UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended January 31, ~~2018.~~2019.

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

COMMISSION FILE NUMBER001-09235

LOGO

THOR INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)


		Delaware				93-0768752
		(State or other jurisdiction of ~~incorporation or organization)~~				(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)

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

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically, ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.


Large accelerated filer	☑	Accelerated filer	☐
~~Non-accelerated filer~~	☐Non-accelerated ~~(Do not check if a smaller reporting company)~~filer	~~Smaller reporting company~~	☐	Smaller reporting company	☐
Emerging growth company	☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).

Yes ☐ No ☑

As of February 28, ~~2018, 52,695,365~~2019, 55,063,473 shares of the registrant’s common stock, par value $0.10 per share, were outstanding.

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

ITEM 1.

FINANCIAL STATEMENTS

THOR INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


	January 31, 2018			July 31, 2017			January 31, 2019			July 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	109,775		$	223,258		$	305,833		$	275,249
Accounts receivable, trade, net		598,908			453,754			325,783			467,488
Accounts receivable, other, net		25,177			31,090			18,999			19,747
Inventories, net		590,363			460,488			561,842			537,909
Prepaid expenses and other		9,979			11,577
Prepaid income taxes, expenses and other								35,699			11,281

Total current assets		1,334,202			1,180,167			1,248,156			1,311,674


Property, plant and equipment, net		466,215			425,238			550,471			522,054


Other assets:
Goodwill		377,693			377,693			377,693			377,693
Amortizable intangible assets, net		416,112			443,466			363,231			388,348
Deferred income taxes, net		69,657			92,969			80,205			78,444
Equity investment in joint venture								48,264			48,463
Other		45,080			38,398			62,178			51,989

Total other assets		908,542			952,526			931,571			944,937

TOTAL ASSETS	$	2,708,959		$	2,557,931		$	2,730,198		$	2,778,665


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	354,499		$	328,601		$	219,881		$	286,974
Accrued liabilities:
Compensation and related items		105,882			100,114			59,183			97,122
Product warranties		243,310			216,781			257,869			264,928
Income and other taxes		13,818			51,211			16,285			19,345
Promotions and rebates		51,717			46,459			72,945			59,133
Product, property and related liabilities		19,332			16,521			13,092			17,815
Foreign currency forward contract liability								73,707			—
Other		28,559			21,359			37,681			24,013

Total current liabilities		817,117			781,046			750,643			769,330


Long-term debt		80,000			145,000
Unrecognized tax benefits		10,507			10,263			10,562			12,446
Other liabilities		53,406			45,082			62,062			59,148

Total long-term liabilities		143,913			200,345			72,624			71,594


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		6,277			6,260
Common stock – par value of $.10 per share; authorized 250,000,000 shares; issued 62,933,415 and 62,765,824 shares, respectively								6,293			6,277
Additionalpaid-in capital		245,390			235,525			263,899			252,204
Retained earnings		1,839,990			1,670,826			1,984,885			2,022,988
Less treasury shares of 10,070,459 and 10,011,069, respectively, at cost		(343,728	)		(336,071	)
Less treasury shares of 10,126,434 and 10,070,459, respectively, at cost								(348,146	)		(343,728	)

Total stockholders’ equity		1,747,929			1,576,540			1,906,931			1,937,741

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	2,708,959		$	2,557,931		$	2,730,198		$	2,778,665

See Notes to the Condensed Consolidated Financial Statements.

THOR INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

FOR THE THREE AND SIX MONTHS ENDED JANUARY 31, ~~2018~~2019 AND ~~2017~~2018 (UNAUDITED)


	Three Months Ended January 31,				Six Months Ended January 31,				Three Months Ended January 31,					Six Months Ended January 31,
	2018		2017		2018		2017		2019			2018		2019			2018
Net sales	$	1,971,560	$	1,588,525	$	4,203,228	$	3,297,056	$	1,290,576		$	1,971,560	$	3,046,552		$	4,203,228
Cost of products sold		1,701,232		1,376,823		3,599,715		2,848,602		1,148,980			1,701,232		2,697,700			3,599,715

Gross profit		270,328		211,702		603,513		448,454		141,596			270,328		348,852			603,513
Selling, general and administrative expenses		117,088		96,969		251,351		199,279		85,069			117,088		187,762			251,351
Amortization of intangible assets		13,796		15,279		27,354		33,494		12,526			13,796		25,117			27,354
Acquisition-related costs										42,059			—		99,148			—
Interest income		401		177		782		330		1,675			401		2,897			782
Interest expense		1,354		2,486		2,766		5,046		859			1,354		1,735			2,766
Other income, net		2,574		1,220		5,332		3,200
Other income (expense), net										(885	)		2,574		(4,597	)		5,332

Income before income taxes		141,065		98,365		328,156		214,165		1,873			141,065		33,390			328,156
Income taxes		61,313		33,583		119,998		70,638		7,290			61,313		24,854			119,998

Net income and comprehensive income	$	79,752	$	64,782	$	208,158	$	143,527
Net and comprehensive income (loss)									$	(5,417	)	$	79,752	$	8,536		$	208,158


Weighted-average common shares outstanding:
Basic		52,694,680		52,582,134		52,653,303		52,543,050		52,806,981			52,694,680		52,766,739			52,653,303
Diluted		52,861,140		52,740,959		52,839,752		52,723,450		52,867,687			52,861,140		52,883,645			52,839,752

Earnings per common share:
Earnings (loss) per common share:
Basic	$	1.51	$	1.23	$	3.95	$	2.73	$	(0.10	)	$	1.51	$	0.16		$	3.95
Diluted	$	1.51	$	1.23	$	3.94	$	2.72	$	(0.10	)	$	1.51	$	0.16		$	3.94

Regular dividends declared and paid per common share	$	0.37	$	0.33	$	0.74	$	0.66	$	0.39		$	0.37	$	0.78		$	0.74

See Notes to the Condensed Consolidated Financial Statements.

THOR INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED JANUARY 31, ~~2018~~2019 AND ~~2017~~2018 (UNAUDITED)


	Six Months Ended January 31,				Six Months Ended January 31,
	2018		2017		2019			2018
Cash flows from operating activities:
Net income	$	208,158	$	143,527	$	8,536		$	208,158
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		18,619		16,911		21,463			18,619
Amortization of intangibles		27,354		33,494		25,117			27,354
Amortization of debt issuance costs		785		785		785			785
Foreign currency forward contract loss						73,707			—
Deferred income tax provision (benefit)		23,312		(4,291)		(84)			23,312
Gain on disposition of property, plant and equipment		(1,482)		(2,262)		(29)			(1,482)
Stock-based compensation expense		8,731		5,892		9,486			8,731
Changes in assets and liabilities (excluding acquisitions):
Changes in assets and liabilities:
Accounts receivable		(138,930)		(96,712)		142,453			(138,930)
Inventories		(129,875)		(73,729)		(23,933)			(129,875)
Prepaid income taxes, expenses and other		(7,140)		(8,455)		(31,693)			(7,140)
Accounts payable		27,235		28,591		(62,208)			27,235
Accrued liabilities		11,283		6,353		(30,213)			11,283
Long-term liabilities and other		8,795		2,712		1,243			8,795

Net cash provided by operating activities		56,845		52,816		134,630			56,845


Cash flows from investing activities:
Purchases of property, plant and equipment		(63,003)		(50,924)		(54,802)			(63,003)
Proceeds from dispositions of property, plant and equipment		3,552		4,554		66			3,552
Acquisitions		—		(5,039)
Equity investment in joint venture						(3,500)			—
Other		960		(2,213)		—			960

Net cash used in investing activities		(58,491)		(53,622)		(58,236)			(58,491)


Cash flows from financing activities:
Principal payments on revolving credit facility		(65,000)		(35,000)		—			(65,000)
Regular cash dividends paid		(38,994)		(34,704)		(41,189)			(38,994)
Principal payments on capital lease obligations		(186)		(165)		(203)			(186)
Payments related to vesting of stock-based awards		(7,657)		(4,572)		(4,418)			(7,657)

Net cash used in financing activities		(111,837)		(74,441)		(45,810	)		(111,837	)


Net decrease in cash and cash equivalents		(113,483)		(75,247)
Net increase (decrease) in cash and cash equivalents						30,584			(113,483)
Cash and cash equivalents, beginning of period		223,258		209,902		275,249			223,258

Cash and cash equivalents, end of period	$	109,775	$	134,655	$	305,833		$	109,775


Supplemental cash flow information:
Income taxes paid	$	137,169	$	97,180	$	57,728		$	137,169
Interest paid	$	2,114	$	4,466	$	1,055		$	2,114

Non-cash transactions:
Non-cash investing and financing transactions:
Capital expenditures in accounts payable	$	4,929	$	2,904	$	490		$	4,929

See Notes to the Condensed Consolidated Financial Statements.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(All dollar amounts presented in thousands except share and per share ~~data)~~data or except as otherwise specified)

1.	Nature of Operations and Accounting Policies

Nature of Operations

Thor Industries, Inc. was founded in 1980 and, through its subsidiaries (collectively, the “Company” or “Thor”), currently manufactures a wide range of recreational vehicles (“RVs”) at various manufacturing facilities located 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 and Canada. As discussed in more detail in Note 17 to the Condensed Consolidated Financial Statements, on September 18, 2018, the Company entered into a definitive agreement to acquire the Erwin Hymer Group SE (“Erwin Hymer Group”), the largest RV manufacturer in Europe by revenue, and on February 1, 2019 the parties closed on this transaction. Unless the context requires or indicates otherwise, all references to ~~“Thor”,~~“Thor,” the ~~“Company”, “we”,~~“Company,” “we,” “our” and “us” refer to Thor Industries, Inc. and its subsidiaries.

The July 31, ~~2017~~2018 amounts are derived from the annual audited financial statements. 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.~~2018. Due to seasonality within the recreational vehicle industry, among other factors, annualizing the results of operations for the six months ended January 31, ~~2018~~2019 would not necessarily be indicative of the results expected for a full fiscal ~~year, and recreational vehicle sales are historically lowest during the second fiscal quarter ending January 31.~~year.

Adoption of Revenue Recognition Accounting ~~Pronouncements~~Standard

In ~~January 2017,~~May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)No. 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.

The Company adopted ASUNo. 2014-09, and all the related amendments, as of August 1, 2018, using the modified retrospective method related to all contracts as of the date of adoption. The cumulative effect of the adoption was recognized as an increase to accrued promotions and rebates of $7,127, an increase of $1,677 in deferred income tax assets, net and a $5,450 decrease to retained earnings as of August 1, 2018 on the Condensed Consolidated Balance Sheet and as reflected in Note 14 to the Condensed Consolidated Financial Statements. As of and for the three andsix-month periods ended January 31, 2019, accrued promotions and rebates increased $773 and $1,506, respectively, on apre-tax basis and Net sales were reduced by the same amount as a result of the application of this new standard. The comparative financial statements for prior periods have not been adjusted.

The adoption impact is a result of a change in the accounting for certain sales incentives, which were historically recorded as a reduction of revenue at the later of the time products were sold or the date the incentive was offered. Upon adoption of ASUNo. 2014-09, these incentives are now estimated and recorded at the time of sale, which is primarily upon shipment to customers. This new standard only changes the timing of when these sales incentives are recognized, and does not change the total amount of revenue recognized. The Company did not elect to separately evaluate contract modifications occurring before the adoption date. See Note 16 to the Condensed Consolidated Financial Statements for further discussion of the Company’s revenue recognition policies and practices.

Other Accounting Pronouncements Not Yet Adopted

In January 2017, the FASB issued ASUNo. 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge (referred to as Step 2 in the goodwill impairment test). Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment charge equal to that excess shall be recognized, not to exceed the amount of goodwill allocated to the reporting unit. This ASU is effective for annual and any interim impairment tests for periods beginning after December 15, 2019, with early adoption permitted after January 1, 2017. This ASU is effective for the Company in its fiscal year 2021 beginning on August 1, 2020. The Company is currently evaluating the impact 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 will have on its consolidated 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. ASU~~No. 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 no material impact on the Condensed Consolidated Financial Statements.~~

~~In 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. ASU~~No. 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 the 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.	~~Acquisition~~

~~Jayco, Corp.~~

On June 30, 2016, the Company closed on a Stock Purchase Agreement (“Jayco SPA”) for the acquisition of all the issued and outstanding capital stock of towable and motorized recreational vehicle manufacturer Jayco, Corp. (“Jayco”) for initial cash consideration of $576,060, subject to adjustment. This acquisition was funded from the Company’s cash on hand and $360,000 from an asset-based revolving credit facility as more fully described in Note 11 to the Condensed Consolidated Financial Statements. The final purchase price adjustment of $5,039 was based on the final determination of net assets as of the June 30, 2016 closing date and was paid during the first quarter of fiscal 2017. Jayco 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. The Company purchased Jayco to complement its existing towable and motorized RV product offerings and dealer base.

~~The following table summarizes the final fair values assigned to the Jayco net assets acquired, which were based on internal and independent external valuations:~~

Cash
   $ 18,409
Other current assets
   258,158
Property, plant and equipment
   80,824
Dealer network
   261,100
Trademarks
   92,800
Backlog
   12,400
Goodwill
   74,184
Current liabilities
   (216,776 )


Total fair value of net assets acquired
   581,099
Less cash acquired
   (18,409 )


Total cash consideration for acquisition, less cash acquired
   $ 562,690

On the acquisition date, amortizable intangible assets had a weighted-average useful life of 19.3 years. The dealer network was valued based on the Discounted Cash Flow Method and is amortized on an accelerated basis over 20 years. The trademarks were valued on the Relief from Royalty Method and are amortized on a straight-line basis over 20 years. Backlog was valued based on the Discounted Cash Flow Method and was amortized on a straight-line basis over 3 months. Goodwill is deductible for tax purposes.

3.	Business Segments

The Company has two reportable segments, both related to recreational vehicles: (1) towables 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)~~Venture RV). 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.

The operations of the Company’s Postle subsidiary are included in “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 established~~arm’s-length~~ transfer prices generally consistent with the selling prices of extrusion components to third-party customers.

