Risk Factors Dashboard

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Risk Factors - THO

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ITEM 1A. RISK FACTORS

The following risk factors should be considered carefully together with the other information contained in this Annual Report on Form 10-K.

Additional risks and uncertainties not presently known to us or that we currently deem not material may also harm our business.

MACROECONOMIC, MARKET AND STRATEGIC RISKS

RV industry sales volumes can be volatile as the industry is both cyclical and seasonal, making our business subject to significant fluctuations in production rates, sales, net income and stock price.

The RV industry has historically been characterized by cycles of growth and contraction in consumer demand, generally reflecting prevailing overall economic and market conditions (such as the level of inflation, interest rates and tariffs), consumer sentiment, consumer behavior and demographic conditions which affect disposable income for leisure-time activities. These changes can affect the RV industry suddenly and significantly. Consequently, the results of any prior period may not be indicative of results for any future period. Furthermore, if RV industry sales were to decline to levels significantly below our planning assumptions, the decline could have a substantial adverse effect on our financial condition, results of operations and cash flows.

The market price of our common stock may experience significant volatility due to factors both related and unrelated to our operating performance, including changes in economic and industry conditions, interest rates and credit availability, trade and regulatory developments, competitive activity, investor expectations regarding our growth and profitability and other events beyond our control. Our stock price may also reflect expectations regarding our strategic initiatives, dividend rate and stock repurchase activity. If we fail to meet these or other market expectations, the price of our common stock could decline significantly.

With our global footprint, macroeconomic, geopolitical and trade-related developments could materially adversely affect our business.

Due to the interconnectedness of the global economy, a financial crisis, economic downturn or recession, trade policy volatility, geopolitical tensions, armed conflicts, sanctions, export controls, natural disasters, public health emergencies or other significant events in one area of the world can have a sudden material adverse effect on global markets, international trade, supply chains and the regions in which we operate and sell our products. RV industry sales volume in our key markets can be volatile and could decline if there is a financial crisis, recession or significant geopolitical event. Historically, we have seen that in times of economic uncertainty, consumers who have less discretionary income generally defer spending on high-cost, discretionary products, such as RVs.

The RV industry is generally characterized by relatively low barriers to entry, which results in a highly competitive business environment. According to Stat Surveys and CIVD, respectively, there are approximately 80 RV manufacturers in the U.S. and Canada and approximately 30 RV manufacturers across Europe. In periods of economic downturn, these competitive pressures can increase as RV manufacturers compete for a share of a smaller RV market. Sustained increases in these competitive pressures could have a material adverse effect on our results of operations.

Due to the anticipated long-term interest in the RV lifestyle, a number of start-up companies in North America, and certain automotive manufacturers, in both North America and Europe, have in the recent past entered the RV industry and introduced products that directly compete with our products. In addition, a number of our operating subsidiaries compete directly with each other.

We also compete against consumer demand for used recreational vehicles, particularly during periods of economic downturn. Increased availability of used recreational vehicles and significant price differences between new and used recreational vehicles, as a result of an economic downturn or otherwise, could have a material adverse effect on demand for our products and our results of operations. We also compete with other discretionary leisure and vacation alternatives. Changes in the availability or relative value of these alternatives could reduce demand for new recreational vehicles and adversely affect our sales and profitability.

Our success depends on our ability to develop, commercialize and market innovative products and technologies.

Technological advances, changing consumer preferences and evolving governmental regulations may require us to modify our product offerings, including the continued development of lightweight, electric, hybrid, autonomous and connected recreational vehicles, as well as related digital services. The increasing integration of connected vehicle technologies, telematics and software-enabled features into our products may also expose us to additional product development costs, cybersecurity and data privacy risks, evolving regulatory requirements applicable to connected vehicles and potential liability associated with the performance, security or reliability of these technologies.

Successfully developing, manufacturing and commercializing new products and services requires significant investment and involves substantial uncertainty. Our investments in automation, product innovation and digital capabilities may not achieve their intended benefits or generate commercially successful products. New products may not achieve market acceptance, may reduce sales of existing products or may be introduced by competitors more successfully or at lower prices. If we fail to successfully develop, commercialize or adapt our products and services to evolving market conditions, our sales, profitability and competitive position could be materially adversely affected.

OPERATIONAL RISKS

Increases in the cost of raw materials and component parts could adversely affect our business, financial condition and results of operations.

Our manufacturing operations require substantial quantities of raw materials and component parts, including aluminum, lumber, petroleum-based products, chassis, electronics, appliances, furniture and other components. The prices of these materials and components are subject to volatility due to inflation, changes in supply and demand, tariffs and trade policies, energy costs, transportation costs, labor costs, currency fluctuations and other economic factors beyond our control. Our ability to recover higher costs depends on market conditions, consumer demand, competitive pricing pressures and dealer acceptance of price increases. In periods of weakened demand or heightened competition, we may be unable to fully recover increased costs through higher selling prices. In addition, sustained increases in the cost of raw materials or component parts, or our inability to timely recover those increases through pricing or other cost-saving initiatives, could reduce gross margins and profitability and materially adversely affect our net sales, results of operations, cash flows and financial condition.

