~~2021 and October 31, 2020.~~2021. The vast majority of the sales to this dealer are reported within the North American Towables and North American Motorized reportable segments. This dealer also accounted for 16% and ~~15%~~10% of the Company’s consolidated trade accounts receivable at October 31, ~~2021~~2022 and July 31, ~~2021,~~2022, 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 October 31, ~~2021~~2022 and July 31, ~~2021~~2022 are as follows:


		Input Level	October 31, 2021		July 31, 2021			Input Level	October 31, 2022		July 31, 2022
Cash equivalents	Cash equivalents	Level 1	$	204	$	204	Cash equivalents	Level 1	$	80,584	$	—
Deferred compensation plan mutual fund assets	Deferred compensation plan mutual fund assets	Level 1	$	55,269	$	51,085	Deferred compensation plan mutual fund assets	Level 1	$	43,957	$	42,312

Equity investments							Equity investments	Level 1	$	11,956	$	—
Foreign currency forward contract asset							Foreign currency forward contract asset	Level 2	$	743	$	—
Foreign currency forward contract liability	Foreign currency forward contract liability	Level 2	$	282	$	88	Foreign currency forward contract liability	Level 2	$	—	$	80
Interest rate swap liabilities		Level 2	$	9,820	$	13,369
Interest rate swap asset, net							Interest rate swap asset, net	Level 2	$	1,137	$	—
Interest rate swap liability, net							Interest rate swap liability, net	Level 2	$	—	$	227
Commodities swap agreements liability							Commodities swap agreements liability	Level 2	$	871	$	—

Cash equivalents represent investments in ~~government and other~~short-term money market ~~funds traded in an active market and~~instruments that are direct obligations of the US Treasury and/or repurchase agreements backed by Treasury obligations. These investments 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.

Equity investments represent stock investments that are publicly traded in an active market.

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.

The fair value of the commodities swaps is determined by discounting the estimated future cash flows based on the applicable observable commodity 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 October 31,						Three Months Ended October 31,
			2021		2020				2022		2021
Beginning balance	Beginning balance		$	267,620	$	252,869	Beginning balance		$	317,908	$	267,620
Provision	Provision		84,539		50,872		Provision		89,425		84,539
Payments	Payments		(70,253)		(57,575)		Payments		(80,141)		(70,253)
Acquisition	Acquisition		9,828		—		Acquisition		—		9,828
Foreign currency translation	Foreign currency translation		(1,117)		(612)		Foreign currency translation		(1,479)		(1,117)

Ending balance	Ending balance		$	290,617	$	245,554	Ending balance		$	325,713	$	290,617

12. Long-Term Debt

The components of long-term debt are as follows:


		October 31, 2021		July 31, 2021			October 31, 2022		July 31, 2022
Term loan	Term loan	$	1,527,639	$	1,540,013	Term loan	$	1,099,179	$	1,124,209
Asset-based credit facility	Asset-based credit facility	159,935		—		Asset-based credit facility	85,000		100,000
Senior unsecured notes	Senior unsecured notes	500,000		—		Senior unsecured notes	500,000		500,000
Unsecured notes	Unsecured notes	29,113		29,728		Unsecured notes	24,785		25,495
Other debt	Other debt	67,536		70,952		Other debt	46,106		50,207
Gross long-term debt		2,284,223		1,640,693
Total long-term debt						Total long-term debt	1,755,070		1,799,911
Debt issuance costs, net of amortization	Debt issuance costs, net of amortization	(39,798)		(33,461)		Debt issuance costs, net of amortization	(30,261)		(32,482)
Total long-term debt, net of debt issuance costs	Total long-term debt, net of debt issuance costs	2,244,425		1,607,232		Total long-term debt, net of debt issuance costs	1,724,809		1,767,429
Less: current portion of long-term debt	Less: current portion of long-term debt	(12,159)		(12,411)		Less: current portion of long-term debt	(10,173)		(13,190)
Total long-term debt, net, less current portion	Total long-term debt, net, less current portion	$	2,232,266	$	1,594,821	Total long-term debt, net, less current portion	$	1,714,636	$	1,754,239

~~The~~As discussed in Note 12 to the Company’s Consolidated Financial Statements included in the Fiscal 2022 Form 10-K, the Company is a party to a seven-year term loan (“term loan”) agreement, which ~~originally consisted~~consists of both a ~~United States~~U.S. Dollar-denominated term loan tranche and a Euro-denominated term loan tranche, and a ~~$750,000~~$1,000,000 revolving asset-based credit facility (“ABL”). Subject to earlier termination, the term loan matures on February 1, 2026 and the ABL ~~originally matured~~matures 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~~loan has not been extended or refinanced. ~~The ABL interest rate remains unchanged.~~

As of October 31, ~~2021,~~2022, the entire outstanding U.S. term loan tranche balance of ~~$941,900~~$661,900 was subject to a LIBOR-based rate totaling ~~3.125%~~6.813%. The interest rate on ~~$432,250~~$220,350 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%. plus a 3.000% interest rate spread. As of July 31, ~~2021,~~2022, the entire outstanding U.S. term loan tranche balance of ~~$941,900~~$671,900 was subject to a LIBOR-based rate of ~~3.125%~~5.375%, but the interest rate on ~~$482,138~~$273,325 of that balance was fixed at 5.466% through ~~an interest rate swap, dated~~the March 18, 2019 ~~by swapping the underlying 1-month LIBOR~~interest rate ~~for a fixed rate of 2.466%.~~swap. The total interest rate on the October 31, ~~2021~~2022 outstanding Euro term loan tranche balance of ~~$585,739~~$437,279 was ~~3.00%~~4.19%, and the total interest rate on the July 31, ~~2021~~2022 outstanding Euro term loan tranche of ~~$598,113~~$452,309 was 3.00%.

As of October 31, 2021, the total weighted average interest rate on the outstanding ABL borrowings of $159,935 was 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 months ended October 31, ~~2021~~2022 or ~~2020.~~2021.

As of October 31, 2022, the total weighted-average interest rate on the outstanding ABL borrowings of $85,000 was 4.436%.

1514

As of July 31, 2022, the total weighted-average interest rate on the outstanding ABL borrowings of $100,000 was 3.048%. 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.

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 0.50%, or LIBOR plus 1.25% to 1.50%, based on adjusted excess availability as defined in the ABL agreement. This agreement also includes a 0.20% unused facility fee.

The unused availability under the ABL is generally available to the Company for general operating purposes and, based on October 31, ~~2021~~2022 eligible accounts receivable and eligible inventory balances, net of amounts drawn, totaled approximately ~~$810,000.~~$890,000.

As discussed in Note 12 to the Company’s Consolidated Financial Statements included in the Fiscal 2022 Form 10-K, 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”) that will mature on October 15, 2029 unless redeemed or repurchased earlier. Interest on the Senior Unsecured Notes is payable in semi-annual installments on April 15 and October 15 of each year.

The unsecured notes of 25,000 Euro ($~~29,113)~~24,785) relate to long-term debt of our European segment. There are two series, 20,000 Euro ($~~23,290)~~19,828) with an interest rate of 1.945% maturing in March 2025, and 5,000 Euro ($~~5,823)~~4,957) 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 ~~2.40%~~2.38% to ~~3.43%~~2.87%.

Total contractual gross debt maturities are as follows:


For the remainder of the fiscal year ending July 31, 2022		$	12,159
For the fiscal year ending July 31, 2023		11,942
For the remainder of the fiscal year ending July 31, 2023				For the remainder of the fiscal year ending July 31, 2023	$	8,390
For the fiscal year ending July 31, 2024	For the fiscal year ending July 31, 2024	12,066		For the fiscal year ending July 31, 2024	10,059
For the fiscal year ending July 31, 2025	For the fiscal year ending July 31, 2025	35,234		For the fiscal year ending July 31, 2025	29,778
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, 2026	1,187,038
For the fiscal year ending July 31, 2027 and thereafter		522,131
For the fiscal year ending July 31, 2027				For the fiscal year ending July 31, 2027	2,429
For the fiscal year ending July 31, 2028 and thereafter				For the fiscal year ending July 31, 2028 and thereafter	517,376
		$	2,284,223		$	1,755,070

For the three ~~months~~month periods ended October 31, 2022 and October 31, 2021, interest expense on the term loan, ABL, Senior Unsecured Notes and other debt facilities ~~was $17,643. For~~totaled $20,179 and $17,643, respectively, and also included the ~~three months ended October 31, 2020, interest expense on the term loan, ABL and other debt facilities was $20,588.~~

~~In fiscal 2019, the Company incurred~~amortization of capitalized 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 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, and certain creditor fees of $2,127 related to the September 1, 2021 expansion of the ABL,Senior Unsecured Notes, 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 termrespective terms of those ~~notes. The Company recorded total charges related to the amortization~~arrangements, of ~~these term loan, ABL~~$2,835 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 $2,723 for the three months ended October 31, 2020. respectively.

The unamortized balance of ~~the~~all capitalized ABL facility fees was ~~$6,304~~$5,133 at October 31, ~~2021~~2022 and ~~$7,005~~$5,940 as of July 31, ~~2021~~2022 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 October 31, ~~2021~~2022 and July 31, ~~2021~~2022 was ~~$1,526,176~~$1,072,883 and ~~$1,551,141,~~$1,097,136, respectively, and 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 $1,527,639 and $1,540,013 at October 31, 2021~~2022 and July 31, ~~2021, respectively,~~2022 was $396,400 and ~~the carrying value of the Company’s Senior Unsecured Notes was $500,000 at October 31, 2021.~~$405,000, respectively. The fair values of the Company’s ~~term loan~~term-loan debt and Senior Unsecured Notes are primarily estimated using Level 2 inputs as defined by ASC 820, ~~primarily~~ based on quoted ~~market prices.~~prices in markets that are not active. The fair value of other debt held by the Company approximates ~~fair~~carrying value.

1615

13. Provision for Income Taxes

The overall effective income tax rate for the three months ended October 31, 2022 was 23.3%. This rate was favorably impacted by certain foreign tax rate differences which include certain interest income not subject to corporate income tax. The favorable foreign rate differential was partially offset by tax expense from the vesting of share-based compensation awards during the three months ended October 31, 2022. The overall effective income tax rate for the three months ended October 31, 2021 was 21.7%~~. This rate~~, which was 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 in the three months ended October 31, 2021 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 October 31, 2020 was 21.0%. This rate was favorably impacted by certain foreign tax rate differences, which include certain interest income not subject to corporate income tax.awards.

Within the next 12 months, the Company anticipates a decrease of approximately ~~$3,900~~$1,700 in unrecognized tax benefits, and ~~$670~~$300 in accrued interest related to unrecognized tax benefits recorded as of October 31, ~~2021,~~2022, 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. The Company is currently under exam by certain foreign jurisdictions for fiscal years ended 2016 through 2019. For U.S. federal income tax purposes, fiscal years ~~2018~~2019 through ~~2020~~2021 remain open and could be subject to examination. In major state jurisdictions, fiscal years ~~2018~~2019 through ~~2020~~2021 generally remain open and could be subject to examination. In major foreign jurisdictions, fiscal years ~~2015~~2016 through 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 ~~$2,322,610~~$4,408,085 and ~~$1,821,012~~$4,308,524 as of October 31, ~~2021~~2022 and July 31, ~~2021,~~2022, respectively. The commitment term is generally up to 18 months.