All manufacturing is currently conducted within the United States. Total assets include those assets used in the operation of each reportable andnon-reportable segment, and the Corporate assets consist primarily of cash and cash equivalents, deferred ~~net~~ income ~~tax and~~taxes, 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
Recreational vehicles

Towables
   $ 1,373,118    $ 1,082,249    $ 2,991,619    $ 2,293,122
Motorized
   559,909    474,972    1,126,520    936,426








Total recreational vehicles
   1,933,027    1,557,221    4,118,139    3,229,548
Other
   68,013    53,891    150,932    112,887
Intercompany eliminations
   (29,480 )    (22,587 )    (65,843 )    (45,379 )








Total
   $ 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
Recreational vehicles

Towables
   $ 116,728    $ 78,000    $ 275,579    $ 172,173
Motorized
   37,538    28,488    75,124    57,411








Total recreational vehicles
   154,266    106,488    350,703    229,584
Other, net
   5,290    5,696    13,773    12,074
Corporate
   (18,491 )    (13,819 )    (36,320 )    (27,493 )








Total
   $ 141,065    $ 98,365    $ 328,156    $ 214,165








Total assets:    January 31, 2018    July 31, 2017
Recreational vehicles

Towables
   $ 1,689,874    $ 1,535,029
Motorized
   625,140    500,761





Total recreational vehicles
   2,315,014    2,035,790
Other, net
   159,630    156,996
Corporate
   234,315    365,145





Total
   $ 2,708,959    $ 2,557,931


	Three Months Ended January 31,						Six Months Ended January 31,
Net sales:	2019			2018			2019			2018
Recreational vehicles
Towables	$	881,564		$	1,373,118		$	2,160,662		$	2,991,619
Motorized		371,495			559,909			802,693			1,126,520

Total recreational vehicles		1,253,059			1,933,027			2,963,355			4,118,139
Other		55,114			68,013			128,962			150,932
Intercompany eliminations		(17,597	)		(29,480	)		(45,765	)		(65,843	)

Total	$	1,290,576		$	1,971,560		$	3,046,552		$	4,203,228


	Three Months Ended January 31,						Six Months Ended January 31,
Income (loss) before income taxes:	2019			2018			2019			2018
Recreational vehicles
Towables	$	34,060		$	116,728		$	108,610		$	275,579
Motorized		17,205			37,538			38,917			75,124

Total recreational vehicles		51,265			154,266			147,527			350,703
Other, net		5,950			5,290			11,860			13,773
Corporate		(55,342	)		(18,491	)		(125,997	)		(36,320	)

Total	$	1,873		$	141,065		$	33,390		$	328,156


Total assets:	January 31, 2019			July 31, 2018
Recreational vehicles
Towables	$	1,541,673		$	1,654,361
Motorized		474,717			492,830

Total recreational vehicles		2,016,390			2,147,191
Other, net		163,964			167,965
Corporate		549,844			463,509

Total	$	2,730,198		$	2,778,665

   Three Months Ended
January 31,    Six Months Ended
January 31,
Depreciation and intangible amortization expense:    2018    2017    2018    2017
Recreational vehicles

Towables
   $ 17,223    $ 18,238    $ 34,016    $ 39,164
Motorized
   2,909    2,246    5,637    4,589








Total recreational vehicles
   20,132    20,484    39,653    43,753
Other
   2,748    3,012    5,557    6,016
Corporate
   395    314    763    636








Total
   $ 23,275    $ 23,810    $ 45,973    $ 50,405








   Three Months Ended
January 31,    Six Months Ended
January 31,
Capital acquisitions:    2018    2017    2018    2017
Recreational vehicles

Towables
   $ 18,821    $ 15,453    $ 36,413    $ 36,318
Motorized
   1,754    6,889    14,069    12,045








Total recreational vehicles
   20,575    22,342    50,482    48,363
Other
   1,983    314    2,593    610
Corporate
   7,016    1,141    8,591    1,317








Total
   $ 29,574    $ 23,797    $ 61,666    $ 50,290


	Three Months Ended January 31,				Six Months Ended January 31,
Depreciation and intangible amortization expense:	2019		2018		2019		2018
Recreational vehicles
Towables	$	16,971	$	17,223	$	33,602	$	34,016
Motorized		3,443		2,909		6,879		5,637

Total recreational vehicles		20,414		20,132		40,481		39,653
Other		2,693		2,748		5,267		5,557
Corporate		415		395		832		763

Total	$	23,522	$	23,275	$	46,580	$	45,973


	Three Months Ended January 31,				Six Months Ended January 31,
Capital acquisitions:	2019		2018		2019		2018
Recreational vehicles
Towables	$	14,255	$	18,821	$	36,497	$	36,413
Motorized		2,809		1,754		10,228		14,069

Total recreational vehicles		17,064		20,575		46,725		50,482
Other		287		1,983		2,731		2,593
Corporate		425		7,016		461		8,591

Total	$	17,776	$	29,574	$	49,917	$	61,666

4.3.	Earnings Per Common Share

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


	Three Months Ended January 31,				Six Months Ended January 31,				Three Months Ended January 31,				Six Months Ended January 31,
	2018		2017		2018		2017		2019		2018		2019		2018
Weighted-average shares outstanding for basic earnings per share		52,694,680		52,582,134		52,653,303		52,543,050		52,806,981		52,694,680		52,766,739		52,653,303
Unvested restricted stock and restricted stock units		166,460		158,825		186,449		180,400
Unvested restricted stock units										60,706		166,460		116,906		186,449

Weighted-average shares outstanding assuming dilution		52,861,140		52,740,959		52,839,752		52,723,450		52,867,687		52,861,140		52,883,645		52,839,752

AtFor the three months ended January 31, ~~2018~~2019 and ~~2017,~~2018, the Company had ~~35,149~~317,234 and ~~27,742, respectively, of~~35,149 unvested restricted stock units outstanding, respectively, which were excluded from this calculation as their effect would be antidilutive. For the six months ended January 31, 2019 and 2018, the Company had 234,756 and 40,921 unvested restricted stock units outstanding, respectively, which were excluded from this calculation as their effect would be antidilutive.

5.4.	Investments and Fair Value Measurements

The Company assesses the inputs used to measure the fair value of certain assets and liabilities using a three-level hierarchy as prescribed in ASC 820, “Fair Value Measurements and ~~Disclosures”,~~Disclosures,” and as discussed in Note 910 in the Notes to the Consolidated Financial Statements in our fiscal ~~2017~~2018 Form10-K.

The financial assets that were accounted for at fair value on a recurring basis at January 31, ~~2018~~2019 and July 31, ~~2017, all using Level 1 inputs,~~2018 are as follows:


	January 31, 2018		July 31, 2017		Input Level	January 31, 2019		July 31, 2018
Cash equivalents	$	47,258	$	176,663	Level 1	$	148,023	$	230,319
Deferred compensation plan assets	$	36,776	$	28,095
Deferred compensation plan assets and liabilities					Level 1	$	46,744	$	43,316
Foreign currency forward contract liability					Level 2	$	73,707	$	—

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

Deferred compensation plan assets represent 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 compensation plan asset balances are recorded as a component of Other long-term assets in the Condensed Consolidated Balance Sheets. An equal and offsetting liability is also recorded in regards to the deferred compensation plan as a component of Other long-term liabilities in the Condensed Consolidated Balance Sheets. Changes in the fair value of the plan assets and the related liability are reflected in Other income, net and Selling, general and administrative expenses, respectively, in the Condensed Consolidated Statements of Income and Comprehensive Income.

See Note 15 to the Condensed Consolidated Financial Statements for a discussion of the foreign currency forward contract liability, including further information as to the inputs used to determine fair value.

6.5.	Inventories

Major classifications of inventories are as follows:


	January 31, 2018			July 31, 2017			January 31, 2019			July 31, 2018
Finished goods – RV	$	54,722		$	24,904		$	106,225		$	44,998
Finished goods – other		34,177			27,862			29,339			35,320
Work in process		144,714			117,319			118,361			124,703
Raw materials		257,765			214,518			245,197			258,429
Chassis		135,555			109,555			107,969			116,308

Subtotal		626,933			494,158			607,091			579,758
Excess of FIFO costs over LIFO costs		(36,570	)		(33,670	)		(45,249	)		(41,849	)

Total inventories, net	$	590,363		$	460,488		$	561,842		$	537,909

Of the ~~$626,933~~$607,091 and ~~$494,158~~$579,758 of inventories at January 31, ~~2018~~2019 and July 31, ~~2017, $351,612~~2018, $327,097 and ~~$284,897,~~$305,990, respectively, was valued on thelast-in,first-out (LIFO) basis, and ~~$275,321~~$279,994 and ~~$209,261,~~$273,768, respectively, was valued on thefirst-in,first-out (FIFO) method.

7.6.	Property, Plant and Equipment

Property, plant and equipment is stated at cost, net of accumulated depreciation, and consists of the following:


	January 31, 2018			July 31, 2017			January 31, 2019			July 31, 2018
Land	$	53,045		$	48,812		$	62,184		$	57,413
Buildings and improvements		415,794			380,139			499,252			468,824
Machinery and equipment		180,559			161,724			211,136			197,294

Total cost		649,398			590,675			772,572			723,531
Less accumulated depreciation		(183,183	)		(165,437	)		(222,101	)		(201,477	)

Property, plant and equipment, net	$	466,215		$	425,238		$	550,471		$	522,054

Property, plant and equipment at both January 31, ~~2018~~2019 and July 31, ~~2017~~2018 includes buildings and improvements under capital leases of $6,527 and related amortization included in accumulated depreciation of ~~$1,496~~$2,040 and ~~$1,224~~$1,768 at January 31, ~~2018~~2019 and July 31, ~~2017,~~2018, respectively.

8.7.	Intangible Assets and Goodwill

The components of amortizable intangible assets are as follows:


	Weighted-Average
	Remaining		January 31, 2018							July 31, 2017								Weighted-Average
	Life in Years at		Cost				Accumulated			Cost				Accumulated				Remaining				January 31, 2019								July 31, 2018
	January 31, 2018					Amortization				Cost			Amortization				Life in Years at January 31, 2019				Cost				Accumulated Amortization				Cost				Accumulated Amortization
Dealer networks/customer relationships		16	Cost	$	404,960			$	124,519		$	404,960			$	101,795				15			$	404,960			$	168,000			$	404,960			$	147,077
Trademarks		18		147,617				21,434			147,617				17,570				17				146,117				27,907				146,117				24,364
Design technology and other intangibles		8		19,300				9,925			19,300				9,203				7				18,200				10,161				18,200				9,555
Non-compete agreements		1		450				337			450				293				Less than 1				450				428				450				383

Total amortizable intangible assets			$	572,327			$	156,215		$	572,327			$	128,861							$	569,727			$	206,496			$	569,727			$	181,379

Estimated annual amortization expense is as follows:


For the fiscal year ending July 31, 2018	$	55,118
For the fiscal year ending July 31, 2019		50,043	$	50,043
For the fiscal year ending July 31, 2020		46,194		46,194
For the fiscal year ending July 31, 2021		42,860		42,860
For the fiscal year ending July 31, 2022		37,753		37,753
For the fiscal year ending July 31, 2023 and thereafter		211,498
For the fiscal year ending July 31, 2023				30,291
For the fiscal year ending July 31, 2024 and thereafter				181,207

	$	443,466	$	388,348

Of the recorded goodwill of $377,693 at both January 31, ~~2018~~2019 and July 31, ~~2017,~~2018, $334,822 relates to the towable recreational vehicle reportable segment and $42,871 relates to the ~~other~~Othernon-reportable segment.

8.	Equity Investment

As discussed in the Company’s fiscal 2018 Form10-K, in February 2018, the Company formed a joint venture with Tourism Holdings Limited (“thl”) called TH2connect, LLC (“TH2”).

The Company’s investment in TH2 is accounted for under the equity method of accounting. Additional investments were made in TH2 by both Thor andthl of $3,500 in the three andsix-month periods ended January 2019. The Company’s share of the losses of this investment, which are included in its operating results for the three andsix-month periods ended January 31, 2019, were $2,216 and $3,699, respectively, and are included in Other income (expense), net in the Condensed Consolidated Statements of Income and Comprehensive Income.

9.	Concentration of Risk

One dealer, FreedomRoads, LLC, accounted for 22% ~~and 18%~~ of the Company’s consolidated net sales for both of thesix-month periods ended January 31, ~~2018~~2019 and January 31, ~~2017, respectively.~~2018. Sales to this dealer are reported within both the towables and motorized segments. This dealer also accounted for ~~20%~~28% of the Company’s consolidated trade accounts receivable at January 31, ~~2018~~2019 and ~~30%~~26% at July 31, ~~2017.~~2018. The loss of this dealer could have a ~~significant~~material effect on the Company’s business.

10.	Product Warranties

~~The~~As discussed in the Company’s fiscal 2018 Form10-K, the 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 ~~reserves~~liabilities during the indicated periods are as follows:

   Three Months Ended
January 31,    Six Months Ended
January 31,
   2018    2017    2018    2017
Beginning balance
   $ 231,999    $ 208,988    $ 216,781    $ 201,840
Provision
   63,209    44,149    127,042    96,096
Payments
   (51,898 )    (43,964 )    (100,513 )    (88,763 )








Ending balance
   $ 243,310    $ 209,173    $ 243,310    $ 209,173


	Three Months Ended January 31,						Six Months Ended January 31,
	2019			2018			2019			2018
Beginning balance	$	271,749		$	231,999		$	264,928		$	216,781
Provision		45,080			63,209			114,847			127,042
Payments		(58,960	)		(51,898	)		(121,906	)		(100,513	)

Ending balance	$	257,869		$	243,310		$	257,869		$	243,310

11.	Long-Term Debt

The Company has a five-year credit agreement, which was entered into on June 30, 2016 and matures on June 30, 2021. See Note 1112 in the Notes to the Consolidated Financial Statements in our fiscal ~~2017~~2018 Form10-K for details regarding the credit agreement. ~~Borrowings~~There were no borrowings outstanding onunder this facility ~~totaled $80,000~~ at January 31, ~~2018 and $145,000 at~~2019 or July 31, ~~2017.~~2018, or at any time during the three andsix-month periods ended January 31, 2019. As of January 31, ~~2018,~~2019, the available and unused credit line under the revolver was ~~$417,675,~~$406,327, and the Company was in compliance with the financial covenant in the credit agreement.

For the three-month periods ended January 31, 2018 and January 31, 2017, the total interest expense on the facility was $547 and $1,826, respectively, and the weighted-average interest rate on borrowings from the facility was 2.70% and 2.23%, respectively. For the~~six-month~~ periods ended January 31, 2018 and January 31, 2017, the total interest expense on the facility was $1,158 and $3,704, respectively, and the weighted-average interest rate on borrowings from the facility was 2.63% and 2.19%, respectively. The Company incurred fees to secure the facility of $7,850 in fiscal 2016, and those fees are being amortized ratably over the five-year term of the agreement, or a shorter period if the credit agreement period is shortened for any reason. The Company recorded charges related to the amortization of ~~these~~the fees incurred to obtain this facility, which are classified as interest expense, of $392 for ~~both~~ the three-month periods ended January 31, ~~2018~~2019 and January 31, ~~2017,~~2018, and $785 for ~~both~~ thesix-month periods ended January 31, ~~2018~~2019 and January 31, ~~2017.~~2018. The unamortized ~~balances~~balance of these facility fees ~~were $5,364~~was $3,794 at January 31, ~~2018~~2019 and ~~$6,149~~$4,579 at July 31, ~~2017,~~2018, and ~~are~~is included in Other long-term assets in the Condensed Consolidated Balance Sheets.

~~The carrying value~~This debt facility was terminated on February 1, 2019 and replaced by the new financing obtained in connection with the acquisition of the ~~Company’s long-term debt at January 31, 2018 approximates fair value~~Erwin Hymer Group as discussed in Note 17 to the entire balance is subject to variable interest rates that the Company believes are market rates for a similarly situated company. The fair value of debt is largely estimated using level 2 inputs as defined by ASC 820.Condensed Consolidated Financial Statements.

12.	Provision for Income Taxes

The overall effective income tax rate for the three months ended January 31, ~~2018~~2019 was 43.5% compared with 34.1% for the three 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 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 a~~non-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~~389.1%, 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.