We depend on timely and sufficient delivery of raw materials and component parts from our suppliers. If there is a shortage of raw materials or component parts in our supply chain or a supplier is unable to deliver raw materials and component parts to us because of production issues, labor constraints, limited availability of materials, shipping problems or other reasons, the shortage may disrupt our operations or increase our cost of production. Such conditions adversely affect net sales and financial results due to delays in completing units on the production line and carrying higher volumes of incomplete units than historical norms.

Additionally, some of our suppliers have in the past discontinued, or could in the future discontinue, their business or the materials or component parts we currently acquire from them with little or no warning. If we are not adequately sourced for certain raw materials or key component parts, the discontinuation of even some smaller suppliers could have an adverse effect on our business.

Furthermore, certain raw materials and component parts are sourced from countries where we do not currently have operations. Changes in trade policy and resulting tariffs that have or may be imposed, along with port, production or other delays, have, in the past, and could, in the future, cause increased costs for, or shortages of, certain raw materials and components. If alternative sources of these raw materials and components are not readily available, our net sales, earnings and cash flows could be adversely affected.

Such conditions adversely affect our results of operations.

Government regulations aimed at reducing emissions and increasing fuel efficiency that impact our motorized chassis suppliers could adversely affect their production capacity and cost structure, which could in turn adversely affect the supply of motorized chassis and/or result in increased input costs for our products.

In addition, increased restrictions have been, and may in the future be, imposed on various products and chemicals utilized in the production of our vehicles. These include a class of chemicals known as per- and polyfluoroalkyl substances ("PFAS") and products containing, or capable of releasing, formaldehyde. PFAS are widely used in parts and materials that are incorporated into our products, and restrictions on PFAS may adversely affect our supply chain due to the potentially decreased availability, or unavailability, of PFAS-containing parts and materials. Likewise, many of the wood-based products, adhesives, and other materials used in our vehicle interiors can release formaldehyde. Recently adopted European Union restrictions establish formaldehyde emission limits for articles placed on the EU market after August 6, 2026 and for the interior of road vehicles placed on the EU market after August 6, 2027, and other jurisdictions, including the United States, impose similar formaldehyde emission standards on composite wood products. Compliance with these and similar future requirements may require changes to the materials we use, increase our material, testing and production costs, limit the availability of compliant materials from our suppliers or restrict our ability to sell certain products in affected markets, any of which could adversely affect our net sales, earnings and cash flows.

We rely on a small number of suppliers for certain key components, including chassis, and we may not be able to source these key components from alternative suppliers.

Certain key components are currently produced by only a small group of suppliers that have the capacity to supply large quantities, primarily (1) motorized chassis, where there are a limited number of chassis suppliers, and (2) doors, towable frames, slide-out mechanisms, axles and upholstered furniture for our recreational vehicles, where LCI Industries is a major supplier for these items within the North American RV industry.

Consolidation within our North American RV industry supplier base, including announced or future mergers, acquisitions or other strategic transactions involving significant key component suppliers, could reduce the number of available suppliers for certain products, increase supplier concentration, enhance the bargaining position of our suppliers, inhibit our ability to source components from alternative suppliers, and could result in increased component costs or inadequate supply. For example, in June 2026 Patrick Industries and LCI Industries, two of the largest component suppliers to the North American RV industry, announced a proposed merger which, if completed, would further increase supplier concentration within our industry. These conditions may result in decreased margins, higher wholesale product costs or limited production output, which could ultimately result in lower demand for our products, decreased sales and reduced operating results.

In addition, as is standard in the industry, our arrangements with chassis and other suppliers are generally terminable at any time either by us or by the supplier. If we cannot obtain an adequate supply of chassis, raw materials or other key components, this would result in a decrease in our sales and earnings.

We provide warranties on the products we sell. These warranties vary depending on the type of product and geographic location of the sale; however, in general, our warranties promise, within certain specified time periods following a retail sale, that we will repair, replace or adjust parts on our products that are not performing within acceptable standards or tolerances. These warranties extend to some, but not all, of our vendor-supplied raw materials and component parts as well. Estimated warranty costs are accounted for at the time of product sale and adjusted on a quarterly basis to reflect our best estimate of the amounts necessary to settle existing and future claims on our products. An increase in actual warranty claim costs as compared to our estimates could result in increased warranty liabilities and expense, which could have an adverse effect on our earnings.

Government safety standards require manufacturers to remedy issues related to vehicle safety through safety recall campaigns, and we regularly engage in voluntary recalls when we determine our products may have a safety issue. Issues subject to recall include both materials and workmanship from our companies as well as component parts supplied by vendors, arising from their quality issues or otherwise. In addition, multiple recalls to address safety or significant operating concerns could erode consumer confidence in our brands and adversely affect our reputation or the public perception and market acceptance of our products, resulting in lower sales and could adversely affect our business and results of operations. Although we maintain appropriate reserves for such recall contingencies, from time to time we have been and likely will again be faced with specific campaigns that result in material expense. To mitigate this risk, we endeavor to compel our suppliers to maintain appropriate levels of insurance coverage and agree to commercially reasonable indemnification requirements. Our efforts may not be successful and the failure of suppliers to maintain sufficient insurance coverage or provide meaningful indemnification protection could result in increased expense and adversely affect our financial condition and results of operations.

