Executing on diversification, operational
improvements, and innovation to drive long-term performance with
continued strong performance in the Aftermarket Segment
Third Quarter 2023 Highlights
- Net sales of $1.0 billion in the third quarter, down 15%
year-over-year
- Net income of $26 million, or $1.02 per diluted share, in the
third quarter, down 58% year-over-year
- EBITDA of $79 million, down 34% year-over-year
- Continued execution of diversification strategy with
Aftermarket Segment and Adjacent Industries OEM net sales exceeding
56% of total net sales for the twelve months ended September 30,
2023
- Inventory reduction of $238 million year-to-date through
September 30, 2023
- Cash flows from operating activities of $389 million
year-to-date through September 30, 2023
- Net repayments of indebtedness of $211 million year-to-date
through September 30, 2023
- Quarterly dividend of $1.05 per share paid, totaling $27
million in the third quarter and $80 million year-to-date
LCI Industries (NYSE: LCII) which, through its
wholly-owned subsidiary, Lippert Components, Inc. ("Lippert"),
supplies a broad array of highly engineered components for the
leading original equipment manufacturers ("OEMs") in the
recreation, transportation products, and housing markets, and the
related aftermarkets of those industries, today reported third
quarter 2023 results.
“Our commitment to diversification and operational discipline
continues to support our performance in a volatile macro
environment. The strength we are seeing in our diversified
businesses, highlighted by substantial margin expansion in
Aftermarket, greatly contributes to the long-term growth and
profitability prospects of Lippert, helping us weather challenges
far better than if we competed solely in the RV OEM space,”
commented Jason Lippert, LCI Industries’ President and Chief
Executive Officer. “With our diverse set of manufacturing
capabilities, continuous new product launches, and broad industry
and customer portfolios serving as significant differentiators, we
have continued to drive organic content growth even as we have seen
selling prices decline. Just in the last four years, we have added
sales of $0.9 billion from acquisitions and another $1 billion in
organic sales growth. Further, through the investments made in our
facilities and teams over the years, we have established strong
manufacturing capabilities allowing us to develop deep customer
relationships, solidifying Lippert’s position as a leader across
the outdoor recreation space. Additionally, new business
commitments for 2024 across our businesses total approximately $185
million. We believe these are tremendous organic growth and market
share wins for next year.”
“We have an incredibly experienced team that has led our
business through downturns like this one in the past and each time
we have come out stronger as a result of their great leadership.
With our strong balance sheet, reinforced by the substantial
inventory reductions we have made throughout the year, we believe
we are well-positioned to manage through near-term challenges and
capture growth opportunities once conditions improve,” Lippert
continued. “I want to thank all of the Lippert team members
worldwide for their dedication and hard work this quarter as we
navigate challenging conditions and focus on generating sustained
value for all our stakeholders.”
Third Quarter 2023 Results
Consolidated net sales for the third quarter of 2023 were $1.0
billion, a decrease of 15% from 2022 third quarter net sales of
$1.1 billion. Net income in the third quarter of 2023 was $25.9
million, or $1.02 per diluted share, compared to net income of
$61.4 million, or $2.40 per diluted share, in the third quarter of
2022. EBITDA in the third quarter of 2023 was $78.9 million,
compared to EBITDA of $119.8 million in the third quarter of 2022.
Additional information regarding EBITDA, as well as a
reconciliation of this non-GAAP financial measure to the most
directly comparable GAAP financial measure of net income, is
provided in the "Supplementary Information - Reconciliation of
Non-GAAP Measures" section below.
The decrease in year-over-year net sales for the third quarter
of 2023 was primarily driven by decreased North American RV
wholesale shipments, lower North American marine production levels,
and decreased selling prices which are indexed to select
commodities, partially offset by acquisitions. Net sales from
acquisitions completed in the twelve months ended September 30,
2023 contributed approximately $16.9 million in the third quarter
of 2023.
October 2023 Results
October 2023 consolidated net sales were approximately $344
million, down 1% from October 2022, primarily due to an approximate
10% decline in North American RV wholesale shipments and an
approximate 3% decline due to decreased selling prices which are
indexed to select commodities compared to October 2022. October
2023 results were favorably impacted by our diversification
efforts, including 15% growth in adjacent markets and 5% growth in
the Aftermarket Segment compared to October 2022.
OEM Segment
OEM net sales for the third quarter of 2023 were $728.5 million,
down 20% year-over-year, primarily driven by a 21% reduction in
North American wholesale shipments, decreased selling prices which
are indexed to select commodities, and lower North American marine
production levels. Operating profit of the OEM Segment was $11.2
million in the third quarter of 2023, or 1.5% of net sales,
compared to $65.2 million, or 7.1%, in the same period in 2022. The
operating profit of the OEM Segment for the quarter was driven by
decreased selling prices which are indexed to select commodities
and the impact of fixed costs on reduced sales.