~~The overall~~ effective income tax rate for the six months ended January 31, ~~2018~~2019 was ~~36.6% compared with 33.0%~~74.4%. The effective rates for the ~~six months ended January 31, 2017. Income tax expense for~~periods presented include the ~~six months ended January 31, 2018 included approximately $34,000~~effect of ~~additional income tax expense resulting from~~thenon-deductible foreign currency forward contract loss, as noted in Note 15 to the ~~revaluation~~Condensed Consolidated Financial Statements, and the effects of the ~~Company’s net deferred tax assets in connection with~~enactment of the Tax ~~Act. Income tax expense for~~Cuts and Jobs Act on December 22, 2017, which include, but are not limited to, a reduction in the~~six-month~~ ~~period ended January 31, 2018 also reflects the use of the estimated blended~~ US federal corporate income tax rate to 21.0%, the repeal of ~~26.9% as a result~~the domestic production deduction, and expanded limitations on the deductibility of executive compensation. The Company has now completed its accounting for the income tax effects of the Tax Cuts and Jobs Act. Under current federal income tax law, the foreign currency forward contract was characterized as a component of the acquisition of the Erwin Hymer Group discussed in Note 17 to the Condensed Consolidated Financial Statements. As a result, the foreign currency forward contract loss recognized for financial statement purposes isnon-deductible for federal income tax purposes.

~~The~~

Within the next 12 months, the Company anticipates a decrease of approximately ~~$2,730~~$4,000 in unrecognized tax benefits, and ~~$370~~$900 in accrued interest related to unrecognized tax benefits recorded as of January 31, ~~2018, within the next 12 months~~2019, 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 2015 ~~and 2016~~through 2017 remain open for federal income tax purposes, and fiscal years 2013 ~~2014, 2015 and 2016~~through 2017 remain open for state and Canadian income tax purposes. The State of Indiana completed an exam of the Company ~~and its subsidiaries file a consolidated U.S. federal income tax return and multiple state income tax returns. The Company is currently under examination by certain state authorities~~ for the fiscal years ended July 31, 2013 through 2015. A formal protest was submitted in response to the exam. The Company is also currently under exam by other state tax authorities for the fiscal years ended July 31, 2015 through 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 Matters

The Company’s total commercial commitments under standby repurchase obligations on dealer inventory financing, as discussed in Note ~~13 in the Notes~~14 to the Consolidated Financial Statements in our fiscal ~~2017~~2018 Form10-K, were ~~$3,076,327~~$2,587,944 and ~~$2,200,544~~$2,748,465 as of January 31, ~~2018~~2019 and July 31, ~~2017,~~2018, respectively. The commitment term is generally up to eighteen months.

~~The~~As discussed in the Company’s fiscal 2018 Form10-K, 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~~$7,124 and ~~$6,345~~$7,400 as of January 31, ~~2018~~2019 and July 31, ~~2017,~~2018, respectively, which are included in Other current liabilities in the Condensed Consolidated Balance Sheets.

Losses incurred related to repurchase agreements during the ~~three-month~~six-month periods ended January 31, ~~2018~~2019 and January 31, ~~2017~~2018 were not ~~significant.~~material. Based on current market conditions, the Company believes that any future losses under these agreements will not have a ~~significant~~material effect on the Company’s consolidated financial position, results of operations or cash flows.

The Company is also involved in certain litigation arising out of its operations in the normal course of its business, most of which is based upon state “lemon ~~laws”,~~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, 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.

14.	Stockholders’ Equity

Stock-Based Compensation

Under the Company’s restricted stock unit (“RSU”) program, as discussed in Note 1617 in the Notes to the Consolidated Financial Statements in our fiscal ~~2017~~2018 Form10-K, RSU awards have been approved each October related to the financial performance 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.

Total expense recognized in the three-month periods ended January 31, ~~2018~~2019 and January 31, ~~2017~~2018 for these restricted stock unit awards and other stock-based compensation was ~~$4,413~~$4,956 and ~~$3,154,~~$4,413, respectively. Total expense recognized in thesix-month periods ended January 31, ~~2018~~2019 and January 31, ~~2017~~2018 for these restricted stock unit awards and other stock-based compensation was $9,486 and $8,731, ~~and $5,892,~~ respectively.

For the restricted stock units that vested during thesix-month periods ended January 31, ~~2018~~2019 and January 31, ~~2017,~~2018, portions of the vested shares awarded were withheld as treasury shares to cover the recipients’ estimated withholding taxes. Tax payments made by the Company related to these stock-based awards for the six months ended January 31, ~~2018~~2019 and January 31, ~~2017~~2018 totaled $4,418 and $7,657, respectively.

Share Repurchase Program

As discussed in the Company’s 2018 Form10-K, on June 19, 2018, the Company’s Board of Directors authorized Company management to utilize up to $250,000 to purchase shares of the Company’s common stock through June 19, 2020. There were no repurchases under this program during the three orsix-month periods ended January 31, 2019.

Retained Earnings

The components of the change in retained earnings are as follows:


Balance as of July 31, 2018	$	2,022,988
Cumulative effect of the adoption of ASU No. 2014-09, net of tax		(5,450	)
Net income		8,536
Dividends declared and paid		(41,189	)

Balance as of January 31, 2019	$	1,984,885

The cumulative effect of the change in accounting principle relates to the adoption of the new revenue recognition standard as discussed in Note 1 to the Condensed Consolidated Financial Statements.

The dividends declared and ~~$4,572, respectively.~~paid total of $41,189 represents the regular quarterly dividend of $0.39 per share for each of the first two quarters of fiscal 2019.

15.	~~Subsequent Event~~Foreign Currency Forward Contract

~~On February 15,~~As described in more detail in Note 17 to the Condensed Consolidated Financial Statements, on September 18, 2018, the Company ~~announced~~entered into a definitive agreement to acquire the ~~formation~~Erwin Hymer Group SE (“Erwin Hymer Group”), the largest RV manufacturer in Europe by revenue. The purchase price was to be paid with a combination of Thor common stock and approximately 1.7 billion Euro in cash, and therefore changes in the Euro/USD exchange rate between the September 18, 2018 agreement date and the closing date could cause the purchase price to fluctuate, affecting the Company’s cash flows.

In order to reduce its exposure to foreign currency exchange rate changes in relation to the acquisition of the Erwin Hymer Group, the Company entered into a ~~joint venture with Tourism Holdings Limited (“~~~~thl~~~~”) called TH2. The Company and~~~~thl~~ ~~each have a 50% ownership position in TH2 and equal representation~~deal-contingent, foreign currency forward contract on the ~~board~~agreement date in the amount of ~~directors of TH2. The Company contributed cash totaling approximately $47,000~~1.625 billion Euro. Hedge accounting was not applied to ~~TH2~~this instrument, and therefore all changes in ~~early March 2018 while~~~~thl~~ ~~contributed various assets with a~~fair value during the period are reported in current period earnings.

The fair value of ~~approximately $47,000.~~the foreign currency forward contract, using Level 2 inputs, was $73,707 as of January 31, 2019, and is included as a current liability in the Condensed Consolidated Balance Sheet. The Level 2 inputs used in determining fair value are based on information obtained from third-party sources and include the spot rate and market-forward points. The liability was settled in connection with the close of the Erwin Hymer Group acquisition on February 1, 2019. The Company recognizednon-cash charges related to this contract of $31,152 and $73,707 during the three andsix-month periods ended January 31, 2019, respectively, which are included in Acquisition-related costs in the Condensed Consolidated Statements of Income and Comprehensive Income.

16.	Revenue Recognition

Revenue is recognized as performance obligations under the terms of contracts with customers are satisfied. The Company’s ~~investment~~contracts have a single performance obligation of providing the promised goods (recreational vehicles and extruded aluminum components), which is satisfied when control of the goods is transferred to the customer. Dealers do not have a right of return. All warranties provided are assurance-type warranties.

For recreational vehicle sales, the Company recognizes revenue when all performance obligations have been satisfied and control of the product is transferred to the dealer in ~~TH2 was funded entirely~~accordance with shipping terms, primarily FOB shipping point. For sales made to dealers financing their purchases under flooring arrangements with banks or finance companies, revenue is not recognized until written or oral financing approval has been received from the floorplan lender. The Company recognizes revenue on credit sales upon product shipment, and sales withcash-on-delivery terms upon receiving payment, at which points the criteria for establishing a contract have been fully satisfied.

Revenue from the sale of extruded aluminum components is recognized when all performance obligations have been satisfied and control of the products is transferred to the customer, which is generally upon delivery to the customer’s location.

Revenue is measured as the amount of consideration to which the Company expects to be entitled in exchange for the Company’s products. The amount of revenue recognized includes adjustments for any variable consideration, such as sales discounts, sales allowances, promotions, rebates and other sales incentives which are included in the transaction price and allocated to each performance obligation based on the standalone selling price. The Company estimates variable consideration based on the expected value of total consideration to which customers are likely to be entitled to based primarily on historical experience and current market conditions. Included in the estimate is an assessment as to whether any variable consideration is constrained. Revenue estimates are adjusted at the earlier of a change in the expected value of consideration or when the consideration becomes fixed. During the three andsix-month periods ended January 31, 2019, adjustments to revenue from performance obligations satisfied in prior periods, which relate primarily to changes in estimated variable consideration, were immaterial.

Amounts billed to customers related to shipping and handling activities are included in net sales. In adopting ASU No. 2014-09, the Company elected to account for shipping and handling costs as fulfillment activities, and these costs are included in cost of sales.

The table below disaggregates revenue to the level that the Company believes best depicts how the nature, amount, timing and uncertainty of the Company’s revenue and cash ~~on hand.~~ flows are affected by economic factors. All revenue streams are considered point in time.


	Three Months Ended January 31,						Six Months Ended January 31,
	2019			2018			2019			2018
NET SALES:
Towables
Travel Trailers and Other	$	535,779		$	829,318		$	1,297,263		$	1,822,922
Fifth Wheels		345,785			543,800			863,399			1,168,697

Total Towables		881,564			1,373,118			2,160,662			2,991,619
Motorized
Class A		173,488			257,092			400,762			509,515
Class C		182,502			278,853			366,886			565,519
Class B		15,505			23,964			35,045			51,486

Total Motorized		371,495			559,909			802,693			1,126,520
Other, primarily aluminum extruded components		55,114			68,013			128,962			150,932
Intercompany eliminations		(17,597	)		(29,480	)		(45,765	)		(65,843	)

Total	$	1,290,576		$	1,971,560		$	3,046,552		$	4,203,228

Other Practical Expedients

We do not disclose information about the transaction price allocated to the remaining performance obligations at period end because our contracts generally have original expected durations of one year or less. In addition, we expense when incurred contract acquisition costs, primarily sales commissions, because the amortization period would be one year or less.

17.	Subsequent Event—Erwin Hymer Group Acquisition

On September 18, 2018, the Company and the shareholders of Erwin Hymer Group SE (the “Erwin Hymer Group’) announced that they entered into a definitive agreement for the Company to acquire Erwin Hymer Group (“EHG”). EHG is headquartered in Bad Waldsee, Germany, and is the largest RV manufacturer in Europe, by revenue. The Company entered the definitive agreement with EHG to expand its operations into the growing European market with a long-standing European industry leader.

In accordance with the ~~operating~~definitive agreement, ~~TH2’s future capital needs, which are not expected~~consideration to be ~~material~~paid to the sellers at closing was to consist of approximately 1.7 billion Euro in cash and equity consisting of approximately 2.3 million shares of the Company. The Company will also assume responsibility for the debt of EHG.

On February 1, 2019, the parties closed on this transaction. In connection with the closing, the parties entered into an amendment to the purchase agreement to reflect the exclusion of EHG’s North American operations from the business operations acquired by the Company. As a result, the cash purchase price paid by the Company was reduced by 170 million Euro, and the debt obligations the Company otherwise assumed at closing were reduced by 180 million Euro.

At the closing, the Company paid cash consideration of approximately 1.5 billion Euro (approximately $1.7 billion at the exchange rate as of January 31, 2019) and issued 2,256,492 shares of the Company’s common stock to the sellers. The Company also assumed debt of EHG and its affiliates of approximately 315 million Euro (approximately $359 million at the exchange rate as of January 31, 2019), a portion of which was refinanced at closing. The cash consideration paid was funded through a combination of available cash on hand of approximately $95 million and debt financing.

The debt financing obtained in connection with the acquisition of EHG consists of two credit facility agreements, a 7 year, $2.1 billion term loan, and a 5 year, $750.0 million asset-based credit facility (ABL). The obligations of the Company under each facility are secured by liens on substantially all of the assets of the Company, and both agreements contain certain customary representations, warranties and covenants of the Company.

Subject to earlier termination, the term loan matures on February 1, 2026 and the ABL terminates on February 1, 2024. In connection with the closing of the transaction, the Company borrowed an aggregate amount of approximately $1.386 billion under a United States Dollar denominated term loan tranche, approximately 618 million Euro (approximately $704 million at the exchange rate as of January 31, 2019) under a Euro denominated term loan tranche, and $100 million under the ABL in order to provide funding for, among other things, the cash consideration paid to the EHG shareholders, the refinancing of specified existing EHG indebtedness, and to pay fees and expenses related to the transaction.

Under the term loan, both the U.S. and Euro term loan tranches require annual payments of 1.0% of the initial term loan balance, payable quarterly in 0.25% installments. The interest rate on the U.S. portion of the term loan will be at an annual base rate plus 2.75%, or LIBOR plus 3.75%, and the interest rate on the Euro portion will be at EURIBOR plus 4.0%, with interest on both tranches payable quarterly. In addition, the Company must make mandatory prepayments of principal under the term loan agreement upon the occurrence of certain specified events, including certain asset sales, debt issuances and receipt of annual cash flows in excess of certain amounts. The Company may, at its option, prepay any borrowings under the term loan, in whole or in part, at any time without premium or penalty (except in certain circumstances). The Company may add one or more incremental term loan facilities to the term loan, subject to obtaining commitments from any participating lenders and certain other conditions. Ticking fees on the term loan, as defined in the financing commitments, were incurred for the period from December 4, 2018 through January 31, 2019 and totaled approximately $10.7 million.

Availability under the ABL agreement is subject to a borrowing base based on a percentage of applicable eligible receivables and eligible inventory. The ABL will carry interest at an annual base rate plus 0.25% to 0.75%, or LIBOR plus 1.25% to 1.75%, based on adjusted excess availability as defined in the ABL agreement, with the applicable base rate and LIBOR margins being stipulated at 0.25% and 1.25%, respectively, for the third quarter of fiscal 2019 per the ABL agreement. This agreement also includes a 0.25% unused facility fee. The Company may, generally at its option, pay any borrowings under the ABL, in whole or in part, at any time and from time to time, without premium or penalty.

The ABL also contains a financial covenant, which requires the Company to maintain a consolidated fixed-charge coverage ratio of 1.0X, provided that the covenant is only applicable when adjusted excess availability falls below a certain threshold. Up to $75.0 million of the ABL is available for the issuance of letters of credit, and up to $75.0 million is available for swingline loans. The Company may also increase commitments under the ABL by up to $150.0 million by obtaining additional commitments from lenders and adhering to certain other conditions. The unused availability under the ABL is generally available to the Company ~~will be funded proportionally by~~~~thl~~for general operating purposes.

Costs incurred during the three months ended January 31, 2019 related specifically to this acquisition are included in Acquisition-related costs in the Condensed Consolidated Statements of Income and Comprehensive Income. These costs include the impact of the change in the fair value and likelihood of closing on the foreign currency forward contract of $31,152 discussed in Note 15 above, and $10,907 of other expenses, consisting primarily of ticking fees.

Costs incurred during the six months ended January 31, 2019 related specifically to this acquisition totaled $99,148 and include the change in the fair value of the foreign currency forward contract of $73,707 discussed in Note 15 above, and $25,441 of other expenses, consisting primarily of ticking fees and legal, professional and advisory fees related to financial due diligence and preliminary implementation costs, as well as regulatory review costs.