Our business and results of operations may be harmed if the frequency and size of product liability or other claims against us increase.

We are subject, in the ordinary course of business, to litigation involving product liability, consumer protection and other claims against us. In North America, we generally self-insure a portion of our exposure to product liability and certain other claims and also purchase product liability coverage above our self-insured retention. In Europe, we generally fully insure similar risks with insurance offering relatively low deductibles and premiums. Not all risks we face are covered by insurance, nor can we be certain that our insurance coverage will be sufficient to cover all future claims against us.

While we record, and adjust on a quarterly basis, reserves for known claims or possible claims to reflect our best estimate of the amount necessary to settle the claim, litigation is inherently unpredictable and final adjudications may be materially worse than our estimate.

The loss of our largest independent dealer or an increase in independent dealer consolidations could have a material adverse effect on our business.

Sales to FreedomRoads, LLC accounted for approximately 13.0% of our consolidated net sales for fiscal 2026. During recent years, FreedomRoads, LLC has acquired a number of formerly independent RV dealerships. The leverage to negotiate better terms with us arising from FreedomRoads, LLC’s acquisitions or the loss of independent dealers could have a material adverse effect on our business.

Recently, a number of other U.S.-based independent dealers have acquired, and continue to acquire, formerly independent RV dealerships, resulting in further independent dealer concentration and improved negotiating leverage for these multi-location dealers. Continued consolidation in the U.S. independent dealer network could adversely affect our sales or gross margins and increase the concentration of our exposure under repurchase obligations related to these independent dealers.

Combined sales from the U.S. to foreign countries (predominantly Canada) and sales from our foreign subsidiaries to countries other than the U.S. (predominantly within the European Union) represented approximately 39.4% of THOR’s consolidated sales for fiscal 2026. Changes in U.S. trade policy, tariffs or other governmental actions may adversely affect customer demand, market conditions and perceptions of U.S.-based businesses in certain international markets. In addition, global political uncertainty poses risks of volatility in global markets, which could adversely affect our operations and financial results.

Factors affecting our non-U.S. sales have adversely affected our financial operating results in the past and are likely to recur in the future, at varying levels. These implications include foreign currency effects, tariffs, customs duties, inflation, difficulties in enforcing agreements and collecting receivables through foreign legal systems, compliance with international laws, treaties and regulations, unexpected changes in regulatory or tax environments, disruptions in supply or distribution, dependence on foreign personnel and various employee work agreements, foreign governmental action, as well as economic and social instability. In addition, there may be tax inefficiencies in repatriating cash from non-U.S. subsidiaries or unfavorable tax law changes.

Our U.S.-based subsidiaries have expenses and sales denominated in U.S. dollars. Sales by our U.S.-based subsidiaries into the Canadian market are subject to currency risk as devaluation of the Canadian dollar versus the U.S. dollar may adversely affect U.S.-dollar denominated sales into Canada. Our European-based subsidiaries primarily have Euro-denominated expenses, sales and assets, which are subject to changes in the Euro and U.S. dollar currency exchange rate. To offset a portion of this currency risk, the EHG acquisition was partially funded through a Euro-denominated Term Loan B, which provides an economic hedge. Fluctuations in foreign currency exchange rates in the future could have a material adverse effect on our reported revenues and results of operations.

We are also subject to additional foreign regulatory frameworks, in some cases, more stringent or complex than similar United States frameworks. These emerging regulations are likely to require significant resources and could increase our cost of doing business, restrict our ability to operate our business or execute our strategies, and result in fines, penalties, or reputational harm if we fail to comply with them.

We continually review and evaluate our business to identify strategic opportunities to make our operations more efficient and reduce costs. Our plans for implementing such actions are generally in response to external RV industry market factors or internal cost saving and efficiency opportunities. These actions may also include employee separations, realignment of our operating footprint (e.g., plant closures) or other strategic actions. Further, we may not realize the expected benefits of such reorganizational actions (e.g., anticipated cost savings), such benefits may be delayed, or market dynamics or other factors may have evolved such that we cannot obtain the original intended results of an action.

Business acquisitions pose integration and other risks.