RV OEM
RV OEM net sales for the third quarter of 2023 were $429.2
million, down 26% compared to the same prior year period, driven by
a 21% decline in North American wholesale shipments.
Adjacent Industries OEM
Adjacent Industries OEM net sales for the third quarter of 2023
were $299.2 million, down 11% year-over-year, primarily due to
lower sales to North American marine OEMs. North American marine
OEM net sales in the third quarter of 2023 were $72.5 million, down
42% year-over-year.
Aftermarket Segment
Aftermarket net sales for the third quarter of 2023 were $230.8
million, up 5% year-over-year, as distribution channel inventories
stabilized. Operating profit of the Aftermarket Segment was $34.4
million in the third quarter of 2023, or 14.9% of net sales,
compared to $22.4 million, or 10.2%, in the same period in 2022.
The operating profit expansion of the Aftermarket Segment for the
quarter was driven by decreased commodity costs and leveraging of
fixed costs over larger sales and production volume.
Income Taxes
The Company's effective tax rate was 26.6% for the quarter ended
September 30, 2023, compared to 23.9% for the quarter ended
September 30, 2022. The rate was impacted by a decrease to the life
insurance contract assets related to the deferred compensation
plan.
Balance Sheet and Other Items
At September 30, 2023, the Company's cash and cash equivalents
balance was $31.2 million, compared to $47.5 million at December
31, 2022. The Company used $79.7 million for dividend payments to
shareholders, $50.1 million for capital expenditures, and $25.9
million for acquisitions in the nine months ended September 30,
2023. The Company also made $165.7 million in net repayments under
its revolving credit facility and $45.8 million in repayments under
its term loan and other borrowings in the nine months ended
September 30, 2023.
The Company's outstanding long-term indebtedness, including
current maturities, was $908.8 million at September 30, 2023, and
the Company was in compliance with its debt covenants.
Conference Call & Webcast
LCI Industries will host a conference call to discuss its third
quarter results on Tuesday, November 7, 2023, at 8:30 a.m. Eastern
time, which may be accessed by dialing (833) 470-1428 for
participants in the U.S. and (646) 904-5544 for participants
outside the U.S. using the required conference ID 356208. Due to
the high volume of companies reporting earnings at this time,
please be prepared for hold times of up to 15 minutes when dialing
in to the call. In addition, an online, real-time webcast, as well
as a supplemental earnings presentation, can be accessed on the
Company's website, www.investors.lci1.com.
A replay of the conference call will be available for two weeks
by dialing (866) 813-9403 for participants in the U.S. and (929)
458-6194 for participants outside the U.S. and referencing access
code 105381. A replay of the webcast will be available on the
Company’s website immediately following the conclusion of the
call.
About LCI Industries
LCI Industries, through its wholly-owned subsidiary, Lippert,
supplies, domestically and internationally, a broad array of highly
engineered components for the leading OEMs in the recreation,
transportation products, and housing markets, consisting primarily
of recreational vehicles and adjacent industries, including boats;
buses; trailers used to haul boats, livestock, equipment, and other
cargo; trucks; trains; manufactured homes; and modular housing. The
Company also supplies engineered components to the related
aftermarkets of these industries, primarily by selling to retail
dealers, wholesale distributors, and service centers, as well as
direct to retail customers via the Internet. Lippert's products
include steel chassis and related components; axles and suspension
solutions; slide-out mechanisms and solutions; thermoformed bath,
kitchen, and other products; vinyl, aluminum, and frameless
windows; manual, electric, and hydraulic stabilizer and leveling
systems; entry, luggage, patio, and ramp doors; furniture and
mattresses; electric and manual entry steps; awnings and awning
accessories; towing products; truck accessories; electronic
components; appliances; air conditioners; televisions and sound
systems; tankless water heaters; and other accessories. Additional
information about Lippert and its products can be found at
www.lippert.com.
Forward-Looking Statements
This press release contains certain "forward-looking statements"
with respect to our financial condition, results of operations,
profitability, margin growth, business strategies, operating
efficiencies or synergies, competitive position, growth
opportunities, acquisitions, plans and objectives of management,
markets for the Company's common stock, the impact of legal
proceedings, and other matters. Statements in this press release
that are not historical facts are "forward-looking statements" for
the purpose of the safe harbor provided by Section 21E of the
Securities Exchange Act of 1934, as amended, and Section 27A of the
Securities Act of 1933, as amended, and involve a number of risks
and uncertainties.