Due to the recent timing of the close of the acquisition, the Company has not yet allocated the purchase price to the fair value of the assets acquired and the ~~Company. The Company’s investment in TH2 will be accounted for under~~liabilities assumed at 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.

acquisition date.

1315

ITEM2. ~~MANAGEMENT’S~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless otherwise indicated, all dollar amounts are presented in thousands except share and per share data.

~~Unless~~

~~otherwise indicated, all dollar amounts are presented in thousands except per share data.~~

Forward Looking Statements

This report includes certain statements that are “forward looking” statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward looking statements are made based on management’s current expectations and beliefs regarding future and anticipated developments and their effects upon Thor, and inherently involve uncertainties and risks. These forward looking statements are not a guarantee of future performance. We cannot assure you that actual results will not differ materially from our expectations. Factors which could cause materially different results include, among others, raw material and commodity price ~~fluctuations,~~fluctuations; raw material, commodity or chassis supply ~~restrictions,~~restrictions; 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 or announced transactions; lower consumer confidence and the level of discretionary consumer ~~spending,~~spending; interest rate ~~fluctuations,~~fluctuations; the potential impact of interest rate fluctuations on the general economy and specifically on our dealers and ~~consumers,~~consumers; restrictive lending ~~practices,~~practices; management ~~changes,~~changes; the success of new and existing products and ~~services,~~services; consumer ~~preferences,~~preferences; the ~~pace of obtaining and producing at new~~ability to efficiently utilize production ~~facilities,~~facilities; the pace of acquisitions and the successful closing, integration and financial impact ~~thereof,~~thereof; the potential loss of existing customers of ~~acquisitions, the integration of new acquisitions,~~acquisitions; our ability to retain key management personnel of acquired ~~companies,~~companies; a shortage of necessary personnel for ~~production,~~production; the loss or reduction of sales to key ~~dealers,~~dealers; disruption of the ~~availability~~delivery of ~~delivery personnel,~~units to dealers; increasing costs for freight and transportation; asset impairment ~~charges,~~charges; cost structure ~~changes, competition,~~changes; competition; the impact of potential losses under repurchase ~~agreements,~~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,~~conditions; and changes to investment and capital allocation strategies or other facets of our strategic ~~plan,~~plan. Additional risks and uncertainties surrounding the acquisition of Erwin Hymer Group SE (the “Erwin Hymer Group”) include risks regarding the potential benefits of the acquisition and the anticipated operating synergies, the integration of the business, changes inEuro-U.S. dollar exchange rates that could impact themark-to-market value of outstanding derivative instruments, the impact of exchange rate fluctuations and unknown or understated liabilities related to the acquisition and Erwin Hymer Group’s business. These and other risks and uncertainties are discussed more fully in ~~ITEM~~Item 1A of our Annual Report on Form10-K for the year ended July 31, ~~2017.~~2018 and in this report.

We disclaim any obligation or undertaking to disseminate any updates or revisions to any forward looking statements contained in this report or to reflect any change in our expectations after the date hereof or any change in events, conditions or circumstances on which any statement is based, except as required by law.

Executive Overview

We were founded in 1980 and have grown to be the largest manufacturer of RVs in North America. According to Statistical Surveys, Inc. (“Stat Surveys”), for the calendar ~~year~~years ended December 31, 2018 and 2017, Thor’s combined U.S. and Canadian market share was approximately 49.8% and 50.4%, respectively, for travel trailers and fifth wheels combined and approximately 39.3% and 39.1%, respectively, for motorhomes. Our business model includes decentralized operating units, and our RV products are 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.

Recent Events

Erwin Hymer Group Acquisition

~~Tax~~

~~Reform~~

On September 18, 2018, the Company and the shareholders of Erwin Hymer Group announced that they entered into a definitive agreement for the Company to acquire Erwin Hymer Group (“EHG”). EHG is headquartered in Bad Waldsee, Germany, and is the largest RV manufacturer in Europe by revenue. The Company entered into the definitive agreement with EHG to expand its operations into the growing European market with a long-standing European industry leader.

Subject to earlier termination, the term loan matures on February 1, 2026 and the ABL terminates on February 1, 2024. In connection with the closing of the transaction, the Company borrowed an aggregate amount of approximately $1.386 billion under a United States Dollar denominated term loan, approximately 618 million Euro (approximately $704 million as of January 31, 2019) under a Euro denominated term loan, and $100 million under the ABL in order to provide funding for, among other things, the cash consideration paid to the EHG shareholders, the refinancing of specified existing EHG indebtedness, and to pay fees and expenses related to the transaction.

Availability under the ABL agreement is subject to a borrowing base based on a percentage of applicable eligible receivables and eligible inventory. The ABL will carry interest at an annual base rate plus 0.25% to 0.75%, or LIBOR plus 1.25% to 1.75%, based on adjusted excess availability as defined in the ABL agreement, with the applicable base rate and LIBOR margins being stipulated at 0.25% and 1.25%, respectively, for the third quarter of fiscal 2019 per the ABL agreement. The Company may, generally at its option, pay any borrowings under the ABL, in whole or in part, at any time and from time to time, without premium or penalty. The ABL also contains a financial covenant, which requires the Company to maintain a consolidated fixed-charge coverage ratio of 1.0X, provided that the covenant is only applicable when adjusted excess availability falls below a certain threshold. The unused availability under the ABL is generally available to the Company for general operating purposes.

All costs incurred in the three andsix-month periods ended January 31, 2019 related to this acquisition, including the foreign currency forward contract loss and certain ticking fees, legal, advisory and other costs as discussed in Notes 15 and 17 to the Condensed Consolidated Financial Statements, are included in Acquisition-related costs in the Condensed Consolidated Statements of Income and Comprehensive Income.

Share Repurchase Program

On June 19, 2018, the Company’s Board of Directors authorized Company management to utilize up to $250,000 to purchase shares of the Company’s common stock through June 19, 2020. There were no repurchases under this program during the three orsix-month periods ended January 31, 2019.

Joint Venture

On February 15, 2018, the Company announced the formation of a joint venture with Tourism Holdings Limited (“thl”) called TH2connect, LLC (“TH2”). The Company andthl each have a 50% ownership position in TH2 and equal representation on the board of directors of TH2. The Company’s investment in TH2 is accounted for under the equity method of accounting.

Tax Reform

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”), was signed into law. The Tax Act includes numerous changes to tax laws impacting business, the most significant being a permanent reduction in 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, among other items, the repeal of the domestic production activities (“Code Section 199”) deduction and limitations on the deductibility of executive compensation.

1417

As 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 a~~non-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~~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 U.S. income tax rate between 23.0% and 25.0%, before consideration of any discrete tax ~~items.~~

~~While~~items and the ~~Tax Act is expected to generate additional cash flow~~acquisition of the Erwin Hymer Group, as described in ~~the future, our main priorities~~Note 17, which closed on February 1, 2019. The effective tax rate for the ~~use of current and future available cash generated from operations will continue~~Erwin Hymer Group is preliminarily estimated 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 bybe generally consistent with 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~~

~~Venture~~

~~On February 15, 2018, the Company announced the formation of a joint venture with Tourism Holdings Limited (“~~~~thl~~~~”) called TH2. The Company and~~~~thl~~ ~~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 while~~~~thl~~ 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 tocurrent estimated U.S. income tax rate, however, the Company will ~~be funded proportionally by~~~~thl~~ ~~and~~consider the ~~Company. The Company’s investment~~tax impacts of the acquisition in ~~TH2 will be accounted for under the equity method of accounting.~~

Industry Outlook

The Company monitors industry conditions in the RV market through the use of monthly wholesale shipment data as reported by the Recreation Vehicle Industry Association (“RVIA”), which is typically issued on aone-month lag and represents manufacturers’ RV production and delivery to dealers. In addition, we ~~also~~ monitor monthly 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,~~ RV dealer inventory of Thor products as of January 31, ~~2018 increased 25.5%~~2019 decreased 11.4% to approximately ~~155,650~~137,900 units, compared to approximately ~~124,000~~155,650 units as of January 31, ~~2017.~~2018. We believe our dealer inventory levels are approaching appropriate levels for seasonal consumer ~~demand.~~demand and are progressing toward more normalized levels.

Thor’s RV backlog as of January 31, ~~2018 increased $708,013,~~2019 decreased $1,346,461, or ~~33.9%~~48.1%, to ~~$2,798,357~~$1,451,896 compared to ~~$2,090,344~~$2,798,357 as of January 31, ~~2017.~~2018, with the decrease partially attributable to our capacity expansions since the prior year, which allows for quicker production and delivery of units to dealers, and the existing dealer inventory levels noted above.

Industry Wholesale Statistics

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


	U.S. and Canada Wholesale Unit Shipments								U.S. and Canada Wholesale Unit Shipments
	Calendar Year						%		Calendar Year				Increase (Decrease)			% Change
	2017		2016		Increase		Change		2018		2017		Increase (Decrease)			% Change
Towable Units		441,961		375,950		66,011		17.6		426,087		441,961		(15,874	)		(3.6	)
Motorized Units		62,638		54,741		7,897		14.4		57,585		62,638		(5,053	)		(8.1	)

Total		504,599		430,691		73,908		17.2		483,672		504,599		(20,927	)		(4.1	)

According to their most recent forecast published in February 2019, RVIA ~~releases~~has forecasted that 2019 calendar year ~~unit shipment forecasts periodically throughout~~shipments for towables and motorized units will ease back to approximately 407,900 and 52,200 units, respectively, for a total of 460,100 units, a decline of 4.9% from the 2018 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~~shipments. RVIA forecast for calendar year 2018 will be published in March 2018 and will take into consideration the current wholesale and retail shipment trends, such as the 8,238 unit or 11.7% increase in retail registrationsnoted that except for the ~~three months ended December 31, 2017 vs. the comparable prior-year period as reported by Stat Surveys.~~past two calendar years, total RV shipments for 2019 are expected to be higher than in any prior year since 1973.

Industry Retail Statistics

We believe that retail demand is the key to continued growth in the RV industry, and that annual RV industry wholesale shipments will generally ~~be in line~~approximate aone-to-one replenishment ratio with ~~annual~~ retail sales ~~going forward.~~once dealer inventory levels are adjusted to generally normalized levels, which we expect to happen during the second half of fiscal 2019.

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


	U.S. and Canada Retail Unit Registrations								U.S. and Canada Retail Unit Registrations
	Calendar Year						%		Calendar Year				Increase		%
	2017		2016		Increase		Change		2018		2017		Increase		Change
Towable Units		408,309		365,773		42,536		11.6		430,341		413,602		16,739		4.0
Motorized Units		56,963		50,281		6,682		13.3		57,552		57,498		54		0.1

Total		465,272		416,054		49,218		11.8		487,893		471,100		16,793		3.6

Note: Data reported by Stat Surveys is based on official state and provincial records. This information is subject to adjustment and is continuously ~~updated.~~updated, and is often impacted by delays in reporting by various states or provinces.

Company Wholesale Statistics

The Company’s wholesale RV shipments, for the calendar years ended December 31, ~~2017~~2018 and ~~2016~~2017 to correspond to the industry wholesale periods noted above, were as ~~follows (includes Jayco results from the June 30, 2016 date of acquisition forward):~~follows:

   U.S. and Canada Wholesale Unit
Shipments
   Calendar Year       %
   2017    2016    Increase    Change
Towable Units
   232,231    164,015    68,216    41.6
Motorized Units
   26,029    17,827    8,202    46.0







Total
   258,260    181,842    76,418    42.0


	U.S. and Canada Wholesale Unit Shipments
	Calendar Year				(Decrease)			%
	2018		2017		(Decrease)			Change
Towable Units		211,164		232,231		(21,067	)		(9.1	)
Motorized Units		21,290		26,029		(4,739	)		(18.2	)

Total		232,454		258,260		(25,806	)		(10.0	)

Company Retail Statistics

Retail statistics of the Company’s RV products, as reported by Stat Surveys, for the calendar years ended December 31, ~~2017~~2018 and ~~2016~~2017 to correspond to the 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								U.S. and Canada Retail Unit Registrations
	Calendar Year						%		Calendar Year				Increase		%
	2017		2016		Increase		Change		2018		2017		Increase		Change
Towable Units		200,931		150,566		50,365		33.5		209,740		203,333		6,407		3.2
Motorized Units		22,283		15,986		6,297		39.4		22,642		22,459		183		0.8

Total		223,214		166,552		56,662		34.0		232,382		225,792		6,590		2.9

Note: Data reported by Stat Surveys is based on official state and provincial records. This information is subject to adjustment and is continuously updated, and is often impacted by delays in reporting by various states or provinces.

Our outlook for future growth in retail sales is 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 prices. ~~With~~Assuming continued stability or improvement in consumer confidence, availability of retail and wholesale credit, low interest rates with modest rate increases and the absence of negative economic factors, we would expect to see continued long-term growth in the RV industry.

A positive ~~future~~long-term outlook for the RV segment is supported by ~~favorable demographics, as more people reach the age brackets that historically have accounted for the bulk of retail RV sales. The number of~~continued demographic diversification. While consumers between the ages of 55 and 74 ~~will total 79 million by 2025, 15% higher than in 2015 according to~~still account for the ~~RVIA. In addition, in recent years the industry has benefited from~~majority of RV retail sales, there is strong interest and growing retail ~~sales to~~momentum with the younger ~~consumers with new product offerings targeted to younger,~~“generation X” and “millennials” segments. Not surprisingly, behavioral attributes confirm these groups as being more active, ~~families, as they place a higher value on~~tech savvy, well researched, open to new ideas, seeking new experiences and very 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~~centric, specifically when it comes to cross-generational family activities like RV’ing, camping 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 thetime spent outdoors.

Since 2014, Kampgrounds of America (KOA) ~~2017 North American Camping Report, their millennial group comprised 31%~~has measured an increase of ~~the total population~~6 million new camper households and in ~~the most recent census, yet accounted for 38% of the total campers~~2018 KOA projected a 45% rise in ~~2016, which increased from 34% of the total campers~~frequency among all camping families; largely driven by millennials with 6 in ~~2015.~~10 having tried a new camping destination in 2017. Younger RV consumers are ~~generally attracted~~also redefining cultural views on “vacation” and opting instead for 50 to ~~lower~~100 mile getaways within driving distance to home or school. Given the importance younger consumers and ~~moderately-priced travel trailers, as affordability is a key driver at this stage in their lives.~~millennial households place on family, quality experiences, technology and time, we are well-positioned to provide the innovative product offerings which deliver the lifestyle experiences that complement millennial expectations.

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 well as a way to reduce stress, escape the pressures of everyday life, be more active and lead a healthier lifestyle. In addition to younger age demographics, there are opportunities to expand sales to a more ethnically diverse and global customer ~~base. In~~base through lifestyle, lifestage and data-driven marketing. We intend to expand upon our ~~efforts to connect with RV consumers of all generations, beginning in the first quarter of fiscal 2017 we launched a new consumer-facing website designed to inspire consumers to explore~~recent marketing initiatives that focus on diversity, women, families, millennials and the RV ~~lifestyle. The new website includes video~~lifestyle across social, digital, web, acquisition, mobile and ~~interactive features~~content marketing. In addition to ~~help~~providingbest-in-class marketing and research assets to our dealers, we are committed to providing our end consumers ~~determine the type of~~with technology tools and RV ~~which may suit their specific camping needs, while providing video footage that can be utilized by dealers to market~~lifestyle resources through 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 opportunities to younger and more diverse consumers over the remainder 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 proposition and ownership experience for this younger, more technically savvy customer group.TH2.

