THOR INDUSTRIES, INC.
Washington,
April 30, 2021.
____.
THOR INDUSTRIES, INC.
| 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) | ||||||||||||||||||||
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| Common stock (Par value $.10 Per Share) | |||||||||||||||||||||||||||
| THO | |||||||||||
| New York Stock Exchange | |||||||||||
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Current assets: Cash and cash equivalents Accounts receivable, trade, net Accounts receivable, other, net Inventories, net Prepaid expenses and other Total current assets Property, plant and equipment, net Other assets: Goodwill Amortizable intangible assets, net Deferred income taxes, net Other Total other assets TOTAL ASSETS LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable Accrued liabilities: Compensation and related items Product warranties Income and other taxes Promotions and rebates Product, property and related liabilities Other Total current liabilities Long-term debt Unrecognized tax benefits Other liabilities Total long-term liabilities Contingent liabilities and commitments Stockholders’ equity: Preferred stock – authorized 1,000,000 shares; none outstanding Common stock – par value of $.10 per share; authorized 250,000,000 shares; issued 62,765,824 and 62,597,110 shares, respectively Additionalpaid-in capital Retained earnings Less treasury shares of 10,070,459 and 10,011,069, respectively, at cost Total stockholders’ equity TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY Net sales Cost of products sold Gross profit Selling, general and administrative expenses Amortization of intangible assets Interest income Interest expense Other income, net Income before income taxes Income taxes Net income and comprehensive income Weighted-average common shares outstanding: Basic Diluted Earnings per common share: Basic Diluted Regular dividends declared and paid per common share Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation Amortization of intangibles Amortization of debt issuance costs Deferred income tax provision (benefit) Gain on disposition of property, plant and equipment Stock-based compensation expense Changes in assets and liabilities (excluding acquisitions): Accounts receivable Inventories Prepaid income taxes, expenses and other Accounts payable Accrued liabilities Long-term liabilities and other Net cash provided by operating activities Cash flows from investing activities: Purchases of property, plant and equipment Proceeds from dispositions of property, plant and equipment Acquisitions Other Net cash used in investing activities Cash flows from financing activities: Principal payments on revolving credit facility Regular cash dividends paid Principal payments on capital lease obligations Payments related to vesting of stock-based awards Net cash used in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period Supplemental cash flow information: Income taxes paid Interest paid Non-cash transactions: Capital expenditures in accounts payable data or except as otherwise specified) year. Standards Cash Other current assets Property, plant and equipment Dealer network Trademarks Backlog Goodwill Current liabilities Total fair value of net assets acquired Less cash acquired Total cash consideration for acquisition, less cash acquired certain accrued expenses remain subject to potential adjustment. The Company expects to finalize these values as soon as practical and no later than one year from the acquisition date. (3) European. The operations of the Recreational vehicles Towables Motorized Total recreational vehicles Other Intercompany eliminations Total Recreational vehicles Towables Motorized Total recreational vehicles Other, net Corporate Total Recreational vehicles Towables Motorized Total recreational vehicles Other, net Corporate Total segment: Recreational vehicles Towables Motorized Total recreational vehicles Other Corporate Total Recreational vehicles Towables Motorized Total recreational vehicles Other Corporate Total Weighted-average shares outstanding for basic earnings per share Unvested restricted stock and restricted stock units Weighted-average shares outstanding assuming dilution For the nine months ended April 30, 2021 and 2020, the Company had 81,557 and 189,090 unvested restricted stock units outstanding, respectively, which were excluded from this calculation as their effect would have been antidilutive. Cash equivalents Deferred compensation plan assets Finished goods – RV Finished goods – other Work in process Raw materials Chassis Subtotal Excess of FIFO costs over LIFO costs Total inventories, net Land Buildings and improvements Machinery and equipment Total cost Less accumulated depreciation Property, plant and equipment, net Dealer networks/customer relationships Trademarks Design technology and other intangibles Non-compete agreements Total amortizable intangible assets For the fiscal year ending July 31, 2018 For the fiscal year ending July 31, 2019 For the fiscal year ending July 31, 2020 For the fiscal year ending July 31, 2021 For the fiscal year ending July 31, 2022 For the fiscal year ending July 31, 2023 and thereafter applicable observable yield curves. Beginning balance Provision Payments Ending balance interest rates ranging from 1.40% to 3.43%. 820, primarily based on quoted market prices for the term loan debt. The fair value of other debt held by the Company approximates fair value. tax. The overall effective income tax rate for the April 30, 2021 were as follows: foreseeable future. 2020. North American independent dealer base. — North America April 30, 2020, with Tiffin Group's backlog included in the April 30, 2021 totals accounting for $711,701, or 7.4%, of the $9,574,197 increase. Towable Units Motorized Units Total 33.8% higher than calendar year 2020 shipments. According to RVIA, this calendar year 2021 most-likely forecast could range from a lower estimate of 565,800 total units to an upper estimate of approximately 586,300 units. calendar year 2021 and early calendar 2022 may not follow typical seasonal patterns as dealers respond to ongoing high current consumer demand and then rebuild their inventory to optimal stocking levels. Towable Units Motorized Units Total 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. Towable Units Motorized Units Total Towable Units Motorized Units Total most professionally structured dealer and service networks. output. NET SALES: Recreational vehicles Towables Motorized Total recreational vehicles Other Intercompany eliminations Total # OF UNITS: Recreational vehicles Towables Motorized Total Recreational vehicles Towables Motorized Total recreational vehicles Other, net Total SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Recreational vehicles Towables Motorized Total recreational vehicles Other Corporate Total INCOME (LOSS) BEFORE INCOME TAXES: Recreational vehicles Towables Motorized Total recreational vehicles Other, net Corporate Total Recreational vehicles Towables Motorized Total April 30, 2020 April 30, 2020. The increases in consolidated gross profit and the consolidated gross profit percentage were both primarily due to the impact of the increase in net sales in the current-year period compared to the prior-year period and gross margin cost percentage improvements noted below. 996.0%, primarily driven by the increase in net sales and the increase in the consolidated gross profit percentage noted above. $4,016. $6,884 related to the Company's former equity investment as discussed in Note 2 to the Condensed Consolidated Financial Statements. comparable periods. NET SALES: Towables Travel Trailers and Other Fifth Wheels Total Towables # OF UNITS: Towables Travel Trailers and Other Fifth Wheels Total Towables April 30, 2020: According to statistics published by Stat Surveys, for the nine-month periods ended March 31, 2021 and 2020, our North American market share for travel trailers and fifth wheels combined was 41.4% and 43.7%, respectively. Comparisons of Company shipments to industry shipments on a quarterly basis would not necessarily be indicative of the results expected for a full fiscal year. the combination of a lower amortization expense percentage this year and the impairment charges in the prior-year period as discussed in Note 8 to the Condensed Consolidated Financial Statements. NET SALES: Motorized Class A Class C Class B Total Motorized # OF UNITS: Motorized Class A Class C Class B Total Motorized April 30, 2020: According to statistics published by Stat Surveys, for the nine-month periods ended March 31, 2021 and 2020, our North American market share for motorhomes was 41.7% and 37.7%, respectively, including 1.9% attributable to the Tiffin Group for the nine-month period ended March 31, 2021. Comparisons of Company shipments to industry shipments on a quarterly basis would not necessarily be indicative of the results expected for a full fiscal year. NET SALES: Recreational vehicles Towables Motorized Total recreational vehicles Other Intercompany eliminations Total # OF UNITS: Recreational vehicles Towables Motorized Total Recreational vehicles Towables Motorized Total recreational vehicles Other, net Total SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Recreational vehicles Towables Motorized Total recreational vehicles Other Corporate Total INCOME (LOSS) BEFORE INCOME TAXES: Recreational vehicles Towables Motorized Total recreational vehicles Other, net Corporate Total NET SALES: Towables Travel Trailers and Other Fifth Wheels Total Towables # OF UNITS: Towables Travel Trailers and Other Fifth Wheels Total Towables sales. The increase NET SALES: Motorized Class A Class C Class B Total Motorized # OF UNITS: Motorized Class A Class C Class B Total Motorized compliance with any then-existing financing facilities. April 30, 2020. primarily related to the inventory growth. COVID-19 pandemic. $81,162. $26,854. $68,100. $66,239. Standards Exhibit Description XBRL Instance Document Inline XBRL Taxonomy Extension Schema Document Inline XBRL Taxonomy Calculation Linkbase Document Inline XBRL Taxonomy Presentation Linkbase Document Inline XBRL Taxonomy Label Linkbase Document Inline XBRL Taxonomy Extension Definition Linkbase Document Senior Vice President and Chief Financial OfficerPART I – FINANCIAL INFORMATION (Unless otherwise indicated, amounts in thousands except share and per share data.)ITEM1. FINANCIAL STATEMENTSITEM 1. FINANCIAL STATEMENTSTHOR INDUSTRIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) January 31, 2018 July 31, 2017 ASSETS $ 109,775 $ 223,258 598,908 453,754 25,177 31,090 590,363 460,488 9,979 11,577 1,334,202 1,180,167 466,215 425,238 377,693 377,693 416,112 443,466 69,657 92,969 45,080 38,398 908,542 952,526 $ 2,708,959 $ 2,557,931 $ 354,499 $ 328,601 105,882 100,114 243,310 216,781 13,818 51,211 51,717 46,459 19,332 16,521 28,559 21,359 817,117 781,046 80,000 145,000 10,507 10,263 53,406 45,082 143,913 200,345 — — 6,277 6,260 245,390 235,525 1,839,990 1,670,826 (343,728 ) (336,071 ) 1,747,929 1,576,540 $ 2,708,959 $ 2,557,931 April 30, 2021 July 31, 2020 ASSETS Current assets: Cash and cash equivalents $ 294,562 $ 538,519 Restricted cash 2,900 2,844 Accounts receivable, trade, net 769,826 588,069 Factored accounts receivable 122,671 143,278 Accounts receivable, other, net 121,651 82,880 Inventories, net 1,484,054 716,305 Prepaid income taxes, expenses and other 50,124 30,382 Total current assets 2,845,788 2,102,277 Property, plant and equipment, net 1,158,380 1,107,649 Other assets: Goodwill 1,577,828 1,476,541 Amortizable intangible assets, net 976,261 914,724 Deferred income tax assets, net 49,754 78,738 Other 105,956 91,531 Total other assets 2,709,799 2,561,534 TOTAL ASSETS $ 6,713,967 $ 5,771,460 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 1,033,026 $ 636,506 Current portion of long-term debt 12,559 13,817 Short-term financial obligations 34,654 35,939 Accrued liabilities: Compensation and related items 246,680 160,083 Product warranties 261,965 252,869 Income and other taxes 44,254 83,893 Promotions and rebates 108,893 97,378 Product, property and related liabilities 21,292 15,440 Liabilities related to factored receivables 122,671 143,278 Other 65,927 76,078 Total current liabilities 1,951,921 1,515,281 Long-term debt 1,718,127 1,652,831 Deferred income tax liabilities, net 123,530 123,802 Unrecognized tax benefits 19,864 12,765 Other liabilities 142,603 121,212 Total long-term liabilities 2,004,124 1,910,610 Contingent liabilities and commitments 0 0 Stockholders’ equity: Preferred stock – authorized 1,000,000 shares; NaN outstanding 0 0 Common stock – par value of $.10 per share; authorized 250,000,000 shares; issued 65,651,570 and 65,396,531 shares, respectively 6,565 6,540 Additional paid-in capital 454,327 436,828 Retained earnings 2,562,822 2,201,330 Accumulated other comprehensive income, net of tax 69,211 26,993 Less treasury shares of 10,285,329 and 10,197,775, respectively, at cost (360,226) (351,909) Stockholders' equity attributable to THOR Industries, Inc. 2,732,699 2,319,782 Non-controlling interests 25,223 25,787 Total stockholders’ equity 2,757,922 2,345,569 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 6,713,967 $ 5,771,460 See Notes to the Condensed Consolidated Financial Statements.2THOR INDUSTRIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOMEFOR THE THREE AND SIX MONTHS ENDED JANUARY 31, 2018 AND 2017 (UNAUDITED) Three Months Ended
January 31, Six Months Ended
January 31, 2018 2017 2018 2017 $ 1,971,560 $ 1,588,525 $ 4,203,228 $ 3,297,056 1,701,232 1,376,823 3,599,715 2,848,602 270,328 211,702 603,513 448,454 117,088 96,969 251,351 199,279 13,796 15,279 27,354 33,494 401 177 782 330 1,354 2,486 2,766 5,046 2,574 1,220 5,332 3,200 141,065 98,365 328,156 214,165 61,313 33,583 119,998 70,638 $ 79,752 $ 64,782 $ 208,158 $ 143,527 52,694,680 52,582,134 52,653,303 52,543,050 52,861,140 52,740,959 52,839,752 52,723,450 $ 1.51 $ 1.23 $ 3.95 $ 2.73 $ 1.51 $ 1.23 $ 3.94 $ 2.72 $ 0.37 $ 0.33 $ 0.74 $ 0.66 Three Months Ended April 30, Nine Months Ended April 30, 2021 2020 2021 2020 Net sales $ 3,459,264 $ 1,681,735 $ 8,724,412 $ 5,843,653 Cost of products sold 2,953,984 1,476,102 7,425,403 5,072,803 Gross profit 505,280 205,633 1,299,009 770,850 Selling, general and administrative expenses 231,834 128,147 619,786 478,968 Amortization of intangible assets 30,480 24,079 87,110 72,645 Impairment charges 0 0 0 10,057 Interest income 142 847 662 2,796 Interest expense 26,808 26,868 75,248 82,127 Other income (expense), net 16,379 (6,157) 25,430 (5,123) Income before income taxes 232,679 21,229 542,957 124,726 Income tax provision (benefit) 49,960 (1,555) 113,409 23,071 Net income 182,719 22,784 429,548 101,655 Less: Net (loss) attributable to non-controlling interests (592) (1,284) (44) (2,151) Net income attributable to THOR Industries, Inc. $ 183,311 $ 24,068 $ 429,592 $ 103,806 Weighted-average common shares outstanding: Basic 55,366,241 55,198,756 55,323,080 55,163,943 Diluted 55,723,378 55,392,982 55,615,107 55,337,665 Earnings per common share: Basic $ 3.31 $ 0.44 $ 7.77 $ 1.88 Diluted $ 3.29 $ 0.43 $ 7.72 $ 1.88 Comprehensive income (loss): Net income $ 182,719 $ 22,784 $ 429,548 $ 101,655 Other comprehensive income (loss), net of tax Foreign currency translation adjustment (7,449) (25,245) 33,691 (36,154) Unrealized gain (loss) on derivatives, net of tax 2,929 (7,763) 8,612 (11,709) Total other comprehensive income (loss), net of tax (4,520) (33,008) 42,303 (47,863) Total Comprehensive income (loss) 178,199 (10,224) 471,851 53,792 Less: Comprehensive income (loss) attributable to non-controlling interests (647) (1,483) 41 (2,794) Comprehensive income (loss) attributable to THOR Industries, Inc. $ 178,846 $ (8,741) $ 471,810 $ 56,586 See Notes to the Condensed Consolidated Financial Statements.3THOR INDUSTRIES, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE SIX MONTHS ENDED JANUARY 31, 2018 AND 2017 (UNAUDITED) Six Months Ended January 31, 2018 2017 $ 208,158 $ 143,527 18,619 16,911 27,354 33,494 785 785 23,312 (4,291) (1,482) (2,262) 8,731 5,892 (138,930) (96,712) (129,875) (73,729) (7,140) (8,455) 27,235 28,591 11,283 6,353 8,795 2,712 56,845 52,816 (63,003) (50,924) 3,552 4,554 — (5,039) 960 (2,213) (58,491) (53,622) (65,000) (35,000) (38,994) (34,704) (186) (165) (7,657) (4,572) (111,837) (74,441) (113,483) (75,247) 223,258 209,902 $ 109,775 $ 134,655 $ 137,169 $ 97,180 $ 2,114 $ 4,466 $ 4,929 $ 2,904 Nine Months Ended April 30, 2021 2020 Cash flows from operating activities: Net income $ 429,548 $ 101,655 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 82,533 71,966 Amortization of intangible assets 87,110 72,645 Amortization of debt issuance costs 12,825 8,050 Impairment charges 0 10,057 Deferred income tax (benefit) provision (4,499) 19,312 (Gain) loss on disposition of property, plant and equipment (296) 1,524 Stock-based compensation expense 21,424 14,425 Changes in assets and liabilities: Accounts receivable (175,635) 219,750 Inventories, net (632,506) (62,475) Prepaid income taxes, expenses and other (28,280) (8,963) Accounts payable 341,535 (137,668) Accrued liabilities 32,581 (73,621) Long-term liabilities and other 8,733 612 Net cash provided by operating activities 175,073 237,269 Cash flows from investing activities: Purchases of property, plant and equipment (81,162) (77,302) Proceeds from dispositions of property, plant and equipment 1,742 26,854 Business acquisitions, net of cash acquired (310,938) 0 Other 9,330 (5,239) Net cash used in investing activities (381,028) (55,687) Cash flows from financing activities: Borrowings on revolving asset-based credit facilities 225,676 379,222 Payments on revolving asset-based credit facilities (114,836) (74,776) Payments on term-loan credit facilities (59,700) (199,301) Payments on other debt (9,711) (10,358) Regular cash dividends paid (68,100) (66,239) Payments on finance lease obligations (492) (324) Payments related to vesting of stock-based awards (8,317) (3,763) Short-term financial obligations and other, net (7,323) 532 Net cash provided by (used in) financing activities (42,803) 24,993 Effect of exchange rate changes on cash and cash equivalents and restricted cash 4,857 (2,872) Net increase (decrease) in cash and cash equivalents and restricted cash (243,901) 203,703 Cash and cash equivalents and restricted cash, beginning of period 541,363 451,262 Cash and cash equivalents and restricted cash, end of period 297,462 654,965 Less: restricted cash 2,900 3,480 Cash and cash equivalents, end of period $ 294,562 $ 651,485 Supplemental cash flow information: Income taxes paid $ 172,397 $ 51,281 Interest paid $ 62,048 $ 75,709 Non-cash investing and financing transactions: Capital expenditures in accounts payable $ 3,497 $ 2,057 See Notes to the Condensed Consolidated Financial Statements.4THOR INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) Three Months Ended April 30, 2021 Accumulated Stockholders' Additional Other Equity Non- Total Common Stock Paid-In Retained Comprehensive Treasury Stock Attributable controlling Stockholders' Shares Amount Capital Earnings Income (Loss) Shares Amount to THOR Interests Equity Balance at February 1, 2021 65,651,570 $ 6,565 $ 448,010 $ 2,402,211 $ 73,676 10,285,329 $ (360,226) $ 2,570,236 $ 26,475 $ 2,596,711 Net income (loss) — — — 183,311 — — — 183,311 (592) 182,719 Restricted stock unit activity — — (2,049) — — — — (2,049) — (2,049) Dividends $0.41 per common share — — — (22,700) — — — (22,700) — (22,700) Stock-based compensation expense — — 8,366 — — — — 8,366 — 8,366 Other comprehensive income (loss) — — — — (4,465) — — (4,465) (55) (4,520) Dividend paid to non-controlling interest — — — — — — — — (605) (605) Balance at April 30, 2021 65,651,570 $ 6,565 $ 454,327 $ 2,562,822 $ 69,211 10,285,329 $ (360,226) $ 2,732,699 $ 25,223 $ 2,757,922 Nine Months Ended April 30, 2021 Accumulated Stockholders' Additional Other Equity Non- Total Common Stock Paid-In Retained Comprehensive Treasury Stock Attributable controlling Stockholders' Shares Amount Capital Earnings Income Shares Amount to THOR Interests Equity Balance at August 1, 2020 65,396,531 $ 6,540 $ 436,828 $ 2,201,330 $ 26,993 10,197,775 $ (351,909) $ 2,319,782 $ 25,787 $ 2,345,569 Net income (loss) — — — 429,592 — — — 429,592 (44) 429,548 Restricted stock unit activity 255,039 25 (3,925) — — 87,554 (8,317) (12,217) — (12,217) Dividends $1.23 per common share — — — (68,100) — — — (68,100) — (68,100) Stock-based compensation expense — — 21,424 — — — — 21,424 — 21,424 Other comprehensive income — — — — 42,218 — — 42,218 85 42,303 Dividend paid to non-controlling interest — — — — — — — — (605) (605) Balance at April 30, 2021 65,651,570 $ 6,565 $ 454,327 $ 2,562,822 $ 69,211 10,285,329 $ (360,226) $ 2,732,699 $ 25,223 $ 2,757,922 See Notes to the Condensed Consolidated Financial Statements.5THOR INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) Three Months Ended April 30, 2020 Accumulated Stockholders' Additional Other Equity Non- Total Common Stock Paid-In Retained Comprehensive Treasury Stock Attributable controlling Stockholders' Shares Amount Capital Earnings (Loss) Shares Amount to THOR Interests Equity Balance at February 1, 2020 65,396,531 $ 6,540 $ 427,373 $ 2,102,253 $ (71,415) 10,197,775 $ (351,909) $ 2,112,842 $ 9,492 $ 2,122,334 Net income (loss) — — — 24,068 — — — 24,068 (1,284) 22,784 Restricted stock unit activity — — 297 — — — — 297 — 297 Dividends $0.40 per common share — — — (22,080) — — — (22,080) — (22,080) Stock-based compensation expense — — 4,350 — — — — 4,350 — 4,350 Other comprehensive loss — — — — (32,809) — — (32,809) (199) (33,008) Acquisitions — — — — — — — — 16,835 16,835 Balance at April 30, 2020 65,396,531 $ 6,540 $ 432,020 $ 2,104,241 $ (104,224) 10,197,775 $ (351,909) $ 2,086,668 $ 24,844 $ 2,111,512 Nine Months Ended April 30, 2020 Accumulated Stockholders' Additional Other Equity Non- Total Common Stock Paid-In Retained Comprehensive Treasury Stock Attributable controlling Stockholders' Shares Amount Capital Earnings (Loss) Shares Amount to THOR Interests Equity Balance at August 1, 2019 65,189,907 $ 6,519 $ 416,382 $ 2,066,674 $ (57,004) 10,126,434 $ (348,146) $ 2,084,425 $ 10,803 $ 2,095,228 Net income (loss) — — — 103,806 — — — 103,806 (2,151) 101,655 Restricted stock unit activity 206,624 21 1,213 — — 71,341 (3,763) (2,529) — (2,529) Dividends $1.20 per common share — — — (66,239) — — — (66,239) — (66,239) Stock-based compensation expense — — 14,425 — — — — 14,425 — 14,425 Other comprehensive loss — — — — (47,220) — — (47,220) (643) (47,863) Acquisitions — — — — — — — — 16,835 16,835 Balance at April 30, 2020 65,396,531 $ 6,540 $ 432,020 $ 2,104,241 $ (104,224) 10,197,775 $ (351,909) $ 2,086,668 $ 24,844 $ 2,111,512 See Notes to the Condensed Consolidated Financial Statements.6NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)(All dollarU.S. Dollar, Euro and British Pound Sterling amounts presented in thousands except share and per share data)1.Nature of Operations and Accounting Policies1. Nature of OperationsThor and Accounting PoliciesNature of OperationsTHOR Industries, Inc. was founded in 1980 and through itsis the sole owner of operating subsidiaries (collectively, the “Company” or "THOR"), manufactures a wide rangethat, combined, represent the world's largest manufacturer of recreational vehicles (“RVs”) at various manufacturing facilities located. The Company manufactures a wide variety of RVs in the United States and Europe and sells those vehicles, as well as related parts and accessories, primarily in Indiana, with additional facilities in Ohio, Oregon, Idaho and Michigan. These products are sold to independent,non-franchise dealers primarily throughout the United States, Canada and Canada.Europe. Unless the context requires or indicates otherwise, all references to “Thor”,“THOR,” the “Company”, “we”,“Company,” “we,” “our” and “us” refer to ThorTHOR Industries, Inc. and its subsidiaries.The July 31, 20172020 amounts are derived from the annual audited financial statements.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 Form10-K for the fiscal year ended July 31, 2017.2020. Due to seasonality within the recreational vehicle industry, and the impact of the ongoing COVID-19 pandemic on our industry, among other factors, annualizing the results of operations for the sixnine months ended January 31, 2018April 30, 2021 would not necessarily be indicative of the results expected for athe full fiscal year, and recreational vehicle sales are historically lowest during the second fiscal quarter ending January 31.Recently Adopted Accounting PronouncementsIn January 2017, the Financial Accounting Standards Board (“FASB”)FASB issued Accounting Standards Update (“ASU”("ASU")No. 2017-04, “Intangibles— "Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,”" which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge (referred to as Step 2 in the goodwill impairment test). Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment charge equal to that excess shall be recognized, not to exceed the amount of goodwill allocated to the reporting unit. This ASU is effective for annual and any interim impairment tests for periods beginning after December 15, 2019, with early adoption permitted after January 1, 2017. This2019. The Company adopted ASU is2017-04, effective for the Company in its fiscal year 2021 beginning on August 1, 2020. The Company is currently evaluating the impactadoption of this ASU on its consolidated financial statements, which will depend on the outcomes of future goodwill impairment tests.In February 2016, the FASB issued ASUNo. 