The Company accounts for the guarantee under repurchase agreements of independent dealers’ financing by deferring a portion of the related product sale that represents the estimated fair value of the guarantee at inception. This estimate is based on recent historical experience supplemented by the Company’s assessment of current economic and other conditions affecting its independent dealers. This deferred amount is included in the repurchase and guarantee reserve balances of ~~$6,980~~$11,763 and ~~$6,023~~$11,346 as of October 31, ~~2021~~2022 and July 31, ~~2021,~~2022, 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 months ended October 31, ~~2021~~2022 and October 31, ~~2020~~2021 were not material. Based on current market conditions and other conditions affecting its independent dealers, 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~~

A product recall was issued in ~~the fourth quarter of~~late fiscal 2021 related to certain purchased parts utilized in certain of our ~~North American towable products.~~products, and a reserve to cover anticipated costs was established at that time. During fiscal 2022, the reserve was adjusted quarterly based on developments involving the recall, including our expectations regarding the extent of vendor reimbursements and the estimated total cost of the recall. The Company ~~believes that~~has been, and will continue to be, reimbursed for a portion of the costs it ~~is legally entitled to full reimbursement of costs~~will incur related to this ~~recall from~~recall. In addition, the ~~applicable vendor suppliers. However,~~Company accrued expenses during fiscal 2022 based on ~~a current assessment,~~developments related to an ongoing investigation by certain German-based authorities regarding the adequacy of historical disclosures of vehicle weight in advertisements and other Company-provided literature in Germany. The Company ~~has recorded an additional expense~~is fully cooperating with the investigation. In the first quarter of ~~$22,000~~fiscal 2023, the Company’s adjustments related to these matters were not material, and in the first quarter of fiscal 2022, the Company recognized $22,000 of net expense as a component of ~~sales,~~selling, general and administrative costs related to the product recall issue. Based on current available information, the Company does not believe there will be a material, adverse impact to our future results of operations and cash flows due to ~~collection uncertainties.~~these matters.

15. Leases

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

Certain of the 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-month periods ended October 31, ~~2021~~2022 and October 31, ~~2020~~2021 were as follows:


		Three Months Ended October 31,						Three Months Ended October 31,
			2021		2020				2022		2021
Operating lease cost	Operating lease cost		$	6,308	$	3,877	Operating lease cost		$	6,879	$	6,308
Finance lease cost:	Finance lease cost:						Finance lease cost:
Amortization of right-of-use assets	Amortization of right-of-use assets		186		136		Amortization of right-of-use assets		186		186
Interest on lease liabilities	Interest on lease liabilities		125		126		Interest on lease liabilities		105		125
Total lease cost	Total lease cost		$	6,619	$	4,139	Total lease cost		$	7,170	$	6,619

Other information related to leases was as follows:


		Three Months Ended October 31,					Three Months Ended October 31,
Supplemental Cash Flows Information	Supplemental Cash Flows Information	2021		2020		Supplemental Cash Flows Information	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:					Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	Operating cash flows from operating leases	$	6,309	$	3,855	Operating cash flows from operating leases	$	6,853	$	6,309
Right-of-use assets obtained in exchange for lease obligations:	Right-of-use assets obtained in exchange for lease obligations:					Right-of-use assets obtained in exchange for lease obligations:
Operating leases	Operating leases	$	8,401	$	2,348	Operating leases	$	3,395	$	8,401

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


Supplemental Balance Sheet Information	October 31, 2022		July 31, 2022
Operating leases:
Operating lease right-of-use assets	$	44,158	$	44,407

Operating lease liabilities
Other current liabilities	$	9,437	$	9,406
Other long-term liabilities	34,622		34,830
Total operating lease liabilities	$	44,059	$	44,236

Finance leases:
Finance lease right-of-use assets	$	6,077	$	6,264

Finance lease liabilities
Other current liabilities	$	1,085	$	1,215
Other long-term liabilities	3,296		3,476
Total finance lease liabilities	$	4,381	$	4,691


	October 31, 2022		July 31, 2022
Weighted-average remaining lease term:
Operating leases	10.0 years		10.2 years
Finance leases	4.2 years		4.4 years
Weighted-average discount rate:
Operating leases	3.9	%	3.6	%
Finance leases	9.3	%	9.2	%

Future minimum rental payments required under operating and finance leases as of October 31, 2022 were as follows:


	Operating Leases		Finance Leases
For the remainder of the fiscal year ending July 31, 2023	$	11,287	$	1,186
For the fiscal year ending July 31, 2024	12,175		1,059
For the fiscal year ending July 31, 2025	8,787		1,083
For the fiscal year ending July 31, 2026	5,989		1,107
For the fiscal year ending July 31, 2027	4,432		896
For the fiscal year ending July 31, 2028 and thereafter	18,532		58
Total future lease payments	61,202		5,389
Less: amount representing interest	(17,143)		(1,008)
Total reported lease liability	$	44,059	$	4,381

October 31, 2021 July 31, 2021
Weighted-average remaining lease term:
Operating leases 10.4 years 11.1 years
Finance leases 4.9 years 5.1 years
Weighted-average discount rate:
Operating leases 3.4 % 3.2 %
Finance leases 9.0 % 8.9 %

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

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 October 31, ~~2021~~2022 and October 31, ~~2020~~2021 for stock-based awards totaled ~~$6,027~~$8,392 and ~~$5,768,~~$6,027, respectively.

Share Repurchase Program

On December 21, 2021, the Company’s Board of Directors authorized Company management to utilize up to $250,000 to repurchase shares of the Company’s common stock through December 21, 2024. On June 24, 2022, the Board authorized Company management to utilize up to an additional $448,321 to repurchase shares of the Company’s common stock through July 31, 2025.

Under the two share repurchase authorizations, the Company is authorized to repurchase, on a discretionary basis and from time-to-time, outstanding shares of its common stock in the open market, in privately negotiated transactions or by other means. The timing and amount of share repurchases will be determined at the discretion of the Company’s management team based upon the market price of the stock, management's evaluation of general market and economic conditions, cash availability and other factors. The share repurchase program may be suspended, modified or discontinued at any time, and the Company has no obligation to repurchase any amount of its common stock under this program.

During the three-month period ended October 31, 2022, the Company purchased 338,733 shares of its common stock, at various times in the open market, at a weighted-average price of $75.01 and held them as treasury shares at an aggregate purchase price of $25,407, all from the December 21, 2021 authorization. Since the inception of the December 21, 2021 authorization, the Company has purchased 2,282,976 shares of its common stock, at various times in the open market, at a weighted-average price of $83.45 and held them as treasury shares at an aggregate purchase price of $190,514.

As of October 31, 2022, the remaining amount of the Company's common stock that may be repurchased under the December 21, 2021 $250,000 authorization expiring on December 21, 2024 is $59,486. As of October 31, 2022, the remaining amount of the Company’s common stock that may be repurchased under the June 24, 2022 authorization expiring on July 31, 2025 is $448,321. As of October 31, 2022, the total remaining amount of the Company’s common stock that may be repurchased under these two authorizations is $507,807.

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, new and used vehicle sales at owned dealerships and RV rentals. ~~All material revenue streams are considered 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. All material revenue streams are considered point-in-time.


		Three Months Ended October 31,						Three Months Ended October 31,
NET SALES:	NET SALES:		2021		2020		NET SALES:		2022		2021
Recreational vehicles	Recreational vehicles						Recreational vehicles
North American Towables	North American Towables						North American Towables
Travel Trailers	Travel Trailers		$	1,409,624	$	837,900	Travel Trailers		$	822,869	$	1,409,624
Fifth Wheels	Fifth Wheels		831,210		554,144		Fifth Wheels		494,937		831,210
Total North American Towables	Total North American Towables		2,240,834		1,392,044		Total North American Towables		1,317,806		2,240,834
North American Motorized	North American Motorized						North American Motorized
Class A	Class A		409,499		158,555		Class A		404,578		409,499
Class C	Class C		360,006		275,399		Class C		490,787		360,006
Class B	Class B		155,523		59,901		Class B		228,154		155,523
Total North American Motorized	Total North American Motorized		925,028		493,855		Total North American Motorized		1,123,519		925,028
Total North America	Total North America		3,165,862		1,885,899		Total North America		2,441,325		3,165,862
European	European						European
Motorcaravan	Motorcaravan		316,264		318,343		Motorcaravan		239,785		316,264
Campervan	Campervan		177,783		143,400		Campervan		139,166		177,783
Caravan	Caravan		60,680		55,195		Caravan		61,615		60,680
Other RV-related	Other RV-related		78,270		85,550		Other RV-related		63,736		78,270
Total European	Total European		632,997		602,488		Total European		504,302		632,997
Total recreational vehicles	Total recreational vehicles		3,798,859		2,488,387		Total recreational vehicles		2,945,627		3,798,859
Other	Other		257,830		80,707		Other		232,648		257,830
Intercompany eliminations	Intercompany eliminations		(98,465)		(31,734)		Intercompany eliminations		(70,191)		(98,465)
Total	Total		$	3,958,224	$	2,537,360	Total		$	3,108,084	$	3,958,224

18. Accumulated Other Comprehensive Income (Loss)

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


		Three Months Ended October 31, 2021													Three Months Ended October 31, 2022
		Foreign Currency Translation Adjustment		Unrealized Gain (Loss) on Derivatives		Other		AOCI, net of tax, Attributable to THOR		Non-controlling Interests		Total AOCI			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	Balance at beginning of period, net of tax	$	54,152	$	(8,655)	$	(876)	$	44,621	$	(772)	$	43,849	Balance at beginning of period, net of tax	$	(183,453)	$	675	$	1,171	$	(181,607)	$	(2,205)	$	(183,812)
OCI before reclassifications	OCI before reclassifications	(35,007)		585		—		(34,422)		(160)		(34,582)		OCI before reclassifications	(42,895)		1,123		—		(41,772)		(434)		(42,206)
Income taxes associated with OCI before reclassifications (1)	Income taxes associated with OCI before reclassifications (1)	—		(132)		—		(132)		—		(132)		Income taxes associated with OCI before reclassifications (1)	—		(269)		—		(269)		—		(269)
Amounts reclassified from AOCI	Amounts reclassified from AOCI	—		2,528		—		2,528		—		2,528		Amounts reclassified from AOCI	—		(62)		—		(62)		—		(62)
Income taxes associated with amounts reclassified from AOCI	Income taxes associated with amounts reclassified from AOCI	—		(626)		—		(626)		—		(626)		Income taxes associated with amounts reclassified from AOCI	—		12		—		12		—		12
OCI, net of tax for the fiscal year	OCI, net of tax for the fiscal year	(35,007)		2,355		—		(32,652)		(160)		(32,812)		OCI, net of tax for the fiscal year	(42,895)		804		—		(42,091)		(434)		(42,525)
AOCI, net of tax	AOCI, net of tax	$	19,145	$	(6,300)	$	(876)	$	11,969	$	(932)	$	11,037	AOCI, net of tax	$	(226,348)	$	1,479	$	1,171	$	(223,698)	$	(2,639)	$	(226,337)

		Three Months Ended October 31, 2020													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			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	Balance at beginning of period, net of tax	$	46,512	$	(18,823)	$	(696)	$	26,993	$	(855)	$	26,138	Balance at beginning of period, net of tax	$	54,152	$	(8,655)	$	(876)	$	44,621	$	(772)	$	43,849
OCI before reclassifications	OCI before reclassifications	(19,106)		732		—		(18,374)		113		(18,261)		OCI before reclassifications	(35,007)		585		—		(34,422)		(160)		(34,582)
Income taxes associated with OCI before reclassifications (1)	Income taxes associated with OCI before reclassifications (1)	—		(174)		—		(174)		—		(174)		Income taxes associated with OCI before reclassifications (1)	—		(132)		—		(132)		—		(132)
Amounts reclassified from AOCI	Amounts reclassified from AOCI	—		3,639		—		3,639		—		3,639		Amounts reclassified from AOCI	—		2,528		—		2,528		—		2,528
Income taxes associated with amounts reclassified from AOCI	Income taxes associated with amounts reclassified from AOCI	—		(865)		—		(865)		—		(865)		Income taxes associated with amounts reclassified from AOCI	—		(626)		—		(626)		—		(626)
OCI, net of tax for the fiscal year	OCI, net of tax for the fiscal year	(19,106)		3,332		—		(15,774)		113		(15,661)		OCI, net of tax for the fiscal year	(35,007)		2,355		—		(32,652)		(160)		(32,812)
AOCI, net of tax	AOCI, net of tax	$	27,406	$	(15,491)	$	(696)	$	11,219	$	(742)	$	10,477	AOCI, net of tax	$	19,145	$	(6,300)	$	(876)	$	11,969	$	(932)	$	11,037

(1)We do not recognize deferred taxes for a majority of the foreign currency translation gains and losses because we do not anticipate reversal in the foreseeable future.