Economic or industry-wide factors affecting our RV business include the costs of commodities, the impact of actual or threatened tariffs on commodity costs, 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 labor costs would impact our profit margins negatively if we were unable to ~~raise~~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 ~~pass along those~~offset net cost increases ~~to customers.~~over time.

We have not experienced any ~~recent~~significant unusual ~~cost increases or~~ supply constraints from our chassis ~~suppliers.~~suppliers recently. The recreational vehicle industry has, from time to time, experienced shortages of chassis for various reasons, including component shortages, production delays and work stoppages at the chassis manufacturers. These shortages have had a negative impact on our sales and earnings in the past. We believe that the current supply of chassis used in our motorized RV production is generally adequate for current production levels, and that available inventory would compensate for short-term changes in supply schedules if they occur.

1720

Three Months Ended January 31, ~~2018~~2019 Compared to the Three Months Ended January 31, ~~2017~~2018


		Three Months Ended January 31, 2018					Three Months Ended January 31, 2017					Change Amount			% Change				Three Months Ended January 31, 2019					Three Months Ended January 31, 2018					Change Amount			% Change
NET SALES:
Recreational vehicles
Towables		$	1,373,118				$	1,082,249				$	290,869			26.9			$	881,564				$	1,373,118				$	(491,554	)		(35.8	)
Motorized			559,909					474,972					84,937			17.9				371,495					559,909					(188,414	)		(33.7	)

Total recreational vehicles			1,933,027					1,557,221					375,806			24.1				1,253,059					1,933,027					(679,968	)		(35.2	)
Other			68,013					53,891					14,122			26.2				55,114					68,013					(12,899	)		(19.0	)
Intercompany eliminations			(29,480	)				(22,587	)				(6,893	)		(30.5	)			(17,597	)				(29,480	)				11,883			40.3

Total		$	1,971,560				$	1,588,525				$	383,035			24.1			$	1,290,576				$	1,971,560				$	(680,984	)		(34.5	)


# OF UNITS:
Recreational vehicles
Towables			55,346					45,754					9,592			21.0				32,758					55,346					(22,588	)		(40.8	)
Motorized			6,735					5,831					904			15.5				4,092					6,735					(2,643	)		(39.2	)

Total			62,081					51,585					10,496			20.3				36,850					62,081					(25,231	)		(40.6	)


GROSS PROFIT:					% of Segment Net Sales					% of Segment Net Sales		Change Amount			% Change							% of Segment Net Sales					% of Segment Net Sales		Change Amount			% Change
Recreational vehicles
Towables		$	198,305			14.4	$	151,767			14.0	$	46,538			30.7			$	96,510			10.9	$	198,305			14.4	$	(101,795	)		(51.3	)
Motorized			62,961			11.2		50,288			10.6		12,673			25.2				36,282			9.8		62,961			11.2		(26,679	)		(42.4	)

Total recreational vehicles			261,266			13.5		202,055			13.0		59,211			29.3				132,792			10.6		261,266			13.5		(128,474	)		(49.2	)
Other, net			9,062			13.3		9,647			17.9		(585	)		(6.1	)			8,804			16.0		9,062			13.3		(258	)		(2.8	)

Total		$	270,328			13.7	$	211,702			13.3	$	58,626			27.7			$	141,596			11.0	$	270,328			13.7	$	(128,732	)		(47.6	)


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:	SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:																	SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Recreational vehicles
Towables		$	70,367			5.1	$	61,155			5.7	$	9,212			15.1			$	52,433			5.9	$	70,367			5.1	$	(17,934	)		(25.5	)
Motorized			24,309			4.3		20,868			4.4		3,441			16.5				17,808			4.8		24,309			4.3		(6,501	)		(26.7	)

Total recreational vehicles			94,676			4.9		82,023			5.3		12,653			15.4				70,241			5.6		94,676			4.9		(24,435	)		(25.8	)
Other			2,239			3.3		2,272			4.2		(33	)		(1.5	)			1,912			3.5		2,239			3.3		(327	)		(14.6	)
Corporate			20,173			—		12,674			—		7,499			59.2				12,916			—		20,173			—		(7,257	)		(36.0	)

Total		$	117,088			5.9	$	96,969			6.1	$	20,119			20.7			$	85,069			6.6	$	117,088			5.9	$	(32,019	)		(27.3	)


INCOME (LOSS) BEFORE INCOME TAXES:	INCOME (LOSS) BEFORE INCOME TAXES:																	INCOME (LOSS) BEFORE INCOME TAXES:
Recreational vehicles
Towables		$	116,728			8.5	$	78,000			7.2	$	38,728			49.7			$	34,060			3.9	$	116,728			8.5	$	(82,668	)		(70.8	)
Motorized			37,538			6.7		28,488			6.0		9,050			31.8				17,205			4.6		37,538			6.7		(20,333	)		(54.2	)

Total recreational vehicles			154,266			8.0		106,488			6.8		47,778			44.9				51,265			4.1		154,266			8.0		(103,001	)		(66.8	)
Other, net			5,290			7.8		5,696			10.6		(406	)		(7.1	)			5,950			10.8		5,290			7.8		660			12.5
Corporate			(18,491	)		—		(13,819	)		—		(4,672	)		(33.8	)			(55,342	)		—		(18,491	)		—		(36,851	)		(199.3	)

Total		$	141,065			7.2	$	98,365			6.2	$	42,700			43.4			$	1,873			0.1	$	141,065			7.2	$	(139,192	)		(98.7	)

ORDER BACKLOG:    As of
January 31, 2018    As of
January 31, 2017    Change
Amount    %
Change
Recreational vehicles

Towables
   $ 1,816,520    $ 1,323,451    $ 493,069    37.3
Motorized
   981,837    766,893    214,944    28.0







Total
   $ 2,798,357    $ 2,090,344    $ 708,013    33.9


ORDER BACKLOG:	As of January 31, 2019		As of January 31, 2018		Change Amount			% Change
Recreational vehicles
Towables	$	812,020	$	1,816,520	$	(1,004,500	)		(55.3	)
Motorized		639,876		981,837		(341,961	)		(34.8	)

Total	$	1,451,896	$	2,798,357	$	(1,346,461	)		(48.1	)

1821

CONSOLIDATED

Consolidated net sales for the three months ended January 31, ~~2018 increased $383,035,~~2019 decreased $680,984, or ~~24.1%~~34.5%, compared to the three months ended January 31, ~~2017.~~2018. Consolidated gross profit for the three months ended January 31, ~~2018 increased $58,626,~~2019 decreased $128,732, or ~~27.7%~~47.6%, compared to the three months ended January 31, ~~2017.~~2018. Consolidated gross profit was ~~13.7%~~11.0% of consolidated net sales for the three months ended January 31, ~~2018~~2019 and ~~13.3%~~13.7% for the three months ended January 31, ~~2017.~~2018.

Selling, general and administrative expenses for the three months ended January 31, ~~2018 increased $20,119,~~2019 decreased $32,019, or ~~20.7%~~27.3%, compared to the three months ended January 31, ~~2017.~~2018. Amortization of intangible assets expense for the three months ended January 31, ~~2018~~2019 decreased ~~$1,483,~~$1,270, or ~~9.7%~~9.2%, compared to the three months ended January 31, ~~2017,~~2018, primarily due to lower dealer network amortization as compared to the prior-year period. Acquisition-related costs totaled $42,059 for the three months ended January 31, 2019. Income before income taxes for the three months ended January 31, ~~2018~~2019 was ~~$141,065,~~$1,873, as compared to ~~$98,365~~$141,065 for the three months ended January 31, ~~2017, an increase~~2018, a decrease of ~~$42,700,~~$139,192, or ~~43.4%~~98.7%.

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

Corporate costs included in selling, general and administrative expenses ~~increased $7,499~~decreased $7,257 to $12,916 for the three months ended January 31, 2019 compared to $20,173 for the three months ended January 31, 2018, ~~compared to $12,674 for the three months ended January 31, 2017. The increase is due~~a decrease of 36.0%. This decrease includes a decrease of $2,166 in ~~part to an increase in compensation costs, as~~ incentive compensation ~~increased $761~~ in correlation with the ~~increase~~decrease in income before income taxes compared to the prior year, 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.year. Deferred compensation expense also ~~increased $1,419,~~decreased $1,519, which relates to the equal and offsetting increase in other ~~income noted below due~~expense related to the ~~increase in the related~~ deferred compensation plan ~~assets. Legal~~assets as noted below. In addition, costs recorded at Corporate related to our standby repurchase obligations on dealer inventory decreased $1,850 due to lower dealer inventory levels, and ~~professional fees, including~~sales and marketing costs also decreased by $2,125.

Acquisition-related costs were $42,059 for the three months ended January 31, 2019 and include all costs related to ~~sales and marketing initiatives and~~ the ~~joint venture discussed~~acquisition of Erwin Hymer Group as described in Note 1517 to the Condensed Consolidated Financial ~~Statements, increased $2,541.~~Statements. These Corporate costs included anon-cash foreign currency forward contract loss of $31,152, with the remaining $10,907 primarily related to ticking fees.

Corporate interest and other income and expense was $367 of net expense for the three months ended January 31, 2019 compared to $1,682 of net income for the three months ended January 31, ~~2018 compared to $1,145 of~~2018. This increase in net expense ~~for the three months ended January 31, 2017. This favorable change~~ of ~~$2,827~~$2,049 is ~~partially~~primarily due to interest expense and fees of $1,202 incurred in the current-year period related to the revolving credit facility, as compared to $2,325 in the prior-year period, a decrease of $1,123 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~~resulting in ~~$2,460~~net income of ~~net income~~$941 in the current-year period as compared to net income of ~~$1,041~~$2,460 in the prior-year period, ~~an increase~~a decrease in income of ~~$1,419.~~$1,519. The three months ended January 31, 2019 also included a $2,216 operating loss related to the joint venture as discussed in Note 8 to the Condensed Consolidated Financial Statements. These increases in expense were partially offset by increased interest income of $1,273 on higher average cash balances as compared to the prior-year period, and interest expense and fees on the revolving credit facility decreased $487 as a result of the lower outstanding debt balances.

The overall effective income tax rate for the three months ended January 31, ~~2018~~2019 was ~~43.5%~~389.1% compared with ~~34.1%~~43.5% for the three months ended January 31, ~~2017.~~2018. The primary reason for the ~~increase~~change in the overall effective income tax rate ~~was~~between the ~~impact of~~comparable periods is the ~~Tax Cuts and Jobs Act (the “Tax Act”) that was signed into law on December 22, 2017. Under~~non-deductible foreign currency forward contract loss noted in Note 15 to 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 a~~non-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 federalCondensed Consolidated Financial Statements. The effective income tax rate for the three months ended January 31, ~~2018 and a~~2019, without considering the tax ~~benefit~~effect of ~~$12,535 recorded in~~the forward contract loss, would have been approximately 24%. Income tax expense for the three months ended January 31, 2018 included additional tax expense resulting from ~~applying~~ the ~~lower~~revaluation of the Company’s net deferred tax assets in connection with the Tax Cuts and Jobs Act enacted December 22, 2017. The effective income tax rates for both three-month periods were impacted by the reduction in the US federal corporate income tax rate ~~for fiscal 2018 to~~along with the ~~results~~other tax impacts as a result of ~~operations for~~ the ~~first quarter~~enactment of ~~fiscal 2018.~~the Tax Cuts and Jobs Act.

1922

Segment Reporting

TOWABLE RECREATIONAL VEHICLES

Analysis of the change in net sales for the three months ended January 31, ~~2018~~2019 compared to the three months ended January 31, ~~2017:~~2018:


	Three Months Ended January 31, 2018		% of Segment Net Sales		Three Months Ended January 31, 2017		% of Segment Net Sales		Change Amount		% Change		Three Months Ended January 31, 2019		% of Segment Net Sales		Three Months Ended January 31, 2018		% of Segment Net Sales		Change Amount			% Change
NET SALES:
Towables
Travel Trailers and Other	$	829,318		60.4	$	653,524		60.4	$	175,794		26.9	$	535,779		60.8	$	829,318		60.4	$	(293,539	)		(35.4	)
Fifth Wheels		543,800		39.6		428,725		39.6		115,075		26.8		345,785		39.2		543,800		39.6		(198,015	)		(36.4	)

Total Towables	$	1,373,118		100.0	$	1,082,249		100.0	$	290,869		26.9	$	881,564		100.0	$	1,373,118		100.0	$	(491,554	)		(35.8	)


	Three Months Ended January 31, 2018		% of Segment Shipments		Three Months Ended January 31, 2017		% of Segment Shipments		Change Amount		% Change		Three Months Ended January 31, 2019		% of Segment Shipments		Three Months Ended January 31, 2018		% of Segment Shipments		Change Amount			% Change
# OF UNITS:
Towables
Travel Trailers and Other		42,979		77.7		35,730		78.1		7,249		20.3		25,222		77.0		42,979		77.7		(17,757	)		(41.3	)
Fifth Wheels		12,367		22.3		10,024		21.9		2,343		23.4		7,536		23.0		12,367		22.3		(4,831	)		(39.1	)

Total Towables		55,346		100.0		45,754		100.0		9,592		21.0		32,758		100.0		55,346		100.0		(22,588	)		(40.8	)


Impact of Change in Product Mix and Price on Net Sales:	% Increase
Towables
Travel Trailers and Other		~~6.6~~5.9
Fifth Wheels		~~3.4~~2.7
Total Towables		~~5.9~~5.0

The ~~increase~~decrease in total towables net sales of ~~26.9%~~35.8% compared to the prior-year quarter resulted from a ~~21.0% increase~~40.8% decrease in unit shipments and a ~~5.9%~~5.0% 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 three months ended January 31, ~~2018,~~2019, combined travel trailer and fifth wheel wholesale unit shipments ~~increased 19.1%~~decreased 28.1% compared to the same period last year. According to statistics published by Stat Surveys, for the three-month periods ended December 31, 2018 and 2017, our market share for travel trailers and fifth wheels combined was 48.1% and 48.5%, respectively. Comparisons of Company shipments to industry shipments on a quarterly basis would not necessarily be indicative of the results expected for a full fiscal year.

The increases in the overall net price per unit within the travel trailer and other product lines of ~~6.6%~~5.9% and the fifth wheel product lines of ~~3.4%~~2.7% were both primarily due to changes in product mix and selective net price increases since the prior-year quarter.

Cost of products sold ~~increased $244,331~~decreased $389,759 to $785,054, or 89.1% of towables net sales, for the three months ended January 31, 2019 compared to $1,174,813 or 85.6% of towables net sales, for the three months ended January 31, ~~2018 compared to $930,482, or 86.0% of towables net sales, for the three months ended January 31, 2017.~~2018. The changes in material, labor,freight-out and warranty costs comprised ~~$232,286~~$375,911 of the ~~$244,331 increase~~$389,759 decrease in cost of products sold. Material, labor,freight-out and warranty costs as a combined percentage of towables net sales increased ~~slightly~~to 81.2% for the three months ended January 31, 2019 compared to 79.5% for the three months ended January 31, ~~2018 compared to 79.4% for the three months ended January 31, 2017.~~2018. This increase in percentage was primarily the result of 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 decrease in the material cost percentage to net sales, primarily due to ~~selective~~an increase in discounts and sales incentives, which effectively decreases net ~~price increase~~sales and ~~operating efficiencies attained since~~therefore increases the ~~prior-year period, primarily by Jayco.~~unit material cost percentage. The warranty cost percentage to net sales also increased slightly. Total manufacturing overhead ~~increased $12,045~~decreased $13,848 with the ~~increase~~decrease in sales, but ~~decreased~~increased as a percentage of towables net sales from ~~6.6%~~6.1% to ~~6.1%~~7.9%, as the ~~increased~~decreased production resulted in ~~better absorption of fixed~~higher overhead ~~costs.~~costs per unit sold.