2016-02, “Leases (Topic 842),” which provides guidance on the recognition, measurement, presentation, and disclosure of leases. ASUNo. 2016-02 requires the recognition of lease assets and lease liabilities by lessees for all leases with terms greater than 12 months. The principal difference from current guidance is that the lease assets and lease liabilities arising from operating leases will be recognized on the Consolidated Balance Sheet. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. This ASU is effective for the Company in its fiscal year 2020 beginning on August 1, 2019. The Company is currently evaluating the impact that implementing this ASU willdid not have on its financial statements.In July 2015, the FASB issued ASUNo. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory.” ASUNo. 2015-11 requires inventory measured using any method other thanlast-in,first-out (“LIFO”) or the retail inventory method to be subsequently measured at the lower of cost or net realizable value, rather than at the lower of cost or market. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Under this ASU, subsequent measurement of inventory using the LIFO and retail inventory method is unchanged. ASUNo. 2015-11 is effective prospectively for fiscal years, and for interim periods within those years, beginning after December 15, 2016. The Company adopted ASUNo. 2015-11 on August 1, 2017 and there was noa material impact on the Condensed Consolidated Financial Statements.5In May 2014, the FASB issued ASUNo. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers. This ASU will supersede most current revenue recognition guidance. Under this ASU, entities are required to identify the contract with a customer, identify the separate performance obligations in the contract, determine the transaction price, allocate the transaction price to the separate performance obligations in the contract and recognize the appropriate amount of revenue when (or as) the entity satisfies each performance obligation. This ASU will also require additional qualitative and quantitative disclosures about contracts with customers, significant judgments made in applying the revenue guidance, and assets recognized from the costs to obtain or fulfill a contract. ASUNo. 2014-09 is effective for fiscal years, and the interim periods within those years, beginning after December 15, 2017. This ASU is effective for the Company in its fiscal year 2019 beginning on August 1, 2018. In applying this ASU, entities have the option of using either a full retrospective transition or a modified retrospective approach with the cumulative effect recognized as of the date of adoption. The Company plans to use the modified retrospective approach in applying this ASU.The Company is in the process of analyzing and quantifying the adoption impact of this ASU as well as evaluating the impact to internal controls, business processes and financial statement disclosures under this ASU. While the Company is still completing its assessment of all the potential impacts of this ASU, the Company does not anticipate adoption will have a material impact to theCompany's consolidated financial statements. The ASU will, however, require more extensive revenue-related disclosures. The Company will continue evaluation of the adoption of this ASU through the date of adoption, including assessing the impact of required financial statement disclosures.2.AcquisitionJayco, Corp.2. AcquisitionsTiffin GroupOn June 30, 2016,December 18, 2020, the Company closed on a Stock Purchase Agreement (“JaycoTiffin Group SPA”) for the acquisition of all of the issued and outstanding capital stock of towable andluxury motorized recreational vehicle manufacturer Jayco, Corp. (“Jayco”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”) for. 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 $576,060,the Tiffin Group was approximately $300,000, subject to adjustment. This acquisitionadjustment, and was funded through existing cash-on-hand as well as $165,000 in borrowings from the Company’s existing asset-based credit facility. The total cash on hand and $360,000 from an asset-based revolving credit facility as more fully described in Note 11consideration to the Condensed Consolidated Financial Statements. The final purchase price adjustment of $5,039 was based onbe paid is subject to the final determination of the actual acquired net assetsworking capital, as defined in the Tiffin Group SPA, as of the June 30, 2016 closing date andclose of business on December 18, 2020, which determination was paid duringfinalized in the firstfourth quarter of fiscal 2017. Jayco2021 and the true-up was not material. The Tiffin Group operates as an independent operation in the same manner as the Company’s other recreational vehicle subsidiaries, and its towables operations are aggregated within the Company’s towable recreational vehicle reportable segment and its motorized operations are aggregated within the Company’s motorized recreational vehicle reportable segment and its towable operations are aggregated within the Company’s towable recreational vehicle reportable segment. The Company purchased Jaycothe Tiffin Group to complement its existing towablemotorized and motorizedtowable RV product offerings and North American independent dealer base.7The results of the Tiffin Group are included in the Company’s Condensed Consolidated Statements of Income and Comprehensive Income since the December 18, 2020 acquisition date. The Tiffin Group recorded net sales of $253,636 and net income before income taxes of $8,847 for the period from the date of acquisition through April 30, 2021. Net income before income taxes included a charge of $4,272 related to the step-up in assigned value of acquired Tiffin Group inventory that was included in cost of products sold in the current period, and also includes a charge of $4,248 for the amortization expense related to the acquired backlog and the other acquired amortizable intangible assets.The following table summarizes the finalestimated fair values assigned toof the JaycoTiffin Group net assets acquired which were based on internalthe acquisition date. The Company is in the process of finalizing a fair value analysis, but this analysis has not been fully completed. The provisional amounts related to deferred income tax liabilities and independent external valuations: $ 18,409 258,158 80,824 261,100 92,800 12,400 74,184 (216,776 ) 581,099 (18,409 ) $ 562,690 Cash $ 13,074 Inventory 116,441 Other assets 53,860 Property, plant and equipment 48,262 Amortizable intangible assets: Dealer network 92,200 Trademarks 32,100 Non-compete agreements 1,400 Backlog 4,800 Goodwill 62,905 Current liabilities (81,423) Deferred income tax liabilities (35,104) 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 19.318.8 years. The dealer network was valued based on the Discounted Cash Flow Method and iswill be amortized on an accelerated basis over 18 to 20 years. The trademarks were valued on the Relief from Royalty Method and arewill be amortized on a straight-line basis over 20 years. Backlog was valued based on the Discounted Cash Flow Method and waswill be amortized on a straight-line basis over 3five to seven months. Goodwill isGenerally, the goodwill recognized as a result of this transaction will be not deductible for tax purposes.6Togo GroupIn February 2018, the Company formed a 50/50 joint venture, originally called TH2connect, LLC, with Tourism Holdings Limited ("thl"). In July 2019, this joint venture was rebranded as "Togo Group." Togo Group was formed to own, improve and sell innovative and comprehensive digital applications through a platform designed for the global RV industry.Effective March 23, 2020, the Company and thl reached an agreement (the “2020 Agreement”) whereby the Company obtained additional ownership interest in Togo Group. THOR obtained a 73.5% controlling interest in Togo Group and the power to direct the activities of Togo Group. Since the effective date of the 2020 Agreement, the operating results, balance sheet accounts and cash flow activity of Togo Group have been consolidated within the Company's Condensed Consolidated Financial Statements.The operations of Togo Group are focused on digital solutions primarily for the North American market related to travel and RV use, with expansion into other regions anticipated in future periods. The Togo Group is managed as a stand-alone operating entity and represents a non-reportable segment and a separate reporting unit for goodwill assessment purposes.8The table below summarizes the final estimated fair value of the Togo Group assets acquired and liabilities assumed as of the 2020 Agreement effective date.3.Business SegmentsCash $ 326 Accounts receivable 466 Other assets 749 Property, plant and equipment 362 Amortizable intangible assets Trade names and trademarks 1,130 Developed technology 5,700 Other 1,350 Goodwill 61,955 Liabilities (2,595) Non-controlling interest (16,835) Total fair value of net assets acquired $ 52,608 Amortizable intangible assets have a weighted-average useful life of approximately eight years and are amortized on a straight-line basis. The developed technology was valued using the Multi-Period Excess Earnings method, which is a form of the income approach. Trade names and trademarks were valued using the Relief from Royalty method. The majority of the goodwill is expected to be deductible for tax purposes.Prior to the March 23, 2020 effective date of the 2020 Agreement, the Company accounted for the investment in Togo Group under the equity method of accounting, and the Company's share of the losses of this investment were included in Other income (expense), net in the Condensed Consolidated Statements of Income and Comprehensive Income. The Company's share of the losses from this investment recognized in the three and nine-month periods ended April 30, 2020 were $2,137 and $6,884, respectively.The following unaudited pro forma information represents the Company’s results of operations as if the fiscal 2021 acquisition of the Tiffin Group had occurred at the beginning of fiscal 2020 and the fiscal 2020 acquisition of the Togo Group had occurred at the beginning of fiscal 2019. These performance results may not be indicative of the actual results that would have occurred under the ownership and management of the Company.Three Months Ended Nine Months Ended April 30, 2021 April 30, 2021 Net sales $ 3,459,264 $ 8,988,314 Net income attributable to THOR Industries, Inc. $ 183,104 $ 436,817 Basic earnings per common share $ 3.31 $ 7.90 Diluted earnings per common share $ 3.29 $ 7.85 Three Months Ended Nine Months Ended April 30, 2020 April 30, 2020 Net sales $ 1,826,765 $ 6,403,792 Net income attributable to THOR Industries, Inc. $ 20,966 $ 103,623 Basic earnings per common share $ 0.38 $ 1.88 Diluted earnings per common share $ 0.38 $ 1.87 93. Business SegmentsThe Company has two3 reportable segments, bothall related to recreational vehicles: (1) towablesNorth American Towables, (2) North American Motorized and (2) motorized. The towable recreational vehicle reportable segment consists of the following operating segments that have been aggregated: Airstream (towable), Heartland (including Bison, Cruiser RV and DRV), Jayco (including Jayco towable, Starcraft and Highland Ridge), Keystone (including CrossRoads and Dutchmen) and KZ (including Livin’ Lite). The motorized recreational vehicle reportable segment consists of the following operating segments that have been aggregated: Airstream (motorized), Jayco (including Jayco motorized and Entegra Coach) and Thor Motor Coach.Company’sCompany's Postle subsidiaryand Togo Group subsidiaries are included in “Other,”Other, which is anon-reportable segment. Net sales included in Other mainly relate to the sale of aluminum extrusions and specialized component products. Intercompany eliminations adjust for Postle sales to the Company’s towable and motorized segments, which are consummated at establishedarm’s-length transfer prices generally consistent with the selling prices of extrusion components to third-party customers.All manufacturing is conducted within the United States. Total assets include those assets used in the operation of eachThe following tables reflect certain financial information by reportable andnon-reportable segment, and the Corporate assets consist primarily of cash and cash equivalents, deferred net income tax and deferred compensation plan assets and certain Corporate real estate holdings primarily utilized by Thor operating subsidiaries. Three Months Ended
January 31, Six Months Ended
January 31, Net sales: 2018 2017 2018 2017 $ 1,373,118 $ 1,082,249 $ 2,991,619 $ 2,293,122 559,909 474,972 1,126,520 936,426 1,933,027 1,557,221 4,118,139 3,229,548 68,013 53,891 150,932 112,887 (29,480 ) (22,587 ) (65,843 ) (45,379 ) $ 1,971,560 $ 1,588,525 $ 4,203,228 $ 3,297,056 Three Months Ended
January 31, Six Months Ended
January 31, Income (loss) before income taxes: 2018 2017 2018 2017 $ 116,728 $ 78,000 $ 275,579 $ 172,173 37,538 28,488 75,124 57,411 154,266 106,488 350,703 229,584 5,290 5,696 13,773 12,074 (18,491 ) (13,819 ) (36,320 ) (27,493 ) $ 141,065 $ 98,365 $ 328,156 $ 214,165 Total assets: January 31, 2018 July 31, 2017 $ 1,689,874 $ 1,535,029 625,140 500,761 2,315,014 2,035,790 159,630 156,996 234,315 365,145 $ 2,708,959 $ 2,557,931 7Three Months Ended April 30, Nine Months Ended April 30, NET SALES: 2021 2020 2021 2020 Recreational vehicles North American Towables $ 1,726,102 $ 773,391 $ 4,491,327 $ 2,958,186 North American Motorized 775,393 264,037 1,846,243 1,023,606 Total North America 2,501,495 1,037,428 6,337,570 3,981,792 European 894,240 615,343 2,230,191 1,745,465 Total recreational vehicles 3,395,735 1,652,771 8,567,761 5,727,257 Other 106,960 45,632 262,381 176,943 Intercompany eliminations (43,431) (16,668) (105,730) (60,547) Total $ 3,459,264 $ 1,681,735 $ 8,724,412 $ 5,843,653 Three Months Ended April 30, Nine Months Ended April 30, INCOME (LOSS) BEFORE INCOME TAXES: 2021 2020 2021 2020 Recreational vehicles North American Towables $ 167,693 $ 49,261 $ 456,752 $ 207,009 North American Motorized 54,780 10,915 139,768 47,606 Total North America 222,473 60,176 596,520 254,615 European 43,993 (242) 48,703 (18,576) Total recreational vehicles 266,466 59,934 645,223 236,039 Other, net 16,667 3,996 37,801 24,356 Corporate (50,454) (42,701) (140,067) (135,669) Total $ 232,679 $ 21,229 $ 542,957 $ 124,726 TOTAL ASSETS: April 30, 2021 July 31, 2020 Recreational vehicles North American Towables $ 1,802,162 $ 1,529,913 North American Motorized 1,149,043 480,225 Total North America 2,951,205 2,010,138 European 3,206,221 3,102,071 Total recreational vehicles 6,157,426 5,112,209 Other, net 258,531 212,378 Corporate 298,010 446,873 Total $ 6,713,967 $ 5,771,460 10 Three Months Ended
January 31, Six Months Ended
January 31, Depreciation and intangible amortization expense: 2018 2017 2018 2017 $ 17,223 $ 18,238 $ 34,016 $ 39,164 2,909 2,246 5,637 4,589 20,132 20,484 39,653 43,753 2,748 3,012 5,557 6,016 395 314 763 636 $ 23,275 $ 23,810 $ 45,973 $ 50,405 Three Months Ended
January 31, Six Months Ended
January 31, Capital acquisitions: 2018 2017 2018 2017 $ 18,821 $ 15,453 $ 36,413 $ 36,318 1,754 6,889 14,069 12,045 20,575 22,342 50,482 48,363 1,983 314 2,593 610 7,016 1,141 8,591 1,317 $ 29,574 $ 23,797 $ 61,666 $ 50,290 4.Earnings Per Common ShareDEPRECIATION AND INTANGIBLE AMORTIZATION EXPENSE: Three Months Ended April 30, Nine Months Ended April 30, 2021 2020 2021 2020 Recreational vehicles North American Towables $ 16,904 $ 16,696 $ 49,029 $ 49,398 North American Motorized 7,008 3,600 16,112 10,608 Total North America 23,912 20,296 65,141 60,006 European 31,251 22,049 94,182 75,552 Total recreational vehicles 55,163 42,345 159,323 135,558 Other 3,108 2,676 9,058 7,710 Corporate 418 438 1,262 1,343 Total $ 58,689 $ 45,459 $ 169,643 $ 144,611 Three Months Ended April 30, Nine Months Ended April 30, CAPITAL ACQUISITIONS: 2021 2020 2021 2020 Recreational vehicles North American Towables $ 9,750 $ 5,192 $ 26,071 $ 23,888 North American Motorized 6,716 2,160 12,191 10,588 Total North America 16,466 7,352 38,262 34,476 European 14,889 15,880 38,105 38,057 Total recreational vehicles 31,355 23,232 76,367 72,533 Other 1,427 517 4,087 1,445 Corporate 358 121 747 1,049 Total $ 33,140 $ 23,870 $ 81,201 $ 75,027 4. Earnings Per Common ShareThe 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
January 31, Six Months Ended
January 31, 2018 2017 2018 2017 52,694,680 52,582,134 52,653,303 52,543,050 166,460 158,825 186,449 180,400 52,861,140 52,740,959 52,839,752 52,723,450 At January 31, 2018Three Months Ended April 30, Nine Months Ended April 30, 2021 2020 2021 2020 Weighted-average common shares outstanding for basic earnings per share 55,366,241 55,198,756 55,323,080 55,163,943 Unvested restricted stock units 357,137 194,226 292,027 173,722 Weighted-average common shares outstanding assuming dilution 55,723,378 55,392,982 55,615,107 55,337,665 For the three months ended April 30, 2021 and 2017,2020, the Company had 35,14986,946 and 27,742, respectively, of140,481 unvested restricted stock and restricted stock units outstanding, respectively, which were excluded from this calculation as their effect would be antidilutive.5.Fair Value Measurements115. Derivatives and HedgingThe fair value of our derivative instruments and the associated notional amounts, presented on a pre-tax basis, were as follows:April 30, 2021 July 31, 2020 Fair Value in Fair Value in Fair Value in Other Current Other Current Other Current Cash Flow Hedges Notional Assets Liabilities Notional Liabilities Foreign currency forward contracts $ 75,110 $ 494 $ 0 $ 0 $ 0 Interest rate swap agreements 532,025 0 14,008 673,400 24,840 Total derivative financial instruments $ 607,135 $ 494 $ 14,008 $ 673,400 $ 24,840 Foreign currency forward contracts accounted for as cash flow hedges and outstanding at April 30, 2021 mature over the next nine months.Net Investment HedgesThe foreign currency transaction gains and losses on the Euro-denominated portion of the term loan, which is designated and effective as a hedge of the Company’s net investment in its Euro-denominated functional currency subsidiaries, are included as a component of the foreign currency translation adjustment. Gains for the three months ended April 30, 2021, net of tax, were $1,984 and losses for the nine months ended April 30, 2021, net of tax, were $8,969. Gains for the three and nine months ended April 30, 2020, net of tax, were $6,293 and $9,136, respectively.There were 0 amounts reclassified out of accumulated other comprehensive income ("AOCI") pertaining to the net investment hedge during the three and nine-month periods ended April 30, 2021 and April 30, 2020, respectively.Derivatives Not Designated as Hedging InstrumentsThe Company assesseshas certain other derivative instruments which have not been designated as hedges. These other derivative instruments had a notional amount totaling approximately $33,634 and a fair value of $1,774, which is included in Other current liabilities in the inputs usedCondensed Consolidated Balance Sheet as of April 30, 2021. These other derivative instruments had a notional amount totaling approximately $34,862 and a fair value of $1,824, as of July 31, 2020. 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 measurechanges in the fair value of certainthe following derivative instruments are as follows:Three Months Ended April 30, 2021 2020 Gain (Loss) on Derivatives Designated as Cash Flow Hedges Gain (Loss) recognized in Other Comprehensive Income, net of tax Foreign currency forward contracts $ 422 $ 856 Interest rate swap agreements 2,507 (8,619) Total gain (loss) $ 2,929 $ (7,763) Nine Months Ended April 30, 2021 2020 Gain (Loss) on Derivatives Designated as Cash Flow Hedges Gain (Loss) recognized in Other Comprehensive Income, net of tax Foreign currency forward contracts $ 356 $ (159) Interest rate swap agreements 8,256 (11,550) Total gain (loss) $ 8,612 $ (11,709) 12Three Months Ended April 30, 2021 2020 Interest Interest Sales Expense Sales Expense Gain (Loss) Reclassified from AOCI, Net of Tax Foreign currency forward contracts $ (429) $ 0 $ (121) $ 0 Interest rate swap agreements 0 (2,353) 0 (1,383) Gain (Loss) on Derivatives Not Designated as Hedging Instruments Amount of loss recognized in income, net of tax Interest rate swap agreements 0 108 0 (107) Total gain (loss) $ (429) $ (2,245) $ (121) $ (1,490) Nine Months Ended April 30, 2021 2020 Interest Interest Sales Expense Sales Expense Gain (Loss) Reclassified from AOCI, Net of Tax Foreign currency forward contracts $ (422) $ 0 $ (555) $ 0 Interest rate swap agreements 0 (7,750) 0 (2,897) Gain (Loss) on Derivatives Not Designated as Hedging Instruments Amount of loss recognized in income, net of tax Interest rate swap agreements 0 62 0 (275) Total gain (loss) $ (422) $ (7,688) $ (555) $ (3,172) 6. InventoriesMajor classifications of inventories are as follows:April 30, 2021 July 31, 2020 Finished goods – RV $ 129,030 $ 152,297 Finished goods – other 59,369 44,779 Work in process 370,402 128,181 Raw materials 534,965 302,813 Chassis 445,697 135,194 Subtotal 1,539,463 763,264 Excess of FIFO costs over LIFO costs (55,409) (46,959) Total inventories, net $ 1,484,054 $ 716,305 Of the $1,539,463 and $763,264 of inventories at April 30, 2021 and July 31, 2020, $527,670 and $251,099, respectively, were valued on the last-in, first-out (LIFO) method, and $1,011,793 and $512,165, respectively, were valued on the first-in, first-out (FIFO) method.137. Property, Plant and EquipmentProperty, plant and equipment consists of the following:April 30, 2021 July 31, 2020 Land $ 141,166 $ 136,200 Buildings and improvements 815,802 760,986 Machinery and equipment 509,924 438,985 Rental vehicles 64,992 83,534 Lease right-of-use assets – operating 38,545 33,609 Lease right-of-use assets – finance 7,196 3,672 Total cost 1,577,625 1,456,986 Less accumulated depreciation (419,245) (349,337) Property, plant and equipment, net $ 1,158,380 $ 1,107,649 See Note 15 to the Condensed Consolidated Financial Statements for further information regarding the lease right-of-use assets.8. Intangible Assets and GoodwillThe components of amortizable intangible assets are as follows:April 30, 2021 July 31, 2020 Accumulated Accumulated Cost Amortization Cost Amortization Dealer networks/customer relationships $ 867,483 $ 309,523 $ 766,198 $ 252,320 Trademarks 313,309 59,037 275,775 47,743 Design technology and other intangibles 219,012 57,537 213,468 40,654 Backlog 4,800 3,471 0 0 Non-compete agreements 1,400 175 0 0 Total amortizable intangible assets $ 1,406,004 $ 429,743 $ 1,255,441 $ 340,717 Estimated future amortization expense is as follows:For the remainder of the fiscal year ending July 31, 2021 $ 30,178 For the fiscal year ending July 31, 2022 125,339 For the fiscal year ending July 31, 2023 106,759 For the fiscal year ending July 31, 2024 96,863 For the fiscal year ending July 31, 2025 88,655 For the fiscal year ending July 31, 2026 and thereafter 528,467 $ 976,261 Changes in the carrying amount of goodwill by reportable segment for the nine months ended April 30, 2021 are summarized as follows:North American Towables North American Motorized European Other Total Net balance as of August 1, 2020 $ 333,786 $ 0 $ 1,037,929 $ 104,826 $ 1,476,541 Fiscal 2021 activity: Goodwill acquired 18,845 43,491 0 17,882 80,218 Measurement period adjustments (7,656) 8,225 0 0 569 Foreign currency translation 0 0 20,500 0 20,500 Net balance as of April 30, 2021 $ 344,975 $ 51,716 $ 1,058,429 $ 122,708 $ 1,577,828 14Changes in the carrying amount of goodwill by reportable segment for the nine months ended April 30, 2020 are summarized as follows:North American Towables North American Motorized European Other Total Net balance as of August 1, 2019 $ 334,822 $ 0 $ 980,339 $ 42,871 $ 1,358,032 Fiscal 2020 activity: Goodwill acquired 0 0 — 62,366 62,366 Measurement period adjustments 0 0 1,282 0 1,282 Foreign currency translation 0 0 (24,243) 0 (24,243) Impairment charge (1,036) 0 0 0 (1,036) Net balance as of April 30, 2020 $ 333,786 $ 0 $ 957,378 $ 105,237 $ 1,396,401 During the fiscal quarter ended January 31, 2020, there was an interim impairment assessment performed related to two groups of tangible and intangible assets within the North American Towables reportable segment using Level 3 inputs as defined by ASC 820. The Company recognized an aggregate impairment charge of $10,057 related to these assets during the fiscal year-to-date period ended April 30, 2020, which included a goodwill impairment charge of $1,036.9. Concentration of RiskOne dealer, FreedomRoads, LLC, accounted for 13% of the Company's consolidated net sales for the three-month period ended April 30, 2021 and 15% of the Company's consolidated net sales for the three-month period ended April 30, 2020, and 13% for the nine-month period ended April 30, 2021 and 15% for the nine-month period ended April 30, 2020, respectively. Sales to this dealer are reported within both the North American Towables and North American Motorized segments. This dealer also accounted for 15% and 18% of the Company’s consolidated trade accounts receivable at April 30, 2021 and July 31, 2020, respectively. The loss of this dealer could have a material effect on the Company’s business.10. Fair Value MeasurementsThe financial assets and liabilities using a three-level hierarchy as prescribed in ASC 820, “Fair Value Measurements and Disclosures”, and as discussed in Note 9 in the Notes to the Consolidated Financial Statements in our fiscal 2017 Form10-K.The financial