Forward-looking statements, including, without limitation, those
relating to our future business prospects, net sales, expenses and
income (loss), capital expenditures, tax rate, cash flow, financial
condition, liquidity, covenant compliance, retail and wholesale
demand, integration of acquisitions, R&D investments, commodity
prices, and industry trends, whenever they occur in this press
release are necessarily estimates reflecting the best judgment of
the Company's senior management at the time such statements were
made. There are a number of factors, many of which are beyond the
Company's control, which could cause actual results and events to
differ materially from those described in the forward-looking
statements. These factors include, in addition to other matters
described in this press release, the impacts of future pandemics,
geopolitical tensions, armed conflicts, or natural disaster, on the
Company's customers, suppliers, employees, business and cash flows,
pricing pressures due to domestic and foreign competition, costs
and availability of, and tariffs on, raw materials (particularly
steel and aluminum) and other components, seasonality and
cyclicality in the industries to which we sell our products,
availability of credit for financing the retail and wholesale
purchase of products for which we sell our components, inventory
levels of retail dealers and manufacturers, availability of
transportation for products for which we sell our components, the
financial condition of our customers, the financial condition of
retail dealers of products for which we sell our components,
retention and concentration of significant customers, the costs,
pace of and successful integration of acquisitions and other growth
initiatives, availability and costs of production facilities and
labor, team member benefits, team member retention, realization and
impact of expansion plans, efficiency improvements and cost
reductions, the disruption of business resulting from natural
disasters or other unforeseen events, the successful entry into new
markets, the costs of compliance with environmental laws, laws of
foreign jurisdictions in which we operate, other operational and
financial risks related to conducting business internationally, and
increased governmental regulation and oversight, information
technology performance and security, the ability to protect
intellectual property, warranty and product liability claims or
product recalls, interest rates, oil and gasoline prices, and
availability, the impact of international, national and regional
economic conditions and consumer confidence on the retail sale of
products for which we sell our components, and other risks and
uncertainties discussed more fully under the caption "Risk Factors"
in the Company's Annual Report on Form 10-K for the year ended
December 31, 2022, and in the Company's subsequent filings with the
Securities and Exchange Commission. Readers of this press release
are cautioned not to place undue reliance on these forward-looking
statements, since there can be no assurance that these
forward-looking statements will prove to be accurate. The Company
disclaims any obligation or undertaking to update forward-looking
statements to reflect circumstances or events that occur after the
date the forward-looking statements are made, except as required by
law.
LCI INDUSTRIES
OPERATING RESULTS
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Last Twelve
2023
2022
2023
2022
Months
(In thousands, except per share
amounts)
Net sales
$
959,315
$
1,132,079
$
2,947,264
$
4,312,797
$
3,841,610
Cost of sales
748,367
879,025
2,332,125
3,186,415
3,079,564
Gross profit
210,948
253,054
615,139
1,126,382
762,046
Selling, general and administrative
expenses
165,358
165,479
494,332
550,317
664,276
Operating profit
45,590
87,575
120,807
576,065
97,770
Interest expense, net
10,325
6,910
30,968
19,353
39,188
Income before income taxes
35,265
80,665
89,839
556,712
58,582
Provision for income taxes
9,378
19,273
23,267
144,609
9,139
Net income
$
25,887
$
61,392
$
66,572
$
412,103
$
49,443
Net income per common share:
Basic
$
1.02
$
2.41
$
2.63
$
16.23
$
1.95
Diluted
$
1.02
$
2.40
$
2.62
$
16.15
$
1.94
Weighted average common shares
outstanding:
Basic
25,340
25,447
25,293
25,398
25,299
Diluted
25,504
25,600
25,405
25,520
25,434
Depreciation
$
18,857
$
17,989
$
55,974
$
53,953
$
74,860
Amortization
$
14,412
$
14,258
$
42,844
$
42,013
$
57,204
Capital expenditures
$
15,978
$
32,911
$
50,060
$
103,748
$
76,953
LCI INDUSTRIES
SEGMENT RESULTS
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Last Twelve
2023
2022
2023
2022
Months
(In thousands)
Net sales:
OEM Segment:
RV OEMs:
Travel trailers and fifth-wheels