Our growth has been achieved both organically and through acquisition. Business acquisitions, including joint ventures and other equity investment arrangements, pose a number of risks, including integration risks, that may result in negative consequences to our business, financial condition or results of operations. The pace and significance of acquisitions and the nature and extent of integration of acquired companies, assets, operations, joint venture arrangements and other equity investment arrangements involve a number of related risks including:

•The diversion of management’s attention from the management of existing operations to various transaction and integration activities;

•The potential for disruption to existing operations and strategic plans;

•The assimilation and retention of employees, including key employees;

•Risks related to transacting business in geographies outside the U.S., including but not limited to: foreign currency exchange rate changes, expanded macroeconomic risks due to operations in and sales to a wide base of countries, political and regulatory exposures to a wide array of countries, varying employee/employer relationships, including the existence of works councils and labor organizations and other challenges caused by distance, language and cultural differences, making it harder to do business in certain jurisdictions;

•Risks related to regulatory environments or product categories with which we have limited or no experience;

•Risks related to acquisitions outside of our historical RV OEM operations, which may carry new and less understood operational challenges;

•The ability of our management teams to manage expanded operations, including international operations, to meet operational and financial expectations;

•The integration of departments and systems, including accounting systems, technologies, books and records, controls and procedures;

•The adverse effect on profitability if acquired operations, joint ventures or other equity investments do not achieve expected financial results or realize the synergies and other benefits expected;

•The potential loss of, or adverse effects on, existing business relationships with suppliers and customers;

•The assumption of liabilities of the acquired businesses, which could be greater than anticipated;

•The potential failure of our due diligence efforts to identify and properly evaluate risks or liabilities acquired or assumed in acquisition transactions;

•The potential adverse effect on available cash and/or future cash flows to support acquisitions, joint ventures or equity investments and related commitments; and

•The potential adverse effect on operating results if, in future periods, impairments of significant amounts of goodwill and other assets occur.

Cybersecurity incidents or technology disruptions could adversely affect our operations, financial condition and reputation.

Our business relies on information systems and other technology (“information systems”), including enterprise resource planning systems, cloud-based applications, software-as-a-service (“SaaS”) applications, managed technology services and other systems that are owned, operated, managed or hosted by third parties, to support aspects of our global business operations including procurement, supply chain management, manufacturing, engineering, design, distribution, invoicing, financial reporting, treasury activities, human resources, customer relationship management and other transactions with suppliers, financial institutions and third-party service providers. We also use information systems to accumulate, analyze and report our operational results. In connection with our use of information systems, we obtain, create and maintain confidential and personal information. Additionally, we rely upon information systems in our marketing and communication efforts. Due to our reliance on our information systems, we have established various levels of security as well as backup and disaster recovery procedures. Despite devoting significant resources to our cybersecurity program and business continuity plans, we are at risk for interruptions, outages and compromises of our information technology systems caused by cyber-attacks, including state-sponsored attacks, computer viruses, malware, ransomware, phishing attacks or breaches due to errors or misconduct by employees and others who have access, or gain access, to these systems. The occurrence of any of these events could compromise the confidentiality, operational integrity and accessibility of these systems and the data that resides within them and our business processes and operations may be adversely affected in the event of a substantial or prolonged disruption of service caused by such events.

We and others within the RV industry, including suppliers, dealers, cloud service providers, software vendors, managed service providers and other third-party technology providers, have been the target of cyber-attacks in the past, and such attacks are expected to continue and evolve in the future. A cybersecurity incident, operational failure, prolonged outage, software defect, service interruption or other disruption affecting one or more of our third-party technology providers could impair our ability to manufacture products, procure materials, process transactions, manage inventory, communicate with dealers and suppliers, access critical business information or prepare timely and accurate financial information. Moreover, a cybersecurity incident could harm our reputation, cause customers to lose trust in our security measures and/or subject us to regulatory actions or litigation, which may result in fines, penalties, judgments or injunctions.

The methods and technologies used to obtain unauthorized access to our information systems are constantly changing as are laws and regulations concerning data protection and privacy. Additionally, our increasing reliance on cloud environments and SaaS applications may increase our dependence on the availability, security and resilience of third-party technology providers. Any material failure by these providers to maintain appropriate security controls, system availability, disaster recovery capabilities or regulatory compliance could adversely affect our operations, financial reporting processes and business continuity. We employ capabilities, processes and other security measures we believe are reasonably designed to detect, reduce and mitigate the risk of cybersecurity incidents, however, we may not be aware of all vulnerabilities or might not accurately assess the risks of incidents, and such preventive measures cannot provide absolute security and may not be sufficient in all circumstances or mitigate all potential risks, including the loss or disclosure of sensitive information.

Our success depends on our ability to attract, develop and retain qualified employees and key management personnel.

We depend on our ability to attract, develop and retain qualified hourly and salaried employees to support our operations. Competition for skilled employees can be intense, particularly during periods of high industry demand, and may require higher compensation and benefits costs. Evolving employee expectations and the introduction of new technologies may also require us to invest in employee development and enhance our compensation and benefit offerings. In addition, healthcare, workers’ compensation and other employee benefit costs may increase due to higher utilization, regulatory requirements or other factors. New or revised governmental mandates may also cause our operating results and financial condition to suffer.

We also rely on the knowledge, experience and skills of our executive management and key operating company personnel. Our continued success depends on our ability to attract and retain these employees and maintain effective succession plans. The loss of key personnel, particularly if suitable successors are not available, could adversely affect our business and results of operations.

Collective labor arrangements, additional unionization or work stoppages could increase our costs or disrupt our operations.

These arrangements may increase labor costs or limit our ability to adjust staffing levels or working hours in response to market conditions.