assets that wereare accounted for at fair value on a recurring basis at January 31, 2018April 30, 2021 and July 31, 2017, all using Level 1 inputs,2020 are as follows: January 31, 2018 July 31, 2017 $ 47,258 $ 176,663 $ 36,776 $ 28,095 Input Level April 30, 2021 July 31, 2020 Cash equivalents Level 1 $ 211 $ 227,154 Deferred compensation plan mutual fund assets Level 1 $ 46,931 $ 47,327 Deferred compensation plan liabilities Level 1 $ 77,289 $ 61,290 Foreign currency forward contract asset Level 2 $ 494 $ 0 Interest rate swap liabilities Level 2 $ 15,782 $ 26,664 Cash equivalents represent investments in government and other money market funds traded in an active market and are reported as a component of Cash and cash equivalents in the Condensed Consolidated Balance Sheets.8Deferred compensation plan assets representaccounted 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. Deferred compensationAdditional plan asset balancesinvestments in corporate-owned life insurance are recorded asat their cash surrender value, not fair value, and therefore are not included above.Foreign currency forward contracts outstanding at April 30, 2021 are used to exchange British Pounds Sterling ("GBP") for Euro. The total notional value of these contracts, including designated hedges and other contracts not designated, at April 30, 2021 is 54,000 GBP ($75,110), and these contracts have various maturity dates through January 31, 2022.The Company entered into interest rate swaps to convert a componentportion of Otherthe Company's long-term assets indebt from floating rate to fixed rate debt. As of April 30, 2021, the Condensed Consolidated Balance Sheets. An equal and offsetting liability is also recorded in regardsoutstanding swaps had notional contract values of $532,025, partially hedging the interest rate risk related to the deferred compensation planCompany's U.S. dollar term loan tranche that matures in February 2026. The Company's other interest rate swaps not designated as hedging instruments had a componentnotional contract value of Other long-term liabilities in the Condensed Consolidated Balance Sheets. Changes in the$33,634 at April 30, 2021.15The fair value of foreign currency forward contracts is estimated by discounting the plan assetsdifference between the contractual forward price and the related liability are reflected in Other income, net and Selling, general and administrative expenses, respectively, incurrent available forward price for the Condensed Consolidated Statements of Income and Comprehensive Income.6.InventoriesMajor classifications of inventories are as follows: January 31, 2018 July 31, 2017 $ 54,722 $ 24,904 34,177 27,862 144,714 117,319 257,765 214,518 135,555 109,555 626,933 494,158 (36,570 ) (33,670 ) $ 590,363 $ 460,488 Of the $626,933 and $494,158 of inventories at January 31, 2018 and July 31, 2017, $351,612 and $284,897, respectively, was valued on thelast-in,first-out (LIFO) basis, and $275,321 and $209,261, respectively, was valued on thefirst-in,first-out (FIFO) method.7.Property, Plant and EquipmentProperty, plant and equipment is stated at cost, net of accumulated depreciation, and consistsresidual maturity of the following: January 31, 2018 July 31, 2017 $ 53,045 $ 48,812 415,794 380,139 180,559 161,724 649,398 590,675 (183,183 ) (165,437 ) $ 466,215 $ 425,238 Property, plant and equipment at both January 31, 2018 and July 31, 2017 includes buildings and improvements under capital leasescontract using observable market rates. The fair value of $6,527 and related amortization included in accumulated depreciation of $1,496 and $1,224 at January 31, 2018 and July 31, 2017, respectively.98.Intangible Assets and GoodwillThe components of amortizable intangible assets are as follows: Weighted-Average Remaining January 31, 2018 July 31, 2017 Life in Years at Cost Accumulated Cost Accumulated January 31, 2018 Amortization Amortization 16 $ 404,960 $ 124,519 $ 404,960 $ 101,795 18 147,617 21,434 147,617 17,570 8 19,300 9,925 19,300 9,203 1 450 337 450 293 $ 572,327 $ 156,215 $ 572,327 $ 128,861 Estimated annual amortization expenseinterest rate swaps is as follows: $ 55,118 50,043 46,194 42,860 37,753 211,498 $ 443,466 Ofdetermined by discounting the recorded goodwill of $377,693 at both January 31, 2018 and July 31, 2017, $334,822 relates to the towable recreational vehicle reportable segment and $42,871 relates to the othernon-reportable segment.9.Concentration of RiskOne dealer, FreedomRoads, LLC, accounted for 22% and 18% of the Company’s consolidated net sales for the six-month periods ended January 31, 2018 and January 31, 2017, respectively. Sales to this dealer are reported within both the towables and motorized segments. This dealer also accounted for 20% of the Company’s consolidated trade accounts receivable at January 31, 2018 and 30% at July 31, 2017. The loss of this dealer could have a significant effectestimated future cash flows based on the Company’s business.10.Product Warranties11. Product WarrantiesThe Company generally provides retail customers of its products with aone-year ortwo-year warranty covering defects in material or workmanship, with longer warranties on certain structural components. The Company records a liability based on its best estimate of the amounts necessary to settle future and existing claims on products sold as of the balance sheet date. Factors used in estimating the warranty liability include a history of units sold, existing dealer inventory, average cost incurred and a profile of the distribution of warranty expenditures over the warranty period. Management believes that the recorded warranty liabilities are adequate, however, actual claims incurred could differ from estimates, requiring adjustments to the liabilities. Warranty liabilities are reviewed and adjusted as necessary on at least a quarterly basis.Changes in our product warranty reservesliability during the indicated periods are as follows: Three Months Ended
January 31, Six Months Ended
January 31, 2018 2017 2018 2017 $ 231,999 $ 208,988 $ 216,781 $ 201,840 63,209 44,149 127,042 96,096 (51,898 ) (43,964 ) (100,513 ) (88,763 ) $ 243,310 $ 209,173 $ 243,310 $ 209,173 1011.Long-Term DebtThree Months Ended April 30, Nine Months Ended April 30, 2021 2020 2021 2020 Beginning balance $ 251,009 $ 282,065 $ 252,869 $ 289,679 Provision 84,805 35,780 188,546 157,453 Payments (73,767) (59,956) (191,706) (189,254) Acquisition 0 0 11,032 0 Foreign currency translation (82) (12) 1,224 (1) Ending balance $ 261,965 $ 257,877 $ 261,965 $ 257,877 12. Long-Term DebtThe components of long-term debt are as follows:April 30, 2021 July 31, 2020 Term loan $ 1,549,621 $ 1,597,091 Asset-based credit facility 110,000 0 Unsecured notes 30,205 29,620 Other debt 76,358 84,500 Gross long-term debt 1,766,184 1,711,211 Debt issuance costs, net of amortization (35,498) (44,563) Total long-term debt, net of debt issuance costs 1,730,686 1,666,648 Less: current portion of long-term debt (12,559) (13,817) Total long-term debt, net, less current portion $ 1,718,127 $ 1,652,831 On February 1, 2019, the Company entered into a seven-year term loan (“term loan”) agreement, which consists of both a United States Dollar-denominated term loan tranche and a Euro-denominated term loan tranche, and a $750,000 revolving asset-based credit facility (“ABL”). Subject to earlier termination, the term loan matures on February 1, 2026 and the ABL matures on February 1, 2024.As of April 30, 2021, the entire outstanding U.S. term loan tranche balance of $941,900 was subject to a LIBOR-based rate totaling 3.125%. The interest rate on $532,025 of that balance, however, was fixed at 5.466% through an interest rate swap, dated March 18, 2019, by swapping the underlying 1-month LIBOR rate for a fixed rate of 2.466%. As of July 31, 2020, the entire outstanding U.S. term loan tranche balance of $941,900 was subject to a LIBOR-based rate of 3.938%, but the interest rate on $673,400 of that balance was fixed at 6.216% through an interest rate swap, dated March 18, 2019, by swapping the underlying 1-month LIBOR rate for a fixed rate of 2.466%. The total interest rate on the April 30, 2021 outstanding Euro term loan tranche balance of $607,721 was 3.00%, and the total interest rate on the July 31, 2020 outstanding Euro term loan tranche of $655,191 was 4.00%.As of April 30, 2021, the total interest rate on the outstanding ABL borrowings of $110,000 was 1.375%. The Company hasmay, 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.16The Company must make mandatory prepayments of principal under the term loan agreement upon the occurrence of certain specified events, including certain asset sales, debt issuances and receipt of annual cash flows in excess of certain amounts. No such specified events occurred during the three or nine months ended April 30, 2021 or 2020.Availability under the ABL agreement is subject to a five-year credit agreement, which was entered intoborrowing base based on June 30, 2016a percentage of applicable eligible receivables and matureseligible inventory. The ABL carries interest at an annual base rate plus 0.25% to 0.75%, or LIBOR plus 1.25% to 1.75%, based on June 30, 2021. See Note 11adjusted excess availability as defined in the NotesABL agreement. This agreement also includes a 0.25% unused facility fee.The unused availability under the ABL is generally available to the Consolidated Financial StatementsCompany for general operating purposes and, based on April 30, 2021 eligible accounts receivable and inventory balances, net of amounts drawn, totaled approximately $610,000.The unsecured notes of 25,000 Euro ($30,205) relate to long-term debt of our European segment. There are two series, 20,000 Euro ($24,164) with an interest rate of 1.945% maturing in our fiscal 2017 Form10-K for details regarding the credit agreement. Borrowings outstanding on this facility totaled $80,000 at January 31, 2018March 2025, and $145,000 at July 31, 2017. As5,000 Euro ($6,041) with an interest rate of January 31, 2018, the available2.534% maturing March 2028. Other debt relates primarily to real estate loans with varying maturity dates through September 2032 and unused credit line under the revolver was $417,675, and the Company was in compliance with the financial covenant in the credit agreement.Total contractual gross debt maturities are as follows: For the remainder of the fiscal year ending July 31, 2021 $ 4,202 For the fiscal year ending July 31, 2022 12,264 For the fiscal year ending July 31, 2023 12,390 For the fiscal year ending July 31, 2024 122,519 For the fiscal year ending July 31, 2025 36,557 For the fiscal year ending July 31, 2026 and thereafter 1,578,252 $ 1,766,184 For the three-month periodsthree and nine months ended January 31, 2018 and January 31, 2017, the totalApril 30, 2021, interest expense on the facilityterm loan, ABL and other debt facilities was $547$18,361 and $1,826, respectively, and the weighted-average interest rate on borrowings from the facility was 2.70% and 2.23%,$59,612, respectively. For thesix-month periods three and nine months ended January 31, 2018 and January 31, 2017, the totalApril 30, 2020, interest expense on the facilityterm loan, ABL and other debt facilities was $1,158$22,825 and $3,704, respectively,$71,037, respectively.On March 25, 2021, the Company repriced its term loan debt, which resulted in reductions of the interest rate spread included in the overall interest rates on the Company’s U.S. term loan tranche and the weighted-average interest rate on borrowings from the facility was 2.63%Euro term loan tranche of 0.75% and 2.19%1.00%, respectively. TheThis term loan debt repricing was evaluated on a creditor-by-creditor basis to determine whether modification or extinguishment accounting was required under the provisions of ASC 470-50. Extinguishment accounting was applied to a small percentage of the creditors that were deemed to have a substantial difference in terms based on an analysis of the present values of cash flows before and after the repricing. As a result, the Company recorded a debt extinguishment charge of $4,688 in the three months ended April 30, 2021. This charge was recognized through accelerated amortization of unamortized debt issuance costs that is classified as interest expense in the Company’s Condensed Consolidated Statements of Income and Comprehensive Income. For the majority of the creditors, the debt repricing was accounted for as a modification.In 2019, the Company incurred fees ("2019 fees") to secure the facility of $7,850 in fiscal 2016,term loan and ABL, and those feesamounts are being amortized ratably over the respective seven and five-year terms of those agreements. The Company also incurred and capitalized an insignificant amount of creditor fees related to the March 25, 2021 repricing of its term loan noted above, to be amortized over the remaining life of the agreement, or a shorter period if the credit agreement period is shortened for any reason.term loan. The Company recorded total charges related to the amortization of these term loan and ABL fees, which are classified as interest expense, of $392$7,365 and $12,825 for both the three-month periodsthree and nine months ended January 31, 2018April 30, 2021, respectively, which included $4,688 of accelerated amortization of the 2019 fees recorded in the three months ended April 30, 2021 as a result of the debt repricing. The Company recorded total charges related to the amortization of these term loan and January 31, 2017,ABL fees, which are classified as interest expense, of $2,679 and $785$8,050 for both thesix-month periods three and nine months ended January 31, 2018 and January 31, 2017.April 30, 2020, respectively. The unamortized balancesbalance of thesethe ABL facility fees were $5,364was $7,705 at January 31, 2018April 30, 2021 and $6,149 at$9,807 as of July 31, 2017,2020 and areis included in Other long-term assets in the Condensed Consolidated Balance Sheets.17The fair value of the Company’s term-loan debt at April 30, 2021 and July 31, 2020 was $1,551,141 and $1,565,866, respectively. The carrying value of the Company’s long-termterm-loan debt, excluding debt issuance costs, was $1,549,621 and $1,597,091 at JanuaryApril 30, 2021 and July 31, 2018 approximates fair value as the entire balance is subject to variable interest rates that the Company believes are market rates for a similarly situated company.2020, respectively. The fair value of the Company's debt is largelyprimarily estimated using levelLevel 2 inputs as defined by ASC 820.12.Provision for Income Taxes13. Provision for Income TaxesThe overall effective income tax rate for the three months ended January 31, 2018April 30, 2021 was 43.5% compared with 34.1% for the three months ended January 31, 2017. The primary reason for the increase in21.5%, and the effective income tax rate for the nine months ended April 30, 2021 was the impact of the Tax Cuts and Jobs Act (the “Tax Act”) that was signed into law on December 22, 2017. Under the Tax Act, the federal20.9%. These rates were both favorably impacted by certain foreign tax rate differences which include certain interest income not subject to corporate income tax rate has been reduced from 35.0% to 21.0% starting January 1, 2018, which results in the use of an estimated blended federal corporate income tax rate of 26.9% for the Company’s 2018 fiscal year. In addition, the Company was also required to revalue its net deferred tax assets to reflect the impact of the lower tax rates. This revaluation caused anon-recurring,non-cash reduction of the Company’s net deferred tax assets, and a corresponding charge to income tax expense, of approximately $34,000. This charge, with respect to the reduced federal income tax rate and the potential impact of limitations on the deductibility of executive compensation, among other items, represents a provisional amount in accordance with SEC Staff Accounting Bulletin No. 118 (“SAB 118”) based on currently available information and is subject to further refinement during the measurement period as defined by SAB 118. The Company also recorded a tax benefit of $12,535 in the three months ended January 31, 2018 from applying the lower federal income tax rate for fiscal 2018 to the results of operations for the first quarter of fiscal 2018.11sixthree months ended January 31, 2018April 30, 2020 was 36.6% compared with 33.0%(7.3)%, and the effective income tax rate for the sixnine months ended January 31, 2017. IncomeApril 30, 2020 was 18.5%. These rates were both favorably impacted by certain foreign tax expense forrate differences, the six months ended January 31, 2018 included approximately $34,000mix of additionalearnings between foreign and domestic operations, which include certain interest income tax expense resulting from the revaluation of the Company’s net deferred tax assets in connection with the Tax Act. Income tax expense for thesix-month period ended January 31, 2018 also reflects the use of the estimated blended federalnot subject to corporate income tax, rate of 26.9% asand, with respect to the three months ended April 30, 2020, a result ofreduction in forecasted, full-year income before income taxes.Within the Tax Act.Thenext 12 months, the Company anticipates a decrease of approximately $2,730$7,900 in unrecognized tax benefits, and $370$2,000 in accrued interest related to unrecognized tax benefits recorded as of January 31, 2018, within the next 12 monthsApril 30, 2021, from expected settlements or payments of uncertain tax positions and lapses of the applicable statutes of limitations. Actual results may differ from these estimates.Generally, fiscal years 2015The Company files income tax returns in the U.S. federal jurisdiction and 2016 remain open forin many U.S. state and foreign jurisdictions. For U.S. federal income tax purposes, and fiscal years 2013, 2014, 2015 and 20162017 through 2019 remain open forand could be subject to examination. In major state and Canadian income tax purposes. The Companymajor foreign jurisdictions, fiscal years 2017 through 2019 generally remain open and its subsidiaries file a consolidated U.S. federal income tax return and multiple state income tax returns.could be subject to examination. The Company is currently under examinationexam by certain U.S. state tax authorities for the fiscal years ended July 31, 20132015 through 2015.2017. The Company believes it has adequately reserved for its exposure to additional payments for uncertain tax positions related to its state income tax returns in its liability for unrecognized tax benefits.13.Contingent Liabilities, Commitments and Legal Matters14. Contingent Liabilities, Commitments and Legal MattersThe Company’s total commercial commitments under standby repurchase obligations on global dealer inventory financing as discussed in Note 13 in the Notes to the Consolidated Financial Statements in our fiscal 2017 Form10-K,were $3,076,327$2,149,930 and $2,200,544$1,876,922 as of January 31, 2018April 30, 2021 and July 31, 2017,2020, respectively. The commitment term is generally up to eighteen18 months.The Company accounts for the guarantee under repurchase agreements of dealers’ financing by deferring a portion of the related product sale that represents the estimated fair value of the guarantee at inception. The estimated fair value takes into account an estimate of the losses that may be incurred upon resale of any repurchases. This estimate is based on recent historical experience supplemented by the Company’s assessment of current economic and other conditions affecting its dealers. This deferred amount is included in the repurchase and guarantee reserve balances of $8,550$7,302 and $6,345$7,747 as of January 31, 2018April 30, 2021 and July 31, 2017,2020, respectively, which areis included in Other current liabilities in the Condensed Consolidated Balance Sheets.Losses incurred related to repurchase agreements that were settled during the three-month periodsthree and nine months ended January 31, 2018April 30, 2021 and January 31, 2017April 30, 2020 were not significant.material. Based on current market conditions, the Company believes that any future losses under these agreements will not have a significantmaterial 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”,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.121814.Stockholders’ EquityUnder15. LeasesThe Company has operating leases principally for land, buildings and equipment and has various finance leases for certain land and buildings expiring through 2035.Certain of the Company’s restricted stock unit (“RSU”) program, as discussed in Note 16Company's leases include options to extend or terminate the leases, and these options have been included in the Notesrelevant lease term to the Consolidated Financial Statementsextent that they are reasonably certain to be exercised.The Company does not include significant restrictions or covenants in our fiscal 2017 Form10-K, RSU awards have been approved each Octoberlease agreements, and residual value guarantees are not generally included within our operating leases.The components of lease costs for the three and nine-month periods ended April 30, 2021 and April 30, 2020 were as follows:Three Months Ended April 30, Nine Months Ended April 30, 2021 2020 2021 2020 Operating lease cost $ 5,075 $ 2,920 $ 12,833 $ 9,063 Finance lease cost Amortization of right-of-use assets 164 136 475 408 Interest on lease liabilities 134 131 391 402 Total lease cost $ 5,373 $ 3,187 $ 13,699 $ 9,873 Other information related to the financial performanceleases was as follows:Nine Months Ended April 30, Supplemental Cash Flows Information 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 12,767 $ 8,992 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 9,842 $ 3,777 Finance leases $ 4,000 $ 0 Supplemental Balance Sheet Information April 30, 2021 July 31, 2020 Operating leases: Operating lease right-of-use assets $ 38,545 $ 33,609 Operating lease liabilities: Other current liabilities $ 7,672 $ 5,343 Other long-term liabilities 31,126 28,456 Total operating lease liabilities $ 38,798 $ 33,799 Finance leases: Finance lease right-of-use assets $ 7,196 $ 3,672 Finance lease liabilities Other current liabilities $ 1,014 $ 505 Other long-term liabilities 5,018 4,743 Total finance lease liabilities $ 6,032 $ 5,248 19April 30, 2021 July 31, 2020 Weighted-average remaining lease term: Operating leases 11.8 years 13.6 years Finance leases 5.3 years 6.8 years Weighted-average discount rate: Operating leases 3.2 % 3.4 % Finance leases 8.9 % 9.7 % Future minimum rental payments required under operating and finance leases as of the most recently completed fiscal year since October 2012. The awarded employee restricted stock units vest, and shares of common stock are issued, in equal installments on the first, second and third anniversaries of the date of grant. In addition, concurrent with the timing of the employee awards, the Nominating and Governance Committee of the Board of Directors (“Board”) has awarded restricted stock units to Board members that will vest, and shares of common stock will be issued, on the first anniversary of the date of the grant.Operating Leases Financing Leases For the remainder of the fiscal year ending July 31, 2021 $ 3,517 $ 387 For the fiscal year ending July 31, 2022 12,025 1,555 For the fiscal year ending July 31, 2023 9,187 1,578 For the fiscal year ending July 31, 2024 6,449 1,059 For the fiscal year ending July 31, 2025 4,426 1,083 For the fiscal year ending July 31, 2026 and thereafter 19,616 2,062 Total future lease payments 55,220 7,724 Less: amount representing interest (16,422) (1,692) Total reported lease liability $ 38,798 $ 6,032 16. Stockholders’ EquityTotal stock-based compensation expense recognized in the three-month periods ended January 31, 2018April 30, 2021 and January 31, 2017April 30, 2020 for these restricted stock unitstock-based awards totaled $8,366 and other$4,350, respectively. Total stock-based compensation was $4,413 and $3,154, respectively. Total expense recognized in thesix-month nine-month periods ended January 31, 2018April 30, 2021 and January 31, 2017April 30, 2020 for these restricted stock unitstock-based awards totaled $21,424 and other stock-based compensation was $8,731$14,425, respectively.2017. RevenueThe table below disaggregates revenue to the level that the Company believes best depicts how the nature, amount, timing and $5,892, respectively.For the restricted stock units that vested during thesix-month periods ended January 31, 2018 and January 31, 2017, portionsuncertainty of the vested shares awardedCompany’s revenue and cash flows are affected by economic factors. Other RV-related revenues shown below in the European segment include sales related to accessories and services, used vehicle sales at owned dealerships and RV rentals. All material revenue streams are considered point in time.Three Months Ended April 30, Nine Months Ended April 30, NET SALES: 2021 2020 2021 2020 Recreational vehicles North American Towables Travel Trailers $ 1,060,058 $ 455,434 $ 2,729,317 $ 1,748,220 Fifth Wheels 666,044 317,957 1,762,010 1,209,966 Total North American Towables 1,726,102 773,391 4,491,327 2,958,186 North American Motorized Class A 323,547 96,849 704,230 384,055 Class C 342,425 144,826 912,124 561,424 Class B 109,421 22,362 229,889 78,127 Total North American Motorized 775,393 264,037 1,846,243 1,023,606 Total North America 2,501,495 1,037,428 6,337,570 3,981,792 European Motorcaravan 489,702 380,023 1,227,182 1,044,178 Campervan 236,988 104,486 529,500 280,006 Caravan 84,074 65,790 210,923 196,731 Other RV-related 83,476 65,044 262,586 224,550 Total European 894,240 615,343 2,230,191 1,745,465 Total recreational vehicles 3,395,735 1,652,771 8,567,761 5,727,257 Other, primarily aluminum extruded components 106,960 45,632 262,381 176,943 Intercompany eliminations (43,431) (16,668) (105,730) (60,547) Total $ 3,459,264 $ 1,681,735 $ 8,724,412 $ 5,843,653 2118. 