Towables gross profit ~~increased $46,538~~decreased $101,795 to $96,510, or 10.9% of towables net sales, for the three months ended January 31, 2019 compared to $198,305, or 14.4% of towables net sales, for the three months ended January 31, ~~2018 compared~~2018. The decrease in gross profit is primarily due to ~~$151,767,~~the 40.8% decrease in unit sales volume noted above, while the decrease in gross profit percentage is due to the increase in the cost of products sold percentage noted above.

Selling, general and administrative expenses were $52,433, or ~~14.0%~~5.9% of towables net sales, for the three months ended January 31, ~~2017. The increase in gross profit is primarily due~~2019 compared to ~~the 21.0% 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.~~

~~Selling, general and administrative expenses were~~ $70,367, or 5.1% of towables net sales, for the three months ended January 31, ~~2018 compared to $61,155, or 5.7% of towables net sales, for the three months ended January 31, 2017.~~2018. The primary reason for the ~~$9,212 increase~~$17,934 decrease was ~~increased~~decreased towables net sales and towables income before income taxes, which caused related commissions, bonuses and other compensation to ~~increase~~decrease by ~~$8,864.~~$18,859. Sales-related travel, advertising and promotional costs also ~~increased $1,041 in correlation~~decreased $2,958, primarily due to reduced trade show costs with the ~~sales increase.~~elimination of the national Louisville RV trade show historically held in late November or early December of each year. These ~~increases~~decreases were partially offset by ~~a reduction~~an increase of ~~$1,562~~$4,213 in legal, professional and related settlement costs, primarily due to ~~a reduction~~the prior-year period being favorably impacted by reductions in the estimated costs to satisfy certain outstanding legal liability and product recall costs. The increase in the overall selling, general and administrative expense as a percentage of towables net sales ~~decreased by 0.6%~~is primarily due to the ~~significant increase in towables net sales.~~increased legal, professional and settlement costs noted above.

Towables income before income taxes was $34,060, or 3.9% of towables net sales, for the three months ended January 31, 2019 compared to $116,728 or 8.5% of towables net sales, for the three months ended January 31, ~~2018 compared to $78,000, or 7.2% of towables net sales, for the three months ended January 31, 2017.~~2018. The primary reasons for the ~~increase~~decrease in percentage were the ~~decreases~~increases in both the cost of products sold and selling, general and administrative ~~expense~~ percentages ~~to sales~~ noted above.

MOTORIZED RECREATIONAL VEHICLES

Analysis of the change in net sales for the three months ended January 31, ~~2018~~2019 compared to the three months ended January 31, ~~2017:~~2018:


	Three Months Ended January 31, 2018		% of Segment Net Sales		Three Months Ended January 31, 2017		% of Segment Net Sales		Change Amount		% Change		Three Months Ended January 31, 2019		% of Segment Net Sales		Three Months Ended January 31, 2018		% of Segment Net Sales		Change Amount			% Change
NET SALES:
Motorized
Class A	$	257,092		45.9	$	223,818		47.1	$	33,274		14.9	$	173,488		46.7	$	257,092		45.9	$	(83,604	)		(32.5	)
Class C		278,853		49.8		233,197		49.1		45,656		19.6		182,502		49.1		278,853		49.8		(96,351	)		(34.6	)
Class B		23,964		4.3		17,957		3.8		6,007		33.5		15,505		4.2		23,964		4.3		(8,459	)		(35.3	)

Total Motorized	$	559,909		100.0	$	474,972		100.0	$	84,937		17.9	$	371,495		100.0	$	559,909		100.0	$	(188,414	)		(33.7	)


	Three Months Ended January 31, 2018		% of Segment Shipments		Three Months Ended January 31, 2017		% of Segment Shipments		Change Amount		% Change		Three Months Ended January 31, 2019		% of Segment Shipments		Three Months Ended January 31, 2018		% of Segment Shipments		Change Amount			% Change
# OF UNITS:
Motorized
Class A		2,364		35.1		2,059		35.3		305		14.8		1,392		34.0		2,364		35.1		(972	)		(41.1	)
Class C		4,191		62.2		3,631		62.3		560		15.4		2,589		63.3		4,191		62.2		(1,602	)		(38.2	)
Class B		180		2.7		141		2.4		39		27.7		111		2.7		180		2.7		(69	)		(38.3	)

Total Motorized		6,735		100.0		5,831		100.0		904		15.5		4,092		100.0		6,735		100.0		(2,643	)		(39.2	)


Impact of Change in Product Mix and Price on Net Sales:	% Increase
Motorized
Class A		~~0.1~~8.6
Class C		~~4.2~~3.6
Class B		~~5.8~~3.0
Total Motorized		~~2.4~~5.5

The ~~increase~~decrease in total motorized net sales of ~~17.9%~~33.7% compared to the prior-year ~~period~~quarter resulted from a ~~15.5% increase~~39.2% decrease in unit shipments and a ~~2.4%~~5.5% 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 three months ended January 31, ~~2018,~~2019, combined motorhome wholesale unit shipments ~~increased 15.8%~~decreased 27.5% compared to the same period last year. According to statistics published by Stat Surveys, for the three-month periods ended December 31, 2018 and 2017, our market share for motorhomes was 36.2% and 37.1%, respectively. Comparisons of Company shipments to industry shipments on a quarterly basis would not necessarily be indicative of the results expected for a full fiscal year.

The ~~increases~~increase in the overall net price per unit within the Class A product line of ~~0.1%~~8.6% was primarily due to a shift in the concentration of sales toward the generally larger and more expensive diesel units from the more modestly-priced gas units compared to the prior-year period. The increase in the overall net price per unit within the Class C product line of ~~4.2% were~~3.6% was 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 ~~5.8%~~3.0% 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 $72,264~~decreased $161,735 to $335,213, or 90.2% of motorized net sales, for the three months ended January 31, 2019 compared to $496,948, or 88.8% of motorized net sales, for the three months ended January 31, ~~2018 compared to $424,684, or 89.4% of motorized net sales, for the three months ended January 31, 2017.~~2018. The changes in material, labor,freight-out and warranty costs comprised ~~$69,738~~$158,787 of the ~~$72,264 increase~~$161,735 decrease due to ~~increased~~the decreased sales volume. Material, labor,freight-out and warranty costs as a combined percentage of motorized net sales ~~decreased~~increased slightly to 84.7% for the three months ended January 31, 2019 compared to 84.6% for the three months ended January 31, 2018 compared to 85.0% for the three months ended January 31, 2017. This decrease in percentage was primarily the result of a decrease in the material cost percentage, which was partially due to operating efficiencies attained in the past year, primarily at Jayco, but this decrease was partially offset by an increase in labor costs associated with increasing employment levels and the continued competitive RV labor market.2018. Total manufacturing overhead ~~increased $2,526~~decreased $2,948 with the volume ~~increase,~~decrease, but ~~decreased~~increased as a percentage of motorized net sales from ~~4.4%~~4.2% to ~~4.2%~~5.5%, as the ~~increase~~decrease in production resulted in ~~better absorption of fixed~~higher overhead ~~costs.~~costs per unit sold.

Motorized gross profit ~~increased $12,673~~decreased $26,679 to $36,282, or 9.8% of motorized net sales, for the three months ended January 31, 2019 compared to $62,961, or 11.2% of motorized net sales, for the three months ended January 31, ~~2018 compared to $50,288, or 10.6% of motorized net sales, for the three months ended January 31, 2017.~~2018. The ~~$12,673 increase~~decrease in gross profit was due primarily to the ~~15.5% increase~~39.2% decrease in unit sales volume noted above, and the ~~increase~~decrease as a percentage of motorized net sales is due to the ~~decrease~~increase in the cost of products sold percentage noted above.

Selling, general and administrative expenses were $17,808, or 4.8% of motorized net sales, for the three months ended January 31, 2019 compared to $24,309, or 4.3% of motorized net sales, for the three months ended January 31, ~~2018 compared to $20,868, or 4.4% of motorized net sales, for the three months ended January 31, 2017.~~2018. The ~~$3,441 increase~~$6,501 decrease was ~~partially~~primarily due to ~~increased~~decreased motorized net sales and motorized income before income taxes, which caused related commissions, bonuses and other compensation to ~~increase~~decrease by ~~$2,509.~~$6,001. In addition, sales-related travel, advertising and promotional costs decreased $1,032, primarily due to reduced trade show costs with the recent elimination of the national Louisville RV trade show historically held in late November or early December of each year. These decreases were partially offset by an increase in legal, professional and related settlement costs ~~increased $462, primarily due to estimated product liability settlement costs. Sales-related travel, advertising and promotional costs also increased $254 in connection with the sales increase.~~of $758.

Motorized income before income taxes was $17,205, or 4.6% of motorized net sales, for the three months ended January 31, 2019 compared to $37,538, or 6.7% of motorized net sales, for the three months ended January 31, ~~2018 compared to $28,488, or 6.0% of motorized net sales, for the three months ended January 31, 2017.~~2018. The primary ~~reason~~reasons for this ~~increase~~decrease in percentage ~~was~~were the ~~impact of the decrease~~increases in both the cost of products sold ~~percentage as~~and selling, general and administrative expense percentages noted above.

2225

Six Months Ended January 31, ~~2018~~2019 Compared to the Six Months Ended January 31, ~~2017~~2018

   Six Months Ended
January 31, 2018    Six Months Ended
January 31, 2017    Change
Amount %
Change
NET SALES:

Recreational vehicles

Towables
   $ 2,991,619    $ 2,293,122    $ 698,497 30.5
Motorized
   1,126,520    936,426    190,094 20.3






Total recreational vehicles
   4,118,139    3,229,548    888,591 27.5
Other
   150,932    112,887    38,045 33.7
Intercompany eliminations
   (65,843 )    (45,379 )    (20,464 ) (45.1 )






Total
   $ 4,203,228    $ 3,297,056    $ 906,172 27.5






# OF UNITS:

Recreational vehicles

Towables
   121,441    96,928    24,513 25.3
Motorized
   13,578    11,250    2,328 20.7






Total
   135,019    108,178    26,841 24.8






GROSS PROFIT:    % of
Segment
Net
Sales    % of
Segment
Net
Sales    Change
Amount %
Change
Recreational vehicles

Towables
   $ 455,018 15.2    $ 326,745 14.2    $ 128,273 39.3
Motorized
   126,864 11.3    101,725 10.9    25,139 24.7






Total recreational vehicles
   581,882 14.1    428,470 13.3    153,412 35.8
Other, net
   21,631 14.3    19,984 17.7    1,647 8.2






Total
   $ 603,513 14.4    $ 448,454 13.6    $ 155,059 34.6






SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:


Recreational vehicles

Towables
   $ 157,127 5.3    $ 128,743 5.6    $ 28,384 22.0
Motorized
   51,017 4.5    42,182 4.5    8,835 20.9






Total recreational vehicles
   208,144 5.1    170,925 5.3    37,219 21.8
Other
   4,808 3.2    4,592 4.1    216 4.7
Corporate
   38,399 —      23,762 —      14,637 61.6






Total
   $ 251,351 6.0    $ 199,279 6.0    $ 52,072 26.1






INCOME (LOSS) BEFORE INCOME TAXES:


Recreational vehicles

Towables
   $ 275,579 9.2    $ 172,173 7.5    $ 103,406 60.1
Motorized
   75,124 6.7    57,411 6.1    17,713 30.9






Total recreational vehicles
   350,703 8.5    229,584 7.1    121,119 52.8
Other, net
   13,773 9.1    12,074 10.7    1,699 14.1
Corporate
   (36,320 ) —      (27,493 ) —      (8,827 ) (32.1 )






Total
   $ 328,156 7.8    $ 214,165 6.5    $ 113,991 53.2


	Six Months Ended January 31, 2019					Six Months Ended January 31, 2018					Change Amount			% Change
NET SALES:
Recreational vehicles
Towables	$	2,160,662				$	2,991,619				$	(830,957	)		(27.8	)
Motorized		802,693					1,126,520					(323,827	)		(28.7	)

Total recreational vehicles		2,963,355					4,118,139					(1,154,784	)		(28.0	)
Other		128,962					150,932					(21,970	)		(14.6	)
Intercompany eliminations		(45,765	)				(65,843	)				20,078			30.5

Total	$	3,046,552				$	4,203,228				$	(1,156,676	)		(27.5	)


# OF UNITS:
Recreational vehicles
Towables		81,826					121,441					(39,615	)		(32.6	)
Motorized		8,458					13,578					(5,120	)		(37.7	)

Total		90,284					135,019					(44,735	)		(33.1	)


GROSS PROFIT:				% of Segment Net Sales					% of Segment Net Sales		Change Amount			% Change
Recreational vehicles
Towables	$	250,202			11.6	$	455,018			15.2	$	(204,816	)		(45.0	)
Motorized		80,512			10.0		126,864			11.3		(46,352	)		(36.5	)

Total recreational vehicles		330,714			11.2		581,882			14.1		(251,168	)		(43.2	)
Other, net		18,138			14.1		21,631			14.3		(3,493	)		(16.1	)

Total	$	348,852			11.5	$	603,513			14.4	$	(254,661	)		(42.2	)


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Recreational vehicles
Towables	$	121,515			5.6	$	157,127			5.3	$	(35,612	)		(22.7	)
Motorized		39,060			4.9		51,017			4.5		(11,957	)		(23.4	)

Total recreational vehicles		160,575			5.4		208,144			5.1		(47,569	)		(22.9	)
Other		4,001			3.1		4,808			3.2		(807	)		(16.8	)
Corporate		23,186			—		38,399			—		(15,213	)		(39.6	)

Total	$	187,762			6.2	$	251,351			6.0	$	(63,589	)		(25.3	)


INCOME (LOSS) BEFORE INCOME TAXES:
Recreational vehicles
Towables	$	108,610			5.0	$	275,579			9.2	$	(166,969	)		(60.6	)
Motorized		38,917			4.8		75,124			6.7		(36,207	)		(48.2	)

Total recreational vehicles		147,527			5.0		350,703			8.5		(203,176	)		(57.9	)
Other, net		11,860			9.2		13,773			9.1		(1,913	)		(13.9	)
Corporate		(125,997	)		—		(36,320	)		—		(89,677	)		(246.9	)

Total	$	33,390			1.1	$	328,156			7.8	$	(294,766	)		(89.8	)

2326

CONSOLIDATED

Consolidated net sales for the six months ended January 31, ~~2018 increased $906,172,~~2019 decreased $1,156,676, or 27.5%, compared to the six months ended January 31, ~~2017.~~2018. Consolidated gross profit for the six months ended January 31, ~~2018 increased $155,059,~~2019 decreased 254,661, or ~~34.6%~~42.2%, compared to the six months ended January 31, ~~2017.~~2018. Consolidated gross profit was ~~14.4%~~11.5% of consolidated net sales for the six months ended January 31, ~~2018~~2019 and ~~13.6%~~14.4% for the six months ended January 31, ~~2017.~~2018.