We also depend on suppliers and transportation providers with unionized workforces. Strikes, work stoppages or other labor disruptions involving our employees or these third parties have in the past, and could in the future, disrupt the manufacture, sale or distribution of our products and adversely affect our business and results of operations.

Our business depends on the performance of independent, non-franchise authorized dealers and third-party transportation carriers.

We distribute all of our North American and the majority of our European products through a system of independent, non-franchise authorized dealers, many of whom sell products from competing manufacturers. We depend on the capability of these independent dealers to develop and implement effective retail sales plans to create demand among retail consumers for the products that the dealers purchase from us. The geographic coverage of our independent dealers and their individual business conditions can affect the ability of our independent dealers to sell our products to consumers. If our independent dealers are unsuccessful, they may exit or be forced to exit the business or, in some cases, we may seek to terminate relationships with certain dealerships. As a result, we could face adverse consequences related to the termination of independent dealer relationships. In addition, ongoing consolidation of independent dealers, as well as the growth of large, multi-location dealers, has in the past and could in the future result in increased bargaining power on the part of these independent dealers.

Given the independent nature of the dealers who sell our products, they generally maintain control over which manufacturers, and which brands, they will do business with, often carrying more than one manufacturer’s products. Independent dealers can, and do, change the brands and manufacturers they sell.

The network of carriers is limited, and in times of high demand and limited availability, we have experienced in the past, and could face again, the disruption of our distribution channel. If future health emergencies, military conflicts or other circumstances that inhibit transportation of our products emerge in the regions in which we operate or sell our products, the network of carriers we rely on may have difficulty finding drivers who are available and willing to deliver in those regions or governmental agencies or other actors may restrict movement of goods in those regions. The inability to timely deliver our products to our independent dealers could adversely affect our relationships with those dealers and adversely affect our sales and net income.

The concentration of our U.S. operations and certain key suppliers in northern Indiana exposes us to regional risks.

A majority of our U.S. operations and a number of our key suppliers are located in northern Indiana, where a significant portion of the North American RV industry is concentrated. As a result, regional labor shortages, natural disasters, public health emergencies or other disruptions could simultaneously affect our operations and supply chain, increase our costs or limit our ability to respond to changes in demand, which could adversely affect our results of operations.

Natural disasters and adverse weather conditions could adversely affect our operations and financial results.

Natural disasters and changes in seasonal weather conditions can have a significant effect on our operating and financial results. Demand for our products is generally stronger during the spring and summer months, and unfavorable seasonal weather conditions during these periods may reduce consumer demand. In addition, natural disasters and severe weather events, including flooding, tornadoes, severe winter storms and hail, may disrupt our manufacturing operations, damage facilities or inventory, interrupt our supply chain network, or otherwise adversely affect our ability to manufacture products. While we maintain property and business interruption insurance to address such events, our coverage may not be adequate to fully offset all losses or may not be available on commercially reasonable terms in the future. Long-term changes in climate and weather patterns, including rising temperatures, water scarcity and other chronic physical risks, could adversely affect our global manufacturing operations, which could, in turn, affect our ability to fulfill customer demand. Additionally, the chronic, physical risks of temperature increases, rising sea levels and other gradual changes to the climate could adversely affect global ecosystems.

LEGAL AND REGULATORY RISKS

More stringent privacy, data use, data protection and artificial intelligence laws and regulations as well as consumers’ heightened expectations to safeguard their personal information may have an adverse effect on our business.

We are subject to laws, rules and regulations in the United States and other jurisdictions (such as the European Union’s and the U.K. Accordingly, complying with such laws and regulations may lead to a decline in consumer engagement or cause us to incur substantial costs to modify our business practices.

The rapid evolution and increasing adoption of artificial intelligence (“AI”) technologies may further increase these risks and introduce additional legal, operational and cybersecurity challenges. We, and certain of our third-party service providers, may increasingly utilize AI-enabled technologies to support various business functions. The use of AI may create risks associated with inaccurate, incomplete or biased outputs; unauthorized disclosure of confidential, proprietary or personal information; infringement or misappropriation of intellectual property rights; cybersecurity vulnerabilities and evolving regulatory requirements governing the development, deployment and use of AI technologies. In addition, third-party AI tools and service providers may not operate in accordance with our expectations or applicable legal and regulatory requirements, and we may have limited visibility into or control over their development, training methodologies, security practices or use of data.

As AI technologies continue to evolve, existing and new laws, regulations and industry standards governing AI, automated decision-making, transparency, accountability and data usage may impose additional compliance obligations, require changes to our business practices or increase our operating costs. Although we may establish governance frameworks, policies, employee training and other controls designed to promote the responsible use of AI technologies, these measures may not prevent misuse, unauthorized use, inaccurate outputs, regulatory noncompliance or other unintended consequences. Any actual or perceived failure to appropriately govern the use of AI technologies by us or our third-party providers could adversely affect our operations, financial condition, reputation or results of operations.

Our business is subject to numerous national, regional, federal, state and local regulations in the various countries in which we operate, sell and/or use our products.