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 withheld as treasury shares to coverfollows:Three Months Ended April 30, 2021 2020 Foreign Currency Unrealized Foreign Currency Unrealized Translation Gain (Loss) on Translation Gain (Loss) on Adjustment Derivative Other Total Adjustment Derivative Other Total Balance at beginning of period $ 86,797 $ (13,140) $ (696) $ 72,961 $ (57,987) $ (13,418) $ (1,048) $ (72,453) OCI before reclassifications (7,449) 193 0 (7,256) (25,245) (12,059) 0 (37,304) Income taxes associated with OCI before reclassifications 0 (46) 0 (46) 0 2,792 0 2,792 Amounts reclassified from AOCI 0 3,703 0 3,703 0 1,979 0 1,979 Income taxes associated with amounts reclassified from AOCI 0 (921) 0 (921) 0 (475) 0 (475) AOCI, net of tax 79,348 (10,211) (696) 68,441 (83,232) (21,181) (1,048) (105,461) Less: AOCI attributable to noncontrolling interest (770) 0 0 (770) (1,237) 0 0 (1,237) AOCI, net of tax, attributable to THOR Industries, Inc. $ 80,118 $ (10,211) $ (696) $ 69,211 $ (81,995) $ (21,181) $ (1,048) $ (104,224) 22Nine Months Ended April 30, 2021 2020 Foreign Currency Unrealized Foreign Currency Unrealized Translation Gain (Loss) on Translation Gain (Loss) on Adjustment Derivative Other Total Adjustment Derivative Other Total Balance at beginning of period $ 45,657 $ (18,823) $ (696) $ 26,138 $ (47,078) $ (9,472) $ (1,048) $ (57,598) OCI before reclassifications 33,691 573 0 34,264 (36,154) (19,885) 0 (56,039) Income taxes associated with OCI before reclassifications 0 (133) 0 (133) 0 4,724 0 4,724 Amounts reclassified from AOCI 0 10,752 0 10,752 0 4,561 0 4,561 Income taxes associated with amounts reclassified from AOCI 0 (2,580) 0 (2,580) 0 (1,109) 0 (1,109) AOCI, net of tax 79,348 (10,211) (696) 68,441 (83,232) (21,181) (1,048) (105,461) Less: AOCI attributable to noncontrolling interest (770) 0 0 (770) (1,237) 0 0 (1,237) AOCI, net of tax, attributable to THOR Industries, Inc. $ 80,118 $ (10,211) $ (696) $ 69,211 $ (81,995) $ (21,181) $ (1,048) $ (104,224) The Company does not recognize deferred taxes for a majority of the recipients’ estimated withholding taxes. Tax payments made byforeign currency translation gains and losses because the Company related to these stock-based awards fordoes not anticipate reversal in the six months ended January 31, 2018 and January 31, 2017 totaled $7,657 and $4,572, respectively.15.Subsequent EventOn February 15, 2018, the Company announced the formation of a joint venture with Tourism Holdings Limited (“thl”) called TH2. The Company andthl each have a 50% ownership position in TH2 and equal representation on the board of directors of TH2. The Company contributed cash totaling approximately $47,000 to TH2 in early March 2018 whilethl contributed various assets with a fair value of approximately $47,000. The Company’s investment in TH2 was funded entirely from cash on hand. In accordance with the operating agreement, TH2’s future capital needs, which are not expected to be material to the Company, will be funded proportionally bythl and the Company. The Company’s investment in TH2 will be accounted for under the equity method of accounting.TH2 was formed to own, improve and sell innovative and comprehensive digital platforms throughout the world. TH2 will offer a variety of products focused on enhancing the enjoyment, safety, connectivity and convenience of RV ownership and use.1323ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSUnlessotherwise indicated, all dollar amounts are presented in thousands except per share data.Forward LookingUnless otherwise indicated, all U.S. Dollar, Euro and British Pound Sterling amounts are presented in thousands except share and per share data.Forward-Looking StatementsThis report includes certain statements that are “forward looking”“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 lookingforward-looking statements are made based on management’s current expectations and beliefs regarding future and anticipated developments and their effects upon Thor,THOR, and inherently involve uncertainties and risks. These forward lookingforward-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,others:•the extent and impact from the continuation of the COVID-19 pandemic, along with the responses to contain the spread of the virus by various governmental entities or other actors, which may have negative effects on retail customer demand, our independent dealers, our supply chain, our labor force, our production or other aspects of our business and which may have a negative impact on our consolidated results of operations, financial position, cash flows and liquidity;•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 restrictions, constraints;•the impact of tariffs on material or other input costs;•the level and magnitude of warranty claims incurred, incurred;•legislative, regulatory and tax law and/or policy developments including their potential impact on our dealers and their retail customers or on our suppliers;•the costs of compliance with governmental regulation, regulation;•legal and compliance issues including those that may arise in conjunction with recent transactions, recently completed transactions;•lower consumer confidence and the level of discretionary consumer spending, spending;•interest rate fluctuations theand their potential impact of interest rate fluctuations on the general economy and, specifically, on our dealers and consumers, consumers;•the impact of exchange rate fluctuations;•restrictive lending practices which could negatively impact our independent dealers and/or retail consumers;•management changes, changes;•the success of new and existing products and services,services;•the ability to efficiently utilize existing production facilities;•changes in consumer preferences,preferences;•the risks associated with acquisitions, including: the pace of obtaining and producing at new production facilities, the pace of acquisitions and the 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 the integration of new acquisitions,and our ability to retain key management personnel of acquired companies, companies;•a shortage of necessary personnel for production and increasing labor costs to attract production personnel in times of high demand;•the loss or reduction of sales to key dealers,dealers;•disruption of the availabilitydelivery of delivery personnel, units to dealers;•increasing costs for freight and transportation;•asset impairment charges, charges;•cost structure changes, competition, changes;24•competition;•the impact of potential losses under repurchase agreements, or financed receivable agreements;•the potential impact of the strength of the U.S. dollar on international demand for products priced in U.S. dollars;•general economic, market and political conditions in the various countries in which our products are produced and/or sold;•the impact of changing emissions and other related climate change regulations in the various jurisdictions in which our products are produced, used and/or sold;•changes to our investment and capital allocation strategies or other facets of our strategic plan,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 ITEMItem 1A of our Annual Report on Form10-K for the year ended July 31, 2017.We disclaim any obligation or undertaking to disseminate any updates or revisions to any forward lookingforward-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 OverviewWe were founded in 1980 and have grown to bebecome the largest manufacturer of recreational vehicles ("RVs") in the world. We are also the largest manufacturer of RVs in North America. AccordingAmerica, and one of the largest manufacturers of RVs in Europe. In North America, according to Statistical Surveys, Inc. (“Stat Surveys”), for the calendar yearthree months ended DecemberMarch 31, 2017, Thor’s2021, THOR’s combined U.S. and Canadian market share was approximately 50.4%40.6% for travel trailers and fifth wheels combined and approximately 39.1%48.9% for motorhomes. In Europe, according to the European Caravan Federation and based on unit registrations for Europe's original equipment manufacturer ("OEM") reporting countries, our European market share for the three months ended March 31, 2021 was approximately 23.2% for motorcaravans and campervans combined and approximately 16.2% 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. Our growth has been achieved both organically and bythrough acquisition, and our strategy is designed to increase our profitability by driving innovation, servicing our customers, manufacturing quality products, improving the efficiencies of our facilities and making strategic growth acquisitions.The COVID-19 pandemic, including its wide-reaching impact on nearly all facets of our operations and the RV industry, as well as related governmental actions, has impacted and continues to impact our business and our financial results and financial position. In particular, the pandemic has contributed to chassis and certain other supply-side constraints, as described below. Additional impacts could be incurred in future periods, including negative impacts to our results of operations, liquidity and financial position, as a direct or indirect result of the pandemic. Should the rate of COVID-19 infections escalate, or the virus mutate into new, uncontrolled strains, those developments and the resulting impacts could exacerbate risks to our business, financial results and financial position. Refer also to the COVID-19 related risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended July 31, 2020.Recent EventsTaxReformOn December 22, 2017,March 11, 2021, the Tax Cuts and JobsAmerican Rescue Plan Act (the “Tax Act”), was signed into law. The Tax Act includes numerousseveral changes impacting businesses, including but not limited to insurance premium subsidies effective from April 2021 through September 2021, extension of employee retention tax laws impacting business,credits through the most significant being a permanent reductionend of 2021 and amendments to deductible compensation for tax years beginning in 2027. The Company is evaluating the federal corporate income tax rate from 35.0% to 21.0%. The rate reduction took effect on January 1, 2018. As the Company’s 2018 fiscal year ends on July 31, 2018, the Company’s estimated federal corporate income tax rate for fiscal year 2018 will be prorated to a blended 26.9% rate, based on the applicable tax rates before and after the Tax Act and the number of days in the fiscal year to which the two different rates applied. As a result of other Tax Act changes, the Company’s income tax rate for fiscal year 2019 will be negatively impacted by the repealimpacts of the domestic production activities (“Code Section 199”) deduction and limitations on the deductibility of executive compensation.14As a result of the reduction of the federal corporate income tax rate, the Company was required to perform a revaluation of its net deferred tax assets. Based on currently available information, the Company has performed a preliminary analysis of the impact of the Tax Act, as of the enactment date and has recorded anon-recurring,non-cash reduction of its net deferred tax assets due to the reduced federal income tax rate, and a corresponding charge to income tax expense, of approximately $34,000 in the three months ended January 31, 2018. The Company’s revaluation of its net deferred tax assets, with respect to the reduced federal income tax rate and the potential impact of limitations on the deductibility of executive compensation, among other items, are subject to further refinement, review and clarification under the new law as additional information becomes available. In addition to the benefit of a lower income tax rate in the three months ended January 31, 2018, an income tax benefit of $12,535 was also recorded in the three months ended January 31, 2018 to reflect the benefit of applying the lower federal tax rate to the results of operations for the first quarter of fiscal 2018.The reduction in the statutory US federal income tax rate is expected to positively impact the Company’s fiscal 2018 and future USafter-tax earnings. The Company currently estimates an overall effective income tax rate between 27.0% and 29.0% for the remainder of fiscal year 2018, before consideration of any discrete tax items, as compared to an effective income tax rate of 32.7% for fiscal 2017. For fiscal 2019, after considering the lower federal income tax rate of 21.0%, an estimated blended state income tax rate, the elimination of the Code Section 199 deduction and the limitations on the deductibility of executive compensation, the Company currently estimates an overall effective income tax rate between 23.0% and 25.0%, before consideration of any discrete tax items.While the Tax Act is expected to generate additional cash flow in the future, our main priorities for the use of current and future available cash generated from operations will continue to focus on funding our growth, both organically and through acquisitions, maintaining and growing our regular dividends over time, and reducing indebtedness. Strategic share repurchases or special dividends, as determined by the Company’s Board, will also continue to be considered. As a component of funding our growth, we anticipate making additional investments in our workforce through a variety of initiatives, including enhanced employee training and development programs and other initiatives that will be introduced in fiscal 2018 and fiscal 2019 and targeted to the varying needs of our individual operating entities.Joint VentureOn February 15, 2018, the Company announced the formation of a joint venture with Tourism Holdings Limited (“thl”) called TH2. The Company andthl each have a 50% ownership position in TH2 and equal representation on the board of directors of TH2. The Company contributed cash totaling approximately $47,000 to TH2 in early March 2018 whilethl contributed various assets with a fair value of approximately $47,000. The Company’s investment in TH2 was funded entirely from cash on hand. In accordance with the operating agreement, TH2’s future capital needs, which are currently not expected to be materialsignificant.25On December 18, 2020, the Company closed on a Stock Purchase Agreement (“Tiffin Group SPA”) for the acquisition of 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, and is subject to the Company, will be funded proportionally bythlfinal determination of the actual acquired net working capital, as defined in the Tiffin Group SPA, as of the close of business on December 28, 2020, which determination was finalized in the fourth quarter of fiscal 2021 and the Company.true-up was not material. The Tiffin Group operates as an independent operation in the same manner as the Company’s investment in TH2 will be accounted for underother recreational vehicle subsidiaries. The Company purchased the equity method of accounting.TH2 was formedTiffin Group to own, improvecomplement its existing towable and sell innovativemotorized RV product offerings and comprehensive digital platforms throughout the world. TH2 will offer a variety of products focused on enhancing the enjoyment, safety, connectivity and convenience of RV ownership and use.Industry OutlookThe Company monitors industry conditions in the North American RV market through the useusing a number of resources including its own performance tracking and modeling. The Company also considers monthly wholesale shipment data as reported by the Recreation Vehicle Industry Association (“RVIA”), which is typically issued on aone-month lag and represents manufacturers’ North American RV production and delivery to dealers. In addition, we also monitor monthly North American retail sales trends as reported by Stat Surveys, whose data is typically issued on amonth-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.In correlation with current retail demand,North American RV independent dealer inventory of Thorour North American products as of January 31, 2018 increased 25.5%April 30, 2021 decreased 29.2% to approximately 155,65075,000 units, compared to approximately 124,000105,900 units as of January 31, 2017. We believe ourApril 30, 2020. The acquisition of Tiffin Group accounted for approximately 600 of the 75,000 units as of April 30, 2021.Dealer inventory levels have decreased materially based on strong retail demand for RVs given the perceived safety of RV travel during the COVID-19 pandemic, a strong desire to socially distance and the reduction in commercial air travel and cruises. As of April 30, 2021, North American dealer inventory levels are appropriate for seasonal consumer demand.Thor’swere well below optimal stocking levels, which has led to increased dealer orders and backlog. THOR’s North American RV backlog as of January 31, 2018April 30, 2021 increased $708,013,$9,574,197, or 33.9%681.0%, to $2,798,357$10,980,015 compared to $2,090,344$1,405,818 as of January 31, 2017.15North American Industry Wholesale StatisticsKey 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 Calendar Year % 2017 2016 Increase Change 441,961 375,950 66,011 17.6 62,638 54,741 7,897 14.4 504,599 430,691 73,908 17.2 U.S. and Canada Wholesale Unit Shipments Calendar Quarter Ended March 31, Increase % 2021 2020 (Decrease) Change North American Towable Units 134,199 90,327 43,872 48.6 North American Motorized Units 14,308 10,077 4,231 42.0 Total 148,507 100,404 48,103 47.9 The changes in wholesale shipments noted above in the towable and motorized units were both impacted by the COVID-19 pandemic. Shipments were significantly limited for both towables 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 year-to-date period.26In June 2021, RVIA releases calendar year unit shipment forecasts periodically throughout the calendar year, updating their prior forecast by factoring actual year-to-date wholesale and retail unit shipments and current economic indicators into their new forecast. We expect the next RVIAissued a second revised forecast for calendar year 2018 will be published in March 20182021 wholesale unit shipments. In the most-likely scenario, towable and will take into consideration the current wholesalemotorized unit shipments are projected to increase to approximately 520,400 and retail shipment trends, such as the 8,238 unit55,700 units, respectively, for an annual total of 576,100 units, or 11.7% increase in retail registrations for the three months ended December 31, 2017 vs. the comparable prior-year period as reported by Stat Surveys.North American Industry Retail StatisticsWe believe that retail demand is the key to continued growth in the North American RV industry, and that annual North American RV industry wholesale shipments will generally be in line with annual retail sales going forward.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 Calendar Year % 2017 2016 Increase Change 408,309 365,773 42,536 11.6 56,963 50,281 6,682 13.3 465,272 416,054 49,218 11.8 U.S. and Canada Retail Unit Registrations Calendar Quarter Ended March 31, Increase % 2021 2020 (Decrease) Change North American Towable Units 111,305 76,475 34,830 45.5 North American Motorized Units 12,464 10,166 2,298 22.6 Total 123,769 86,641 37,128 42.9 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 continuously updated.We believe that North American retail consumer demand has grown in recent periods due to an increasing interest in the RV lifestyle and the ability to connect with nature and has further accelerated since the onset of the COVID-19 pandemic. Many consumers recognize the perceived benefits offered by the RV lifestyle, which provides people with a personal space to maintain social distance in a safe manner, the ability to connect with loved ones and the potential to get away for short, frequent breaks or longer adventures.Company North American Wholesale StatisticsThe Company’sCompany's North American wholesale RV shipments, for the calendar yearsquarters ended DecemberMarch 31, 20172021 and 20162020 to correspond to the North American industry wholesale periods noted above, were as follows (includes Jayco results from the June 30, 2016 date of acquisition forward)(2021 period includes Tiffin Group shipments): U.S. and Canada Wholesale Unit
Shipments Calendar Year % 2017 2016 Increase Change 232,231 164,015 68,216 41.6 26,029 17,827 8,202 46.0 258,260 181,842 76,418 42.0 16U.S. and Canada Wholesale Unit Shipments Calendar Quarter Ended March 31, Increase % 2021 2020 (Decrease) Change North American Towable Units 58,858 38,778 20,080 51.8 North American Motorized Units 6,990 4,058 2,932 72.3 Total 65,848 42,836 23,012 53.7 27Company North American Retail StatisticsRetail statistics of the Company’sCompany's North American RV products, as reported by Stat Surveys, for the calendar yearsquarters ended DecemberMarch 31, 20172021 and 20162020 to correspond to the North American industry retail periods noted above, (and adjusted to include Jayco’s results from the June 30, 2016 date of acquisition forward) were as follows: U.S. and Canada Retail Unit
Registrations Calendar Year % 2017 2016 Increase Change 200,931 150,566 50,365 33.5 22,283 15,986 6,297 39.4 223,214 166,552 56,662 34.0 Ourfollows (2021 period includes Tiffin Group registrations):U.S. and Canada Retail Unit Registrations Calendar Quarter Ended March 31, Increase % 2021 2020 (Decrease) Change North American Towable Units 44,217 31,243 12,974 41.5 North American Motorized Units 6,098 3,881 2,217 57.1 Total 50,315 35,124 15,191 43.2 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.The extent to which the COVID-19 pandemic may continue to impact our business in future periods remains uncertain and unpredictable. Nonetheless, our outlook for future growth in North American retail sales in both the short term and the long term remains optimistic as there are many factors driving the current demand that we believe will continue even after the pandemic officially ends. In the near-term, we believe consumers are likely to continue altering their future vacation and travel plans, opting for fewer vacations via air travel, cruise ships and hotels, and preferring vacations that RVs are uniquely positioned to provide, where they can continue practicing social distancing while also allowing them the ability to explore or unwind, often close to home. Minimal-contact vacation options like road trips and camping may prove ideal for people who want to limit pandemic-related risks involved with close personal interactions. We will, however, need to continue to manage through temporary supply chain issues noted below, which may limit the level to which we can increase output in the near term.Longer-term, a positive outlook for the North American RV segment is supported by surveys conducted by THOR, RVIA and others, which show that Americans love the freedom of the outdoors and the enrichment that comes with living an active lifestyle. RVs allow people to be in control of their travel experiences, going where they want, when they want and with the people they want. The RV units we design, produce and sell allow people to spend time outdoors pursuing their favorite activities, creating cherished moments and deeply connecting with family and friends. Based on the increasing value consumers place on these factors, we expect to see long-term growth in the North American RV industry. Longer term, we also believe retail sales will be dependent upon various economic conditions faced by consumers, such as the rate of unemployment, the level of consumer confidence, the growth in disposable income of consumers, changes in interest rates, credit availability, the health of the housing market, and changes in tax rates and fuel availability and prices. With continued stability or improvement in consumer confidence,Economic and industry-wide factors that have historically, and we believe will continue to affect our RV business, include the costs of commodities, the availability of critical supply components, the impact of actual or threatened tariffs on commodity costs and labor costs incurred in the production of our products. Material and labor costs are the primary factors determining our cost of products sold, and any future increases in raw material or labor costs would impact our profit margins negatively if we are unable to offset those cost increases through a combination of product decontenting, material sourcing strategies, efficiency improvements or raising the selling prices for our products by corresponding amounts. Historically, we have generally been able to offset net cost increases over time.Recently, we have been alerted by a number of our North American chassis suppliers that supply constraints of key components that they require for the manufacturing of chassis, particularly semiconductor chips, will limit their production of chassis, and hence, our production and sales of motorized RVs will also be impacted, particularly in the near term. The North American recreational vehicle industry has, from time to time in the past and during the quarter ended April 30, 2021, experienced shortages of chassis for various other reasons, including component shortages, production delays and work stoppages at the chassis manufacturers. If shortages of chassis were to recur or continue for a prolonged period for any reason, it would have a negative impact on our sales and earnings.28The North American RV industry is also facing continuing supply shortages or delivery delays of other, non-chassis, raw material components. While our supply chain has been resilient enough to support us during our recent growth in sales and production, these shortages and constraints have negatively impacted our ability to further ramp up production rates and sales during the current fiscal year and has caused an increase in unfinished units as of April 30, 2021. We believe these shortages and delays are temporary, however, in the near term they may continue to result in production delays or adjusted production rates, which may limit our ability to ramp up production to meet existing demand and could have a negative impact on our sales and earnings. 