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 impact of inflation on the cost of our products as well as on general consumer demand;

•the effect of raw material and commodity price fluctuations, and/or raw material, commodity or chassis supply constraints;

•the impact of war, military conflict, terrorism and/or cyber-attacks, including state-sponsored or ransom attacks;

•the impact of sudden or significant adverse changes in the cost and/or availability of energy or fuel, including those caused by geopolitical events, on our costs of operation, on raw material prices, on our suppliers, on our independent dealers or on retail customers;

•the dependence on a small group of suppliers for certain components used in production, including chassis;

•interest rate fluctuations and their potential impact on the general economy and, specifically, on our profitability and on our independent dealers and consumers;

•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;

•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 dependence on a small group of 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 independent dealers, ~~and their~~ retail customers or on our suppliers;

•the costs of compliance with governmental regulation;

•the impact of an adverse outcome or conclusion related to current or future litigation or regulatory investigations;

•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 and related employee benefits to attract and retain production personnel in times of high demand;

•the loss or reduction of sales to key independent dealers;

•disruption of the delivery of units to ~~dealers;~~independent dealers or the disruption of delivery of raw materials, including chassis, to our facilities;

•increasing costs for freight and transportation;

•

the ability to protect our information technology systems from data breaches, cyber-attacks and/or network disruptions;

•asset impairment charges;

•competition;

•the impact of ~~potential~~ losses under repurchase 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, ~~2021.~~2022.

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”) in the ~~world.~~world based on units sold and revenue. 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 nine months ended September 30, ~~2021,~~2022, THOR’s current combined U.S. and Canadian market share based on units was approximately ~~41.9%~~42.1% for travel trailers and fifth wheels combined and approximately ~~47.6%~~48.6% for motorhomes. In Europe, according to the European Caravan Federation ~~and based on unit registrations for Europe's original equipment manufacturer~~ (“~~OEM”~~ECF”) ~~reporting countries,~~, our European market share for the nine months ended September 30, ~~2021~~2022 based on units was approximately ~~24.9%~~21.6% for motorcaravans and campervans combined and approximately ~~18.1%~~18.7% 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 other 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~~We generally do not finance independent dealers directly, but we do provide repurchase agreements to the independent dealers’ floor plan lenders.

We generally have financed our growth through a combination of ~~our~~internally generated cash flows from operations and, ~~the RV industry, as well as related governmental actions and labor shortages throughout the~~when needed, outside credit facilities. Ongoing supply chain constraints, particularly chassis constraints within our European operations, have and ~~within THOR, have impacted and~~could continue to impact our business and our consolidated financial results and financial position. In ~~particular,~~addition, the ~~pandemic~~impact of recent inflation on consumer confidence, which historically has ~~directly or indirectly, contributed to chassis~~been highly correlated with RV retail sales, and ~~certain other supply-side constraints, as described below. Additional~~the impact of inflation on the availability of discretionary funds of our end consumers, combined with rapidly rising interest rates impacting both our independent dealers and the end consumer, may have a negative impact on future demand for our products at both the wholesale and retail levels. Furthermore, 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 continuing COVID-19 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~~These risks to our business ~~financial results and financial position. Refer also to the COVID-19 related risk factors disclosed~~are more fully described in Part I,1, Item 1A of our Annual Report on Form 10-K for the fiscal year ended July 31, ~~2021.~~2022.

Recent Events

23Share Repurchase Program

Under these two share repurchase authorizations, the Company is authorized to repurchase, on a discretionary basis and from time-to-time, outstanding shares of its common stock in the open market, in privately negotiated transactions or by other means.

~~Recent Events~~

As of October 31, 2022, the remaining amount of the Company's common stock that may be repurchased under the $250,000 December 21, 2021 authorization expiring on December 21, 2024 is $59,486. As of October 31, 2022, the remaining amount of the Company’s common stock that may be repurchased under the June 24, 2022 authorization expiring on July 31, 2025 is $448,321. As of October 31, 2022, the total remaining amount of the Company’s common stock that may be repurchased under these two authorizations is $507,807.

Inflation Reduction Act of 2022

The Inflation Reduction Act of 2022 was enacted in August 2022. Among other provisions, this statute provides for a 1% tax to be imposed on the fair market value of shares repurchased by issuers whose shares are traded on an established securities market, subject to certain exceptions. The tax applies to repurchases made after December 31, 2022.

Issuance of Senior Unsecured Notes

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 ~~October~~April 15 and ~~April~~October 15 of each ~~year, beginning with the first payment on April 15, 2022.~~year. 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.

Airxcel Acquisition

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 ~~they sell~~are sold primarily to RV 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~~total cash isconsideration to be paid was subject to ~~standard post-closing adjustments,~~the final determination of the actual acquired net working capital as of the close of business on September 1, 2021, which determination was finalized in the second quarter of fiscal 2022 and ~~was funded through a combination~~brought the final cash consideration to $745,279, net of ~~cash-on-hand and $625,000 in borrowings from the Company’s ABL.~~cash acquired. 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.~~ABL.

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

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~~RV 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 and net sales.

North American RV independent dealer inventory of our North American RV products as of October 31, ~~2021~~2022 increased ~~36.9%~~48.4% to approximately ~~82,400~~122,300 units, compared to approximately ~~60,200 units as of October 31, 2020. The acquisition of Tiffin Group since the prior-year period accounted for approximately 550 of the~~ 82,400 units as of October 31, 2021. As of October 31, 2022, we believe North American dealer inventory levels have reached historical, normalized levels for most of our towable products, while dealer inventory levels for our motorized product lines are still generally below historical stocking levels. Due to the combination of the increased cost of RV products due to inflationary cost increases over recent periods and the rapid increase in interest rates, we believe dealers are reevaluating the stocking levels that they will elect to carry in future periods, which may be less than historical stocking levels.

THOR’s North American RV backlog as of October 31, 2022 decreased $10,289,938, or 69.9%, to $4,432,138 compared to $14,722,076 as of October 31, 2021. As noted above, dealer inventory levels at October 31, 2022 were at historical, normalized levels for most of our towable products and still generally below historical levels for our motorized products. As of October 31, 2021, North American dealer inventory levels ~~continue to be~~were well below optimal stocking levels for both towable and motorized products, which ~~has~~ led to ~~ongoing record backlogs. THOR’s North American RV~~significantly higher dealer orders and backlog at that time, which were primarily reduced 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 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 well as an underlying desire by many to get back to nature and relax with family and friends.we filled outstanding orders.

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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
Nine Months Ended September 30, Increase %
2021 2020 (Decrease) Change
North American Towable Units 410,215 271,770 138,445 50.9
North American Motorized Units 42,422 28,330 14,092 49.7
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 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.


	U.S. and Canada Wholesale Unit Shipments
	Nine Months Ended September 30,		Increase	%
	2022	2021	(Decrease)	Change
North American Towable Units	369,772	410,215	(40,443)	(9.9)
North American Motorized Units	45,822	42,422	3,400	8.0
Total	415,594	452,637	(37,043)	(8.2)

In December ~~2021,~~2022, RVIA issued a revised forecast for calendar year ~~2021~~2022 wholesale unit shipments. Under a most likely scenario, towable and motorized unit shipments are projected to ~~increase to~~be approximately ~~545,400~~435,700 units and ~~56,800~~59,600 units, respectively, for an annual total of approximately ~~602,200~~495,300 units, ~~up 39.9%~~down 17.5% from the ~~2020~~2021 calendar year wholesale shipments. The most likely forecast for calendar year ~~2021~~2022 could range from a lower estimate of approximately ~~593,600~~487,200 total units to an upper estimate of approximately ~~610,800~~503,500 units.

As part of their December ~~2021~~2022 forecast, RVIA also revised their estimates for calendar year ~~2022~~2023 wholesale unit shipments. In the most likely scenario, towable and motorized unit shipments are projected to ~~increase~~decrease to an approximated annual total of ~~613,700~~391,400 units, or ~~1.9% higher~~21.0% lower than the most likely scenario for calendar year ~~2021~~2022 wholesale shipments. This calendar year ~~2022~~2023 most likely forecast could range from a lower estimate of approximately ~~599,600~~379,200 total units to an upper estimate of approximately ~~627,600~~403,600 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 ~~years 2021 and 2022 may not follow typical~~year 2023 will return to historical seasonal patterns as ~~dealers respond to ongoing high~~dealer inventory levels and consumer demand ~~and then rebuild their inventory to optimal stocking levels.~~become more balanced.

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
		Nine Months Ended September 30,		Increase	%		Nine Months Ended September 30,		Increase	%
		2021	2020	(Decrease)	Change		2022	2021	(Decrease)	Change
North American Towable Units	North American Towable Units	431,754	376,667	55,087	14.6	North American Towable Units	335,407	435,896	(100,489)	(23.1)
North American Motorized Units	North American Motorized Units	42,760	41,187	1,573	3.8	North American Motorized Units	39,439	44,353	(4,914)	(11.1)
Total	Total	474,514	417,854	56,660	13.6	Total	374,846	480,249	(105,403)	(21.9)

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.

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We believe that near-term wholesale demand from our independent dealers will be impacted by anticipated and actual retail demand, interest rates and dealers’ desired inventory stocking levels, among other factors, while near-term North American retail demand will also be influenced by a number of factors, including consumer ~~demand has grown in recent periods due to an increasing~~confidence, the level of consumer spending on discretionary products, interest ~~in the RV lifestyle~~rates and the ~~ability~~rate of inflation. We believe future retail demand over the longer term will exceed historical, pre-pandemic levels as consumers continue to ~~connect with nature and has further accelerated since the onset of the COVID-19 pandemic. Many consumers recognize~~value 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. We believe that North American retail consumer demand had started to grow even before the COVID-19 pandemic due to an increasing interest in the RV lifestyle and the ability to connect with nature, and then accelerated since the onset of the pandemic, particularly in calendar 2021 and the first half of calendar 2022, which resulted in record retail sales during these periods. We believe this additional exposure to the RV lifestyle during this time will bring new consumers to the market over the longer term. We are also encouraged about the long-term demand given the continued robust web traffic to our websites and independent dealer websites, which in the past has been a positive indicator of future demand for our products.

Company North American Wholesale Statistics

The Company's North American wholesale RV shipments, for the nine-month periods ended September 30, ~~2021~~2022 and ~~2020~~2021 to correspond to the North American industry wholesale periods noted above, were as ~~follows (2021 period includes Tiffin Group shipments):~~follows:


		U.S. and Canada Wholesale Unit Shipments					U.S. and Canada Wholesale Unit Shipments
		Nine Months Ended September 30,		Increase	%		Nine Months Ended September 30,		Increase	%
		2021	2020	(Decrease)	Change		2022	2021	(Decrease)	Change
North American Towable Units	North American Towable Units	178,249	116,323	61,926	53.2	North American Towable Units	156,777	178,249	(21,472)	(12.0)
North American Motorized Units	North American Motorized Units	21,229	11,426	9,803	85.8	North American Motorized Units	23,243	21,229	2,014	9.5
Total	Total	199,478	127,749	71,729	56.1	Total	180,020	199,478	(19,458)	(9.8)

Company North American Retail Statistics

Retail statistics of the Company’s North American RV products, as reported by Stat Surveys, for the nine-month periods ended September 30, ~~2021~~2022 and ~~2020~~2021 to correspond to the North American industry retail periods noted above, were as ~~follows (2021 period includes Tiffin Group registrations):~~follows:


		U.S. and Canada Retail Unit Registrations					U.S. and Canada Retail Unit Registrations
		Nine Months Ended September 30,		Increase	%		Nine Months Ended September 30,		Increase	%
		2021	2020	(Decrease)	Change		2022	2021	(Decrease)	Change
North American Towable Units	North American Towable Units	176,997	157,867	19,130	12.1	North American Towable Units	137,619	178,643	(41,024)	(23.0)
North American Motorized Units	North American Motorized Units	20,349	15,757	4,592	29.1	North American Motorized Units	19,154	21,012	(1,858)	(8.8)
Total	Total	197,346	173,624	23,722	13.7	Total	156,773	199,655	(42,882)	(21.5)

~~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 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 anticipated supply chain issues noted below, which may limit the level to which we can increase output in the near term.