Our operations are subject to numerous national, regional, federal, state and local regulations governing the manufacture and sale of our products, including various vehicle and component safety and compliance standards. In various jurisdictions, governmental agencies require a manufacturer to recall and repair vehicles which contain certain hazards or defects. Any recalls of our products, voluntary or involuntary, could have a material adverse effect on our results of operations and could harm our reputation. Additionally, changes in policy, regulations or the imposition of additional regulations could have a material adverse effect on our business.

Our U.S. operations are also subject to federal and numerous state consumer protection and unfair trade practice laws and regulations relating to the sale, transportation and marketing of motor vehicles, including so-called “lemon laws.” U.S. federal and state, as well as various European laws and regulations, impose upon vehicle operators’ various restrictions on the weight, length and width of motor vehicles that may be operated in certain jurisdictions or on certain roadways. Certain jurisdictions also prohibit the sale of vehicles exceeding length restrictions. U.S. federal and state, as well as various European, authorities impose environmental control standards relating to air, water, noise pollution and hazardous waste generation and disposal which affect our business and operations. Numerous other U.S. and European laws and regulations affect a wide range of the Company’s activities.

We are also subject, in the ordinary course of business, to litigation and claims arising from numerous labor and employment laws and regulations, including potential class action claims arising from alleged violations of such laws and regulations. Any liability arising from such claims would not ordinarily fall within the scope of our insurance coverages.

Climate-related regulations and ongoing compliance requirements with chassis emissions standards designed to address climate change in both North America and Europe may result in additional disclosure requirements and compliance costs or limit the use of our products in certain areas.

Our operations and certain motorized products we sell are subject to rules limiting emissions and other climate-related regulations in certain jurisdictions where we operate or sell our products. The impacts of changing emissions and other related climate regulations (including revised emission standards applying to heavy-duty trucks by the EPA as well as zero-emission vehicle regulations such as the California Air Resources Board’s Advanced Clean Truck and Advanced Clean Fleet Regulations adopted in California and other U.S. jurisdictions) could result in different or more limited product offerings in those jurisdictions which may result in lower sales and significantly higher costs. Climate-related reporting regulations, such as the European Corporate Sustainability Reporting Directive and California SB 253/SB 261, in the various jurisdictions in which our products are produced, used and/or sold could result in additional material costs of compliance. In addition, our towable products are generally towed by vehicles that would also be subject to emissions and climate-related regulations. Concerns regarding climate change at numerous levels of government in various jurisdictions may lead to additional and potentially more stringent international, national, regional and local legislative and regulatory responses, and compliance with any new rules could be costly and difficult.

Climate change regulation combined with public sentiment could result in reduced demand for our products, higher energy and fuel prices or carbon taxes, limitations on where we can produce or sell our products, limitations on where our products can be used or other restrictions or costs, all of which could materially and adversely affect our business and results of operations.

Furthermore, we obtain motorized chassis from a number of different chassis suppliers who are required to comply with strict emission standards. Compliance efforts, changing business priorities or strategic decisions by chassis manufacturers could delay the introduction of compliant chassis, reduce available production capacity, limit the types or variety of chassis offered to the recreational vehicle industry or increase chassis costs. Changes to chassis specifications or product offerings may also require modifications to our engineering, manufacturing and production processes, resulting in additional costs, production inefficiencies or delays. If chassis manufacturers discontinue or reduce production of chassis used in our products, limit the availability of certain chassis configurations or significantly increase prices, we may incur additional costs, experience production disruptions or be unable to offer certain products, which could materially adversely affect our net sales, results of operations, cash flows and financial condition.

Evolving stakeholder expectations and regulatory requirements relating to environmental, social and governance matters could adversely affect our business.

We are subject to increasing expectations from investors, consumers, employees, regulators and other stakeholders regarding environmental stewardship, social responsibility, corporate governance, business ethics and other sustainability-related matters. These expectations continue to evolve and may differ among stakeholder groups and jurisdictions. Failure to appropriately manage or communicate these matters, comply with applicable regulatory requirements or meet evolving stakeholder expectations could adversely affect our reputation, employee recruitment and retention, access to capital and operating results. For example, our RV products are powered by gasoline and diesel engines or are required to be towed by gasoline or diesel-powered vehicles. Government policies, evolving regulatory requirements, consumer preferences, investor expectations and broader market developments relating to environmental matters may affect demand for our products, increase compliance costs, influence access to capital or require changes to our products, operations or supply chain.

Various investors, customers, lenders, employees, regulators and other stakeholders may evaluate our environmental, social and governance practices using differing standards, methodologies or expectations. These expectations may continue to evolve and may differ across jurisdictions or stakeholder groups. Failure to satisfy these evolving expectations, or differences between our practices and external stakeholder expectations, could adversely affect our reputation, customer and business relationships, ability to attract and retain employees, access to capital and results of operations.

We may be unable to adequately protect our intellectual property, and third parties may assert that our products or technologies infringe their intellectual property rights.

