Editor’s Note: Elkhart, Ind.-based THOR Industries Inc. – world’s largest manufacturer of recreational vehicles – on Wednesday released its 2024 annual report. Following is the letter to shareholders from company President and CEO Bob Martin that was included in the report.
We are proud to have built a company that can perform in any market and across any economic cycle.
Fiscal Year 2024 demonstrated the value of our investment in geographic and product diversity and our ability to execute on our proven downturn playbook, advancing key initiatives and margin improvements while maintaining our focus on prudent alignment of our production with the retail environment, particularly within our North American market. While macroeconomic uncertainties persist, we remain committed to delivering value to our shareholders.
In fiscal year 2024, we delivered record results in Europe, improving both margin and market share and are now the European leader in total industry market share. Our North American operating companies produced strong margins relative to current market conditions through production optimization and strategic initiatives to drive margin improvements, validating our efforts to structurally enhance margins even under challenging conditions.
As an enterprise, we achieved over $10.0 billion in net sales. We generated net income attributable to THOR of $265.3 million, or $4.94 per diluted share. From a cash flow perspective, we continued to effectively manage inventory within the current environment, contributing to cash flows from operations of $545.5 million for the fiscal year. We utilized this cash to repay $224.2 million of our total debt and returned $170.5 million to shareholders in the form of cash dividends and repurchases of common stock.
Continued Leadership in Innovation
Our global innovation team continues to set the pace for new developments that will change not only the face of our products but how we produce them. We introduced several exciting innovations at our recent Dealer Open House, including a first of its kind, plug-in hybrid Class A motorhome prototype. We partnered with Harbinger Motors to develop a motorhome chassis capable of a combined 500-mile range, well ahead of the current range expectations of consumers. The prototype was on display at our Dealer Open House, offering dealers, media and investors the opportunity to experience first-hand the superior ride and handling of this coach ahead of our planned commercialization in calendar 2025.
Continuing the electrification trend, we introduced the HV-1 towable chassis that includes battery packs and solar power generation to enable consumers to stay off grid for an extended duration. Off-grid camping has been one of the biggest trends among consumers for the past several years, but the challenge has been creating a way to power appliances, climate systems and technology without being connected to a power source. The HV-1 towable chassis will allow owners to camp off grid for weeks on end, without giving up the comforts of home.
In addition to these innovations, our team has also been working on automation and improved processes that will enhance the productivity of our workforce and the quality of our products. The team has developed new automation for laminated sidewall routing that enhances efficiency and alleviates pressure on one of the most physically demanding and highest turnover positions within our production process.
As a further enhancement, we also introduced printed sidewalls, which can be printed with a range of custom and standard designs, enhancing quality and reducing labor content on the manual design application process. Beyond their attractiveness, printed sidewalls also offer enhanced quality and the ability to easily repair damage from regular use.
Responsible Leadership
In fiscal year 2024, we released our sixth annual Corporate Sustainability Report outlining our ongoing efforts in environmental, social and governance matters. Our efforts encompass THOR’s four core values that also shape the way we approach sustainability: Adventurous (Environmental), Community, Compassionate (Social Responsibility) and Trustworthy (Effective Governance).
Our innovation work has been a key component of our environmental efforts, as we work to drive energy efficiency and reduce the environmental impact of our products, in alignment with what our core consumers are demanding. Social responsibility encompasses the work we do surrounding our great team members and how we positively impact our communities. We are focused on creating a culture where every member of our team can thrive.
In terms of effective governance, we are fortunate to have an incredibly talented and diverse Board of Directors. Our entire management team benefits from the oversight, perspective and depth of experience of our Board as we develop and implement long-term strategic plans. During fiscal 2024, we added a new director, Jeff Lorenger. Jeff is a proven leader in manufacturing and managing independent distribution networks, leading some of the best-known brands in the office furniture industry. We are looking forward to his contributions as we pursue our innovation strategy and employ continuous improvement initiatives in every aspect of our business.
A Conservative Approach to Fiscal 2025
As we look forward to the coming fiscal year, we are encouraged by the Federal Reserve’s recent first steps in the reduction of interest rates and other macroeconomic factors that will boost consumer confidence in the long term. Until those factors and additional interest rate reductions fully materialize, we still see challenges in the near term. As a result, our full-year fiscal 2025 guidance reflects our conservative outlook on the macroeconomic conditions.
For fiscal 2025 we expect:
- Consolidated net sales in the range of $9.0 billion to $9.8 billion
- Consolidated gross profit margin in the range of 14.7% to 15.2%
- Diluted earnings per share in the range of $4.00 to $5.00
We remain confident in the strong return of our market as macroeconomic conditions improve and our optimism remains steadfast. We are already seeing early signs of improvement, starting with the recent retail shows this fall. The strong growth in interest in the RV lifestyle remains, and we see consumers who bought RVs in the past three years on the cusp of entering a renewed trade-in cycle.
In North America, our operating plan for fiscal 2025 reflects an industry wholesale shipment range of between 330,000 and 345,000 units with wholesale shipments matching retail demand in total, but we are expecting that dealers will hold off as long as possible on stocking for the spring selling season to keep inventory levels low over the winter months. In Europe, we face a tougher comparison to the record results posted in fiscal year 2024 as well as the conclusion of dealer restocking, resulting in our outlook for a modest reduction in European segment net sales.
In the meantime, we will continue to operate the Company as efficiently as possible in the current challenging environment. Our operating companies are well positioned to leverage the capacity of THOR to realize the financial benefits of the coming return of a robust retail environment where we expect to seize market share and meaningfully grow diluted EPS as we have after previous down cycles. We remain confident that our strong financial position and status as the global leader in the RV industry enables THOR to meet the challenges of the current market, positioning us for success in the long term.
Finally, I would like to express my gratitude to each member of our global team for their dedication and hard work to enhance the experiences of families of all types who enjoy the outdoors and for delivering on THOR’s promise to Go Everywhere, Stay Anywhere. I also want to thank our shareholders and other stakeholders for your continued confidence and dedication to our company as we work to achieve our long-term strategic vision.
Bob Martin, president and chief executive officer
Click here to see the complete annual report.
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