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 fully supply our needs for key components, our costs of such components and our production output could be adversely affected. Where possible, we continue to work closely with our suppliers on various supply chain strategies to minimize these constraints, and we continue to identify alternative suppliers. The geographic centrality of the North American RV industry in northern Indiana, where the majority of our facilities and many of our suppliers are located, could exacerbate supply chain and other COVID-19 related risks, should northern Indiana, or any of the other areas in which we, our suppliers or our customers operate, become disproportionately impacted by the pandemic or other factors.Industry Outlook — EuropeThe Company monitors retail trends in the European RV market as reported by the European Caravan Federation (“ECF”), whose industry data is reported to the public quarterly and typically issued on a one-to-two-month lag. Additionally, on a monthly basis the Company receives OEM-specific reports from most of the individual member countries that make up the ECF. As these reports are coming directly from the ECF member countries, timing and content vary, but typically the reports are issued on a one-to-two-month lag as well. While most countries provide OEM-specific information, the United Kingdom, which made up 16.9% and 5.1% of the caravan and motorcaravan (including campervans) European market for the three months ended March 31, 2021, respectively, does not provide OEM-specific information. Industry wholesale credit, lowshipment data for the European RV market is not available.Within Europe, over 90% of our sales are made to dealers within 13 different European countries. The market conditions, as well as the operating status of our independent dealers within each country, vary based on the various local economic conditions, the current impact of COVID-19 and the local responses and restrictions in place to manage the pandemic. It is inherently difficult to generalize about the operating conditions within the entire European region. However, independent RV dealer inventory levels of our European products are generally below prior-year levels in the various countries we serve. Within Germany, which accounts for approximately 60% of our European product sales, independent dealer inventory levels are currently below historical norms, with dealers submitting higher levels of orders than typical due to continued high end-consumer demand, as discussed further below.THOR’s European RV backlog as of April 30, 2021 increased $2,540,511, or 316.2%, to $3,344,033 compared to $803,522 as of April 30, 2020. We believe this increase is attributable to a number of causes, including the perceived safety of RV travel during the COVID-19 pandemic, a strong desire to socially distance, the reduction in commercial air travel and cruises, an increase in various marketing campaigns to promote sales, and the lower levels of independent European RV dealer inventory levels noted above, which has led to increased dealer orders and backlog.29European Industry Retail StatisticsKey retail statistics for the European RV industry, as reported by the ECF for the periods indicated, are as follows:European Unit Registrations Motorcaravan and Campervan (2)Caravan Calendar Quarter Ended March 31, % Calendar Quarter Ended March 31, % 2021 2020 Change 2021 2020 Change OEM Reporting Countries (1)38,092 27,722 37.4 12,532 12,237 2.4 Non-OEM Reporting Countries (1)2,923 3,062 (4.5) 3,238 4,400 (26.4) Total 41,015 30,784 33.2 15,770 16,637 (5.2) (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 Reporting Countries" is primarily related to the United Kingdom, as a result of both extended shutdowns due to the COVID-19 pandemic and BREXIT. Total European unit registrations are reported quarterly by ECF.(2)The ECF reports motorcaravans and campervans together.Note: Data from the ECF is subject to adjustment, is continuously updated and is often impacted by delays in reporting by various countries. (The "Non-OEM Reporting Countries" either do not report OEM-specific data to the ECF or do not have it available for the entire time period covered.)Company European Retail Statistics (1)European Unit Registrations (1)Calendar Quarter Ended March 31, Increase % 2021 2020 (Decrease) Change Motorcaravan and Campervan 8,827 6,507 2,320 35.7 Caravan 2,026 2,397 (371) (15.5) Total OEM-Reporting Countries 10,853 8,904 1,949 21.9 (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, is continuously updated and is often impacted by delays in reporting by various countries.Our European operations offer a full lineup of leisure vehicles including caravans, urban campers, campervans and small-to-large motorcaravans. Our product offering is not limited to vehicles only but also includes accessories and services, including vehicle rentals. In addition, we address our European end customers through a sophisticated brand management approach based on consumer segmentation according to target group, core values and emotions. With the help of data-based and digital marketing, we intend to expand our customer reach, in particular, to new and younger consumer segments.The extent to which the COVID-19 pandemic may impact our business in future periods remains uncertain and unpredictable. Our outlook for future growth in European RV retail sales depends upon various economic conditions in the respective countries in which we sell, and also depends on our ability to manage through temporary supply chain issues in the near term that could limit the level to which we can increase output. End-customer demand for RVs depends strongly on consumer confidence. Factors such as the rate of unemployment, private consumption and investments, growth in disposable income of consumers, changes in interest rates, the health of the housing market, changes in tax rates and, the absence of negative economic factors, we would expect to see continuedmost recently, travel safety considerations all influence retail sales. We believe our long-term outlook for future growth in the RV industry.Aretail sales remains positive future outlook for the RV segment is supported by favorable demographics, as more and more people reach the age brackets that historically have accounted for the bulk of retail RV sales. The number of consumers between the ages of 55 and 74 will total 79 million by 2025, 15% higher than in 2015 according to the RVIA. In addition, in recent years the industry has benefited from growing retail sales to younger consumers with new product offerings targeted to younger, more active families, as they place a higher value on family outdoor recreation than any prior generation. Based on a study from the Pew Research Center, the “Millennial” generation, defined as those between the ages of 18 and 34, consisted of more than 75 million people in 2015. In general, these consumers are more technologically savvy, but still value active outdoor experiences shared with family and friends, making them strong potential customers for our industry in the decades to come. Based on the Kampgrounds of America (KOA) 2017 North American Camping Report, their millennial group comprised 31% of the total population in the most recent census, yet accounted for 38% of the total campers in 2016, which increased from 34% of the total campers in 2015. Younger RV consumers are generally attracted to lower and moderately-priced travel trailers, as affordability is a key driver at this stage in their lives.As the first generation of the internet age, Millennials are generally more comfortable gathering information online, and are therefore generally more knowledgeable about products and competitive pricing than any prior generation. This generation is camping more as they view camping as an opportunity to spend time with family and friends as welldiscover RVs as a way to reduce stress,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.30Historically, we and our independent European dealers have marketed our European recreational vehicles through numerous RV fairs at the pressures of everyday life, be more activecountry and lead a healthier lifestyle. Inregional levels which occur throughout the calendar year. These fairs have historically been well-attended events that allow retail consumers the ability to see the newest products, features and designs and to talk with product experts in addition to younger age demographics, there are opportunitiesbeing able to expand sales topurchase or order an RV. The protection of the health of our employees, customers and dealer-partners is our top priority. As a more ethnically diverse customer base. result, we have cancelled our participation in most European trade fairs and major events through calendar 2021.In our efforts to connect with RV consumersplace of all generations, beginning in the first quarter of fiscal 2017trade fairs, we launched a new consumer-facing website designed to inspire consumers to explore the RV lifestyle. The new website includes videohave and interactive features to help consumers determine the type of RV which may suit their specific camping needs, while providing video footage that can be utilized by dealers to market our products. In the second quarter of fiscal 2018, we launched a targeted campaign towards Millennials, and have begun exploring related marketing opportunities. We will continue to consider additional marketing opportunitiesstrengthen and expand our digital activities in order to youngerreach high potential target groups, generate leads and more diverse consumerssteer customers directly to dealerships. With over the remainder1,000 active dealer-partners in Germany and throughout Europe, we believe our European brands have one of the year. We anticipate our recent formation of the joint venture TH2, as discussed in Note 15 to the Condensed Consolidated Financial Statements, will further enhance the RV value propositionstrongest and ownership experience for this younger, more technically savvy customer group.Economic or industry-wide factors affecting our European RV business include the costs of commodities and the labor used in the manufacture of our products. Material and labor costs are the primary factors determining our cost of products sold and any future increases in raw material or laborthese costs would impact our profit margins negatively if we were unable to raiseoffset 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,Recently, we have been able to pass along those cost increases to customers.We have not experienced any recent unusual cost increases oralerted by a number of our European chassis suppliers that supply constraints of key components that they require for the manufacturing of chassis, including, but not limited to, semiconductor chips, will limit their production of chassis. During the quarter ended April 30, 2021, we also experienced delays in the receipt of chassis from our European chassis suppliers. The recreational vehicle industry has, from timesuppliers, limiting our ability to time, experienced shortagesfurther increase production. In the short term, we expect these challenges to persist and, in particular, anticipate continued delays in receipt of chassis in Europe. As a result, limitations in the availability of chassis will limit our ability to ramp up production of certain products despite dealer demand for various reasons, including componentthose products, and our production and sales of motorized RVs will also be negatively impacted, particularly in the near term.In Europe, we continue to experience supply shortages or delivery delays of other, non-chassis, raw material components which negatively impacted our ability to further ramp up production and sales in the current fiscal year and has caused an increase in unfinished units as of April 30, 2021. We believe these shortages and delays are temporary, however, in the near term they may continue to result in production delays or adjusted production rates, which may limit our ability to ramp up production to meet existing demand and work stoppages at the chassis manufacturers. These shortagescould have had a negative impact on our sales and earningsearnings.Where possible, to minimize the impact of these supply chain constraints, we have identified a second-source supplier base for most component parts. However, due to engineering requirements, it is generally not possible to quickly change the chassis our various units are built upon.If shortages of chassis or other component parts were to become more significant or longer term in nature, or if other factors were to impact our suppliers' ability to fully supply our needs for key components, our costs of such components and our production output could be adversely affected. In addition, if the past. We believe thatimpact of COVID-19 on our vendors increases or is prolonged, the current supplyavailability of key components, including chassis, will have a further negative impact on our production output during fiscal 2021. 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 other vehicles starting January 2022, may also impact the availability of chassis used in our production of certain European motorized RVRVs and could also impact consumer buying patterns.In addition to material supply constraints, labor shortages may also impact our European operations, especially in light of the ongoing COVID-19 pandemic. Currently, a number of the employees of our production is adequate for currentfacilities in Europe reside in one country while working in another and therefore travel restrictions imposed by certain countries within Europe may negatively impact the availability of our labor force and therefore our production levels, and that available inventory would compensate for short-term changes in supply schedules if they occur.1731Three Months Ended January 31, 2018April 30, 2021 Compared to the Three Months Ended January 31, 2017 Three Months Ended
January 31, 2018 Three Months Ended
January 31, 2017 Change
Amount %
Change $ 1,373,118 $ 1,082,249 $ 290,869 26.9 559,909 474,972 84,937 17.9 1,933,027 1,557,221 375,806 24.1 68,013 53,891 14,122 26.2 (29,480 ) (22,587 ) (6,893 ) (30.5 ) $ 1,971,560 $ 1,588,525 $ 383,035 24.1 55,346 45,754 9,592 21.0 6,735 5,831 904 15.5 62,081 51,585 10,496 20.3 GROSS PROFIT: % of
Segment
Net
Sales % of
Segment
Net
Sales Change
Amount %
Change $ 198,305 14.4 $ 151,767 14.0 $ 46,538 30.7 62,961 11.2 50,288 10.6 12,673 25.2 261,266 13.5 202,055 13.0 59,211 29.3 9,062 13.3 9,647 17.9 (585 ) (6.1 ) $ 270,328 13.7 $ 211,702 13.3 $ 58,626 27.7 $ 70,367 5.1 $ 61,155 5.7 $ 9,212 15.1 24,309 4.3 20,868 4.4 3,441 16.5 94,676 4.9 82,023 5.3 12,653 15.4 2,239 3.3 2,272 4.2 (33 ) (1.5 ) 20,173 — 12,674 — 7,499 59.2 $ 117,088 5.9 $ 96,969 6.1 $ 20,119 20.7 $ 116,728 8.5 $ 78,000 7.2 $ 38,728 49.7 37,538 6.7 28,488 6.0 9,050 31.8 154,266 8.0 106,488 6.8 47,778 44.9 5,290 7.8 5,696 10.6 (406 ) (7.1 ) (18,491 ) — (13,819 ) — (4,672 ) (33.8 ) $ 141,065 7.2 $ 98,365 6.2 $ 42,700 43.4 ORDER BACKLOG: As of
January 31, 2018 As of
January 31, 2017 Change
Amount %
Change $ 1,816,520 $ 1,323,451 $ 493,069 37.3 981,837 766,893 214,944 28.0 $ 2,798,357 $ 2,090,344 $ 708,013 33.9 18NET SALES: Three Months Ended
April 30, 2021Three Months Ended
April 30, 2020Change
Amount%
ChangeRecreational vehicles North American Towables $ 1,726,102 $ 773,391 $ 952,711 123.2 North American Motorized 775,393 264,037 511,356 193.7 Total North America 2,501,495 1,037,428 1,464,067 141.1 European 894,240 615,343 278,897 45.3 Total recreational vehicles 3,395,735 1,652,771 1,742,964 105.5 Other 106,960 45,632 61,328 134.4 Intercompany eliminations (43,431) (16,668) (26,763) (160.6) Total $ 3,459,264 $ 1,681,735 $ 1,777,529 105.7 # OF UNITS: Recreational vehicles North American Towables 60,147 28,233 31,914 113.0 North American Motorized 7,162 2,885 4,277 148.2 Total North America 67,309 31,118 36,191 116.3 European 18,288 13,668 4,620 33.8 Total 85,597 44,786 40,811 91.1 GROSS PROFIT: % of
Segment
Net Sales% of
Segment
Net SalesChange
Amount%
ChangeRecreational vehicles North American Towables $ 264,476 15.3 $ 108,757 14.1 $ 155,719 143.2 North American Motorized 96,288 12.4 26,671 10.1 69,617 261.0 Total North America 360,764 14.4 135,428 13.1 225,336 166.4 European 120,159 13.4 62,559 10.2 57,600 92.1 Total recreational vehicles 480,923 14.2 197,987 12.0 282,936 142.9 Other, net 24,357 22.8 7,646 16.8 16,711 218.6 Total $ 505,280 14.6 $ 205,633 12.2 $ 299,647 145.7 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Recreational vehicles North American Towables $ 89,015 5.2 $ 49,590 6.4 $ 39,425 79.5 North American Motorized 38,391 5.0 14,437 5.5 23,954 165.9 Total North America 127,406 5.1 64,027 6.2 63,379 99.0 European 65,943 7.4 49,597 8.1 16,346 33.0 Total recreational vehicles 193,349 5.7 113,624 6.9 79,725 70.2 Other 6,876 6.4 2,819 6.2 4,057 143.9 Corporate 31,609 — 11,704 — 19,905 170.1 Total $ 231,834 6.7 $ 128,147 7.6 $ 103,687 80.9 32INCOME (LOSS) BEFORE INCOME TAXES: Three Months Ended
April 30, 2021% of
Segment
Net SalesThree Months Ended
April 30, 2020% of
Segment
Net SalesChange
Amount%
ChangeRecreational vehicles North American Towables $ 167,693 9.7 $ 49,261 6.4 $ 118,432 240.4 North American Motorized 54,780 7.1 10,915 4.1 43,865 401.9 Total North America 222,473 8.9 60,176 5.8 162,297 269.7 European 43,993 4.9 (242) — 44,235 18,278.9 Total recreational vehicles 266,466 7.8 59,934 3.6 206,532 344.6 Other, net 16,667 15.6 3,996 8.8 12,671 317.1 Corporate (50,454) — (42,701) — (7,753) (18.2) Total $ 232,679 6.7 $ 21,229 1.3 $ 211,450 996.0
ORDER BACKLOG:As of
April 30, 2021As of
April 30, 2020Change
Amount%
ChangeRecreational vehicles North American Towables $ 7,429,729 $ 857,866 $ 6,571,863 766.1 North American Motorized 3,550,286 547,952 3,002,334 547.9 Total North America 10,980,015 1,405,818 9,574,197 681.0 European 3,344,033 803,522 2,540,511 316.2 Total $ 14,324,048 $ 2,209,340 $ 12,114,708 548.3 CONSOLIDATEDConsolidated net sales for the three months ended January 31, 2018April 30, 2021 increased $383,035,$1,777,529, or 24.1%105.7%, compared to the three months ended January 31, 2017. April 30, 2020. The increase in consolidated net sales is due to both the continuing increase in current consumer demand and the negative impact the start of the COVID-19 pandemic had on net sales during the latter half of the prior-year quarter. The addition of the Tiffin Group, acquired on December 18, 2020, accounted for $171,203 of the $1,777,529 increase in net sales or 10.2% of the 105.7% increase. Approximately 25.9% of the Company's net sales for the quarter ended April 30, 2021 were transacted in a currency other than the U.S. dollar. The Company's most material exchange rate exposure is sales in Euros. Of the $1,777,529, or 105.7%, increase in consolidated net sales, $76,683, or 4.6% of the 105.7% increase, reflects the impact of the change in currency exchange rates between the two periods. To determine this information, net sales transacted in currencies other than U.S. dollars have been translated to U.S. dollars using the average exchange rates that were in effect during the comparative period.Consolidated gross profit for the three months ended January 31, 2018April 30, 2021 increased $58,626,$299,647, or 27.7%145.7%, compared to the three months ended January 31, 2017.April 30, 2020. Consolidated gross profit was 13.7%14.6% of consolidated net sales for the three months ended January 31, 2018April 30, 2021 and 13.3%12.2% for the three months ended January 31, 2017.Selling, general and administrative expenses for the three months ended January 31, 2018April 30, 2021 increased $20,119,$103,687, or 20.7%80.9%, compared to the three months ended January 31, 2017. April 30, 2020, primarily due to the increase in net sales.Amortization of intangible assets expense for the three months ended January 31, 2018 decreased $1,483, or 9.7%,April 30, 2021 increased $6,401 compared to the three months ended January 31, 2017,April 30, 2020, primarily due to lowerhigher dealer network amortization in the European segment as compared to the prior-year period. period and additional amortization of $2,832 from the acquisition of the Tiffin Group as discussed in Note 2 to the Condensed Consolidated Financial Statements.Income before income taxes for the three months ended January 31, 2018April 30, 2021 was $141,065,$232,679, as compared to $98,365$21,229 for the three months ended January 31, 2017,April 30, 2020, an increase of $42,700,$211,450 or 43.4%.33Additional information concerning the changes in net sales, gross profit, selling, general and administrative expenses and income before income taxes are addressed below and in the segment reporting that follows.Corporate costs included in selling, general and administrative expenses increased $7,499$19,905 to $20,173$31,609 for the three months ended January 31, 2018April 30, 2021 compared to $12,674$11,704 for the three months ended January 31, 2017. TheApril 30, 2020, an increase of 170.1%. This increase is due in partprimarily related to increased compensation costs, including an increase in deferred compensation costs,expense of $11,265, which was effectively offset by the increase in other income related to the deferred compensation plan assets as noted below. In addition, incentive compensation increased $761 in correlation with$4,070 due to the increase in income before income taxes compared to the prior year,prior-year period, and stock-based compensation increased $1,259. The stock-based compensation increase is due to increasing income before income taxes over the past three years, as most stock awards vest ratably over a three-year period. Deferred compensation expense also increased $1,419, which relates to the equal and offsetting increase in other income noted below due to the increase in the related deferred compensation plan assets. Legal and professional fees, including costs related to sales and marketing initiatives and the joint venture discussed in Note 15 to the Condensed Consolidated Financial Statements, increased $2,541.Corporate interest and other income and expense was $1,682 of net income for the three months ended January 31, 2018 compared to $1,145$18,845 of net expense for the three months ended January 31, 2017.April 30, 2021 compared to $30,997 of net expense for the three months ended April 30, 2020. This favorabledecrease in net expense of $12,152 included the change in the fair value of $2,827 is partiallythe Company’s deferred compensation plan assets due to interest expensemarket fluctuations and feesinvestment income, which resulted in income, net of $1,202 incurred$6,016 in the current-yearcurrent year period related to the revolving credit facility, as compared to $2,325expense, net of $5,316 in the prior-year period, a decreasetotal net increase in other income of $1,123$11,332 compared to the prior-year period. The prior year total also included losses of $2,137 related to the Company's former equity investment as discussed in Note 2 to the Condensed Consolidated Financial Statements. Interest expense and fees on the debt facilities increased slightly by $121, in spite of the reduction in the outstanding debt balances and reduced interest rates compared to the prior-year period, due to the additional accelerated amortization of debt costs of $4,688 included in interest expense in the current-year period as a result of the Company's term loan debt repricing as discussed in Note 12 to the Condensed Consolidated Financial StatementsThe overall effective income tax rate for the three months ended April 30, 2021 was 21.5% compared with (7.3)% for the three months ended April 30, 2020. The primary reason for the increase results from the global spread of the COVID-19 pandemic in the three months ended April 30, 2020 which negatively impacted the Company’s earnings while certain interest income not subject to corporate income tax had a significantly greater impact on the effective tax rate in relation to reduced pre-tax income.34Segment ReportingNORTH AMERICAN TOWABLE RECREATIONAL VEHICLESAnalysis of the change in net sales for the three months ended April 30, 2021 compared to the three months ended April 30, 2020:Three Months Ended
April 30, 2021% of
Segment
Net SalesThree Months Ended
April 30, 2020% of
Segment
Net SalesChange Amount %ChangeNET SALES: North American Towables Travel Trailers $ 1,060,058 61.4 $ 455,434 58.9 $ 604,624 132.8 Fifth Wheels 666,044 38.6 317,957 41.1 348,087 109.5 Total North American Towables $ 1,726,102 100.0 $ 773,391 100.0 $ 952,711 123.2 Three Months Ended
April 30, 2021% of
Segment
ShipmentsThree Months Ended
April 30, 2020% of
Segment
