THOR's Bob Martin Sees Long Term Positives

Welcome. Thank you, thanks for having me. It's always an honor to share a little conversation with both of you. Thank you for that.

Yeah, I have no idea. I know it was a big day and I saw some of the social media, but college athletics are very different right now with the portal and NIL and things we could talk about for hours. And then just to add to that, Purdue being number one in basketball nationally is noteworthy.

It was painful, it was painful.

Yeah, for me, obviously it was a rough year for all, especially in North America with all the interest rate increases and all the macro events. Sometimes things are out of our control, so for me and our companies, we just try to control the things we can. The outside world is going to do what it does. So it's been a challenge, but I'm very blessed to have a team of people that have worked with me for many 10 plus years, 20 plus years, people that I call friends, and it makes the tough times easier to get through. We've got great dealer partners throughout North America as well that give us great feedback, and how we kind of check the temperature of what past year was and what next year could be is really through the dealers we talk to. So for me, I just finished up board meetings last week. It's been a fall of constant travel, either traveling to Europe for our subsidiary there, Erwin Hymer Group, that is kind of bucking the trend. Europe is remaining a very strong part of our business. It's quite simple: in Europe, 80% of the customers pay for their units in cash, they don't rely on financing, so the interest rates aren't driving their business. Whereas in the US, it's the opposite, about 80% finance, so interest rates do have a direct effect. Our teams there have had a great summer, great fall, and we're very happy to have our European business unit right now performing at a very high level. So for us, we have that little bit of balance. And then just looking at next year, it's still cautiously optimistic to see what's coming, but we're always excited for what's around the corner.

Yeah, no one has the crystal ball, but I think you see some of the things from the stock market, the Fed signaling possibly some cuts. That's something we need, and those positive signs can really help us get back to more of a normalized rate. But it'll probably be that second half of the year. So for me, December is always a horrible barometer because it's hard to compete against Santa. We've had snow here in Northern Indiana a few times. So we're really waiting for a lot of these spring shows to give us the first great barometer. For us, it's Cleveland, Tampa, those mid-January shows are going to give us a great feel of how busy the shows are, how sales are going, what the optimism is.

Yeah, obviously all of our companies are all in separate displays. You walk in through the main front door and you have the iconic Airstream in the first hall, and that's always a showpiece for everybody. But really everywhere you go, our companies had a great open house week, they had a lot of new features, products, refinements, and a lot of those will be on display at Tampa. Tampa last year was another very large crowd, over 70,000 people. I think we'd still be looking for that. Tampa is just one that people come from all over to see product. They may buy at Tampa, or they may go buy from their home dealer when they get back in the spring or work something out over the phone. But I think Tampa should be another very strong show. Good times or bad, customers go to shows, they love to shop, they love to see what's new. So we're excited for that. We're excited just to be there. We'll be there in full force. Probably be one of the biggest Tampas ever. So I think for us, we're just excited to get down there and see what customers think. Again, we don't have the crystal ball, we kind of move with the market. As we're down there, we'll be there, we'll be busy, and we're excited to go.

I mean, there are comparisons, but it's everything's different. You go back, you had the spike of COVID down and right back up. 9/11, that was something where the industry slowed for a period of time and then went right back up very quickly. And then I was at Keystone in '08, '09, and with the credit being the biggest thing, it was extended there as well. So it's not exactly like any others. But for us, anytime the macro has an effect, we just keep doing what we're doing. We focus on products, innovation, new features. We keep our product development machine going. Some may back off, we kind of lead into it because we know that as it comes back, and it will, and our customers are many, they own an RV and they don't have to trade in every three to five years, they just many of them choose to do so. So for us, we're really just leaning into that as we look at what the future holds. We're not the best at predicting, but we're really good at reacting as an industry. So that's probably one of my best ways of presenting it. It's always a challenge for me. I have to present a three-year plan to my board, and there are some years that you're on, some years that you're off, but we've been pretty consistent with the guidance that we've given. I also tend to look at some of the outside indicators such as Toby at KOA. We talk periodically, and they put out great information just on campground bookings. Even in '08, '09, before Toby was there, Pat was the CEO of KOA, and I can remember in a tough time, about this time of year, I called Pat and he said, 'Listen, our bookings are still very strong for next year.' And Toby's confirmed that their bookings are still very good. So people are camping, they're continuing the lifestyle. It's a lifestyle that many or most, once they start, they don't get out of it. They simply grow, they change units, they go to a bigger unit, sometimes a smaller, but once you get this camping in your blood, you don't really leave it. And there's still many of the macro effects. I don't know if you've flown recently, just the security's up, the flights are tough, they're packed, they're expensive, hotels are expensive. I still have to travel quite a bit, and when you're at the RVDA convention, just seeing the price of meals while you're out there, our lifestyle still is very affordable compared to many other ways to recreate. So I still think there's great positives, and we're just looking to the future. We get through these tough times, you just kind of hunker down and you have a good team that rallies through.