2627

~~Longer term,~~North American Outlook

Historically, retail sales have been negatively impacted by a ~~positive outlook~~number of economic conditions faced by our independent dealers, and ultimately retail consumers, such as the rate of unemployment, the rate of inflation, the level of consumer confidence, the disposable income of consumers, interest rates, credit availability, the health of the housing market, tax rates and fuel availability and prices. We believe these factors will continue to affect retail sales in fiscal 2023. In addition, due to inflationary pressures and higher interest rates, we believe that in fiscal 2023 our independent dealers will be reevaluating their desired stocking levels, which may result in lower than historical dealer inventory norms. It is difficult to predict how any or all of these factors will impact the RV industry or our business in a particular future period, however, we currently believe the remaining quarters of fiscal 2023 in particular will be negatively impacted by these factors, especially when compared to our strong fiscal 2022 and fiscal 2021 results. The COVID-19 pandemic caused a significant surge in demand for RVs beginning in earnest in fiscal 2021, which, when combined with the supply chain challenges resulting from the pandemic’s disruption of the North American economy, caused a significant increase in our revenues and backlog in calendar 2021. The first half of calendar 2022 saw continued robust wholesale demand as dealers restocked their inventories, in particular with towable products, and we were able to reduce our backlog as we filled outstanding orders. We believe consumer demand, as reflected in the reduced new RV ~~segment is supported by surveys~~registrations, slowed in the first nine months of calendar 2022 compared to the record registration in the prior year period, due to the impact of the factors identified above.

Despite the near-term challenges, we remain optimistic about North American retail sales in the long term, as there are many factors driving product demand. Surveys conducted by THOR, RVIA and others ~~which~~ show that Americans of all generations 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~~The recent growth in industry-wide RV sales has also resulted in exposing a much wider range of consumers to the lifestyle. We believe many of those who have been recently exposed to the industry for the first time will become future owners, and that those who became first-time owners since the pandemic will become long-term RVers, resulting in future repeat and upgrade sales opportunities. We also believe ~~retail sales will be dependent upon various economic conditions faced by~~ consumers ~~such as~~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, allowing consumers 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.ability to explore or unwind, often close to home. 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 which we believe will continue to affect, our ~~RV business,~~operating results include the costs of commodities, the cost and 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 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.

We ~~continue to be alerted by~~recently received communications from a ~~number of our~~key North American chassis ~~suppliers~~supplier that ~~supply constraints~~due to a production issue, certain chassis, which we have already purchased or ordered, are to be held and not sold until the production issue is corrected. This matter will likely result in certain 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 being delayed from our second quarter of ~~motorized RVs~~fiscal 2023 to a future quarter. We currently believe this matter will ~~also~~be fully resolved within fiscal 2023, but our sales and operating results between fiscal 2023 quarters will likely be impacted. While we have seen improvement in the supply of chassis in North America recently, we do not believe the chassis supply chain is fully back to pre-pandemic normalcy. It is currently extremely difficult to predict when or whether future supply chain issues related to chassis will arise. Modifying available chassis for certain motorized products to use for other products is not a viable alternative, particularly in the short term due to engineering requirements. These factors may continue to negatively impact our production schedule and cost structure as we try to balance our production and personnel staffing levels and schedules to the available chassis, often with short notice. The North American RVrecreational vehicle industry has, from time to time in the past and ~~continuing into~~during the fiscal quarter ended October 31, ~~2021,~~2022, experienced shortages of chassis for various ~~other~~ reasons, including component shortages, production delays or other production issues and ~~intermittent~~ work stoppages at the chassis manufacturers. ~~If these shortages continue for a prolonged period for any reason, it would have a negative impact on our sales and earnings.~~

~~The~~

While the North American RV industry ~~is also facing continuing cost increases,~~has at times faced supply shortages ~~and~~or delivery delays of other, non-chassis, raw material ~~components. While~~components, these issues have moderated and our supply chain ~~has been~~was 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 work in process inventory as of October 31, 2021. We believe these shortages and delays will continue to result in production delays or adjusted production rates, which will limit our ability to ramp up production to meet existing demand and could have a negative impact on our results of operations.2023 first quarter demand. 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~~any constraints, and we will continue to identify alternative ~~suppliers. The geographic centrality of the North American RV industry in northern Indiana,~~suppliers 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.possible.

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 ~~22.0%~~17.7% and ~~7.8%~~7.6% of the caravan and motorcaravan (including campervans) European market for the nine months ended September 30, ~~2021,~~2022, 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 1310 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.~~health conditions. 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 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.~~norms.

THOR’s European RV backlog as of October 31, ~~2021 increased $1,039,883,~~2022 decreased $363,150, or ~~45.0%~~10.8%, to ~~$3,348,355~~$2,985,205 compared to ~~$2,308,472~~$3,348,355 as of October 31, ~~2020,~~2021, with the ~~increase attributable~~decrease entirely due to ~~a number of causes, including~~ the ~~perceived safety of RV travel during~~decrease in the ~~COVID-19 pandemic, a strong desire to socially distance, a reduction in commercial air travel and cruises as~~current foreign exchange rate compared to ~~historic levels, an increase in various marketing campaigns to promote sales, and~~ the ~~low independent European RV dealer inventory levels noted above.~~prior year.

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							European Unit Registrations
		Motorcaravan and Campervan (2)			Caravan				Motorcaravan and Campervan (2)			Caravan
		Nine Months Ended September 30,		%	Nine Months Ended September 30,		%		Nine Months Ended September 30,		%	Nine Months Ended September 30,		%
		2021	2020	Change	2021	2020	Change		2022	2021	Change	2022	2021	Change
OEM Reporting Countries (1)	OEM Reporting Countries (1)	136,627	119,220	14.6	50,525	49,956	1.1	OEM Reporting Countries (1)	110,551	137,321	(19.5)	47,242	50,672	(6.8)
Non-OEM Reporting Countries (1)	Non-OEM Reporting Countries (1)	14,904	12,605	18.2	16,481	13,100	25.8	Non-OEM Reporting Countries (1)	13,266	16,537	(19.8)	12,450	16,538	(24.7)
Total	Total	151,531	131,825	14.9	67,006	63,056	6.3	Total	123,817	153,858	(19.5)	59,692	67,210	(11.2)

(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 Reporting Countries.” The “Non-OEM Reporting 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 BREXIT and extended shutdowns ~~due to~~as a result of the COVID-19 ~~pandemic and BREXIT.~~pandemic. Total European unit registrations are reported quarterly by the 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.)~~covered).

Company European Retail Statistics (1)


		European Unit Registrations (1)					European Unit Registrations (1)
		Nine Months Ended September 30,		Increase	%		Nine Months Ended September 30,		Increase	%
		2021	2020	(Decrease)	Change		2022	2021	(Decrease)	Change
Motorcaravan and Campervan	Motorcaravan and Campervan	33,999	31,295	2,704	8.6	Motorcaravan and Campervan	23,832	34,191	(10,359)	(30.3)
Caravan	Caravan	9,170	10,307	(1,137)	(11.0)	Caravan	8,811	9,214	(403)	(4.4)
Total OEM-Reporting Countries	Total OEM-Reporting Countries	43,169	41,602	1,567	3.8	Total OEM-Reporting Countries	32,643	43,405	(10,762)	(24.8)

(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 Reporting Countries.”

Note: Data from the ECF is subject to ~~adjustment,~~adjustments, 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 and motorized products including urban campers, campervans and small-to-large motorcaravans. Our product ~~offering is~~offerings are not limited to vehicles only but also ~~includes~~include accessories and services, including vehicle rentals. ~~In addition, we~~We address ~~our~~ European ~~end~~retail 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 continue expanding our retail customer reach ~~in particular,~~ to new and younger consumer segments.

The impact of current macroeconomic factors on our business, including increasing inflation and interest rates, supply chain constraints, environmental and sustainability regulations and geopolitical events, is uncertain. In addition, although its impact is lessening, 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 the various economic and regulatory conditions in the respective countries in which we sell our products, and ~~also depends~~ on our ability to manage through supply chain issues that have, and will continue to, limit the level to which we can increase output of our motorized products in the near term. End-customer demand for RVs depends strongly on consumer ~~confidence.~~confidence and availability of discretionary funds. Factors such as the rate of unemployment, the rate of inflation, 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~~regulatory restrictions, and, more recently, travel safety considerations, all influence retail sales. ~~We believe our~~Our long-term outlook for future ~~growth in~~European RV 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,~~Prior to the pandemic, we and our independent European dealers ~~have~~ marketed our European recreational vehicles through numerous RV fairs at the country and regional levels which ~~occur~~occurred throughout the calendar year. These fairs have historically been well-attended events that ~~allow~~allowed 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~~Since the start of the pandemic, the protection of the health of our employees, customers and ~~dealer-partners is~~dealers has been our top priority. As a result, we ~~have~~ cancelled our participation in most European trade fairs and major events ~~through the end of~~in calendar 2021 and ~~currently plan on~~ limited participation in early calendar 2022.

We did, however, attend the Caravan Salon show in Dusseldorf in late August/early September 2022 and anticipate participating in other major fiscal 2023 retail shows. The 2022 Caravan Salon show experienced near record attendance, demonstrating the high level of interest in the RV lifestyle despite the current macroeconomic uncertainties facing many consumers. In ~~place of the~~addition to our attendance at various strategic trade fairs going forward, 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~~approximately 1,100 active ~~dealer-partners~~independent dealers in Germany and throughout Europe that we do business with, we believe our European brands have one of the strongest and most professionally structured dealer and service networks in Europe.

Economic or industry-wide factors affecting our European RV ~~business~~operating results include the availability and costs of commodities and component parts 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 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.

We continue to ~~be alerted by a number of~~receive communications from our European chassis suppliers that due to a number of factors, including (1) supply constraints of key components that they require for the manufacturing of chassis, ~~including, but not limited to,~~such as semiconductor chips ~~will limit~~and engines, (2) demand outpacing their production capacity, (3) lack of ~~RV chassis. Continuing~~delivery driver availability once units are produced, (4) operational issues at certain OEMs, and (5) personnel shortages, their production and delivery of chassis will continue to be limited. Exacerbating this situation is the fact that certain of the chassis we have historically utilized in the production of certain of our higher volume products require a higher number of semiconductors compared to other chassis. Throughout fiscal 2022 and continuing into the second quarter ~~ended October 31, 2021,~~of fiscal 2023, we experienced delays in the receipt of, and ~~a reduction~~significant reductions in the volume of, chassis from our European chassis suppliers, limiting our ability to further increase ~~production.~~production of our motorized products. We expect these ongoing challenges to persist throughout fiscal 2023 and, in particular, anticipate continued delays in receipt of chassis in Europe as well as ~~a reduction~~significant reductions in the number of chassis to be received in fiscal ~~2022.~~2023 compared to our planned production rates. As a result, these limitations in the availability of chassis will ~~limit~~inhibit our ability to consistently maintain our planned production levels and will limit our ability to ramp up production and sales of certain products despite dealer demand for those products. Uncertainties related to changing emission standards may also impact the availability of chassis used in our production of certain European motorized RVs and could also impact consumer buying patterns.

In Europe, we also continue to experience cost increases, supply shortages and 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~~which resulted in an ~~increase in our~~elevated level of work in process inventory ~~as of October 31, 2021.~~on hand. We believe these shortages and delays will continue to result in production delays or adjusted production rates in the near term, which will limit our ability to ramp up production and sales to meet existing demand and ~~could~~will have a negative impact on our European operating ~~results.~~results, as we balance our labor and overhead costs to rapidly changing production schedules.