ShipmentsChange Amount %Change# OF UNITS: North American Towables Travel Trailers 47,143 78.4 21,518 76.2 25,625 119.1 Fifth Wheels 13,004 21.6 6,715 23.8 6,289 93.7 Total North American Towables 60,147 100.0 28,233 100.0 31,914 113.0 IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES: %ChangeNorth American Towables Travel Trailers 13.7 Fifth Wheels 15.8 Total North American Towables 10.2 The increase in total North American towables net sales of 123.2% compared to the prior-year quarter resulted from a 113.0% increase in unit shipments and a 10.2% increase in the overall net price per unit due to the impact of changes in product mix and price. The increase in North American towables net sales is due to both the continuing increase in current consumer demand and the negative impact the start of the COVID-19 pandemic had on net sales during the latter half of the prior-year quarter. The addition of the Tiffin Group, acquired on December 18, 2020, accounted for $19,548 of the $952,711 increase and for 2.1% of the 123.2% increase. According to statistics published by RVIA, for the three months ended April 30, 2021, combined North American travel trailer and fifth wheel wholesale unit shipments increased 108.5% compared to the same period last year. According to the most recently published statistics from Stat Surveys, for the three months ended March 31, 2021 and 2020, our North American market share for travel trailers and fifth wheels combined was 40.6% and 41.8%, respectively. Comparisons of Company shipments to industry shipments on a quarterly basis would not necessarily be indicative of the results expected for a full fiscal year.The increase in the overall net price per unit within the travel trailer product line of 13.7% and the overall net price per unit within the fifth wheel product lines of 15.8% was primarily due to the combination of reduced sales discounts, product mix changes and selective net selling price increases compared to the prior-year quarter, with the fifth wheel product line increases also partially attributable to the addition of the Tiffin Group product lines, which generally carry a higher average net selling price.35North American towables cost of products sold increased $796,992 to $1,461,626, or 84.7% of North American towables net sales, for the three months ended April 30, 2021 compared to $664,634, or 85.9% of North American towables net sales, for the three months ended April 30, 2020. The changes in material, labor, freight-out and warranty costs comprised $762,820 of the $796,992 increase in cost of products sold. Material, labor, freight-out and warranty costs as a combined percentage of North American towables net sales increased to 78.9% for the three months ended April 30, 2021 compared to 77.5% for the three months ended April 30, 2020, primarily as a result of an increase in the labor cost percentage due to the current competitive RV labor market conditions in Northern Indiana compared to the prior-year period. In addition, the material cost percentage increased slightly compared to the prior-year period, as the continued benefits from reduced sales discounts since the prior-year period, which effectively increases net selling prices and correspondingly decreases the material cost percentage, was more than offset by increasing material costs since the prior-year period. Total manufacturing overhead increased $34,172 with the increase in sales, but decreased as a percentage of North American towables net sales from 8.4% to 5.8% as the significantly increased net sales levels resulted in lower overhead costs per unit sold.North American towables gross profit increased $155,719 to $264,476, or 15.3% of North American towables net sales, for the three months ended April 30, 2021 compared to $108,757, or 14.1% of North American towables net sales, for the three months ended April 30, 2020. The increase in gross profit was driven by the increase in net sales and the increase in the gross profit percentage is due to the decrease in the cost of products sold percentage noted above.North American towables selling, general and administrative expenses were $89,015, or 5.2% of North American towables net sales, for the three months ended April 30, 2021 compared to $49,590, or 6.4% of North American towables net sales, for the three months ended April 30, 2020. This $39,425 increase is primarily due to the impact of the increase in North American towables net sales and income before income taxes, which caused related commissions, incentive and other compensation to increase by $39,554. Sales-related travel, advertising and promotional costs also increased by $1,395, while legal, professional and related settlement costs decreased $2,105. The decrease in the overall selling, general and administrative expense as a percentage of North American towable net sales is primarily due to the increase in net sales.North American towables income before income taxes was $167,693, or 9.7% of North American towables net sales, for the three months ended April 30, 2021 compared to $49,261 or 6.4% of North American towables net sales, for the three months ended April 30, 2020. The primary reason for the increase in North American towables income before income taxes was the increase in North American towables net sales, and the primary reasons for the increase in percentage were the decreases in the cost of products sold and selling, general and administrative expense percentages noted above.36NORTH AMERICAN MOTORIZED RECREATIONAL VEHICLESAnalysis of the change in net sales for the three months ended April 30, 2021 compared to the three months ended April 30, 2020:Three Months Ended
April 30, 2021% of
Segment
Net SalesThree Months Ended
April 30, 2020% of
Segment
Net SalesChange
Amount%ChangeNET SALES: North American Motorized Class A $ 323,547 41.7 $ 96,849 36.7 $ 226,698 234.1 Class C 342,425 44.2 144,826 54.9 197,599 136.4 Class B 109,421 14.1 22,362 8.4 87,059 389.3 Total North American Motorized $ 775,393 100.0 $ 264,037 100.0 $ 511,356 193.7 Three Months Ended
April 30, 2021% of
Segment
ShipmentsThree Months Ended
April 30, 2020% of
Segment
ShipmentsChange
Amount%Change# OF UNITS: North American Motorized Class A 2,059 28.7 795 27.6 1,264 159.0 Class C 3,983 55.6 1,910 66.2 2,073 108.5 Class B 1,120 15.7 180 6.2 940 522.2 Total North American Motorized 7,162 100.0 2,885 100.0 4,277 148.2 IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES: %ChangeNorth American Motorized Class A 75.1 Class C 27.9 Class B (132.9) Total North American Motorized 45.5 The increase in total North American motorized net sales of 193.7% compared to the prior-year quarter resulted from a 148.2% increase in unit shipments and a 45.5% increase in the overall net price per unit due to the impact of changes in product mix and price. The increase in North American motorized net sales is due to both the continuing increase in current consumer demand and the negative impact the start of the COVID-19 pandemic had on net sales during the latter half of the prior-year quarter. The addition of the Tiffin Group, acquired on December 18, 2020, accounted for $151,655 of the $511,356 increase or 29.7% of the 193.7% increase. According to statistics published by RVIA, for the three months ended April 30, 2021, combined North American motorhome wholesale unit shipments increased 106.0% compared to the same period last year. According to the most recently published statistics from Stat Surveys, for the three months ended March 31, 2021 and 2020, our North American market share for motorhomes was 48.9% and 38.2%, respectively, including 6.7% attributable to the Tiffin Group for the three months ended March 31, 2021. Comparisons of Company shipments to industry shipments on a quarterly basis would not necessarily be indicative of the results expected for a full fiscal year.The increase in the overall net price per unit within the Class A product line of 75.1% was predominately due to the impact of the addition of the higher-priced Tiffin Group product lines. The Tiffin Group Class A product lines are primarily higher-priced diesel units as opposed to the more moderately-priced gas units. The increase in the overall net price per unit within the Class C product line of 27.9% was primarily due to the impact of the addition of the higher-priced Tiffin Group Class C product lines, product mix changes within previously existing product lines and selective net selling price increases. The decrease in the overall net price per unit within the Class B product line of 132.9% is primarily due to product mix changes as a result of a much higher concentration of sales of lower-priced Class B products in the current-year 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.37North American motorized cost of products sold increased $441,739 to $679,105, or 87.6% of North American motorized net sales, for the three months ended April 30, 2021 compared to $237,366, or 89.9% of North American motorized net sales, for the three months ended April 30, 2020. The changes in material, labor, freight-out and warranty costs comprised $418,588 of the $441,739 increase primarily due to the increased net sales volume. Material, labor, freight-out and warranty costs as a combined percentage of North American motorized net sales decreased to 82.3% for the three months ended April 30, 2021 compared to 83.2% for the three months ended April 30, 2020, with the decrease primarily due to a decrease in the material cost percentage, partially offset by an increase in the labor cost percentage. The improvement in the material cost percentage is primarily due to both a reduction in sales discounts since the prior-year period, which effectively increases net selling prices and correspondingly decreases the material cost percentage, and product mix changes, primarily due to the addition of the recently acquired Tiffin Group products. These reductions to the material cost percentage were partially offset by the impact of increased material costs since the prior-year period. The labor cost percentage increase is primarily due to the current competitive RV labor market conditions in northern Indiana compared to the prior-year period. Total manufacturing overhead increased $23,151 due to the net sales increase, but decreased as a percentage of North American motorized net sales from 6.7% to 5.3% as the increased net sales resulted in lower overhead costs per unit sold.North American motorized gross profit increased $69,617 to $96,288, or 12.4% of North American motorized net sales, for the three months ended April 30, 2021 compared to $26,671, or 10.1% of North American motorized net sales, for the three months ended April 30, 2020. The increase in gross profit was driven by the increase in net sales and the increase in the gross profit percentage is due to the decrease in the cost of products sold percentage noted above.North American motorized selling, general and administrative expenses were $38,391, or 5.0% of North American motorized net sales, for the three months ended April 30, 2021 compared to $14,437, or 5.5% of North American motorized net sales, for the three months ended April 30, 2020. The primary reason for the $23,954 increase was the increase in North American motorized net sales and income before income taxes, which caused related commissions, incentive and other compensation to increase by $19,533. Sales-related travel, advertising and promotional costs also increased by $1,266. The decrease in overall selling, general and administrative expense as a percentage of North American motorized net sales was primarily due to the increased net sales volume.North American motorized income before income taxes was $54,780, or 7.1% of North American motorized net sales, for the three months ended April 30, 2021 compared to $10,915, or 4.1% of motorized net sales, for the three months ended April 30, 2020. The primary reason for the increase in North American motorized income before income taxes was the increase in North American motorized net sales. The primary reason for the increase in percentage were the decreases in the cost of products sold and selling, general and administrative expense percentages noted above.38EUROPEAN RECREATIONAL VEHICLESAnalysis of the change in net sales for the three months ended April 30, 2021 compared to the three months ended April 30, 2020:Three Months Ended
April 30, 2021% of
Segment
Net SalesThree Months Ended
April 30, 2020% of
Segment
Net SalesChange
Amount%ChangeNET SALES: European Motorcaravan $ 489,702 54.8 $ 380,023 61.8 $ 109,679 28.9 Campervan 236,988 26.5 104,486 17.0 132,502 126.8 Caravan 84,074 9.4 65,790 10.7 18,284 27.8 Other 83,476 9.3 65,044 10.5 18,432 28.3 Total European $ 894,240 100.0 $ 615,343 100.0 $ 278,897 45.3 Three Months Ended
April 30, 2021% of
Segment
ShipmentsThree Months Ended
April 30, 2020% of
Segment
ShipmentsChange
Amount%Change# OF UNITS: European Motorcaravan 8,177 44.7 6,905 50.5 1,272 18.4 Campervan 6,306 34.5 3,320 24.3 2,986 89.9 Caravan 3,805 20.8 3,443 25.2 362 10.5 Total European 18,288 100.0 13,668 100.0 4,620 33.8 IMPACT OF CHANGES IN FOREIGN CURRENCY, PRODUCT MIX AND PRICE ON NET SALES: Foreign Currency % Mix and Price % %
ChangeEuropean Motorcaravan 12.5 (2.0) 10.5 Campervan 12.5 24.4 36.9 Caravan 12.5 4.8 17.3 Total European 12.5 (1.0) 11.5 The increase in total European recreational vehicle net sales of 45.3% compared to the prior-year quarter resulted from an 33.8% increase in unit shipments and a 11.5% increase in the overall net price per unit due to the total impact of changes in foreign currency, product mix and price. The increase in European recreational vehicle net sales is due to both the continuing increase in current consumer demand and the negative impact the start of the COVID-19 pandemic had on net sales during the latter half of the prior-year quarter. This increase reflects the current heightened European market demand for the Campervan product line, and demand for the Motorcaravan products, as moderated by the negative impact of current chassis supply constraints on the Motorcaravan product line. The sales increase of $278,897 includes an increase of $76,683, or 12.5% of the 45.3% increase, due to the increase in foreign exchange rates since the prior-year period.The overall net price per unit increase of 11.5% includes the impact of foreign currency exchange rate changes, which accounts for 12.5% of the 11.5% increase on a constant-currency basis.39The decrease in the overall net price per unit due to product mix and price within the Motorcaravan product line of 2.0% was due to the impact of product mix changes reflecting the trend toward the lower-priced models within this product category compared to the prior-year quarter. The increase in the overall net price per unit due to product mix and price within the Campervan product line of 24.4% was primarily due to the net impact of product mix changes, including more sales of units with higher chassis content compared to the prior-year quarter, in addition to selective net selling price increase. The increase in the overall net price per unit due to product mix and price within the Caravan product line of 4.8% was primarily due to product mix changes and selective net selling price increases compared to the prior-year quarter.European recreational vehicle cost of products sold increased $221,297 to $774,081, or 86.6% of European recreational vehicle net sales, for the three months ended April 30, 2021 compared to $552,784, or 89.8% of European recreational vehicle net sales, for the three months ended April 30, 2020. The changes in material, labor, freight-out and warranty costs comprised $199,798 of the $221,297 increase primarily due to the increased net sales volume. Material, labor, freight-out and warranty costs as a combined percentage of European recreational vehicle net sales decreased to 77.9% for the three months ended April 30, 2021 compared to 80.7% for the three months ended April 30, 2020, with the decrease primarily due to a reduction in the material cost percentage, driven by net selective selling price increases, product mix changes and net material cost reductions due to higher volume levels compared to the prior-year period. This decrease was partially offset by an increase in the labor percentage due to additional costs incurred from increasing employment levels to accommodate current production levels. Total manufacturing overhead increased $21,499 with the increase in net sales, but decreased as a percentage of motorized net sales from 9.1% to 8.7% as the increased net sales levels resulted in lower overhead costs per unit sold.European recreational vehicle gross profit increased $57,600 to $120,159, or 13.4% of European recreational vehicle net sales, for the three months ended April 30, 2021 compared to $62,559, or 10.2% of European recreational vehicle net sales, for the three months ended April 30, 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.European recreational vehicle selling, general and administrative expenses were $65,943, or 7.4% of European recreational vehicle net sales, for the three months ended April 30, 2021 compared to $49,597, or 8.1% of European recreational vehicle net sales, for the three months ended April 30, 2020. The $16,346 increase includes the impact of the increase in European recreational vehicle net sales and income before income taxes, which caused commissions, incentive and other compensation and benefits to increase by $9,695. Depreciation expense also increased by $3,631, while license and tax-related costs decreased $2,926, primarily due to the favorable settlement of a previously accrued non-income German tax structure fee. The decrease in the overall selling, general and administrative expense as a percentage of European recreational vehicle net sales is primarily due to the increase in net sales.European recreational vehicle net income before income taxes was $43,993, or approximately 4.9% of European recreational vehicle net sales, for the three months ended April 30, 2021 compared to $242, or 0.0% of European recreational vehicle net sales, for the three months ended April 30, 2020. The primary reason for the increase in income before income taxes was the increase in European recreational vehicle net sales. The increase in percentage was primarily due to the decreases in the cost of products sold and selling, general and administrative expense percentages noted above, and an increase of 0.6% in other income as a percentage of European recreational vehicle net sales in the current-year period primarily from a non-recurring favorable settlement.40Nine Months Ended April 30, 2021 Compared to the Nine Months Ended April 30, 2020NET SALES: Nine Months Ended
April 30, 2021Nine Months Ended
April 30, 2020Change
Amount%
ChangeRecreational vehicles North American Towables $ 4,491,327 $ 2,958,186 $ 1,533,141 51.8 North American Motorized 1,846,243 1,023,606 822,637 80.4 Total North America 6,337,570 3,981,792 2,355,778 59.2 European 2,230,191 1,745,465 484,726 27.8 Total recreational vehicles 8,567,761 5,727,257 2,840,504 49.6 Other 262,381 176,943 85,438 48.3 Intercompany eliminations (105,730) (60,547) (45,183) (74.6) Total $ 8,724,412 $ 5,843,653 $ 2,880,759 49.3 # OF UNITS: Recreational vehicles North American Towables 158,891 106,664 52,227 49.0 North American Motorized 17,916 11,178 6,738 60.3 Total North America 176,807 117,842 58,965 50.0 European 45,095 39,251 5,844 14.9 Total 221,902 157,093 64,809 41.3 GROSS PROFIT: % of
Segment
Net Sales% of
Segment
Net SalesChange
Amount%
ChangeRecreational vehicles North American Towables $ 711,980 15.9 $ 423,472 14.3 $ 288,508 68.1 North American Motorized 239,508 13.0 105,647 10.3 133,861 126.7 Total North America 951,488 15.0 529,119 13.3 422,369 79.8 European 287,177 12.9 206,632 11.8 80,545 39.0 Total recreational vehicles 1,238,665 14.5 735,751 12.8 502,914 68.4 Other, net 60,344 23.0 35,099 19.8 25,245 71.9 Total $ 1,299,009 14.9 $ 770,850 13.2 $ 528,159 68.5 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES: Recreational vehicles North American Towables $ 232,549 5.2 $ 178,738 6.0 $ 53,811 30.1 North American Motorized 93,184 5.0 54,040 5.3 39,144 72.4 Total North America 325,733 5.1 232,778 5.8 92,955 39.9 European 192,673 8.6 186,226 10.7 6,447 3.5 Total recreational vehicles 518,406 6.1 419,004 7.3 99,402 23.7 Other 18,561 7.1 7,596 4.3 10,965 144.4 Corporate 82,819 — 52,368 — 30,451 58.1 Total $ 619,786 7.1 $ 478,968 8.2 $ 140,818 29.4 41INCOME (LOSS) BEFORE INCOME TAXES: Nine Months Ended
April 30, 2021% of
Segment
Net SalesNine Months Ended
April 30, 2020% of
Segment
Net SalesChange
Amount%
ChangeRecreational vehicles North American Towables $ 456,752 10.2 $ 207,009 7.0 $ 249,743 120.6 North American Motorized 139,768 7.6 47,606 4.7 92,162 193.6 Total North America 596,520 9.4 254,615 6.4 341,905 134.3 European 48,703 2.2 (18,576) (1.1) 67,279 362.2 Total recreational vehicles 645,223 7.5 236,039 4.1 409,184 173.4 Other, net 37,801 14.4 24,356 13.8 13,445 55.2 Corporate (140,067) — (135,669) — (4,398) 3.2 Total $ 542,957 6.2 $ 124,726 2.1 $ 418,231 335.3 CONSOLIDATEDConsolidated net sales for the nine months ended April 30, 2021 increased $2,880,759, or 49.3%, compared to the nine months ended April 30, 2020. The addition of the Tiffin Group, acquired on December 18, 2020, accounted for $253,636 of the $2,880,759 increase in net sales or 4.3% of the 49.3% increase. Approximately 25.6% of the Company's net sales for the nine months ended April 30, 2021 were transacted in a currency other than the U.S. dollar. The Company's most material exchange rate exposure is sales in Euros. Of the $2,880,759, or 49.3%, increase in consolidated net sales, $172,569, or 3.0% of the 49.3% increase, reflects the impact of the change in currency exchange rates between the two periods. To determine this information, net sales transacted in currencies other than U.S. dollars have been translated to U.S. dollars using the average exchange rates that were in effect during the comparative period.Consolidated gross profit for the nine months ended April 30, 2021 increased $528,159, or 68.5%, compared to the nine months ended April 30, 2020. Consolidated gross profit was 14.9% of consolidated net sales for the nine months ended April 30, 2021 and 13.2% for the nine months ended April 30, 2020. The increases in consolidated gross profit and the consolidated gross profit percentage were both primarily due to the impact of the increase in net sales in the current-year period compared to the prior-year period.Selling, general and administrative expenses for the nine months ended April 30, 2021 increased $140,818, or 29.4%, compared to the nine months ended April 30, 2020.Amortization of intangible assets expense for the nine months ended April 30, 2021 increased $14,465 compared to the nine months ended April 30, 2020, primarily due to higher dealer network amortization in the European segment as compared to the prior-year period and additional amortization of $4,248 due to the acquisition of the Tiffin Group as discussed in Note 2 to the Condensed Consolidated Financial Statements.The impairment charges for the nine months ended April 30, 2020 of $10,057 related to the North American Towables reportable segment as discussed in Note 8 to the Condensed Consolidated Financial Statements.Income before income taxes for the nine months ended April 30, 2021 was $542,957, as compared to $124,726 for the nine months ended April 30, 2020, an increase of $418,231, or 335.3%, primarily driven by the increase in net sales.Additional information concerning the changes in net sales, gross profit, selling, general and administrative expenses, impairment charges, acquisition-related costs and income before income taxes are addressed below and in the segment reporting that follows.42Corporate costs included in selling, general and administrative expenses increased $30,451 to $82,819 for the nine months ended April 30, 2021 compared to $52,368 for the nine months ended April 30, 2020, an increase of 58.1%. This increase is primarily related to increased compensation costs, including an increase in deferred compensation expense of $14,975, which was effectively offset by the increase in other income related to the deferred compensation plan assets as noted below. Incentive compensation increased $9,013 due to the increase in income before income taxes compared to the prior-year period, and stock-based compensation also increased $6,999. Costs related to workers' compensation and product liability reserves recorded at Corporate increased by a total of $3,806, primarily due to favorable adjustments in the prior-year period. These increases were partially offset by a decrease in donations of $1,890, primarily due to a significant contribution to the National Forest Foundation in the prior-year period, and a decrease in marketing costs of $2,421.Corporate interest and other income and expense was $57,248 of net expense for the nine months ended April 30, 2021 compared to $83,301 of net expense for the nine months ended April 30, 2020. This decrease in net expense of $26,053 included a decrease in interest expense and fees on the debt facilities of $6,388 due primarily to the reduction in the outstanding debt balance.balances and reduced interest rates compared to the prior-year period. In addition, the change in the fair value of the Company’s deferred compensation plan assets due to market fluctuations and investment income resulted in $2,460a net increase in other income of net income in the current-year period as$14,888 compared to net income of $1,041 in the prior-year period, an increaseperiod. The prior-year total also included losses of $1,419.The overall effective income tax rate for the threenine months ended January 31, 2018April 30, 2021 was 43.5%20.9% compared with 34.1%18.5% for the threenine months ended January 31, 2017.April 30, 2020. The primary reason for the increase in the effective income tax rate was the impact of the Tax Cuts and Jobs Act (the “Tax Act”) that was signed into law on December 22, 2017. Under the Tax Act, the federal corporate income tax rate has been reduced from 35.0% to 21.0% starting January 1, 2018, which results in the use of an estimated blended federal corporate income tax rate of 26.9% for the Company’s 2018 fiscal year. As a result of the Tax Act, the Company was also required to revalue its net deferred tax assets to reflect the impact of the lower tax rates. This revaluation caused anon-recurring,non-cash reduction of the Company’s net deferred tax assets, and a corresponding charge to income tax expense, of approximately $34,000. This charge was partially offset by the benefits of both the lower federal income tax rate for the three months ended January 31, 2018 and a tax benefit of $12,535 recorded in the three months ended January 31, 2018 from applying the lower federal income tax rate for fiscal 2018relates to the resultsjurisdictional mix of operations forpre-tax income between the first quarter of fiscal 2018.19Segment ReportingNORTH AMERICAN TOWABLE RECREATIONAL VEHICLESAnalysis of the change in net sales for the threenine months ended January 31, 2018April 30, 2021 compared to the threenine months ended January 31, 2017: Three Months