Our brands, trade names, trademarks, patents and other proprietary rights are important to our business, and we rely on a combination of intellectual property registrations, contractual protections and enforcement actions to protect them. Failure to adequately protect our intellectual property could diminish the value of our brands and adversely affect our competitive position and results of operations.

In addition, third parties have asserted, and may in the future assert, claims that our products, components or technologies infringe their patents or other intellectual property rights. As our products increasingly incorporate connectivity, software and other digital technologies, we may also receive demands to license patents, including patents claimed to be essential to industry technology standards. Defending against these claims, regardless of merit, can be costly and divert management attention, and an adverse outcome could require us to pay damages or ongoing royalties, cease manufacturing or selling certain products, redesign products or components or obtain licenses on unfavorable terms, any of which could adversely affect our business, financial condition and results of operations.

Anti-takeover provisions in our organizational documents could delay or prevent a change of control.

Certain provisions of our Amended and Restated Certificate of Incorporation, our Amended and Restated By-Laws and the Delaware General Corporation Law may have an anti-takeover effect and could delay, defer or prevent a merger, acquisition, tender offer or other change of control transaction that stockholders might consider in their best interests, including transactions that may involve a premium over the market price of our common stock.

These provisions provide for, among other things, the ability of our Board of Directors to issue one or more series of preferred stock without further stockholder action; advance notice for nominations of directors by stockholders and for stockholders to present matters to be considered at our annual meetings; limitations on convening special stockholder meetings; and a requirement that a director may be removed without cause, and that certain “business combinations” not approved by 75% of the directors then in office may be approved, only by the affirmative vote of the holders of 75% of our shares entitled to vote generally in the election of directors, voting as a single class. In addition, Section 203 of the Delaware General Corporation Law prohibits us from engaging in a “business combination” with an “interested stockholder” for three years after the time at which a person became an interested stockholder unless certain conditions are met.

These provisions could discourage, delay or prevent a third party from acquiring us or otherwise discourage transactions that stockholders may consider favorable. As a result, these provisions could limit opportunities for our stockholders to receive a premium for their shares.

FINANCIAL RISKS

Changes in tax rates, tax legislation or exposure to additional tax liabilities or tariffs could adversely affect our results of operations, cash flows, financial condition, dividend payments or strategic plans.

We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Our domestic and international tax liabilities are dependent upon the location of earnings among, and the applicable tax rates in, these different jurisdictions. Tax rates in various jurisdictions in which we operate or sell our products may increase to fund existing or future governmental programs.

Our effective income tax rate could also be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in statutory rates, changes in the valuation of deferred tax assets and liabilities or changes in tax laws or their interpretation. If our effective tax rate were to increase, or if the ultimate determination of our taxes owed is for an amount in excess of amounts previously accrued, our operating results, cash flows and financial condition could be adversely affected, which, in turn, could adversely affect the availability of cash for dividend payments or our strategic plans.

In addition, the potential for the imposition of new or additional U.S. tariffs on imports as well as potential retaliatory tariffs or other measures other countries may impose on U.S. imports has increased under the current U.S. federal administration. Supply chain disruptions and delays as a result of any new tariff policies or trade restrictions could also adversely affect our cost of materials, production processes and financial results.

In accordance with customary practice in the RV industry, upon the request of a lending institution financing an independent dealer’s purchase of our products, we will generally execute a repurchase agreement with the lending institution.

The difference between the gross repurchase price and the price at which the repurchased product can then be resold, which is generally at a discount to the original sale price, is an expense to us. In difficult economic times, this amount could increase significantly compared to historical periods.

We could incur impairment charges for goodwill, intangible assets, equity investments or other long-lived assets.

We have a material amount of goodwill, intangible assets, equity investments and other long-lived assets, including property, plant and equipment. At least annually, we review goodwill for impairment. Long-lived assets, equity investments, identifiable intangible assets and goodwill are also reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable from future cash flows. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of the business or other factors. A non-cash impairment charge is recorded for the amount by which the carrying value of the intangible or long-lived asset, asset group or reporting unit exceeds its fair value at the time of measurement. Our determination of future cash flows, future recoverability and fair value includes significant estimates and assumptions. Changes in those estimates or assumptions or lower-than-anticipated future financial performance may result in the identification of an impaired asset and a non-cash impairment charge, which could be material. Any such charge could adversely affect our operating results.

Our business is affected by the availability and terms of financing to independent dealers and retail purchasers.

Generally, independent recreational vehicle dealers finance their purchases of inventory with financing provided by lending institutions.

The impact of inflation on consumer confidence, which historically has been highly correlated with RV retail sales, and the impact of inflation on the availability of discretionary funds of our end consumers, combined with higher interest rates compared to previous years affecting both our independent dealers and end consumers, has had an adverse effect on demand for our products at both the wholesale and retail levels in recent periods. Ongoing elevated interest rates or future substantial or sudden increases in interest rates and decreases in the general availability of credit could have an adverse effect on our independent dealers and therefore on our business and results of operations.