Where possible, to minimize the future impact of these supply chain constraints, we have identified a second-source supplier base for certain component ~~parts. However, due to~~parts, however, the overall scope of supply chain constraints within Europe and the engineering requirements ~~it is generally not possible to quickly change~~required with an alternate component part, particularly 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’ ability to supply our needs for key components, our costs of such components and our production output could be adversely affected. In addition, ifupon, has limited the impact of ~~COVID-19~~these alternative suppliers on reducing 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 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.near-term supply constraints.

In addition to material supply constraints, labor shortages may also impact our European operations. Currently, we are experiencing a ~~number~~shortage of available skilled workers due to near full employment rates in the ~~employees of our production facilities in Europe reside in one country while working in another, and therefore travel restrictions imposed by certain~~European countries ~~within Europe may negatively impact the availability of our labor force and therefore our production output.~~where we have manufacturing sites.

3031

Three Months Ended October 31, ~~2021~~2022 Compared to the Three Months Ended October 31, ~~2020~~2021


NET SALES:	NET SALES:	Three Months Ended October 31, 2021		Three Months Ended October 31, 2020		Change Amount		% Change	NET SALES:	Three Months Ended October 31, 2022		Three Months Ended October 31, 2021		Change Amount		% Change
Recreational vehicles	Recreational vehicles								Recreational vehicles
North American Towables	North American Towables	$	2,240,834	$	1,392,044	$	848,790	61.0	North American Towables	$	1,317,806	$	2,240,834	$	(923,028)	(41.2)
North American Motorized	North American Motorized	925,028		493,855		431,173		87.3	North American Motorized	1,123,519		925,028		198,491		21.5
Total North America	Total North America	3,165,862		1,885,899		1,279,963		67.9	Total North America	2,441,325		3,165,862		(724,537)		(22.9)
European	European	632,997		602,488		30,509		5.1	European	504,302		632,997		(128,695)		(20.3)
Total recreational vehicles	Total recreational vehicles	3,798,859		2,488,387		1,310,472		52.7	Total recreational vehicles	2,945,627		3,798,859		(853,232)		(22.5)
Other	Other	257,830		80,707		177,123		219.5	Other	232,648		257,830		(25,182)		(9.8)
Intercompany eliminations	Intercompany eliminations	(98,465)		(31,734)		(66,731)		(210.3)	Intercompany eliminations	(70,191)		(98,465)		28,274		28.7
Total	Total	$	3,958,224	$	2,537,360	$	1,420,864	56.0	Total	$	3,108,084	$	3,958,224	$	(850,140)	(21.5)


# OF UNITS:	# OF UNITS:					# OF UNITS:
Recreational vehicles	Recreational vehicles					Recreational vehicles
North American Towables	North American Towables	68,437	50,341	18,096	35.9	North American Towables	32,291	68,437	(36,146)	(52.8)
North American Motorized	North American Motorized	7,337	5,167	2,170	42.0	North American Motorized	8,150	7,337	813	11.1
Total North America	Total North America	75,774	55,508	20,266	36.5	Total North America	40,441	75,774	(35,333)	(46.6)
European	European	12,327	12,226	101	0.8	European	9,950	12,327	(2,377)	(19.3)
Total	Total	88,101	67,734	20,367	30.1	Total	50,391	88,101	(37,710)	(42.8)


GROSS PROFIT:	GROSS PROFIT:			% of Segment Net Sales			% of Segment Net Sales	Change Amount		% Change	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	$	408,539	18.2	$	219,848	15.8	$	188,691	85.8	North American Towables	$	195,866	14.9	$	408,539	18.2	$	(212,673)	(52.1)
North American Motorized	North American Motorized	139,721		15.1	68,102		13.8	71,619		105.2	North American Motorized	185,735		16.5	139,721		15.1	46,014		32.9
Total North America	Total North America	548,260		17.3	287,950		15.3	260,310		90.4	Total North America	381,601		15.6	548,260		17.3	(166,659)		(30.4)
European	European	67,444		10.7	72,381		12.0	(4,937)		(6.8)	European	68,865		13.7	67,444		10.7	1,421		2.1
Total recreational vehicles	Total recreational vehicles	615,704		16.2	360,331		14.5	255,373		70.9	Total recreational vehicles	450,466		15.3	615,704		16.2	(165,238)		(26.8)
Other, net	Other, net	39,720		15.4	18,521		22.9	21,199		114.5	Other, net	36,010		15.5	39,720		15.4	(3,710)		(9.3)
Total	Total	$	655,424	16.6	$	378,852	14.9	$	276,572	73.0	Total	$	486,476	15.7	$	655,424	16.6	$	(168,948)	(25.8)


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:	SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:										SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Recreational vehicles	Recreational vehicles										Recreational vehicles
North American Towables	North American Towables	$	133,812	6.0	$	70,338	5.1	$	63,474	90.2	North American Towables	$	78,046	5.9	$	133,812	6.0	$	(55,766)	(41.7)
North American Motorized	North American Motorized	48,081		5.2	25,152		5.1	22,929		91.2	North American Motorized	58,177		5.2	48,081		5.2	10,096		21.0
Total North America	Total North America	181,893		5.7	95,490		5.1	86,403		90.5	Total North America	136,223		5.6	181,893		5.7	(45,670)		(25.1)
European	European	67,516		10.7	60,421		10.0	7,095		11.7	European	62,896		12.5	67,516		10.7	(4,620)		(6.8)
Total recreational vehicles	Total recreational vehicles	249,409		6.6	155,911		6.3	93,498		60.0	Total recreational vehicles	199,119		6.8	249,409		6.6	(50,290)		(20.2)
Other	Other	15,127		5.9	5,436		6.7	9,691		178.3	Other	19,082		8.2	15,127		5.9	3,955		26.1
Corporate	Corporate	31,347		—	20,416		—	10,931		53.5	Corporate	23,423		—	31,347		—	(7,924)		(25.3)
Total	Total	$	295,883	7.5	$	181,763	7.2	$	114,120	62.8	Total	$	241,624	7.8	$	295,883	7.5	$	(54,259)	(18.3)

3132


INCOME (LOSS) BEFORE INCOME TAXES:	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	INCOME (LOSS) BEFORE INCOME TAXES:	Three Months Ended October 31, 2022		% of Segment Net Sales	Three Months Ended October 31, 2021		% of Segment Net Sales	Change Amount		% Change
Recreational vehicles	Recreational vehicles										Recreational vehicles
North American Towables	North American Towables	$	266,282	11.9	$	141,179	10.1	$	125,103	88.6	North American Towables	$	111,007	8.4	$	266,282	11.9	$	(155,275)	(58.3)
North American Motorized	North American Motorized	88,898		9.6	41,567		8.4	47,331		113.9	North American Motorized	124,433		11.1	88,898		9.6	35,535		40.0
Total North America	Total North America	355,180		11.2	182,746		9.7	172,434		94.4	Total North America	235,440		9.6	355,180		11.2	(119,740)		(33.7)
European	European	(17,976)		(2.8)	(5,506)		(0.9)	(12,470)		(226.5)	European	(6,468)		(1.3)	(17,976)		(2.8)	11,508		64.0
Total recreational vehicles	Total recreational vehicles	337,204		8.9	177,240		7.1	159,964		90.3	Total recreational vehicles	228,972		7.8	337,204		8.9	(108,232)		(32.1)
Other, net	Other, net	23,529		9.1	11,490		14.2	12,039		104.8	Other, net	4,745		2.0	23,529		9.1	(18,784)		(79.8)
Corporate	Corporate	(47,891)		—	(42,411)		—	(5,480)		(12.9)	Corporate	(54,446)		—	(47,891)		—	(6,555)		(13.7)
Total	Total	$	312,842	7.9	$	146,319	5.8	$	166,523	113.8	Total	$	179,271	5.8	$	312,842	7.9	$	(133,571)	(42.7)


ORDER BACKLOG:	ORDER BACKLOG:	As of October 31, 2021		As of October 31, 2020		Change Amount		% Change	ORDER BACKLOG:	As of October 31, 2022		As of October 31, 2021		Change Amount		% Change
Recreational vehicles	Recreational vehicles								Recreational vehicles
North American Towables	North American Towables	$	10,444,698	$	4,397,713	$	6,046,985	137.5	North American Towables	$	1,567,829	$	10,444,698	$	(8,876,869)	(85.0)
North American Motorized	North American Motorized	4,277,378		2,215,069		2,062,309		93.1	North American Motorized	2,864,309		4,277,378		(1,413,069)		(33.0)
Total North America	Total North America	14,722,076		6,612,782		8,109,294		122.6	Total North America	4,432,138		14,722,076		(10,289,938)		(69.9)
European	European	3,348,355		2,308,472		1,039,883		45.0	European	2,985,205		3,348,355		(363,150)		(10.8)
Total	Total	$	18,070,431	$	8,921,254	$	9,149,177	102.6	Total	$	7,417,343	$	18,070,431	$	(10,653,088)	(59.0)

CONSOLIDATED

Consolidated net sales for the three months ended October 31, ~~2021 increased $1,420,864,~~2022 decreased $850,140, or ~~56.0%~~21.5%, compared to the three months ended October 31, ~~2020.~~2021. The ~~increase~~decrease in consolidated net sales is primarily due to ~~the continuing increase in~~lower current consumer demand ~~for RVs~~in comparison to record demand in the prior-year period, primarily in the North American Towables segment, and ~~recent acquisitions. The addition~~North American independent dealers were also restocking their depleted inventory levels in the prior-year period while current stocking levels are at more normalized levels. Approximately 16.2% of the Tiffin Group, acquired on December 18, 2020, accounted for $228,284 of the $1,420,864 increase in net sales, or 9.0% of the 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 16.0% of the Company’s consolidated net sales for the quarter ended October 31, ~~2021~~2022 were transacted in a currency other than the U.S. dollar. The Company’s most material exchange rate exposure is sales in Euros. ~~Regarding the $1,420,864,~~The $850,140, or ~~56.0%~~21.5%, ~~increase~~decrease in consolidated net sales, ~~the impact~~includes a decrease of $91,164 from the change in currency exchange rates between the two ~~periods was not material.~~periods. To determine this 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 October 31, ~~2021 increased $276,572,~~2022 decreased $168,948, or ~~73.0%~~25.8%, compared to the three months ended October 31, ~~2020.~~2021. Consolidated gross profit was ~~16.6%~~15.7% of consolidated net sales for the three months ended October 31, ~~2021~~2022 and ~~14.9%~~16.6% for the three months ended October 31, ~~2020.~~2021. The ~~increases~~decreases in consolidated gross profit and the consolidated gross profit percentage were both primarily due to the impact of the ~~increase~~decrease in consolidated net sales in the current-year period compared to the prior-year ~~period and gross margin cost percentage improvements noted below.~~period.

Selling, general and administrative expenses for the three months ended October 31, ~~2021 increased $114,120,~~2022 decreased $54,259, or ~~62.8%~~18.3%, compared to the three months ended October 31, ~~2020,~~2021, primarily due to the ~~56.0% increase~~21.5% decrease in consolidated net ~~sales.~~sales and a decrease in settlement costs related to a product recall as discussed in Note 14 to the Condensed Consolidated Financial Statements.

~~Amortization~~Other income (expense), net for the three months ended October 31, 2022 was $7,555 of ~~intangible assets~~net expense compared to $7,235 of net income for the three months ended October 31, 2021, ~~increased $5,787~~with the change primarily due to unfavorable changes of $8,989 and $3,081, respectively, in the fair value of the Company's deferred compensation plan assets and certain equity investments due to market fluctuations, as well as a reduction in foreign currency gains of $3,035 in the three months ended October 31, 2022 as compared to the three months ended October 31, 2020, primarily due to additional amortization of $2,489 and $2,184 from the acquisitions of the Tiffin Group and Airxcel, respectively, as discussed in Note 2 to the Condensed Consolidated Financial Statements.2021.

Income before income taxes for the three months ended October 31, ~~2021~~2022 was ~~$312,842,~~$179,271, as compared to ~~$146,319~~$312,842 for the three months ended October 31, ~~2020, an increase~~2021, a decrease of ~~$166,523,~~$133,571, or ~~113.8%~~42.7%, primarily driven by the ~~increase~~decrease in consolidated net sales and the ~~increase~~decrease in the consolidated gross profit percentage noted above.