Selling, general and administrative expenses for the six months ended January 31, ~~2018 increased $52,072,~~2019 decreased $63,589, or ~~26.1%~~25.3%, compared to the six months ended January 31, ~~2017.~~2018. Amortization of intangible assets expense for the six months ended January 31, ~~2018~~2019 decreased ~~$6,140,~~$2,237, or ~~18.3%~~8.2%, compared to the six months ended January 31, ~~2017,~~2018, 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. Acquisition-related costs totaled $99,148 for the six months ended January 31, 2019. Income before income taxes for the six months ended January 31, ~~2018~~2019 was ~~$328,156,~~$33,390, as compared to ~~$214,165~~$328,156 for the six months ended January 31, ~~2017, an increase~~2018, a decrease of ~~$113,991,~~$294,766, or ~~53.2%~~89.8%.

Additional information concerning the changes in net sales, gross profit, selling, general and administrative expenses, ~~amortization of intangible assets expense~~acquisition-related costs and income before income taxes are addressed below and in the segment reporting that follows.

Corporate costs included in selling, general and administrative expenses ~~increased $14,637~~decreased $15,213 to $23,186 for the six months ended January 31, 2019 compared 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~~a decrease of 39.6%. This decrease includes a decrease 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. Deferreddeferred compensation expense ~~also increased $2,949,~~of $5,088, which relates to the equal and offsetting increase in other ~~income noted below due~~expense related to the ~~increase in the related~~ deferred compensation plan ~~assets. Legal~~assets as noted below. Incentive compensation also decreased $4,455 in correlation with the decrease in income before income taxes compared to the prior year. In addition, costs recorded at Corporate related to our standby repurchase obligations on dealer inventory decreased $2,650 due to lower dealer inventory levels, and ~~professional fees, including~~sales and marketing costs also decreased by $2,757.

Acquisition-related costs were $99,148 for the six months ended January 31, 2019 and include all costs related to ~~sales and marketing initiatives and~~ the ~~joint venture discussed~~acquisition of Erwin Hymer Group as described in Note 1517 to the Condensed Consolidated Financial ~~Statements, increased $3,928.~~Statements. These Corporate costs included anon-cash foreign currency forward contract loss of $73,707, with the remaining $25,441 related primarily to ticking fees and legal, professional and advisory fees related to financial due diligence and preliminary implementation costs, as well as regulatory review costs.

Corporate interest and other income and expense was $3,663 of net expense for the six months ended January 31, 2019 compared to $2,079 of net income for the six months ended January 31, ~~2018 compared to $3,731 of~~2018. This increase in net expense ~~for the six months ended January 31, 2017. This favorable change~~ of ~~$5,810~~$5,742 is ~~partially~~primarily 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~~resulting in ~~$3,734~~net expense of ~~net income~~$1,354 in the current-year period as compared to net income of ~~$785~~$3,734 in the prior-year period, an increase in expense of ~~$2,949.~~$5,088. The six months ended January 31, 2019 also included a $3,699 operating loss related to the joint venture as discussed in Note 8 to the Condensed Consolidated Financial Statements. These increases in expense were partially offset by increased interest income of $2,115 on average higher cash balances as compared to the prior-year period, and interest expense and fees on the revolving credit facility decreased $1,015 as a result of the lower outstanding debt balances.

The overall effective income tax rate for the six months ended January 31, ~~2018~~2019 was ~~36.6%~~74.4% compared with ~~33.0%~~36.6% for the six months ended January 31, ~~2017.~~2018. The primary reason for the ~~increase~~change in the overall effective income tax rate ~~was~~between the ~~impact~~comparable periods is thenon-deductible foreign currency forward contract loss noted in Note 15 to the Condensed Consolidated Financial Statements. The effective income tax rate for the six months ended January 31, 2019, without considering the tax effect of the forward contract loss, would have been approximately 25%. The income tax rates for bothsix-month periods were impacted by the reduction in the US federal corporate income tax rate along with the other tax impacts as a result of the enactment 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 a~~non-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 the~~six-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.~~

2427

Segment Reporting

TOWABLE RECREATIONAL VEHICLES

Analysis of the change in net sales for the six months ended January 31, ~~2018~~2019 compared to the six months ended January 31, ~~2017:~~2018:


	Six Months Ended January 31, 2018		% of Segment Net Sales		Six Months Ended January 31, 2017		% of Segment Net Sales		Change Amount		% Change		Six Months Ended January 31, 2019		% of Segment Net Sales		Six Months Ended January 31, 2018		% of Segment Net Sales		Change Amount			% Change
NET SALES:
Towables
Travel Trailers and Other	$	1,822,922		60.9	$	1,376,873		60.0	$	446,049		32.4	$	1,297,263		60.0	$	1,822,922		60.9	$	(525,659	)		(28.8	)
Fifth Wheels		1,168,697		39.1		916,249		40.0		252,448		27.6		863,399		40.0		1,168,697		39.1		(305,298	)		(26.1	)

Total Towables	$	2,991,619		100.0	$	2,293,122		100.0	$	698,497		30.5	$	2,160,662		100.0	$	2,991,619		100.0	$	(830,957	)		(27.8	)


	Six Months Ended January 31, 2018		% of Segment Shipments		Six Months Ended January 31, 2017		% of Segment Shipments		Change Amount		% Change		Six Months Ended January 31, 2019		% of Segment Shipments		Six Months Ended January 31, 2018		% of Segment Shipments		Change Amount			% Change
# OF UNITS:
Towables
Travel Trailers and Other		94,647		77.9		75,374		77.8		19,273		25.6		62,719		76.6		94,647		77.9		(31,928	)		(33.7	)
Fifth Wheels		26,794		22.1		21,554		22.2		5,240		24.3		19,107		23.4		26,794		22.1		(7,687	)		(28.7	)

Total Towables		121,441		100.0		96,928		100.0		24,513		25.3		81,826		100.0		121,441		100.0		(39,615	)		(32.6	)


Impact of Change in Product Mix and Price on Net Sales:	% Increase
Towables
Travel Trailers and Other		~~6.8~~4.9
Fifth Wheels		~~3.3~~2.6
Total Towables		~~5.2~~4.8

The ~~increase~~decrease in total towables net sales of ~~30.5%~~27.8% compared to the prior-year period resulted from a ~~25.3% increase~~32.6% decrease in unit shipments and a ~~5.2%~~4.8% 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 six months ended January 31, ~~2018,~~2019, combined travel trailer and fifth wheel wholesale unit shipments ~~increased 24.4%~~decreased 22.0% compared to the same period last year. According to statistics published by Stat Surveys, for the six-month periods ended December 31, 2018 and 2017, our market share for travel trailers and fifth wheels combined was 50.1% and 50.0%, respectively. Comparisons of Company shipments to industry shipments on a quarterly basis would not necessarily be indicative of the results expected for a full fiscal year.

The increases in the overall net price per unit within the travel trailer and other product lines of ~~6.8%~~4.9% and the fifth wheel product lines of ~~3.3%~~2.6% 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~~decreased $626,141 to $1,910,460, or 88.4% of towables net sales, for the six months ended January 31, 2019 compared 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.~~2018. The changes in material, labor,freight-out and warranty costs comprised ~~$541,280~~$605,128 of the ~~$570,224 increase~~$626,141 decrease in cost of products sold. Material, labor,freight-out and warranty costs as a combined percentage of towables net sales ~~decreased~~increased to 81.6% for the six months ended January 31, 2019 compared to 79.2% for the six months ended January 31, ~~2018 compared to 79.7% for the six months ended January 31, 2017.~~2018. This ~~decrease~~increase in percentage was primarily the result of ~~a decrease~~an increase in the material cost percentage to net sales, primarily due to an increase in discounts and sales incentives, which effectively decreases the net sales price per unit and therefore increases the unit material cost percentage. In addition, material cost increases exceeded the favorable impact of 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~~period. The warranty cost percentage ~~due~~ to ~~the continued competitive RV labor market.~~net sales also increased. Total manufacturing overhead ~~increased $28,944~~decreased $21,013 with the ~~increase~~decrease in sales, but ~~decreased~~increased as a percentage of towables net sales from ~~6.1%~~5.6% to ~~5.6%~~6.8%, as the ~~increased~~decreased production resulted in ~~better absorption of fixed~~higher overhead ~~costs.~~costs per unit sold.

Towables gross profit ~~increased $128,273~~decreased $204,816 to $250,202, or 11.6% of towables net sales, for the six months ended January 31, 2019 compared to $455,018, or 15.2% of towables net sales, for the six months ended January 31, ~~2018 compared~~2018. The decrease in gross profit is primarily due to ~~$326,745,~~the 32.6% decrease in unit sales volume noted above, while the decrease in gross profit percentage is due to the increase in the cost of products sold percentage noted above.

Selling, general and administrative expenses were $121,515, or ~~14.2%~~5.6% of towables net sales, for the six months ended January 31, ~~2017. The increase in gross profit is primarily due~~2019 compared 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.~~

~~Selling, 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.~~2018. The primary reason for the ~~$28,384 increase~~$35,612 decrease was ~~increased~~decreased towables net sales and towables income before income taxes, which caused related commissions, bonuses and other compensation to ~~increase~~decrease by ~~$22,938. Legal,~~$36,153. Sales-related travel, advertising and promotion costs also decreased $3,138, while 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.$3,776.

Towables income before income taxes was $108,610, or 5.0% of towables net sales, for the six months ended January 31, 2019 compared to $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.~~2018. The primary reasons for the ~~increase~~decrease in percentage were the ~~decreases~~increases 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 VEHICLES

Analysis of the change in net sales for the six months ended January 31, ~~2018~~2019 compared to the six months ended January 31, ~~2017:~~2018:


	Six Months Ended January 31, 2018		% of Segment Net Sales		Six Months Ended January 31, 2017		% of Segment Net Sales		Change Amount		% Change		Six Months Ended January 31, 2019		% of Segment Net Sales		Six Months Ended January 31, 2018		% of Segment Net Sales			Change Amount			% Change
NET SALES:
Motorized
Class A	$	509,515		45.2	$	463,932		49.5	$	45,583		9.8	$	400,762		49.9	$	509,515		45.2		$	(108,753	)		(21.3	)
Class C		565,519		50.2		433,092		46.3		132,427		30.6		366,886		45.7		565,519		50.2			(198,633	)		(35.1	)
Class B		51,486		4.6		39,402		4.2		12,084		30.7		35,045		4.4		51,486		4.6			(16,441	)		(31.9	)

Total Motorized	$	1,126,520		100.0	$	936,426		100.0	$	190,094		20.3	$	802,693		100.0	$	1,126,520		100.0		$	(323,827	)		(28.7	)


	Six Months Ended January 31, 2018		% of Segment Shipments		Six Months Ended January 31, 2017		% of Segment Shipments		Change Amount		% Change		Six Months Ended January 31, 2019		% of Segment Shipments		Six Months Ended January 31, 2018		% of Segment Shipments			Change Amount			% Change
# OF UNITS:
Motorized
Class A		4,631		34.1		4,248		37.8		383		9.0		3,064		36.2		4,631		34.1			(1,567	)		(33.8	)
Class C		8,555		63.0		6,690		59.5		1,865		27.9		5,146		60.8		8,555		63.0			(3,409	)		(39.8	)
Class B		392		2.9		312		2.7		80		25.6		248		3.0		392		2.9			(144	)		(36.7	)

Total Motorized		13,578		100.0		11,250		100.0		2,328		20.7		8,458		100.0		13,578		100.0	��		(5,120	)		(37.7	)


Impact of Change in Product Mix and Price on Net Sales:	% Increase ~~(Decrease)~~
Motorized
Class A		~~0.8~~12.5
Class C		~~2.7~~4.7
Class B		~~5.1~~4.8
Total Motorized		~~(0.4~~9.0	)

The ~~increase~~decrease in total motorized net sales of ~~20.3%~~28.7% compared to the prior-year period resulted from a ~~20.7% increase~~37.7% decrease in unit shipments and a ~~0.4% decrease~~9.0% increase 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,~~2019, combined motorhome wholesale unit shipments ~~increased 16.1%~~decreased 22.1% compared to the same period last year. According to statistics published by Stat Surveys, for the six-month periods ended December 31, 2018 and 2017, our market share for travel trailers and fifth wheels combined was 38.6% and 38.4%, respectively. Comparisons of Company shipments to industry shipments on a quarterly basis would not necessarily be indicative of the results expected for a full fiscal year.

The ~~modest increases~~increase in the overall net price per unit within the Class A product line of ~~0.8%~~12.5% was primarily due to a shift in the concentration of sales toward the generally larger and more expensive diesel units from the more modestly-priced gas units compared to the prior-year period. The increase in the overall net price per unit within the Class C product line of ~~2.7% were~~4.7% was 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%~~4.8% 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~~decreased $277,475 to $722,181, or 90.0% of motorized net sales, for the six months ended January 31, 2019 compared 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.~~2018. The changes in material, labor,freight-out and warranty costs comprised ~~$158,958~~$272,040 of the ~~$164,955 increase~~$277,475 decrease due to ~~increased~~the decreased sales volume. Material, labor,freight-out and warranty costs as a combined percentage of motorized net sales ~~was~~increased to 85.0% for the six months ended January 31, 2019 compared to 84.7% for the~~six-month~~ ~~period~~ six months ended January 31, ~~2018 and 84.9% for thesix-month~~ ~~period ended January 31, 2017. The primary reason for this decrease~~2018. This increase in percentage was primarily the result of a ~~decrease~~slight increase in the ~~material~~warranty 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.percentage. Total manufacturing overhead ~~increased $5,997~~decreased $5,435 with the volume ~~increase,~~decrease, but ~~decreased~~increased as a percentage of motorized net sales from ~~4.2%~~4.0% to ~~4.0%~~5.0%, as the ~~increase~~decrease in production resulted in ~~better absorption of fixed~~higher overhead ~~costs.~~costs per unit sold.

Motorized gross profit ~~increased $25,139~~decreased $46,352 to $80,512, or 10.0% of motorized net sales, for the six months ended January 31, 2019 compared 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.~~2018. The ~~$25,139 increase~~decrease in gross profit was due primarily to the ~~20.7% increase~~37.7% decrease in unit sales volume noted above, and the ~~increase~~decrease as a percentage of motorized net sales is due to the ~~decrease~~increase in the cost of products sold percentage noted above.

Selling, general and administrative expenses were $39,060, or 4.9% of motorized net sales, for the six months ended January 31, 2019 compared to $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.~~2018. The ~~$8,835 increase~~$11,957 decrease was ~~partially~~primarily due to ~~increased~~decreased motorized net sales and motorized income before income taxes, which caused related commissions, bonuses and other compensation to ~~increase~~decrease by ~~$4,730.~~$10,670. 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 relatedsales-related travel, advertising and ~~promotional costs also increased $804 in connection with the sales increase.~~promotions expenses decreased $1,032.

Motorized income before income taxes was $38,917, or 4.8% of motorized net sales, for the six months ended January 31, 2019 compared to $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.~~2018. The primary ~~reason~~reasons for this ~~increase~~decrease in percentage ~~was~~were the ~~impact of the decrease~~increases in both the cost of products sold ~~percentage~~and selling, general and administrative expense percentages 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 Liquidity

As of January 31, ~~2018,~~2019, we had ~~$109,775~~$305,833 in cash and cash equivalents compared to ~~$223,258~~$275,249 on July 31, ~~2017.~~2018. The components of this ~~$113,483 decrease~~$30,584 increase in cash and cash equivalents are described in more detail below, but the ~~decrease~~increase 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.~~$134,630 being partially offset by capital expenditures of $54,802, and cash dividend payments of $41,189.