Two major floor plan financial institutions held approximately 50% of our products’ portion of our independent dealers’ total floored dollars outstanding at July 31, 2026. In the event that either of these lending institutions limit or discontinue dealer financing, we could experience a material adverse effect on our results of operations.

Our debt arrangements and provisions in our debt agreements may make us more sensitive to the effects of economic downturns.

In addition, we 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 the generation of annual cash flows in excess of certain amounts. Our level of debt impacts our profit before tax and cash flows as a result of the interest expense and periodic debt and interest payments.

Our ability to make payments on our indebtedness depends on our ability to generate cash in the future. If we do not generate sufficient cash flows to meet our debt service, capital investment and working capital requirements, we may need to fund those requirements with additional borrowings from the asset-based credit facility (“ABL”), reduce or cease our payments of dividends, reduce our level of capital investment and/or working capital or we may need to seek additional financing or sell assets.

Availability under the ABL agreement is subject to a borrowing base calculated based on a percentage of applicable eligible receivables and eligible inventory. As such, we may not have full access to our current ABL availability based on the actual borrowing base calculation at any future period.

Changes in market liquidity conditions, credit ratings and other factors may impact our access to future funding and the cost of debt.

Significant changes in market liquidity conditions and changes in our credit ratings could impact our access to future funding, if needed, and funding costs, which could adversely affect our earnings and cash flows. If general economic conditions deteriorate or capital markets are volatile, future funding, if needed, may be unavailable or insufficient.

Our risk management and compliance processes may not be effective in identifying or mitigating all material risks.

We maintain enterprise risk management processes, governance structures, internal controls and compliance programs designed to identify, assess, monitor and mitigate risks across our business. However, these processes cannot anticipate, identify or mitigate every risk we may face and may not be effective under all circumstances. Rapidly evolving business conditions, emerging technologies, changes in laws and regulations, human error, misconduct by employees or third parties, or other unforeseen events may expose us to risks that are unidentified, underestimated or inadequately managed. If our enterprise risk management processes fail to identify or appropriately respond to material risks in a timely manner, our business, financial condition, results of operations or reputation may be adversely affected.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 1C. CYBERSECURITY RISK MANAGEMENT, STRATEGY AND GOVERNANCE

Risk Management and Strategy

While cybersecurity risk can never be eliminated entirely, we devote significant resources to our cybersecurity program that we believe is reasonably designed to mitigate our cybersecurity and information technology (“IT”) risks—which include, among others, unauthorized access to and misappropriation of our information, corruption of data, intentional or unintentional disclosure of confidential information, or disruption of operations. Cybersecurity risk management processes have been integrated into our overall risk management system, including our ERM process. Threats to our cyber/digital landscape are regularly identified and then assessed in terms of their potential business impact. Mitigation strategies are developed based on our assessment of the potential business impact (both quantitatively and reputationally) of the threat. This expertise may involve third-party resources with functional expertise related to the specific threat or business impact. As part of our risk management profile, we regularly review available cybersecurity data regarding our business partners (suppliers, dealers, third-party service providers and others) and regularly engage with them on risk mitigation efforts.

Internally, among other things, we perform penetration tests, internal tests/code reviews, and simulations using cybersecurity professionals to assess vulnerabilities in our information systems and evaluate our cyber defense capabilities. We also perform phishing and social engineering simulations with, and provide cybersecurity training for, personnel with access to our e-mail systems and assets.

When a cybersecurity incident is detected, our response is governed by our IT Security Incident Response Policy, providing a rigorous, standardized process to ensure efficacy of the response. In general, when a cybersecurity incident is identified, our policy requires an initial review and triage of the incident. As with risk mitigation, we may engage third-party advisors, from time to time, as part of our incident response and management process. As part of our risk mitigation efforts, we also maintain cybersecurity insurance to defray the costs of potential information security breaches.

However, despite the capabilities, processes, and other security measures we employ that we believe are designed to detect, reduce, and mitigate the risk of cybersecurity incidents, we may not be aware of all vulnerabilities or may not accurately assess the risks of incidents, and such preventive measures cannot provide absolute security and may not be sufficient in all circumstances or mitigate all potential risks. Moreover, we, our suppliers and our dealers have been the target of cybersecurity incidents in the past and may be subject to such incidents in the future. See Item 1A. “Risk Factors” for a discussion of cybersecurity risks.

Governance

The Company’s Audit Committee of our Board of Directors is charged with specific responsibility for overseeing risks from cybersecurity threats. Our Data Protection Officer provides the Audit Committee with semi-annual reports on cybersecurity risks and any material cybersecurity incidents. In addition, our Data Protection Officer provides semi-annual reports directly to our Board of Directors. These regular updates include topics related to cybersecurity practices, cyber risks and risk management processes, such as updates to our cybersecurity programs and mitigation strategies, and other cybersecurity developments.

Reporting directly to our General Counsel, our Data Protection Officer has primary day-to-day responsibility for our overall cybersecurity risk management program and oversees both our internal cybersecurity personnel and our retained external cybersecurity consultants. With close to 25 years of experience in the fields of cybersecurity and data protection, our Data Protection Officer joined the Company in 2019.

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