The overall effective income tax rate for the three months ended October 31, 2022 was 23.3% compared with 21.7% for the three months ended October 31, 2021. The primary reason for the increase relates to the unfavorable change in the impact from the vesting of share-based compensation awards between the comparable periods.

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 consolidated selling, general and administrative expenses ~~increased $10,931~~decreased $7,924 to $23,423 for the three months ended October 31, 2022 compared to $31,347 for the three months ended October 31, 2021, ~~compared to $20,416 for the three months ended October 31, 2020, an increase~~a decrease of ~~53.5%~~25.3%. This ~~increase~~decrease includes ~~increased compensation costs, including an increase~~a decrease in deferred compensation expense of ~~$2,135,~~$8,985, which was effectively offset by the ~~increase~~decrease in other income related to the deferred compensation plan assets as noted ~~below. In addition,~~below, and incentive compensation ~~increased $1,556~~decreased $664 due to the ~~increase~~decrease in income before income taxes compared to the prior-year ~~period, and~~period. These compensation-related decreases were partially offset by a stock-based ~~and other~~ compensation ~~increased $1,054. Charitable contributions also increased $1,319. Legal and professional fees also increased $1,076, primarily due to acquisition-related costs, and costs~~expense increase of $2,033. Costs recorded at Corporate related to our standby repurchase obligations ~~increased~~decreased by ~~$2,000~~$1,000 due to a smaller increase in dealer inventory levels ~~increasing~~ in the current-year period as compared to the increase in dealer inventory ~~decreasing~~levels in the prior-year period. Corporate research and development costs, which are related to product electrification and other Corporate-led innovation initiatives, increased $1,642.

Corporate interest and other income and expense was $31,023 of net expense for the three months ended October 31, 2022 compared to $16,544 of net expense for the three months ended October 31, ~~2021 compared to $21,995 of net expense for the three months ended October 31, 2020.~~2021. This ~~decrease~~increase in net expense of ~~$5,451 was~~$14,479 is primarily due to ~~a decrease~~unfavorable changes of $8,989 and $3,081, respectively, in the fair value of the Company's deferred compensation plan assets and certain equity investments due to market fluctuations, and also includes an increase in interest expense and fees of ~~$3,278~~$3,232 on our debt primarily due ~~primarily~~ to ~~reduced~~higher 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 a $2,087 increase in income, net in the current-year period as compared to the prior-year period.

The overall effective income tax rate for the three months ended October 31, 2021 was 21.7% compared with 21.0% for the three months ended October 31, 2020. The primary reason for the increase relates to the jurisdictional mix of pre-tax income between foreign and domestic between the comparable periods.

3334

Segment Reporting

NORTH AMERICAN TOWABLE RECREATIONAL VEHICLES

Analysis of the change in net sales for the three months ended October 31, ~~2021~~2022 compared to the three months ended October 31, ~~2020:~~2021:


		Three Months Ended October 31, 2021		% of Segment Net Sales	Three Months Ended October 31, 2020		% of Segment Net Sales	Change Amount		% Change		Three Months Ended October 31, 2022		% of Segment Net Sales	Three Months Ended October 31, 2021		% 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	$	1,409,624	62.9	$	837,900	60.2	$	571,724	68.2	Travel Trailers	$	822,869	62.4	$	1,409,624	62.9	$	(586,755)	(41.6)
Fifth Wheels	Fifth Wheels	831,210		37.1	554,144		39.8	277,066		50.0	Fifth Wheels	494,937		37.6	831,210		37.1	(336,273)		(40.5)
Total North American Towables	Total North American Towables	$	2,240,834	100.0	$	1,392,044	100.0	$	848,790	61.0	Total North American Towables	$	1,317,806	100.0	$	2,240,834	100.0	$	(923,028)	(41.2)

		Three Months Ended October 31, 2021		% of Segment Shipments	Three Months Ended October 31, 2020		% of Segment Shipments	Change Amount		% Change		Three Months Ended October 31, 2022		% of Segment Shipments	Three Months Ended October 31, 2021		% 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	54,899		80.2	39,077		77.6	15,822		40.5	Travel Trailers	25,355		78.5	54,899		80.2	(29,544)		(53.8)
Fifth Wheels	Fifth Wheels	13,538		19.8	11,264		22.4	2,274		20.2	Fifth Wheels	6,936		21.5	13,538		19.8	(6,602)		(48.8)
Total North American Towables	Total North American Towables	68,437		100.0	50,341		100.0	18,096		35.9	Total North American Towables	32,291		100.0	68,437		100.0	(36,146)		(52.8)

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									27.7	Travel Trailers									12.2
Fifth Wheels	Fifth Wheels									29.8	Fifth Wheels									8.3
Total North American Towables	Total North American Towables									25.1	Total North American Towables									11.6

The ~~increase~~decrease in total North American towables net sales of ~~61.0%~~41.2% compared to the prior-year quarter resulted from a ~~35.9% increase~~52.8% decrease in unit shipments and a ~~25.1%~~11.6% increase in the overall net price per unit due to the impact of changes in price and product mix, ~~and price.~~including net selling price increases to help offset higher material costs. The ~~increase~~decrease in ~~North American towables net sales~~unit shipments is primarily due to ~~the continuing increase~~a softening in consumer ~~demand. The addition of~~demand in comparison with the ~~Tiffin Group, acquired on December 18, 2020, accounted for $27,129 of~~record first quarter demand in the ~~$848,790 increase~~prior-year quarter, and ~~for 1.9% of~~independent dealers were also restocking their depleted inventory levels in the ~~61.0% increase.~~prior-year period while current stocking levels are at more normalized levels. According to statistics published by RVIA, for the three months ended October 31, ~~2021,~~2022, combined North American travel trailer and fifth wheel wholesale unit shipments ~~increased 30.3%~~decreased 49.2% compared to the same period last year. According to the most recently published statistics from Stat Surveys, for the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, our North American market share for travel trailers and fifth wheels combined was ~~42.0%~~42.5% and ~~42.4%~~42.3%, 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 increases in the overall net price per unit within both the travel trailer product line of 12.2% and the fifth wheel product line of 8.3% were primarily due to the impact of net selling price increases, primarily to offset higher material costs, as well as product mix changes compared to the prior-year period.

North American towables cost of products sold decreased $710,355 to $1,121,940, or 85.1% of North American towables net sales, for the three months ended October 31, 2022 compared to $1,832,295, or 81.8% of North American towables net sales, for the three months ended October 31, 2021. The changes in material, labor, freight-out and warranty costs comprised $678,186 of the $710,356 decrease in cost of products sold. Material, labor, freight-out and warranty costs as a combined percentage of North American towables net sales increased to 79.0% for the three months ended October 31, 2022 compared to 76.8% for the three months ended October 31, 2021, primarily as a result of an increase in the material cost percentage compared to the prior-year period, due to both increased sales discounts, which effectively decrease net selling prices and correspondingly increase the material cost percentage, and higher material costs since the prior-year period. The warranty cost percentage also increased. Total manufacturing overhead decreased $32,169 in correlation with the decrease in sales, but increased as a percentage of North American towables net sales from 5.0% to 6.1% as the significantly decreased net sales levels resulted in higher overhead costs per unit sold.

North American towables gross profit decreased $212,673 to $195,866, or 14.9% of North American towables net sales, for the three months ended October 31, 2022 compared to $408,539, or 18.2% of North American towables net sales, for the three months ended October 31, 2021. The decrease in gross profit was driven by the decrease in net sales and the decrease in the gross profit percentage is due to the increase in the cost of products sold percentage noted above.

North American towables selling, general and administrative expenses were $78,046, or 5.9% of North American towables net sales, for the three months ended October 31, 2022 compared to $133,812, or 6.0% of North American towables net sales, for the three months ended October 31, 2021. This $55,766 decrease includes the impact of the decrease in North American towables net sales and income before income taxes, which caused related commissions, incentive and other compensation to decrease by $39,918. The remaining decrease is primarily due to a decrease in settlement 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. These decreases were partially offset by an increase of $5,415 in sales-related travel, advertising and promotions costs, as certain dealer shows attended in the current-year period were canceled in the prior-year period due to COVID-19 concerns. The slight decrease in the overall selling, general and administrative expense as a percentage of North American towable net sales, in spite of the decrease in North American towable net sales, is due to the reduction in settlement costs noted above.

North American towables income before income taxes was $111,007, or 8.4% of North American towables net sales, for the three months ended October 31, 2022 compared to $266,282 or 11.9% of North American towables net sales, for the three months ended October 31, 2021. The primary reason for the decrease in North American towables income before income taxes was the decrease in North American towables net sales, and the primary reason for the decrease in percentage was the increase in the cost of products sold percentage noted above.

NORTH AMERICAN MOTORIZED RECREATIONAL VEHICLES

Analysis of the change in net sales for the three months ended October 31, 2022 compared to the three months ended October 31, 2021:


	Three Months Ended October 31, 2022		% of Segment Net Sales	Three Months Ended October 31, 2021		% of Segment Net Sales	Change Amount		% Change
NET SALES:
North American Motorized
Class A	$	404,578	36.0	$	409,499	44.3	$	(4,921)	(1.2)
Class C	490,787		43.7	360,006		38.9	130,781		36.3
Class B	228,154		20.3	155,523		16.8	72,631		46.7
Total North American Motorized	$	1,123,519	100.0	$	925,028	100.0	$	198,491	21.5

	Three Months Ended October 31, 2022		% of Segment Shipments	Three Months Ended October 31, 2021		% of Segment Shipments	Change Amount		% Change
# OF UNITS:
North American Motorized
Class A	1,926		23.6	2,164		29.5	(238)		(11.0)
Class C	4,346		53.3	3,645		49.7	701		19.2
Class B	1,878		23.1	1,528		20.8	350		22.9
Total North American Motorized	8,150		100.0	7,337		100.0	813		11.1

IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES:									% Change
North American Motorized
Class A									9.8
Class C									17.1
Class B									23.8
Total North American Motorized									10.4

The increase in total North American motorized net sales of 21.5% compared to the prior-year quarter resulted from a 11.1% increase in unit shipments due to continuing consumer demand and dealer restocking of certain motorized products, and a 10.4% increase in the overall net price per unit due to the impact of changes in product price and mix, including net selling price increases to help offset higher material and other input costs. According to statistics published by RVIA, for the three months ended October 31, 2022, combined North American motorhome wholesale unit shipments increased 13.6% compared to the same period last year. According to the most recently published statistics from Stat Surveys, for the three months ended September 30, 2022 and 2021, our North American market share for motorhomes was 47.0% and 47.6%, 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 27.7% and the overall net price per unit within the fifth wheel product lines of 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.

North American towables cost of products sold increased $660,099 to $1,832,295, or 81.8% of North American towables net sales, for the three months ended October 31, 2021 compared to $1,172,196, or 84.2% of North American towables net sales, for the three months ended October 31, 2020. The changes in material, labor, freight-out and warranty costs comprised $627,913 of the $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 decreased to 76.8% for the three months ended October 31, 2021 compared to 78.4% for the three months ended October 31, 2020, primarily as a result of a decrease in the labor cost percentage, mainly due to increased volumes combined with a more stable and efficient workforce compared to the prior-year period. 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 compared to the prior-year period, as the continued 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 $32,186 with the increase in sales, but decreased as a percentage of North American towables net sales from 5.8% to 5.0% as the significantly increased net sales levels resulted in lower overhead costs per unit sold.

North American towables gross profit increased $188,691 to $408,539, or 18.2% of North American towables net sales, for the three months ended October 31, 2021 compared to $219,848, or 15.8% of North American towables net sales, for the three months ended 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 $133,812, or 6.0% of North American towables net sales, for the three months ended October 31, 2021 compared to $70,338, or 5.1% of North American towables net sales, for the three months ended October 31, 2020. This $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 $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 $2,184. The increase in the overall selling, general and administrative expense as a percentage of North American towable net sales is primarily due to the increased product-related costs noted above.