Ended
January 31, 2018 % of
Segment
Net Sales Three Months
Ended
January 31, 2017 % of
Segment
Net Sales Change
Amount %
Change $ 829,318 60.4 $ 653,524 60.4 $ 175,794 26.9 543,800 39.6 428,725 39.6 115,075 26.8 $ 1,373,118 100.0 $ 1,082,249 100.0 $ 290,869 26.9 Three Months
Ended
January 31, 2018 % of
Segment
Shipments Three Months
Ended
January 31, 2017 % of
Segment
Shipments Change
Amount %
Change 42,979 77.7 35,730 78.1 7,249 20.3 12,367 22.3 10,024 21.9 2,343 23.4 55,346 100.0 45,754 100.0 9,592 21.0 Impact of Change in Product Mix and Price on Net Sales:%IncreaseTowablesTravel Trailers and Other6.6Fifth Wheels3.4Total Towables5.9Nine Months Ended
April 30, 2021% of
Segment
Net SalesNine Months Ended
April 30, 2020% of
Segment
Net SalesChange Amount %
ChangeNET SALES: North American Towables Travel Trailers $ 2,729,317 60.8 $ 1,748,220 59.1 $ 981,097 56.1 Fifth Wheels 1,762,010 39.2 1,209,966 40.9 552,044 45.6 Total North American Towables $ 4,491,327 100.0 $ 2,958,186 100.0 $ 1,533,141 51.8 Nine Months Ended
April 30, 2021% of
Segment
ShipmentsNine Months Ended
April 30, 2020% of
Segment
ShipmentsChange Amount %
Change# OF UNITS: North American Towables Travel Trailers 123,566 77.8 81,164 76.1 42,402 52.2 Fifth Wheels 35,325 22.2 25,500 23.9 9,825 38.5 Total North American Towables 158,891 100.0 106,664 100.0 52,227 49.0 IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES: %
ChangeNorth American Towables Travel Trailers 3.9 Fifth Wheels 7.1 Total North American Towables 2.8 43The increase in total North American towables net sales of 26.9%51.8% compared to the prior-year quarterperiod resulted from a 21.0%49.0% increase in unit shipments and a 5.9%2.8% increase in the overall net price per unit due to the impact of changes in product mix and price. According to statistics published by RVIA, for the threenine months ended January 31, 2018,April 30, 2021, combined North American travel trailer and fifth wheel wholesale unit shipments increased 19.1%55.7% compared to the same period last year.The increasesincrease in the overall net price per unit within the travel trailer product line of 3.9% and other product lines of 6.6% andthe increase in the overall net price per unit within the fifth wheel product lines of 3.4%7.1% were both primarily due to changes in product mix andthe impacts of selective net price increases sinceand product mix changes compared to the prior-year quarter.Costperiod.North American towables cost of products sold increased $244,331$1,244,633 to $1,174,813,$3,779,347, or 85.6%84.1% of North American towables net sales, for the threenine months ended January 31, 2018April 30, 2021 compared to $930,482,$2,534,714, or 86.0%85.7% of North American towables net sales, for the threenine months ended January 31, 2017.April 30, 2020. The changes in material, labor,freight-out and warranty costs comprised $232,286$1,187,719 of the $244,331$1,244,633 increase in cost of products sold. Material, labor,freight-out and warranty costs as a combined percentage of North American towables net sales increased slightlydecreased to 79.5%78.1% for the threenine months ended January 31, 2018April 30, 2021 compared to 79.4%78.5% for the threenine months ended January 31, 2017. This increaseApril 30, 2020, primarily as a result of improvements in percentage was primarily the result ofmaterial and warranty cost percentages, partially offset by an increase in the labor cost percentage, due to the continued competitive RV labor market, and an increase in the warranty cost percentage, which was partially due to offering extended coverage on certain structural components of certain products since the prior-year period. These increases in percentage were mostly offset by a decreasepercentage. The improvement in the material cost percentage to net sales,is primarily due to selective net price increase and operating efficiencies attaineda reduction in sales discounts since the prior-year period, primarilywhich effectively increases net selling prices and correspondingly decreases the material cost percentage, partially offset by Jayco.recently increasing material costs. The warranty cost percentage is lower due to favorable experience trends, while the labor cost percentage increase is due to the current competitive RV labor market conditions in northern Indiana compared to the prior-year period. Total manufacturing overhead increased $12,045$56,914 with the increase in sales, but decreased as a percentage of North American towables net sales from 6.6%7.2% to 6.1%6.0%, as the increased productionnet sales levels resulted in better absorption of fixedlower overhead costs.Towablescost per units sold.North American towables gross profit increased $46,538$288,508 to $198,305,$711,980, or 14.4%15.9% of North American towables net sales, for the threenine months ended January 31, 2018April 30, 2021 compared to $151,767,$423,472, or 14.0%14.3% of North American towables net sales, for the threenine months ended January 31, 2017.April 30, 2020. The increase in the gross profit is primarily due to the 21.0% increase in unit sales volume noted above, whilewas 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.20Selling,North American towables selling, general and administrative expenses were $70,367,$232,549, or 5.1%5.2% of North American towables net sales, for the threenine months ended January 31, 2018April 30, 2021 compared to $61,155,$178,738, or 5.7%6.0% of North American towables net sales, for the threenine months ended January 31, 2017.April 30, 2020. The primary reason for the $9,212$53,811 increase was increasedthe impact of the increase in North American towables net sales and towables income before income taxes, which caused related commissions, bonusesincentive and other compensation to increase by $8,864. Sales-related$68,817. This increase was partially offset by the decrease in sales-related travel, advertising and promotional costs also increased $1,041of $7,915, primarily due to the cancellation of the major North American RV shows, along with travel restrictions, in correlation with the sales increase. These increases were partially offset by a reduction of $1,562 in legal,current-year period due to the ongoing COVID-19 pandemic. Legal, professional and related settlement costs primarily due to a reductionalso decreased $6,560. The decrease in the estimated costs to satisfy certain outstanding legal liability and product recall costs. The overall selling, general and administrative expense as a percentage of towablesNorth American towable net sales decreased by 0.6%is primarily due to the significantreductions in sales-related travel, advertising and promotion costs and legal, professional and related settlement costs in tandem with the increase in towables net sales.TowablesNorth American towables income before income taxes was $116,728,$456,752, or 8.5%10.2% of North American towables net sales, for the threenine months ended January 31, 2018April 30, 2021 compared to $78,000,$207,009 or 7.2%7.0% of North American towables net sales, for the threenine months ended January 31, 2017.April 30, 2020. The primary reason for the increase in North American towables income before income taxes was the increase in North American towables net sales, and the primary reasons for the increase in percentage were the decreases in both the cost of products sold and selling, general and administrative expense percentages noted above, and a 0.7% increase due to sales noted above.44NORTH AMERICAN MOTORIZED RECREATIONAL VEHICLESAnalysis of the change in net sales for the threenine months ended January 31, 2018April 30, 2021 compared to the threenine months ended January 31, 2017: Three Months
Ended
January 31, 2018 % of
Segment
Net Sales Three Months
Ended
January 31, 2017 % of
Segment
Net Sales Change
Amount %
Change $ 257,092 45.9 $ 223,818 47.1 $ 33,274 14.9 278,853 49.8 233,197 49.1 45,656 19.6 23,964 4.3 17,957 3.8 6,007 33.5 $ 559,909 100.0 $ 474,972 100.0 $ 84,937 17.9 Three Months
Ended
January 31, 2018 % of
Segment
Shipments Three Months
Ended
January 31, 2017 % of
Segment
Shipments Change
Amount %
Change 2,364 35.1 2,059 35.3 305 14.8 4,191 62.2 3,631 62.3 560 15.4 180 2.7 141 2.4 39 27.7 6,735 100.0 5,831 100.0 904 15.5 Impact of Change in Product Mix and Price on Net Sales:%IncreaseMotorizedClass A0.1Class C4.2Class B5.8Total Motorized2.4Nine Months Ended
April 30, 2021% of
Segment
Net SalesNine Months Ended
April 30, 2020% of
Segment
Net SalesChange
Amount%
ChangeNET SALES: North American Motorized Class A $ 704,230 38.1 $ 384,055 37.5 $ 320,175 83.4 Class C 912,124 49.4 561,424 54.8 350,700 62.5 Class B 229,889 12.5 78,127 7.7 151,762 194.3 Total North American Motorized $ 1,846,243 100.0 $ 1,023,606 100.0 $ 822,637 80.4 Nine Months Ended
April 30, 2021% of
Segment
ShipmentsNine Months Ended
April 30, 2020% of
Segment
ShipmentsChange
Amount%
Change# OF UNITS: North American Motorized Class A 4,727 26.4 3,111 27.8 1,616 51.9 Class C 10,928 61.0 7,434 66.5 3,494 47.0 Class B 2,261 12.6 633 5.7 1,628 257.2 Total North American Motorized 17,916 100.0 11,178 100.0 6,738 60.3 IMPACT OF CHANGE IN PRODUCT MIX AND PRICE ON NET SALES: %
ChangeNorth American Motorized Class A 31.5 Class C 15.5 Class B (62.9) Total North American Motorized 20.1 The increase in total North American motorized net sales of 17.9%80.4% compared to the prior-year period resulted from a 15.5%60.3% increase in unit shipments and a 2.4%20.1% increase in the overall net price per unit due to the impact of changes in product mix and price. The addition of the Tiffin Group, acquired on December 18, 2020, accounted for $226,275 of the $822,637 increase or 27.5% of the 80.4% increase. According to statistics published by RVIA, for the threenine months ended January 31, 2018,April 30, 2021, combined North American motorhome wholesale unit shipments increased 15.8%36.0% compared to the same period last year.The increasesincrease in the overall net price per unit within the Class A product line of 0.1%31.5% and the Class C product line of 4.2%15.5% were both primarily due to the net impact of the addition of the higher-priced Tiffin Group product mix changeslines and selective net price increases. The increaseTiffin Group Class A product lines are primarily in the higher-priced diesel units as opposed to the more moderately-priced gas units. The decrease in the overall net price per unit within the Class B product line of 5.8%62.9% is primarily due to product mix changes as a result of a much higher concentration of sales of lower-priced Class B products in the current-year period, including increased sales of previously existing lower-priced models and the introduction of aseveral new higher-priced model sincelower-priced models, as compared to the prior-year period, and more option content per unit in the current-year period.2145CostNorth American motorized cost of products sold increased $72,264$688,776 to $496,948,$1,606,735, or 88.8%87.0% of motorized net sales, for the threenine months ended January 31, 2018April 30, 2021 compared to $424,684,$917,959, or 89.4%89.7% of motorized net sales, for the threenine months ended January 31, 2017.April 30, 2020. The changes in material, labor,freight-out and warranty costs comprised $69,738$652,417 of the $72,264$688,776 increase due to the increased sales volume. Material, labor,freight-out and warranty costs as a combined percentage of motorized net sales decreased to 84.6%82.0% for the threenine months ended January 31, 2018April 30, 2021 compared to 85.0%84.2% for the threenine months ended January 31, 2017. ThisApril 30, 2020, with the decrease in percentage primarily due to decreases in both the material and warranty cost percentages, partially offset by an increase in the labor cost percentage. The improvement in the material cost percentage is primarily due to a reduction in sales discounts since the prior-year period, which effectively increases net selling prices and correspondingly decreases the material cost percentage and product mix changes, partially offset by recently increasing material costs. The warranty cost percentage is lower due to favorable experience trends, while the labor cost percentage increase is due to the current competitive RV labor market conditions in northern Indiana compared to the prior-year period. Total manufacturing overhead increased $36,359 due to the net sales increase, but decreased as a percentage of North American motorized net sales from 5.5% to 5.0%, as the increased net sales resulted in lower overhead costs per unit sold.North American motorized gross profit increased $133,861 to $239,508, or 13.0% of motorized net sales, for the nine months ended April 30, 2021 compared to $105,647, or 10.3% of motorized net sales, for the nine months ended April 30, 2020. The increase in gross profit was due primarily to the increase in net sales, and the increase in the gross profit percentage was due to the decrease in the cost of products sold percentage noted above.North American motorized selling, general and administrative expenses were $93,184, or 5.0% of motorized net sales, for the nine months ended April 30, 2021 compared to $54,040, or 5.3% of motorized net sales, for the nine months ended April 30, 2020. The primary reason for the $39,144 increase was the increase in North American motorized net sales and income before income taxes, which caused related commissions, incentive and other compensation to increase by $35,264. The decrease in the overall selling, general and administrative expense as a percentage of North American motorized net sales was primarily due to the resultincreased net sales volumes.North American motorized income before income taxes was $139,768, or 7.6% of motorized net sales, for the nine months ended April 30, 2021 compared to $47,606, or 4.7% of motorized net sales, for the nine months ended April 30, 2020. The primary reason for the increase in North American motorized income before income taxes was the increase in North American motorized net sales. The primary reason for the increase in percentage was the decrease in the cost of products sold and selling, general and administrative expense percentages noted above.46EUROPEAN RECREATIONAL VEHICLESAnalysis of the change in net sales for the nine months ended April 30, 2021 compared to the nine months ended April 30, 2020:Nine Months Ended
April 30, 2021% of
Segment
Net SalesNine Months Ended
April 30, 2020% of
Segment
Net SalesChange Amount %
ChangeNET SALES: European Motorcaravan $ 1,227,182 55.0 $ 1,044,178 59.8 $ 183,004 17.5 Campervan 529,500 23.7 280,006 16.0 249,494 89.1 Caravan 210,923 9.5 196,731 11.3 14,192 7.2 Other 262,586 11.8 224,550 12.9 38,036 16.9 Total European $ 2,230,191 100.0 $ 1,745,465 100.0 $ 484,726 27.8 Nine Months Ended
April 30, 2021% of
Segment
ShipmentsNine Months Ended
April 30, 2020% of
Segment
ShipmentsChange Amount %
Change# OF UNITS: European Motorcaravan 20,586 45.7 19,787 50.4 799 4.0 Campervan 14,704 32.6 9,255 23.6 5,449 58.9 Caravan 9,805 21.7 10,209 26.0 (404) (4.0) Total European 45,095 100.0 39,251 100.0 5,844 14.9 IMPACT OF CHANGES IN FOREIGN CURRENCY, PRODUCT MIX AND PRICE ON NET SALES: Foreign Currency % Mix and Price % %
ChangeEuropean Motorcaravan 9.9 3.6 13.5 Campervan 9.9 20.3 30.2 Caravan 9.9 1.3 11.2 Total European 9.9 3.0 12.9 The increase in total European recreational vehicle net sales of 27.8% compared to the prior-year period resulted from an 14.9% increase in unit shipments and a 12.9% increase in the overall net price per unit due to the total impact of changes in foreign currency, product mix and price. This increase includes the current heightened European market demand for the Campervan product line, and demand for Motorcaravan products, as moderated by the impact of current chassis supply constraints on the Motorcaravan product line. The sales increase of $484,726 includes an increase of $172,569, or 9.9% of the 27.8% increase, due to the increase in foreign exchange rates since the prior-year period.The overall net price per unit increase of 12.9% includes the impact of foreign currency exchange rate changes, which accounts for 9.9% of the 12.9% increase on a constant-currency basis.The increase in the overall net price per unit due to product mix and price within the Motorcaravan product line of 3.6% was primarily due to product mix changes and selective net selling price increases since the prior-year period. The increase in the overall net price per unit due to product mix and price within the Campervan product line of 20.3% was primarily due to the net impact of product mix changes, including more sales of units with higher chassis content compared to the prior-year period. The increase in the overall net price per unit due to product mix and price within the Caravan product line of 1.3% was primarily due to the impact of product mix changes.47European recreational vehicle cost of products sold increased $404,181 to $1,943,014, or 87.1% of European recreational vehicle net sales, for the nine months ended April 30, 2021 compared to $1,538,833, or 88.2% of European recreational vehicle net sales, for the nine months ended April 30, 2020. The changes in material, labor, freight-out and warranty costs comprised $368,394 of the $404,181 increase primarily due to the increased net sales volume. Material, labor, freight-out and warranty costs as a combined percentage of European recreational vehicle net sales decreased to 77.8% for the nine months ended April 30, 2021 compared to 78.3% for the nine months ended April 30, 2020, with the decrease primarily due to a decrease in the material cost percentage which was partiallydue primarily to better material pricing due to operating efficiencies attained in the past year, primarily at Jayco, but this decrease was partially offset by ansignificant increase in labor costs associated with increasing employment levels and the continued competitive RV labor market.volume. Total manufacturing overhead increased $2,526$35,787 with the volume increase but decreased as a percentage of motorized net sales from 4.4%9.9% to 4.2%,9.3% as the increase in productionincreased net sales levels resulted in better absorption of fixedlower overhead costs.Motorizedcosts per unit sold.European recreational vehicle gross profit increased $12,673$80,545 to $62,961,$287,177, or 11.2%12.9% of motorizedEuropean recreational vehicle net sales, for the threenine months ended January 31, 2018April 30, 2021 compared to $50,288,$206,632, or 10.6%11.8% of motorizedEuropean recreational vehicle net sales, for the threenine months ended January 31, 2017.April 30, 2020. The $12,673 increase in gross profit wasis due primarily to the 15.5% increase in unitnet sales, volume noted above, andwhile the increase in gross profit as a percentage of motorizedEuropean recreational vehicle net sales is due to the decrease in the cost of products sold percentage noted above.Selling,European recreational vehicle selling, general and administrative expenses were $24,309,$192,673, or 4.3%8.6% of motorizedEuropean recreational vehicle net sales, for the threenine months ended January 31, 2018April 30, 2021 compared to $20,868,$186,226, or 4.4%10.7% of motorizedEuropean recreational vehicle net sales, for the threenine months ended January 31, 2017.April 30, 2020. The $3,441primary reason for the $6,447 increase was partially due to increased motorizedthe impact of the increase in European recreational vehicle net sales and motorized income before income taxes, which caused related commissions, bonusesincentive and other compensation and benefits to increase by $2,509. In addition, legal, professional$16,542. Professional fees also increased $7,375 and related settlement costsdepreciation expense increased $462, primarily due to estimated product liability settlement costs. Sales-relatedby $5,683. These increases were mostly offset by the decrease in sales-related travel, advertising and promotional costs also increased $254of $21,551, primarily due to not participating in connectionEuropean trade shows, along with travel restrictions, in the current-year period due to the ongoing COVID-19 pandemic. The decrease in the overall selling, general and administrative expense as a percentage of European recreational vehicle net sales increase.Motorizedis primarily due to the increase in net sales.European recreational vehicle net income before income taxes was $37,538,$48,703, or 6.7%2.2% of motorizedEuropean recreational vehicle net sales, for the threenine months ended January 31, 2018April 30, 2021 compared to $28,488,a net loss of $18,576, or 6.0%1.1% of motorizedEuropean recreational vehicle net sales, for the threenine months ended January 31, 2017.April 30, 2020. The primary reason for this increase in percentage was the impact of the decrease in the cost of products sold percentage as noted above.22Six Months Ended January 31, 2018 Compared to the Six Months Ended January 31, 2017 Six Months Ended
January 31, 2018 Six Months Ended
January 31, 2017 Change
Amount %
Change $ 2,991,619 $ 2,293,122 $ 698,497 30.5 1,126,520 936,426 190,094 20.3 4,118,139 3,229,548 888,591 27.5 150,932 112,887 38,045 33.7 (65,843 ) (45,379 ) (20,464 ) (45.1 ) $ 4,203,228 $ 3,297,056 $ 906,172 27.5 121,441 96,928 24,513 25.3 13,578 11,250 2,328 20.7 135,019 108,178 26,841 24.8 GROSS PROFIT: % of
Segment
Net
Sales % of
Segment
Net
Sales Change
Amount %
Change $ 455,018 15.2 $ 326,745 14.2 $ 128,273 39.3 126,864 11.3 101,725 10.9 25,139 24.7 581,882 14.1 428,470 13.3 153,412 35.8 21,631 14.3 19,984 17.7 1,647 8.2 $ 603,513 14.4 $ 448,454 13.6 $ 155,059 34.6 $ 157,127 5.3 $ 128,743 5.6 $ 28,384 22.0 51,017 4.5 42,182 4.5 8,835 20.9 208,144 5.1 170,925 5.3 37,219 21.8 4,808 3.2 4,592 4.1 216 4.7 38,399 — 23,762 — 14,637 61.6 $ 251,351 6.0 $ 199,279 6.0 $ 52,072 26.1 $ 275,579 9.2 $ 172,173 7.5 $ 103,406 60.1 75,124 6.7 57,411 6.1 17,713 30.9 350,703 8.5 229,584 7.1 121,119 52.8 13,773 9.1 12,074 10.7 1,699 14.1 (36,320 ) — (27,493 ) — (8,827 ) (32.1 ) $ 328,156 7.8 $ 214,165 6.5 $ 113,991 53.2 23CONSOLIDATEDConsolidated net sales for the six months ended January 31, 2018 increased $906,172, or 27.5%, compared to the six months ended January 31, 2017. Consolidated gross profit for the six months ended January 31, 2018 increased $155,059, or 34.6%, compared to the six months ended January 31, 2017. Consolidated gross profit was 14.4% of consolidated net sales for the six months ended January 31, 2018 and 13.6% for the six months ended January 31, 2017.Selling, general and administrative expenses for the six months ended January 31, 2018 increased $52,072, or 26.1%, compared to the six months ended January 31, 2017. Amortization of intangible assets expense for the six months ended January 31, 2018 decreased $6,140, or 18.3%, compared to the six months ended January 31, 2017, primarily due to backlog amortization in the prior-year period related to the Jayco acquisition and lower dealer network amortization as compared to the prior-year period. Income before income taxes for the six months ended January 31, 2018 was $328,156, as compared to $214,165 for the six months ended January 31, 2017, an increase of $113,991, or 53.2%.Additional information concerning the changes in net sales, gross profit, selling, general and administrative expenses, amortization of intangible assets expense and income before income taxes are addressed in the segment reporting that follows.Corporate costs included in selling, general and administrative expenses increased $14,637 to $38,399 for the six months ended January 31, 2018 compared to $23,762 for the six months ended January 31, 2017. The increase is due in part to an increase in compensation costs, as incentive compensation increased $2,265 in correlation with the increase in income before income taxes compared to the prior year, and stock-based compensation increased $2,839. The stock-based compensation increase is due to increasing income before income taxes over the past three years, as most stock awards vest ratably over a three-year period. Deferred compensation expense also increased $2,949, which relates to the equal and offsetting increase in other income noted below due towas the increase in the related deferred compensation plan assets. Legal and professional fees, including costs related to sales and marketing initiatives and the joint venture discussed in Note 15 to the Condensed Consolidated Financial Statements, increased $3,928.Corporate interest and other income and expense was $2,079 ofEuropean recreational vehicle net income for the six months ended January 31, 2018 compared to $3,731 of net expense for the six months ended January 31, 2017. This favorable change of $5,810 is partially due to interest expense and fees of $2,459 incurred in the current-year period related to the revolving credit facility, as compared to $4,723 in the prior-year period, a decrease of $2,264 primarily as a result of the lower outstanding debt balance. In addition, the change in the fair value of the Company’s deferred compensation plan assets due to market fluctuations and investment income resulted in $3,734 of net income in the current-year period as compared to net income of $785 in the prior-year period, an increase of $2,949.The overall effective income tax rate for the six months ended January 31, 2018 was 36.6% compared with 33.0% for the six months ended January 31, 2017. The primary reason for the increase in the effective income tax rate was the impact of the Tax Cuts and Jobs Act (the “Tax Act”) that was signed into law on December 22, 2017. Under the Tax Act, the federal corporate income tax rate was reduced from 35.0% to 21.0% starting January 1, 2018, which results in the use of an estimated blended federal corporate income tax rate of 26.9% for the Company’s 2018 fiscal year. In addition, the Company was also required to revalue its net deferred tax assets to reflect the impact of the lower tax rates. This revaluation caused anon-recurring,non-cash reduction of the Company’s net deferred tax assets, and a corresponding charge to income tax expense, of approximately $34,000 in the second quarter of fiscal 2018. This charge was partially offset by the lower tax expense reflected in thesix-month period ended January 31, 2018 due to the decrease in our federal corporate income tax rate to 26.9% for fiscal 2018 as a result of the Tax Act.24Segment ReportingTOWABLE RECREATIONAL VEHICLESAnalysis of the change in net sales for the six months ended January 31, 2018 compared to the six months ended January 31, 2017: Six Months