Working capital at January 31, ~~2018~~2019 was ~~$517,085~~$497,513 compared to ~~$399,121~~$542,344 at July 31, ~~2017, with the increase~~2018. This decrease is primarily attributable to ~~increases~~the impact of the foreign currency forward contract liability of $73,707 included in ~~accounts receivable and inventory due to~~ the ~~increases in sales, backlog and production lines.~~January 31, 2019 total. Capital expenditures of ~~$63,003~~$54,802 for the six months ended January 31, ~~2018~~2019 were made primarily for land and production building additions and improvements, as well as 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. As discussed in Note 17 to the Condensed Consolidated Financial Statements, on February 1, 2019 we obtained financing commitments for an asset-based credit facility and a term loan to fund the acquisition of Erwin Hymer Group (“EHG”). Upon closing of this acquisition, these new financing commitments replaced the asset-based facility in place as of January 31, 2019 obtained in conjunction with the Jayco acquisition. As such, the remaining unamortized facility fees related to this facility, which totaled $3,794 at January 31, 2019, will be expensed in the third quarter of fiscal 2019. We believe ouron-hand cash and cash equivalents, and funds generated from ~~continuing~~ operations, along with funds available under the new revolving asset-based credit facility obtained in conjunction with the EHG acquisition completed on February 1, 2019, 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.

~~While the Tax Act enacted in December 2017 is expected to generate additional cash flow in the future, our~~Our main priorities for the use of current and future available cash generated from operations ~~will continue to focus on~~include reducing indebtedness, funding our long-term growth, both organically and through ~~acquisitions,~~acquisition, and maintaining and growing our regular dividends over ~~time,~~time. We will also consider strategic and ~~reducing indebtedness. Strategic~~opportunistic repurchases of shares under the share ~~repurchases~~repurchase program, as discussed in Note 14 to the Condensed Consolidated Financial Statements, and special dividends or ~~special dividends,~~other strategic share repurchases, as determined by the Company’s ~~Board, will also continue~~Board.

In regard to ~~be considered. As a component~~reducing indebtedness, we made debt payments of ~~funding our growth, we anticipate making additional investments~~$20,000 in ~~our workforce through a variety of initiatives, including enhanced employee training and development programs and other initiatives that will be introduced~~February 2019 on the asset-based credit facility discussed in ~~fiscal 2018 and fiscal 2019 and targeted~~Note 17 to the ~~varying needs of our individual operating entities.~~

Condensed Consolidated Financial Statements. In regard to growing our business, we anticipate capital expenditures during the remainder of fiscal ~~2018~~2019 for the Company (excluding EHG) of approximately ~~$110,000,~~$60,000, primarily for the ~~continued expansion~~construction of ~~our facilities~~the new Airstream towables facility and replacing and upgrading machinery, equipment and other assets at all of 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, certain actions, including our ability to pay dividends, are subject to the satisfaction of certain payment conditions prior to payment. The conditions for the ~~payments~~payment of dividends under the existing debt facility include a minimum level of adjusted excess cash availability and a fixed charge coverage ratio test, both as defined in the credit agreement. 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.~~factors, in addition to compliance with any then-existing financing facilities.

Future purchases of the Company’s common stock or special cash dividends may occur based upon market and business conditions and excess cash availability, subject to potential customary limits and restrictions pursuant to ~~the~~any then-existing credit facility, applicable legal limitations and determination by the Board.

Operating Activities

Net cash provided by operating activities for the six months ended January 31, ~~2018~~2019 was ~~$56,845~~$134,630 as compared to net cash provided by operating activities of ~~$52,816~~$56,845 for the six months ended January 31, ~~2017.~~2018.

For the six months ended January 31, 2019, net income adjusted fornon-cash items (primarily depreciation, amortization of intangibles, foreign currency forward contract loss, deferred income tax benefit and stock-based compensation) provided $138,981 of operating cash. The change in net working capital used $4,351 of operating cash during that period, due in part to an increase in finished goods inventory due to January 2019month-end shipments being delayed due to severe weather conditions and a decrease in accounts payable due to the timing of payments for inventory. Incentive compensation payables also decreased due to reduced income before income taxes, and estimated income tax payments exceeded the income tax provision during the period as well. All of these decreases were mostly offset by a reduction in accounts receivable due to reduced sales levels.

For the six months ended January 31, 2018, net income adjusted fornon-cash items (primarily depreciation, amortization of intangibles, deferred income tax ~~provision~~benefit and stock-based compensation) provided $285,477 of operating cash. The ~~change~~changes in ~~net~~ working capital used $228,632 of operating cash during that period, primarily ~~as a~~the result of a larger than usual seasonal increase in accounts receivable due to both the timing of shipments and the increase in sales. Inventory also increased in ~~conjunction~~correlation with the increases in backlog and production facilities and lines, and ~~required~~estimated income tax payments exceeded the income tax provision during the period as well. These increases were partially offset by increases in accounts payable and accrued liabilities.

~~For~~Investing Activities

Net cash used in investing activities for the six months ended January 31, ~~2017, net income adjusted fornon-cash~~ items (primarily depreciation, amortization of intangibles, deferred income tax provision and stock-based compensation) provided $194,056 of operating cash. The changes in working capital used $141,240 of operating cash during that period,2019 was $58,236, primarily due to seasonal increases in accounts receivable and inventory in correlation with the increases in sales, backlog and production lines. In addition, required income tax payments exceeded income tax provisions during the period.

~~Investing Activities~~capital expenditures of $54,802.

Net cash used in investing activities for the six months ended January 31, 2018 was $58,491, primarily due to capital expenditures of $63,003, partially offset by proceeds received on the ~~disposition~~dispositions of property, plant and equipment of $3,552.

Financing Activities

Net cash used in ~~investing~~financing activities for the six months ended January 31, ~~2017~~2019 was ~~$53,622,~~$45,810, primarily ~~due to capital expenditures~~for regular quarterly cash dividend payments of ~~$50,924 and a final purchase price adjustment payment~~$0.39 per share for each of ~~$5,039 related to~~ the first two quarters of fiscal ~~2016 acquisition of Jayco, partially offset by proceeds received on the dispositions of property, plant and equipment of $4,554.~~

~~Financing Activities~~2019 totaling $41,189.

Net cash used in financing activities for the six months ended January 31, 2018 was $111,837, primarily for principal payments on the previous revolving credit facility totaling $65,000 and regular quarterly cash dividend payments of $0.37 per share for each of the first two quarters of fiscal 2018 totaling $38,994.

~~Net cash used in financing activities for the six months ended January 31, 2017 was $74,441, primarily for principal payments on the revolving credit facility totaling $35,000 and~~The Company increased its previous regular quarterly ~~cash~~ dividend ~~payments~~ of ~~$0.33~~$0.37 per share ~~for each of~~to $0.39 per share in October 2018. In October 2017, the ~~first two quarters of fiscal 2017 totaling $34,704.~~

~~The~~ Company increased its previous regular quarterly dividend of $0.33 per share to $0.37 per ~~share in October 2017. In October 2016, the Company increased its previous regular quarterly dividend of $0.30 per share to $0.33 per~~ share.

Accounting Pronouncements

Reference 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have exposure to market risk from changes in short-term interest rates on our variable-rate ~~debt.~~debt as discussed in Note 11 to the Condensed Consolidated Financial Statements. 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)~~borrowings), our results of operations and cash flows for the six months ended January 31, 2019 and January 31, 2018 would not have been materially affected.

ITEM4. CONTROLS AND PROCEDURES

The Company maintains “disclosure controls and 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 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,~~2019, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM1. LEGAL PROCEEDINGS

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

ITEM1A. RISK FACTORS

~~There have been no material changes from~~In addition to 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.~~2018, we are exposed to certain additional risks and uncertainties which could have a material adverse impact on our business, financial condition and operating results as a result of our recent acquisition.

On February 1, 2019, we completed our acquisition of Erwin Hymer Group (“EHG”). The risk factors set forth herein relate primarily to the acquisition, the related financing and the nature of EHG’s operations.

The risks described herein or in our Annual Report on Form10-K are not the only risks facing us. New risk factors or risks that we currently deem immaterial emerge from time to time and it is not possible for us to predict all such risk factors, nor to assess the impact such risk factors might have on our business, financial condition and operating results, or the extent to which any such risk factor or combination of risk factors may impact our business, financial condition and operating results.

2932

The Company’s level of debt, which increased as a result of the EHG acquisition, makes us more sensitive to the effects of economic downturns; and provisions in our debt agreements could constrain the options available to us to react to changes in the economy or our industry.

Our outstanding debt increased significantly as a result of the EHG acquisition on February 1, 2019. Upon completion of the EHG acquisition, we had approximately $2.2 billion of combined indebtedness outstanding under our new term loan and ABL credit facilities. In addition, the majority of this indebtedness is currently subject to floating interest rates.

Our current level of debt makes us more vulnerable to significant changes in our results of operations because a portion of our cash flow from operations will be dedicated to servicing our debt and not available for other purposes. Our current level of debt could also impair our ability to raise additional capital, if necessary. Further increases in interest rates will increase the amount of cash required for debt service.

Our ability to make payments on our indebtedness depends on our ability to generate cash in the future. Although our required annual principal payments are only 1% of the original term loan balance, with additional payments required under certain circumstances, if we do not generate sufficient cash flow to meet our debt service, capital investment and working capital requirements, we may need to reduce or cease our payments of dividends, we may be unable to repurchase our shares, or we may need to seek additional financing or sell assets.

In addition, the increased indebtedness may have the effect, among other things, of reducing our flexibility to respond to changing business and economic conditions, requiring us to use substantial amounts of cash flow to repay indebtedness, increasing borrowing costs and placing us at a disadvantage compared to competitors with lower debt obligations.

In addition, our credit facilities contain certain provisions that limit our flexibility in planning for, or reacting to, changes in our business and our industry, including limitations on our ability to:

declare dividends or repurchase capital stock;

prepay or purchase other debt;

incur liens;

make loans, guarantees, acquisitions and investments;

incur additional indebtedness;

amend or otherwise alter debt and other material agreements;

engage in mergers, acquisitions or asset sales; and

engage in transactions with affiliates.

Prior to the EHG acquisition, EHG was a privately-held company and its new obligations arising from being a part of a public company may require significant additional resources and management consideration.

Upon the completion of the EHG acquisition, EHG and its subsidiaries became subsidiaries of our consolidated Company and will need to comply with U.S. GAAP financial reporting, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Act and the rules and regulations subsequently implemented by the SEC and the Public Company Accounting Oversight Board. We will need to ensure that EHG establishes and maintains effective disclosure controls as well as internal controls and procedures for financial reporting under U.S. GAAP, and such compliance efforts may be costly and may divert the attention of management. There are a large number of processes, policies, procedures and functions that must be integrated, or enhanced at EHG, particularly those related to the implementation of a SOX compliant control environment. The execution of these plans may lead to additional unanticipated costs and time delays. These incremental transaction and acquisition-related costs may exceed the savings we expect to achieve from the realization of efficiencies related to the combination of the businesses, particularly in the near term and in the event there are material unanticipated costs.

We assumed certain guarantees that had been previously made by EHG related to their former North American Operations

These guarantees may result in the obligation to cash settle the underlying guarantee at amounts that exceed our initial expectations if the North American Operations do not honor their underlying obligations.

ITEM6. EXHIBITS


Exhibit		Description

3.1		Thor Industries, Inc. Amended and Restated~~By-Laws~~ Certificate of ~~Thor Industries, Inc.~~Incorporation, as amended (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form8-K dated December ~~13, 2017)~~20, 2018)

3.2		Thor Industries, Inc. Amended and RestatedBy-Laws, as amended (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form8-K dated December 20, 2018)

31.1		Chief Executive Officer’s Rule13a-14(a) Certification

31.2		Chief Financial Officer’s Rule13a-14(a) Certification

32.1		Chief Executive Officer’s Section 1350 Certification

32.2		Chief Financial Officer’s Section 1350 Certification

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Calculation Linkbase Document

101.PRE		XBRL Taxonomy Presentation Linkbase Document

101.LAB		XBRL Taxonomy Label Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

Attached as Exhibits 101 to this report are the following financial statements from the Company’s Quarterly report on Form10-Q for the quarter ended January 31, ~~2018~~2019 formatted in XBRL (“eXtensible Business Reporting Language”): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income and Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows, and (iv) related notes to these financial statements.

3034

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		THOR INDUSTRIES, INC.
		(Registrant)

DATE: March ~~7, 2018~~6, 2019		/s/ Robert W. Martin
		Robert W. Martin
		President and Chief Executive Officer

DATE: March ~~7, 2018~~6, 2019		/s/ Colleen Zuhl
		Colleen Zuhl
		Senior Vice President and Chief Financial Officer

3135


Cash	$	18,409
Other current assets		258,158
Property, plant and equipment		80,824
Dealer network		261,100
Trademarks		92,800
Backlog		12,400
Goodwill		74,184
Current liabilities		(216,776	)

Total fair value of net assets acquired		581,099
Less cash acquired		(18,409	)

Total cash consideration for acquisition, less cash acquired	$	562,690


ORDER BACKLOG:	As of January 31, 2018		As of January 31, 2017		Change Amount		% Change
Recreational vehicles
Towables	$	1,816,520	$	1,323,451	$	493,069		37.3
Motorized		981,837		766,893		214,944		28.0

Total	$	2,798,357	$	2,090,344	$	708,013		33.9


	Six Months Ended January 31, 2018					Six Months Ended January 31, 2017					Change Amount			% Change
NET SALES:
Recreational vehicles
Towables	$	2,991,619				$	2,293,122				$	698,497			30.5
Motorized		1,126,520					936,426					190,094			20.3

Total recreational vehicles		4,118,139					3,229,548					888,591			27.5
Other		150,932					112,887					38,045			33.7
Intercompany eliminations		(65,843	)				(45,379	)				(20,464	)		(45.1	)

Total	$	4,203,228				$	3,297,056				$	906,172			27.5


# OF UNITS:
Recreational vehicles
Towables		121,441					96,928					24,513			25.3
Motorized		13,578					11,250					2,328			20.7

Total		135,019					108,178					26,841			24.8


GROSS PROFIT:				% of Segment Net Sales					% of Segment Net Sales		Change Amount			% Change
Recreational vehicles
Towables	$	455,018			15.2	$	326,745			14.2	$	128,273			39.3
Motorized		126,864			11.3		101,725			10.9		25,139			24.7

Total recreational vehicles		581,882			14.1		428,470			13.3		153,412			35.8
Other, net		21,631			14.3		19,984			17.7		1,647			8.2

Total	$	603,513			14.4	$	448,454			13.6	$	155,059			34.6


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Recreational vehicles
Towables	$	157,127			5.3	$	128,743			5.6	$	28,384			22.0
Motorized		51,017			4.5		42,182			4.5		8,835			20.9

Total recreational vehicles		208,144			5.1		170,925			5.3		37,219			21.8
Other		4,808			3.2		4,592			4.1		216			4.7
Corporate		38,399			—		23,762			—		14,637			61.6

Total	$	251,351			6.0	$	199,279			6.0	$	52,072			26.1


INCOME (LOSS) BEFORE INCOME TAXES:
Recreational vehicles
Towables	$	275,579			9.2	$	172,173			7.5	$	103,406			60.1
Motorized		75,124			6.7		57,411			6.1		17,713			30.9

Total recreational vehicles		350,703			8.5		229,584			7.1		121,119			52.8
Other, net		13,773			9.1		12,074			10.7		1,699			14.1
Corporate		(36,320	)		—		(27,493	)		—		(8,827	)		(32.1	)

Total	$	328,156			7.8	$	214,165			6.5	$	113,991			53.2