North American towables income before income taxes was $266,282, or 11.9% of North American towables net sales, for the three months ended October 31, 2021 compared to $141,179 or 10.1% of North American towables net sales, for the three months ended 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 reason for the increase in percentage was the decreases in the cost of products sold percentage noted above, partially offset by the increase in the selling, general and administrative expense percentage noted above.

~~NORTH AMERICAN MOTORIZED RECREATIONAL~~ ~~VEHICLES~~

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

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:
North American Motorized
Class A $ 409,499 44.3 $ 158,555 32.1 $ 250,944 158.3
Class C 360,006 38.9 275,399 55.8 84,607 30.7
Class B 155,523 16.8 59,901 12.1 95,622 159.6
Total North American Motorized $ 925,028 100.0 $ 493,855 100.0 $ 431,173 87.3
Three Months Ended
October 31, 2021 % of
Segment
Shipments Three Months Ended
October 31, 2020 % of
Segment
Shipments Change
Amount
%
Change
# OF UNITS:
North American Motorized
Class A 2,164 29.5 1,168 22.6 996 85.3
Class C 3,645 49.7 3,464 67.0 181 5.2
Class B 1,528 20.8 535 10.4 993 185.6
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:
%
Change
North American Motorized
Class A 73.0
Class C 25.5
Class B (26.0)
Total North American Motorized 45.3

The increase in total North American motorized net sales of 87.3% compared to the prior-year quarter resulted from a 42.0% increase in unit shipments and a 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 consumer demand and the addition of the Tiffin Group, acquired on December 18, 2020, which accounted for $201,154 of the $431,173 increase, or 40.7% of the 87.3% increase. According to statistics published by RVIA, for the three months ended October 31, 2021, combined North American motorhome wholesale unit shipments increased 19.6% compared to the same period last year. According to the most recently published statistics from Stat Surveys, for the three months ended September 30, 2021 and 2020, our North American market share for motorhomes was 47.7% and 37.9%, respectively, including 5.0% attributable to the Tiffin Group for the three months ended 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 ~~73.0%~~9.8% was ~~predominately~~primarily due to ~~the impact of the addition of the higher-priced Tiffin Group product lines along with selective~~ net selling price increases since the prior-year ~~period~~quarter 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~~increases, partially offset by a higher concentration of sales of the more moderately-priced gas ~~units, which represented the majority of the~~ Class A ~~units sold~~products in the ~~prior-year~~current-year period. The increase in the overall net price per unit within the Class C product line of ~~25.5%~~17.1% was primarily due to ~~product mix change and selective~~ net selling price increases since the prior-year period to offset ~~rising~~higher material and other input ~~costs.~~costs as well as product mix changes. The ~~decrease~~increase in the overall net price per unit within the Class B product line of ~~26.0%~~23.8% is primarily due to ~~product mix changes as a result of~~net selling price increases since the prior-year period, and a higher concentration of sales of ~~lower-priced~~higher-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.~~period.

3637

North American motorized cost of products sold increased ~~$359,554~~$152,477 to $937,784, or 83.5% of North American motorized net sales, for the three months ended October 31, 2022 compared to $785,307, or 84.9% of North American motorized net sales, for the three months ended October 31, ~~2021 compared to $425,753, or 86.2% of North American motorized net sales, for the three months ended October 31, 2020.~~2021. The changes in material, labor, freight-out and warranty costs comprised ~~$332,847~~$145,563 of the ~~$359,554~~$152,477 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 78.6% for the three months ended October 31, 2022 compared to 79.7% for the three months ended October 31, 2021, ~~compared to 81.9% for the three months ended October 31, 2020,~~ with the decrease primarily due to a decrease in the material cost percentage, partially offset by a modest ~~increases~~increase in the ~~labor and~~ warranty cost ~~percentages.~~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, selective~~ net selling price increases to cover known and anticipated material cost increases, and ~~product mix changes, primarily due to the addition of the Tiffin Group products~~a reduction in sales discounts since the prior-year ~~period.~~period, which effectively increase net selling prices and correspondingly decrease the material cost percentage. Total manufacturing overhead increased ~~$26,707, primarily due to~~$6,914 in correlation with the net sales increase, ~~and increased employee benefit and health insurance costs, and increased~~but decreased as a percentage of North American motorized net sales from ~~4.3%~~5.2% to ~~5.2%, primarily due to~~4.9% as the ~~increased employee benefit and health insurance~~increase in net sales levels resulted in lower overhead costs ~~percentage.~~per unit sold.

North American motorized gross profit increased ~~$71,619~~$46,014 to $185,735, or 16.5% of North American motorized net sales, for the three months ended October 31, 2022 compared to $139,721, or 15.1% of North American motorized net sales, for the three months ended October 31, ~~2021 compared to $68,102, or 13.8% of North American motorized net sales, for the three months ended October 31, 2020.~~2021. 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 $58,177, or 5.2% of North American motorized net sales, for the three months ended October 31, 2022 compared to $48,081, or 5.2% of North American motorized net sales, for the three months ended October 31, ~~2021 compared to $25,152, or 5.1% of North American motorized net sales, for the three months ended October 31, 2020.~~2021. The primary reason for the ~~$22,929~~$10,096 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 ~~$17,753.~~$7,463. Sales-related travel, advertising and promotional costs also increased by ~~$1,632.~~$1,644, as certain dealer shows attended in the current-year period were canceled in the prior-year period due to COVID-19 concerns.

North American motorized income before income taxes was $124,433, or 11.1% of North American motorized net sales, for the three months ended October 31, 2022 compared to $88,898, or 9.6% of North American motorized net sales, for the three months ended October 31, ~~2021 compared to $41,567, or 8.4% of motorized net sales, for the three months ended October 31, 2020.~~2021. The primary reason for the increase in North American motorized income before income taxes was the increase in North American motorized net sales, and the primary reason for the increase in percentage was the decrease in the cost of products sold percentage noted above.

3738

EUROPEAN RECREATIONAL VEHICLES

Analysis of the change in net sales for the three months ended October 31, ~~2021~~2022 compared to the three months ended October 31, ~~2020:~~2021:


		Three Months Ended October 31, 2021		% of Segment Net Sales	Three Months Ended October 31, 2020		% of Segment Net Sales	Change Amount		% Change		Three Months Ended October 31, 2022		% of Segment Net Sales	Three Months Ended October 31, 2021		% of Segment Net Sales	Change Amount		% Change
NET SALES:	NET SALES:										NET SALES:
European	European										European
Motorcaravan	Motorcaravan	$	316,264	50.0	$	318,343	52.8	$	(2,079)	(0.7)	Motorcaravan	$	239,785	47.5	$	316,264	50.0	$	(76,479)	(24.2)
Campervan	Campervan	177,783		28.1	143,400		23.8	34,383		24.0	Campervan	139,166		27.6	177,783		28.1	(38,617)		(21.7)
Caravan	Caravan	60,680		9.6	55,195		9.2	5,485		9.9	Caravan	61,615		12.2	60,680		9.6	935		1.5
Other	Other	78,270		12.3	85,550		14.2	(7,280)		(8.5)	Other	63,736		12.7	78,270		12.3	(14,534)		(18.6)
Total European	Total European	$	632,997	100.0	$	602,488	100.0	$	30,509	5.1	Total European	$	504,302	100.0	$	632,997	100.0	$	(128,695)	(20.3)

		Three Months Ended October 31, 2021		% of Segment Shipments	Three Months Ended October 31, 2020		% of Segment Shipments	Change Amount		% Change		Three Months Ended October 31, 2022		% of Segment Shipments	Three Months Ended October 31, 2021		% of Segment Shipments	Change Amount		% Change
# OF UNITS:	# OF UNITS:										# OF UNITS:
European	European										European
Motorcaravan	Motorcaravan	5,080		41.2	5,383		44.0	(303)		(5.6)	Motorcaravan	3,552		35.7	5,080		41.2	(1,528)		(30.1)
Campervan	Campervan	4,404		35.7	4,277		35.0	127		3.0	Campervan	3,333		33.5	4,404		35.7	(1,071)		(24.3)
Caravan	Caravan	2,843		23.1	2,566		21.0	277		10.8	Caravan	3,065		30.8	2,843		23.1	222		7.8
Total European	Total European	12,327		100.0	12,226		100.0	101		0.8	Total European	9,950		100.0	12,327		100.0	(2,377)		(19.3)


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	(0.8)	5.7	4.9	Motorcaravan	(14.4)	20.3	5.9
Campervan	Campervan	(0.8)	21.8	21.0	Campervan	(14.4)	17.0	2.6
Caravan	Caravan	(0.8)	(0.1)	(0.9)	Caravan	(14.4)	8.1	(6.3)
Total European	Total European	(0.8)	5.1	4.3	Total European	(14.4)	13.4	(1.0)

The ~~increase~~decrease in total European recreational vehicle net sales of ~~5.1%~~20.3% compared to the prior-year quarter resulted from ~~an 0.8% increase~~a 19.3% decrease in unit shipments and a ~~4.3% increase~~1.0% decrease in the overall net price per unit due to the total impact of changes in foreign currency, product mix and price. The ~~increase~~decrease in European recreational vehicle net sales ~~reflects ongoing European market demand for RV products as moderated by~~is mainly due to the negative impact of ~~current~~continuing chassis supply ~~constraints. The~~constraints limiting motorized production and sales ~~increase~~and other production disruptions due to component part shortages. In addition, the sales decrease of ~~$30,509, or 5.1%, is partially offset by~~$128,695 includes a decrease of ~~$4,688,~~$91,164, or ~~(0.8)%~~14.4% of the ~~5.1% increase,~~20.3% decrease, due to the decrease in foreign exchange rates since the prior-year period. The remaining sales decrease was driven by product mix changes, as the chassis shortages noted above resulted in a higher concentration of sales of the lower-priced caravans compared to the prior-year period.

The overall net price per unit ~~increase~~decrease of ~~4.3%~~1.0% includes a 14.4% decrease due to the impact of foreign currency exchange rate changes ~~which accounts for (0.8)%~~and a 13.4% increase due to the impact of ~~the 4.3% increase on a constant-currency basis.~~product mix and price.

~~The increase~~Excluding the impact of foreign currency exchange rate changes, the increases in the overall net price per unit within the Motorcaravan product line of ~~5.7% was~~20.3% and the Campervan product line of 17.0% were primarily due to the impact of selling price increases and product mix ~~changes and selective net selling price increases.~~changes. The increase in the overall net price per unit due to product mix and price within the ~~Campervan~~Caravan product line of ~~21.8%~~8.1% 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 increases.

3839

European recreational vehicle cost of products sold ~~increased $35,446~~decreased $130,116 to $435,437, or 86.3% of European recreational vehicle net sales, for the three months ended October 31, 2022 compared to $565,553, or 89.3% of European recreational vehicle net sales, for the three months ended October 31, ~~2021 compared to $530,107, or 88.0% of European recreational vehicle net sales, for the three months ended October 31, 2020.~~2021. The changes in material, labor, freight-out and warranty costs comprised ~~$27,412~~$120,558 of the ~~$35,446 increase~~$130,116 decrease primarily due to the ~~increased~~decreased net sales volume. Material, labor, freight-out and warranty costs as a combined percentage of European recreational vehicle net sales ~~increased~~decreased to 74.4% for the three months ended October 31, 2022 compared to 78.3% for the three months ended October 31, 2021, ~~compared to 77.8% for the three months ended October 31, 2020,~~ with the ~~increase~~decrease primarily due to ~~an increase~~a decrease in the material cost percentage due to net selling price increases and product mix changes. The labor ~~percentage.~~and warranty cost percentages also both improved. Total manufacturing overhead ~~increased $8,034~~decreased $9,558 with the ~~increase~~decrease in net sales, ~~and~~but increased as a percentage of ~~motorized~~European recreational vehicle net sales from ~~10.2%~~11.0% to ~~11.0%~~11.9% primarily due to the sales reduction resulting in increased ~~indirect labor and manufacturing employee benefit costs.~~overhead costs per unit sold.