Ended
January 31, 2018 % of
Segment
Net Sales Six Months
Ended
January 31, 2017 % of
Segment
Net Sales Change
Amount %
Change $ 1,822,922 60.9 $ 1,376,873 60.0 $ 446,049 32.4 1,168,697 39.1 916,249 40.0 252,448 27.6 $ 2,991,619 100.0 $ 2,293,122 100.0 $ 698,497 30.5 Six Months
Ended
January 31, 2018 % of
Segment
Shipments Six Months
Ended
January 31, 2017 % of
Segment
Shipments Change
Amount %
Change 94,647 77.9 75,374 77.8 19,273 25.6 26,794 22.1 21,554 22.2 5,240 24.3 121,441 100.0 96,928 100.0 24,513 25.3 Impact of Change in Product Mix and Price on Net Sales:%IncreaseTowablesTravel Trailers and Other6.8Fifth Wheels3.3Total Towables5.2 in total towables net sales of 30.5% compared to the prior-year period resulted from a 25.3% increase in unit shipments and a 5.2% increase in the overall net price per unit due to the impact of changes in product mix and price. According to statistics published by RVIA, for the six months ended January 31, 2018, combined travel trailer and fifth wheel wholesale unit shipments increased 24.4% compared to the same period last year.The increases in the overall net price per unit within the travel trailer and other product lines of 6.8% and the fifth wheel product lines of 3.3% were both primarily due to changes in product mix and selective net price increases since the prior-year period.Cost of products sold increased $570,224 to $2,536,601, or 84.8% of towables net sales, for the six months ended January 31, 2018 compared to $1,966,377, or 85.8% of towables net sales, for the six months ended January 31, 2017. The changes in material, labor,freight-out and warranty costs comprised $541,280 of the $570,224 increase in cost of products sold. Material, labor,freight-out and warranty costs as a combined percentage of towables net sales decreased to 79.2% for the six months ended January 31, 2018 compared to 79.7% for the six months ended January 31, 2017. This decrease in percentage was primarily the result of a decrease in the material cost percentage to net sales, due to selective net price increases and operating efficiencies attained since the prior-year period, primarily by Jayco. This decrease was partially offset by an increase in the labor cost percentage due to the continued competitive RV labor market. Total manufacturing overhead increased $28,944 with the increase in sales, but decreased as a percentage of towables net sales from 6.1% to 5.6%, as the increased production resulted in better absorption of fixed overhead costs.Towables gross profit increased $128,273 to $455,018, or 15.2% of towables net sales, for the six months ended January 31, 2018 compared to $326,745, or 14.2% of towables net sales, for the six months ended January 31, 2017. The increase in gross profit is primarily due to the 25.3% increase in unit sales volume noted above, while the increase in gross profit percentage is due to the decrease in the cost of products sold percentage noted above.25Selling, general and administrative expenses were $157,127, or 5.3% of towables net sales, for the six months ended January 31, 2018 compared to $128,743, or 5.6% of towables net sales, for the six months ended January 31, 2017. The primary reason for the $28,384 increase was increased towables net sales and towables income before income taxes, which caused related commissions, bonuses and other compensation to increase by $22,938. Legal, professional and related settlement costs increased $1,989, primarily due to estimated costs related to an industry-wide recall of certain vendor-supplied components and estimated product liability settlement costs. In addition, sales-related travel, advertising and promotional costs also increased $2,111 in correlation with the sales increase. In spite of these increased amounts, the overall selling, general and administrative expense percentage of towables net sales decreased by 0.3% due to the significant increase in towables net sales.Towables income before income taxes was $275,579, or 9.2% of towables net sales, for the six months ended January 31, 2018 compared to $172,173, or 7.5% of towables net sales, for the six months ended January 31, 2017. The primary reasons for the increase in percentage were the decreases in both the cost of products sold and selling, general and administrative expense percentages to sales noted above. In addition, the towables amortization cost percentage decreased by 0.5%, primarily due tonon-recurring backlog amortization in the prior-year period related to the Jayco acquisition.MOTORIZED RECREATIONAL VEHICLESAnalysis of the change in net sales for the six months ended January 31, 2018 compared to the six months ended January 31, 2017: Six Months
Ended
January 31, 2018 % of
Segment
Net Sales Six Months
Ended
January 31, 2017 % of
Segment
Net Sales Change
Amount %
Change $ 509,515 45.2 $ 463,932 49.5 $ 45,583 9.8 565,519 50.2 433,092 46.3 132,427 30.6 51,486 4.6 39,402 4.2 12,084 30.7 $ 1,126,520 100.0 $ 936,426 100.0 $ 190,094 20.3 Six Months
Ended
January 31, 2018 % of
Segment
Shipments Six Months
Ended
January 31, 2017 % of
Segment
Shipments Change
Amount %
Change 4,631 34.1 4,248 37.8 383 9.0 8,555 63.0 6,690 59.5 1,865 27.9 392 2.9 312 2.7 80 25.6 13,578 100.0 11,250 100.0 2,328 20.7 Impact of Change in Product Mix and Price on Net Sales:%Increase(Decrease)MotorizedClass A0.8Class C2.7Class B5.1Total Motorized(0.4) The increase in total motorized net sales of 20.3% compared to the prior-year period resulted from a 20.7% increase in unit shipments and a 0.4% decrease in the overall net price per unit due to the impact of changes in product mix and price. The 0.4% decrease in the overall motorized net price per unit, in spite of increases within the individual Class A, B and C product lines, is primarily due to a higher concentration of the more moderately-priced Class C units, as compared to Class A units, in the current-year period as compared to the prior-year period. According to statistics published by RVIA, for the six months ended January 31, 2018, combined motorhome wholesale unit shipments increased 16.1% compared to the same period last year.26The modest increases in the overall net price per unit within the Class A product line of 0.8% and the Class C product line of 2.7% were primarily due to the net impact of product mix changes and selective net price increases. The increase in the overall net price per unit within the Class B product line of 5.1% is primarily due to the introduction of a new, higher-priced model since the prior-year period, and more option content per unit in the current-year period.Cost of products sold increased $164,955 to $999,656, or 88.7% of motorized net sales, for the six months ended January 31, 2018 compared to $834,701, or 89.1% of motorized net sales, for the six months ended January 31, 2017. The changes in material, labor,freight-out and warranty costs comprised $158,958 of the $164,955 increase due to increased sales volume. Material, labor,freight-out and warranty costs as a combined percentage of motorized net sales was 84.7% for thesix-month period ended January 31, 2018 and 84.9% for thesix-month period ended January 31, 2017. The primary reason for this decrease in percentage was a decrease in the material cost percentage, which was partially due to operating efficiencies attained in the past year, primarily at Jayco, and purchase accounting charges related to Jayco included in the prior-year period. This decrease was partially offset by an increase in labor costs associated with increasing employment levels and the continued competitive RV labor market. Total manufacturing overhead increased $5,997 with the volume increase, but decreased as a percentage of motorized net sales from 4.2% to 4.0%, as the increase in production resulted in better absorption of fixed overhead costs.Motorized gross profit increased $25,139 to $126,864, or 11.3% of motorized net sales, for the six months ended January 31, 2018 compared to $101,725, or 10.9% of motorized net sales, for the six months ended January 31, 2017. The $25,139 increase in gross profit was due primarily to the 20.7% increase in unit sales volume noted above, and the increase as a percentage of motorized net sales is due to the decrease in the cost of products sold percentage noted above.Selling, general and administrative expenses were $51,017, or 4.5% of motorized net sales, for the six months ended January 31, 2018 compared to $42,182, or 4.5% of motorized net sales, for the six months ended January 31, 2017. The $8,835 increase was partially due to increased motorized net sales and motorized income before income taxes, which caused related commissions, bonuses and other compensation to increase by $4,730. In addition, legal, professional and related settlement costs increased $2,757, primarily due to estimated product liability settlement costs and estimated costs related to an industry-wide recall of certain vendor-supplied components. Sales related travel, advertising and promotional costs also increased $804 in connection with the sales increase.Motorized income before income taxes was $75,124, or 6.7% of motorized net sales, for the six months ended January 31, 2018 compared to $57,411, or 6.1% of motorized net sales, for the six months ended January 31, 2017. The primary reason for this increase in percentage was the impact of the decrease in the cost of products sold percentage noted above. In addition, the motorized income before income taxes percentage increased due to a gain of $1,506 on the sale of certain motorized buildings and equipment during the six months ended January 31, 2018.Financial Condition and LiquidityAs of January 31, 2018,April 30, 2021, we had $109,775$294,562 in cash and cash equivalents, of which $135,507 was held in the U.S. and the equivalent of $159,055, predominantly in Euros, was held in Europe, compared to $223,258$538,519 on July 31, 2017.2020, of which $276,841 was held in the U.S. and the equivalent of $261,678, 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 $113,483$243,957 decrease in cash and cash equivalents are described in more detail below, but the decrease was primarily attributable to capital expenditures of $63,003, principal payments on long-term debt of $65,000 and $38,994 paid for dividends, partially offset by cash provided by operations of $56,845.Workingbelow.Net working capital at January 31, 2018April 30, 2021 was $517,085$893,867 compared to $399,121$586,996 at July 31, 2017, with the2020. This increase is primarily attributable to increases in accounts receivable and inventory due to the increases in sales, backloginventory and production lines.accounts receivable, partially offset by the decrease in cash and cash equivalents noted above and an increase in accounts payable. Capital expenditures of $63,003$81,162 for the sixnine months ended January 31, 2018April 30, 2021 were made primarily for land and production building additions and improvements as well asand replacing machinery and equipment used in the ordinary course of business.We strive to maintain adequate cash balances to ensure we have sufficient resources to respond to opportunities and changing business conditions. We believe ouron-hand cash and cash equivalents and funds generated from continuing operations, along with funds available under the revolving asset-based credit facility, will be sufficient to fund expected future operational requirements for the foreseeable future. We have historically relied on internally generated cash flows from operations to finance substantially all our growth, however, we obtained a revolving asset-based credit facility to partially fund the fiscal 2016 acquisition of Jayco as discussed in Notes 2 and 11 to the Condensed Consolidated Financial Statements.27While the Tax Act enacted in December 2017 is expected to generate additional cash flow in the future, our mainOur priorities for the use of current and future available cash generated from operations will continue to focus onremain 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, maintainingacquisitions. We may also consider strategic and growing our regular dividends over time,opportunistic repurchases of shares and reducing indebtedness. Strategic share repurchases or special dividends as determinedbased upon market and business conditions and excess cash availability, subject to potential customary limits and restrictions pursuant to our credit facilities, applicable legal limitations and determination by the Company’sCompany's Board will also continue to be considered. As a component of funding our growth, we anticipate making additional investments in our workforce through a variety of initiatives, including enhanced employee training and development programs and other initiatives that will be introduced in fiscal 2018 and fiscal 2019 and targeted to the varying needs of our individual operating entities.In regard to growing our business, weDirectors ("Board").48We anticipate capital expenditures during the remainder of fiscal 20182021 for the Company of approximately $110,000,$65,000, primarily for the continued expansion of our facilitiescertain building projects and replacing and upgrading machinery, equipment and other assets throughout our facilities to be used in the ordinary course of business.These expenditures are in addition to the approximately $47,000 cash investment in the joint venture as discussed in Note 15 to the Condensed Financial Statements. In regard to reducing indebtedness, absent an alternative to strategically employ funds available under the credit facility, we expect to pay off the current remaining indebtedness of $80,000 in its entirety by the end of fiscal 2018. We may also consider additional strategic growth acquisitions that complement or expand our ongoing operations.The Company’s Board currently intends to continue regular quarterly cash dividend payments in the future. As is customary under asset-based lines of credit facilities, certain actions, including our ability to pay dividends, are subject to the satisfaction of certain payment conditions prior to payment. The conditions for the paymentspayment 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 agreement.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.Future purchases of the Company’s common stock or special cash dividends may occur based upon market and business conditions and excess cash availability, subjectfactors, in addition to potential customary limits and restrictions pursuant to the credit facility, applicable legal limitations and determination by the Board.Operating ActivitiesNet cash provided by operating activities for the sixnine months ended January 31, 2018April 30, 2021 was $56,845$175,073 as compared to net cash provided by operating activities of $52,816$237,269 for the sixnine months ended January 31, 2017.For the sixnine months ended January 31, 2018,April 30, 2021, net income adjusted fornon-cash items (primarily depreciation, amortization of intangibles deferred income tax provision and stock-based compensation) provided $285,477$628,645 of operating cash. The change in net working capital used $228,632resulted in the use of $453,572 of operating cash during that period, primarily due to an increase in inventory, as a result of a largerproduction levels have increased due to the current heightened demand, and there has been an increase in production lines and capacity. In addition, work in process inventory is higher than usualnormal at April 30, 2021 due to elevated material component shortages on otherwise substantially completed units. Accounts receivable also reflects a seasonal increase, in accounts receivable due to both the timing of shipments and the increase in sales. Inventory also increased in conjunction with the increases in backlog and production facilities and lines, and required income tax payments during the nine months ended April 30, 2021 exceeded the income tax provision duringfor the period as well. These increases were partially offset by increasesan increase in accounts payable and accrued liabilities.For the sixnine months ended January 31, 2017,April 30, 2020, net income adjusted fornon-cash items (primarily depreciation, amortization of intangibles, deferred income tax provisionimpairment and stock-based compensation) provided $194,056$299,634 of operating cash. The changeschange in working capital used $141,240resulted in the use of $62,365 of operating cash during that period, primarily due to seasonal increasesa reduction in accounts payable and accrued liabilities, partially offset by a reduction in accounts receivable and inventoryas shipments in correlation withApril 2020 were significantly reduced due to the increases in sales, backlog and production lines. In addition, required income tax payments exceeded income tax provisions duringimpact of the period.Investing ActivitiesNet cash used in investing activities for the sixnine months ended January 31, 2018April 30, 2021 was $58,491,$381,028, primarily due to $310,938 used in business acquisitions and capital expenditures of $63,003, partially offset by proceeds received on the disposition of property, plant and equipment of $3,552.Net cash used in investing activities for the sixnine months ended January 31, 2017April 30, 2020 was $53,622,$55,687, primarily due to capital expenditures of $50,924 and a final purchase price adjustment payment of $5,039 related to the fiscal 2016 acquisition of Jayco,$77,302, partially offset by proceeds received onfrom the dispositions of property, plant and equipment of $4,554.2849Financing ActivitiesNet cash used in financing activities for the sixnine months ended January 31, 2018April 30, 2021 was $111,837,$42,803, consisting primarily for principal paymentsof borrowings of $225,676 on the revolving asset-based credit facility totaling $65,000facilities, which included $165,000 borrowed in connection with the acquisition of Tiffin Group and $60,676 for temporary working capital needs, partially offset by $184,247 in debt payments and regular quarterly cash dividend payments of $0.37$0.41 per share for each of the first twothree quarters of fiscal 20182021 totaling $38,994.Net cash used inprovided by financing activities for the sixnine months ended January 31, 2017April 30, 2020 was $74,441,$24,993, consisting primarily for principal paymentsof $379,222 in borrowings on the revolving asset-based credit facility totaling $35,000 andfacilities, which included $250,000 of precautionary borrowings taken during the onset of the COVID-19 pandemic, mostly offset by $284,435 in debt payments. Additionally, the Company made regular quarterly cash dividend payments of $0.33$0.40 per share for each of the first twothree quarters of fiscal 20172020 totaling $34,704.The Company increased its previous regular quarterly dividend of $0.33$0.40 per share to $0.37$0.41 per share in October 2017.2020. In October 2016,2019, the Company increased its previous regular quarterly dividend of $0.30$0.39 per share to $0.33$0.40 per share.Accounting PronouncementsReference is made to Note 1 of our Condensed Consolidated Financial Statements contained in this report for a summary of recently issued accounting pronouncements, which summary is hereby incorporated by reference.standards applicable to the Company.50ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKWe have exposureThe Company is exposed to market risk from changes in short-termforeign 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 $714,284 of debt denominated in Euros at April 30, 2021. A hypothetical 10% change in the Euro/U.S. Dollar exchange rate would change our April 30, 2021 debt balance by approximately $71,428.INTEREST RATE RISK – The Company uses pay-fixed, receive-floating interest rate swaps to convert a portion of the Company’s long-term debt from floating to fixed-rate debt. As of April 30, 2021, the Company has $532,025 as notional amounts hedged in relation to the floating-to-fixed interest rate swap. The notional amounts hedged will decrease on a quarterly basis to zero by August 1, 2023.Based on our interest rate exposure at April 30, 2021, assumed floating-rate debt levels throughout the next 12 months and the effects of our existing derivative instruments, a one-percentage-point increase in interest rates on(approximately 15.0% of our variable-rate debt. Depending upon the borrowing option chosen, the interest charged is based upon either the Base Rate or LIBOR of a selected time period, plus an applicable margin. If interest rates increased by 0.25% (which approximates a 10% increase of the weighted-average interest rate on our borrowings as of January 31, 2018), our results of operations and cash flows for the six months ended January 31, 2018at April 30, 2021) would not have been materially affected.result in an estimated $9,250 pre-tax reduction in net earnings over a one-year period.ITEM 4. CONTROLS AND PROCEDURESThe Company maintains “disclosure controls and procedures”,procedures,” as such term is defined under Exchange Act Rule13a-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 necessarily 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 January 31, 2018,April 30, 2021, there were no changes in our internal controlcontrols over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controlcontrols over financial reporting.51PART II – OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSThe 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 FACTORSThereAlthough risks specific to the COVID-19 pandemic are ongoing, including supply chain disruptions, there have been no material changes in those risks or any others from the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form10-K for the fiscal year ended July 31, 2017.29
2020.ITEM 6. EXHIBITS 3.110.1AmendedAmendment No. 1 to the Term Loan Credit Agreement dated as of March 25, 2021, by and RestatedBy-Laws of Thor Industries, Inc. (incorporated by reference to Exhibit 3.1among the Company, certain subsidiaries of the Company’s Current Report on Form8-K dated December 13, 2017)Company and JPMorgan Chase Bank, N.A., as Administrative Agent and Term B-1 Lender.31.1 31.131.2 31.232.1 32.132.2 32.2101.INS 101.INS101.SCH 101.SCH101.CAL 101.CAL101.PRE 101.PRE101.LAB 101.LAB101.DEF 101.DEF104 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’sCompany's Quarterly report on Form10-Q for the quarter ended January 31, 2018April 30, 2021 formatted in XBRL (“("eXtensible Business Reporting Language”Language"): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income and Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows, (iv) the Condensed Consolidated Statements of Changes in Stockholders' Equity and (iv)(v) related notes to these financial statements.3052SIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.THOR INDUSTRIES, INC.(Registrant)DATE: June 8, 2021 /s/ Robert W. Martin Robert W. Martin President and Chief Executive Officer DATE: June 8, 2021 THOR INDUSTRIES, INC.(Registrant)DATE: March 7, 2018/s/ Robert W. MartinRobert W. MartinPresident and Chief Executive OfficerDATE: March 7, 2018/s/ Colleen ZuhlColleen Zuhl31