Yeah, no, it's '08, '09 was still the toughest time I've ever had. There are many things you have to do just for the greater good of the company, and it's a lot of cuts, a lot of things that are painful. You do it so that you can come back and come back stronger. This is where Thor's kind of built for this with our variable business model that Peter and Wade created, and we just follow their handbook and their guidance. I'm lucky, I still have Peter on the board, so he's been through this many more times than I have, and so I'm able to draw upon people with more experience than I have, even though I look like I'm about 60, I'm only about 54.

You're talking about Ryan and Kyle? Yeah. What triggered it ultimately was the passing of one of our presidents and one of our friends, Mr. Kukan, in May. That's something we've never experienced, and so you rely on some of your outside mentors and guidance on what to do. Matt Zimmerman did a great job. He took his time, he moved to KZ at least part-time and helped manage the company for several months, and then made the changes of moving Kyle to Heartland and Ryan Juday to KZ. For us, it's just something we do. We're proud that we can make these moves from within. We have a very strong bench. We had great options, but at the end of the day, Matt worked with me, he worked with our executive staff, he talked to the other presidents, he just got feedback on who's going to be the best fit to backfill some positions. It's something we've had to do over the years for many reasons, never quite like this, but I think the overall feedback has been very good that you've got the right people in the right spot. Moving them from physical locations just places that really play upon their strengths. Ryan Juday, he's that good farm boy that fits right in in Shipshewana, literally he does. And Kyle, he's aggressive, and even for him, he lives on the north side of town and he was driving to Keystone 30, 40 minutes a day. So we take many different things into account. But again, we're just really blessed that we have a deep, deep bench, and it's something we talk about all the time, succession planning. We have to be prepared for the unforeseen, and you're never totally prepared, but we were, I feel like, especially Matt Zimmerman, then all the presidents banded together and helped each other and did the right thing in a tough time.

Yeah, we've taken a lead but with caution. We're watching. Again, there needs to be an infrastructure before people can focus too much on EV cars, EV trailers. We introduced at Tampa last year, or two years ago, our eStream, which was our first, well it was actually our second, we built one in Europe the year before that. That's a trailer that if you're towing it, you really don't feel it behind you because it's running on its own drive motors with batteries, and it can actually charge the car. But the cost is still quite high right now. And then part of what you're referring to is the push of the plan of charging. We really need legislators and our RVIA to help push for charging stations that not just one, you really need them where you can pull up, there's one for your car and there's one for your trailer. So we laid out a creative schematic of what that would look like. K. Featherstone leads our innovation team, and he laid out this presentation, and it really is, even if you think about it, cars towing an RV, but other industries will have to come to this as well. Over-the-road trucking, as we go more EV, they need this infrastructure. And for us, we're doing it with caution because we're watching the EV car market kind of hit a blip right now as well. So it's just something that we do want to be first, we want to be a leader, but we know where our core business is, and we're not going to get ahead of our skis.

Thank you. I didn't go count them up, but well, I did.

Really no big surprises at Tampa for us. Two years ago we had the EV unveiling. I'm there with investors, they'd love to come to that show. So there's no real event other than just all the RVs that you saw at open house, most of those will be at the show on display for sale. Part of the reason we had the shift in the timeframe of open house over the years from a fall to a fall timeframe, so dealers when they saw the product they could buy it and they could have it for the spring show. Looking at everything, dealers are really focused well on their previous model years, their '22s and '23s, so I think you'll have a good strong showing of a lot of '24s at the new show just to create the excitement. It's what our teams do really well in product development, creating the excitement to where a customer may walk in the show with no intent to buy, but if there's been a little bit of positive news, rates lower, gas whatever it is, I've watched people just walk in and be caught off guard and all of a sudden they fall in love and they find themselves buying a new camper. So I'm sure you'll see some of that, but to what extent I really don't know until I get down there and experience it.

Yeah, no, no, mine was unceremoniously. I was a lineman, so you're lucky to get your letter and your family's there for a quick picture with your coach, and maybe there's something in the paper, but it's nothing like you see today. But it's very interesting, times have changed, and I think everybody's trying to navigate through that. But no, for me, it's not a lot of pomp and circumstance for a lineman.

Yeah, thank you very much. Happy Holidays, gentlemen. Enjoy some time off hopefully with your families, and I'll see you in the next year.