European recreational vehicle gross profit ~~decreased $4,937~~increased $1,421 to $68,865, or 13.7% of European recreational vehicle net sales, for the three months ended October 31, 2022 compared to $67,444, or 10.7% of European recreational vehicle net sales, for the three months ended October 31, ~~2021 compared to $72,381, or 12.0% of European recreational vehicle net sales, for the three months ended October 31, 2020.~~2021. The ~~decrease~~increase in gross profit and ~~the decrease in~~ the gross profit percentage is due to the ~~increase~~decrease in the cost of products sold percentage noted above.

European recreational vehicle selling, general and administrative expenses were $62,896, or 12.5% of European recreational vehicle net sales, for the three months ended October 31, 2022 compared to $67,516, or 10.7% of European recreational vehicle net sales, for the three months ended October 31, ~~2021 compared~~2021. The $4,620 decrease is due to ~~$60,421, or 10.0% of European recreational vehicle net sales, for~~ the ~~three months ended October 31, 2020. The $7,095 increase includes~~reduction in foreign exchange rates since the ~~impact of~~prior-year quarter, which more than offset the 9.7% increase in ~~European recreational vehicle net sales, which caused commissions~~selling, general and ~~other compensation and benefits to~~administrative expenses on a constant-currency basis. This constant-currency increase ~~by $1,875. Depreciation expense also increased by $986, while miscellaneous administrative costs increased $1,785,~~was primarily due to ~~a favorable legal reserve settlement~~increased advertising and promotion costs, as participation in most European trade fairs in the prior-year period was cancelled due to the COVID-19 pandemic but resumed in the current-year period. The increase in the overall selling, general and administrative expense as a percentage of European recreational vehicle net sales is primarily due to the ~~increased~~decrease in net sales and the increase in advertising and promotion costs noted above.

European recreational vehicle loss before income taxes was $6,468, or approximately 1.3% of European recreational vehicle net sales, for the three months ended October 31, 2022 compared to a loss before income taxes of $17,976, or ~~approximately~~ 2.8% of European recreational vehicle net sales, for the three months ended October 31, ~~2021 compared to a net~~2021. The primary reason for the decrease in loss before income taxes in spite of ~~$5,506, or 0.9% of~~the decrease in European recreational vehicle net sales ~~for~~was the ~~three months ended October 31, 2020. The primary reasons for the increases~~improvement in the ~~loss before income taxes and the percentage loss were the increases in the cost~~costs of products sold ~~and selling, general and administrative expense~~percentage noted above, ~~as well as an increase of $2,162, or 0.2%~~and amortization expense was also 0.3% lower as a percentage of ~~net~~ sales in ~~amortization expense.~~the current year compared to the prior-year period.

~~Financial Condition~~Liquidity and ~~Liquidity~~Capital Resources

As of October 31, ~~2021,~~2022, we had ~~$336,237~~$291,704 in cash and cash equivalents, of which ~~$185,563~~$203,824 was held in the U.S. and the equivalent of ~~$150,674,~~$87,880, predominantly in Euros, was held in Europe, compared to ~~$445,852~~$311,553 on July 31, ~~2021,~~2022, of which ~~$282,220~~$256,492 was held in the U.S. and the equivalent of ~~$163,632,~~$55,061, 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 ~~$109,615~~$19,849 decrease in cash and cash equivalents are described in more detail below.

Net working capital at October 31, ~~2021~~2022 was ~~$1,176,969~~$1,371,797 compared to ~~$1,008,738~~$1,306,563 at July 31, 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.2022. Capital expenditures of ~~$43,224~~$55,883 for the three months ended October 31, ~~2021~~2022 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. In addition, the unused availability under our revolving asset-based credit facility is generally available to the Company for general operating purposes, and approximated $890,000 at October 31, 2022. 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 under the share repurchase authorizations as discussed in Note 16 to the Condensed Consolidated Financial Statements, 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 ~~our~~the Company's Board of Directors ~~(“Board”~~("Board"). We believe our on-hand cash and cash equivalents and funds generated from operations will be sufficient to fund expected cash dividend payments and share repurchases for the foreseeable future.

We anticipate capital expenditures during the remainder of fiscal ~~2022~~2023 for the Company of ~~$230,000,~~$225,000, primarily for certain building projects and certain automation projects, as well as replacing and upgrading machinery, equipment and other assets throughout our facilities to be used in the ordinary course of business. We anticipate approximately two-thirds will be in North America and one-third in Europe, and that these expenditures will be funded by cash provided by our operating activities.

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 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 three months ended October 31, ~~2021~~2022 was ~~$41,792~~$94,016 as compared to net cash ~~used in~~provided by operating activities of ~~$81,290~~$41,792 for the three months ended October 31, ~~2020.~~2021.

For the three months ended October 31, 2022, net income adjusted for non-cash items (primarily depreciation, amortization of intangibles and stock-based compensation) provided $213,582 of operating cash. The change in net working capital resulted in the use of $119,566 of operating cash during that period, primarily due to an increase in chassis inventory to support the growth in motorized sales and production, as the reductions in accounts receivables and accounts payable mostly offset each other.

For the three months ended October 31, 2021, net income adjusted for non-cash items (primarily depreciation, amortization of intangibles and stock-based compensation) provided $313,583 of operating cash. The change in net working capital resulted in the use of $271,791 of operating cash during that period, primarily due to an increase in inventory, as production levels ~~have~~ increased due to continued heightened consumer demand, and ongoing supply constraints ~~have~~ caused work in process and other inventory categories to increase. In addition, there 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~~Investing Activities

Net cash used in investing activities 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,2022 was $57,948, 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. Accounts receivable also reflects a seasonal increase, and required income tax payments during the three months ended 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.

~~Investing Activities~~capital expenditures of $55,883.

Net cash used in investing activities for the three months ended October 31, 2021 was $791,020, primarily due to $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 $43,224.

~~Net cash used in investing activities for the three months ended October 31, 2020 was $46,433, primarily due to $22,700 used in a business acquisition and capital expenditures of $24,708.~~

4041

Financing Activities

Net cash used in financing activities for the three months ended October 31, 2022 was $53,249, including payments of $15,000 on the asset-based credit facility and $12,355 on the term-loan credit facilities, in addition to treasury share purchases of $25,407. During the first quarter of fiscal 2023, the Board approved and declared the payment of a regular quarterly dividend of $0.45 per share for the first quarter of fiscal 2023, but this dividend, totaling $24,081, was not paid until the second quarter of fiscal 2023.

Net cash provided by financing activities for the three months ended October 31, 2021 was $643,597, consisting primarily of borrowings of $660,088 on the revolving asset-based credit facilities, which included $625,000 borrowed in connection with the acquisition of Airxcel and $35,088 for temporary working capital needs, in 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 ~~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 aThe Company increased its previous regular quarterly dividend ~~payment~~ of ~~$0.41~~$0.43 per share ~~for~~to $0.45 per share in October 2022. In October 2021, the ~~first quarter of fiscal 2021, but this dividend, totaling $22,700, was not paid until the second quarter of fiscal 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.

Accounting Standards

None.

Critical Accounting Estimates

For a discussion of our critical accounting estimates, refer to "Management's Discussion and Analysis of Results of Operations and Financial Condition" in Part II, Item 7 and the notes to our consolidated financial statements in Part II, Item 8 of our Annual Report on Form 10-K for the year ended July 31, 2022. There have been no material changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended July 31, 2022.

4142

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 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 ~~$717,323~~$508,170 of debt denominated in Euros at October 31, ~~2021.~~2022. A hypothetical 10% change in the Euro/U.S. Dollar exchange rate would change our October 31, ~~2021~~2022 debt balance by approximately ~~$71,732.~~$50,817.

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 October 31, ~~2021,~~2022, the Company has ~~$432,250~~$220,350 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 October 31, ~~2021,~~2022, 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 ~~17.7%~~16.2% of our weighted-average interest rate at October 31, ~~2021)~~2022) would result in an estimated ~~$10,357~~$11,098 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 October 31, ~~2021,~~2022, 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.

4243

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,” 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, are ongoing, and macro-economic issues like general inflation, as well as certain geopolitical events, including military conflicts have also continued, at this point 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, ~~2021.~~2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended October 31, 2022, the Company used $25,407 to purchase shares of common stock under its share repurchase authorizations. The Company’s total remaining authorizations for common stock repurchases was $507,807 at October 31, 2022.

A summary of the Company’s share repurchases during the three months ended October 31, 2022 is set forth below:


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs
8/1/22 – 8/31/22	—	$	—	—	$	533,214
9/1/22 – 9/30/22	—	$	—	—	$	533,214
10/1/22 – 10/31/22	338,733	$	75.01	338,733	$	507,807
	338,733			338,733

(1)On December 21, 2021, the Company’s Board of Directors authorized Company management to utilize up to $250,000 to repurchase shares of the Company’s common stock through December 21, 2024. On June 24, 2022, the Board authorized Company management to utilize up to an additional $448,321 to repurchase shares of the Company’s common stock through July 31, 2025. Under the two share repurchase authorizations, the Company is authorized to repurchase, on a discretionary basis and from time-to-time, outstanding shares of its common stock in the open market, in privately negotiated transactions or by other means. The timing and amount of share repurchases will be determined at the discretion of the Company’s management team based upon the market price of the stock, management's evaluation of general market and economic conditions, cash availability and other factors. The share repurchase program may be suspended, modified or discontinued at any time, and the Company has no obligation to repurchase any amount of its common stock under this program. During the three-month period ended October 31, 2022, the Company purchased 338,733 shares of its common stock, at various times in the open market, at a weighted-average price of $75.01 and held them as treasury shares at an aggregate purchase price of $25,407, all from the December 21, 2021 authorization. As of October 31, 2022, the remaining amount of the Company's common stock that may be repurchased under the December 21, 2021 $250,000 authorization expiring on December 21, 2024 is $59,486. As of October 31, 2022, the remaining amount of the Company’s common stock that may be repurchased under the June 24, 2022 authorization expiring on July 31, 2025 is $448,321. As of October 31, 2022, the total remaining amount of the Company’s common stock that may be repurchased under these two authorizations is $507,807.

4344

ITEM 6. EXHIBITS


Exhibit			Description *
~~2.1~~3.1			~~Purchase Agreement, dated~~Thor Industries, Inc. Amended and Restated Certificate of Incorporation, 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~~amended (incorporated by reference to Exhibit ~~4.1 to~~3.1 of the ~~Company~~’sCompany’s Current Report on Form 8-K ~~filed October 14, 2021)~~dated December 20, 2018)
~~4.2~~3.2			~~Form of certificate representing the 4.000% Senior Notes due 2029, included~~Thor Industries, Inc. Amended and Restated By-Laws, as ~~Exhibit A to Exhibit 4.1~~amended (incorporated by reference to Exhibit ~~4.2 to~~3.2 of the ~~Company~~’sCompany’s Current Report on Form 8-K ~~filed October 14, 2021)~~
~~10.1~~			~~Amendment No. 1 to the~~ ~~ABL~~ ~~Credit Agreement~~,dated ~~as of~~ ~~September 1, 2021, by and among the Company, certain~~ ~~domestic~~ ~~subsidiaries of the Company, certain subsidiaries of EHG organized under the laws of Germany and a subsidiary of EHG organized under the laws of the United Kingdom, the several lenders from time to time parties thereto~~ ~~and JPMorgan Chase Bank, N.A., as Administrative Agent~~December 20, 2018)
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 Quarterly report on Form 10-Q for the quarter ended October 31, ~~2021~~2022 formatted in ~~iXBRL (Inline “eXtensible~~XBRL (“eXtensible Business Reporting 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’ 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.

4445

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:	December ~~8, 2021~~7, 2022	/s/ Robert W. Martin
		Robert W. Martin
		President and Chief Executive Officer

DATE:	December ~~8, 2021~~7, 2022	/s/ Colleen Zuhl
		Colleen Zuhl
		Senior Vice President and Chief Financial Officer