THOR Industries President & CEO Bob Martin on Early RV Shows, Starlink Partnership & 2023 Outlook

Thank you, gentlemen. Thanks again for having me on. Always look forward to catching up and seeing what the big questions of the day are.

Yes, it was great. Perfect weather in Tampa. I was there from Industry Day on Tuesday and came home on Friday. Throughout the week, great attendance. It wasn't quite a record, but I think it was their second best year for attendance. On Wednesday, when people came rolling in, you could really see it and feel it. The RV lifestyle is alive and well. The campground was busier than I've ever seen it in several of the camping groups, like the Tiffin groups and the Integral groups. They were in full force. There were a lot of big units out there enjoying the weather and the show. A lot of dogs and strollers, always.

Yeah, it is. The last couple months of the year were pretty tough, not knowing what we were going to go into in the shows. So it was refreshing to get there and see long lines to get in and check into the Tampa show. But then, talking to many of our dealers from throughout the country, Canada, and Europe, all the shows have been really well attended. You've got to remember, this is the third year of the pandemic we've been facing. Some cities haven't had shows for a couple years, and some dealers haven't come to shows for a couple years. So you're getting a lot of customers that maybe didn't attend for the last two years, and they're coming back. It was interesting to see everywhere. The dealers have shared with me that they had great attendance and great shows. If they're not record-breaking, they're top three in sales. Units are moving, and dealers are happy to see that. Overall, I've been pleasantly surprised.

Yeah, it depends on the product and the dealer. Some dealers are great show dealers and geared towards it, and some would rather sell on their lot. Shows are a great barometer for us, but not the only one. Ultimately, Tampa is really busy and important because a lot of sales happen at the show, but a lot of people go to see product and then go back to Michigan and buy their unit in the spring, or work a deal over the phone. It's just great exposure for the industry. We need these snowbirds to come in big numbers, and luckily they did.

Not yet. You can't have just a one-week data point or several weeks. But as we get through January and into February, that's where we'll really start looking at the business and what we need to do, and what the rates will be for the rest of the year. Right now, dealers have inventory depending on the product. Some are starting to run lower, some are still tighter. Our Airstreams never really caught up on their inventory. Some of the higher-end products were moving in the shows, which is good. Dealers need to move some of those big units. It's a different deal. For a couple years, customers would come to a show and hear they couldn't get a motorhome for a year, but now they can get motorhomes in the US. They've caught up. We'll see here in a few more weeks, then get together with all of our presidents and get more feedback. We talk to dealers constantly, not just from the shows, but getting sentiment from people close to the customer tells us what we need to do to run the business.

For me, it's interesting because I love to go to shows and see what the customers are saying. We worry about inflation and interest rates, but I think we also remember that an RV is relative to what people are seeing in the world. I walked into a Montana fifth wheel and listened to a customer explaining why they were buying that unit. They said they wanted to buy a cottage, but they're so expensive now and have gone up tremendously in price. So even though our prices are higher, on a relative basis, it's still a very affordable way to enjoy a vacation and move around with your family. It gets back to the core of what our industry is, and our people are selling that at these shows.

Yeah, that was pretty cool. Starlink came to us over the summer months, and we had some meetings with them. We took them on a tour of our Class B plant in Bristol. They brought out a portable Starlink and popped it up, showing us how quickly it downloaded. We were all really impressed. In the press release, my Chief Operating Officer threw in that I mounted one on my little motorhome and drove our executive team to Red Bay. It's hard to get to, and we had a board meeting down there. So I threw our team in my little B van and drove. I bought a Starlink online to see what the consumer experience was like. After getting it, it fired up within 60 seconds. We had a group of executives on their email, downloading PowerPoints, working. It ended up being longer than the nine-hour drive I thought, more like 12. But it was invaluable. In the evening, people were streaming movies. It works. I started seeing influencers on social media showing videos of all the Starlinks out in the campground. It's expensive to put on, but many people have Hulu, a Roku, a Fire Stick, and all their streaming services. This works really well. I added my Disney Plus account, my Hulu account, and next thing I know, I've got TV everywhere while on the move. I've had tracking satellites before on my bigger motorhomes, and this frankly worked better. I think it'll be really interesting. One of the things that brought us interest in them is that Starlink actually works better in rural areas and doesn't work as well in dense city populations. It gets a little clogged up in cities, but when you go rural, that's when it's at its highest performance. That's perfect for the RV industry. When we heard that, we were pretty excited. They're excited too. A lot of the Starlink team, when they go down to Texas, they stay in Airstreams. The company bought a bunch of Airstreams to house people when they go down. Some cool connections. For me, it works well. I was happy to add it, and I'm glad to have it for next football season too.

Not yet. We needed some good shows coming out of January, February, March. I think we're off to a good start. But as you look at the macro, there's still a war going on in Europe, interest rates are higher. Some of the macro events are going to give us some challenges. But we've been through it before. I think people settle in on price and interest rates a little bit. We need some breaks. We're working with our dealers because we know their inventory is higher. Some still have model year '22s they want to move. We're working with our dealers, and we know we need to get some inventory flow. It all starts with retail. We're all focused on working with the dealers. It was good for me going to Tampa, seeing a good number of our best customers down there. They all share the same sentiment: they need to get some flow going on their inventory. But from the shows, they were pretty happy. This year, we have snow in Elkhart today, but it's been a pretty mild winter up here. Dealers still had lot traffic and a lot of web traffic. That's usually a good precursor that people are shopping. We've had great web traffic at our companies, and dealers are seeing great web traffic as well. Great signs. But you need the actual sale to go over the curb before dealers have the confidence to bring more in. We're balancing it, working with the customers to make sure we never stop developing products. I was glad to go to Tampa and see all the new products our teams designed there. That's what gets people excited. But it's a different situation than the last two years where they had no inventory. Now they've got inventory, and we need to work with them to help get that moving. Then they'll start the order process again. I think this will set us up for more of a normal year. The last two years, everyone will agree, have not been normal. We just got to settle back in. But as an industry, we'll be good. There's still tremendous popularity and interest in the lifestyle, and it'll continue to grow. It'll just take a little time to get there.

I think for us, we'll have to get through this first quarter of the year. More looking to get through the show season, into our summer retail selling season. I think by the second half of this year, it'll look more normal. We started the Open House for a reason because we needed it to set everybody up for the spring selling season. We finally got back to the Open House this year, but even this year's Open House wasn't normal because dealers had inventory. I think as we get into this coming fall, everybody's going to understand where their inventory needs to be, and we'll hit back to what normal is. But it'll be this fall.

Because we haven't even talked about it yet. We'll bring it up again in about three weeks. It's usually in spring we start talking about the date. But it's no secret. It's usually you give some time after Hershey's show. I frankly haven't looked at the calendar. We haven't talked about it. It'll be something we get into later this spring. But I would say, definitely already looking forward to the Open House. Probably more product than ever. The display last year worked really well. We had one rain day, but other than that, it was a great week. Just great to see our dealer partners again. Everybody was happy to come back. We had great attendance. It'll be coming. Your sources are better than mine for the date. We'll see. We'll cut you some slack on that.

Yeah, thank you very much. Always great to catch up. Thanks for having me on.