$
363,573
$
493,515
$
1,032,866
$
2,261,250
$
1,389,201
Motorhomes
65,669
82,922
206,404
261,656
283,845
Adjacent Industries OEMs
299,225
335,983
1,006,378
1,062,374
1,303,192
Total OEM Segment net sales
728,467
912,420
2,245,648
3,585,280
2,976,238
Aftermarket Segment:
Total Aftermarket Segment net sales
230,848
219,659
701,616
727,517
865,372
Total net sales
$
959,315
$
1,132,079
$
2,947,264
$
4,312,797
$
3,841,610
Operating profit:
OEM Segment
$
11,165
$
65,186
$
29,086
$
501,137
$
7,099
Aftermarket Segment
34,425
22,389
91,721
74,928
90,671
Total operating profit
$
45,590
$
87,575
$
120,807
$
576,065
$
97,770
Depreciation and amortization:
OEM Segment depreciation
$
14,835
$
14,213
$
43,840
$
43,090
$
58,915
Aftermarket Segment depreciation
4,022
3,776
12,134
10,863
15,945
Total depreciation
$
18,857
$
17,989
$
55,974
$
53,953
$
74,860
OEM Segment amortization
$
10,550
$
10,472
$
31,204
$
30,668
$
41,788
Aftermarket Segment amortization
3,862
3,786
11,640
11,345
15,416
Total amortization
$
14,412
$
14,258
$
42,844
$
42,013
$
57,204
LCI INDUSTRIES
BALANCE SHEET
INFORMATION
(unaudited)
September 30,
December 31,
2023
2022
(In thousands)
ASSETS
Current assets
Cash and cash equivalents
$
31,242
$
47,499
Accounts receivable, net
338,847
214,262
Inventories, net
791,884
1,029,705
Prepaid expenses and other current
assets
68,666
99,310
Total current assets
1,230,639
1,390,776
Fixed assets, net
472,518
482,185
Goodwill
579,912
567,063
Other intangible assets, net
462,412
503,320
Operating lease right-of-use assets
233,740
247,007
Other long-term assets
54,586
56,561
Total assets
$
3,033,807
$
3,246,912
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term
indebtedness
$
566
$
23,086
Accounts payable, trade
198,914
143,529
Current portion of operating lease
obligations
34,642
35,447
Accrued expenses and other current
liabilities
179,894
219,238
Total current liabilities
414,016
421,300
Long-term indebtedness
908,245
1,095,888
Operating lease obligations
211,289
222,478
Deferred taxes
25,281
30,580
Other long-term liabilities
102,836
95,658
Total liabilities
1,661,667
1,865,904
Total stockholders' equity
1,372,140
1,381,008
Total liabilities and stockholders'
equity
$
3,033,807
$
3,246,912
LCI INDUSTRIES
SUMMARY OF CASH FLOWS
(unaudited)
Nine Months Ended
September 30,
2023
2022
(In thousands)
Cash flows from operating activities:
Net income
$
66,572
$
412,103
Adjustments to reconcile net income to
cash flows provided by operating activities:
Depreciation and amortization
98,818
95,966
Stock-based compensation expense
14,027
20,564
Deferred taxes
—
(2,401
)
Other non-cash items
4,611
1,174
Changes in assets and liabilities, net of
acquisitions of businesses:
Accounts receivable, net
(121,914
)
(18,128
)
Inventories, net
246,155
26,508
Prepaid expenses and other assets
31,237
31,304
Accounts payable, trade
54,817
(82,054
)
Accrued expenses and other liabilities
(5,060
)
471
Net cash flows provided by operating
activities
389,263
485,507
Cash flows from investing activities:
Capital expenditures
(50,060
)
(103,748
)
Acquisitions of businesses
(25,851
)
(55,709
)
Other investing activities
4,284
2,137
Net cash flows used in investing
activities
(71,627
)
(157,320
)
Cash flows from financing activities:
Vesting of stock-based awards, net of
shares tendered for payment of taxes
(9,591
)
(10,805
)
Proceeds from revolving credit
facility
248,900
844,900
Repayments under revolving credit
facility
(414,554
)
(1,001,040
)
Repayments under shelf loan, term loan,
and other borrowings
(45,767
)
(65,852
)
Payment of dividends
(79,744
)
(76,273
)
Payment of contingent consideration and
holdbacks related to acquisitions
(31,857
)
(57,328
)
Other financing activities
(834
)
1,468
Net cash flows used in financing
activities
(333,447
)
(364,930
)
Effect of exchange rate changes on cash
and cash equivalents
(446
)
(2,750
)
Net decrease in cash and cash
equivalents
(16,257
)
(39,493
)
Cash and cash equivalents at beginning of
period
47,499
62,896
Cash and cash equivalents at end of
period
$
31,242
$
23,403
LCI INDUSTRIES
SUPPLEMENTARY
INFORMATION
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
Last Twelve
2023
2022
2023
2022
Months
Industry Data(1) (in thousands of
units):
Industry Wholesale Production:
Travel trailer and fifth-wheel RVs
61.5
73.3
195.7
359.6
257.7
Motorhome RVs
10.3
15.3
35.8
46.0
48.2
Industry Retail Sales:
Travel trailer and fifth-wheel RVs
91.1
(2)
106.0
271.4
(2)
330.6
330.5
(2)
Impact on dealer inventories
(29.6
)
(2)
(32.7
)
(75.7
)
(2)
29.0
(72.8
)
(2)
Motorhome RVs
11.4
(2)
12.3
36.5
(2)
39.3
45.5
(2)
Twelve Months Ended
September 30,
2023
2022
Lippert Content Per Industry Unit
Produced:
Travel trailer and fifth-wheel RV
$
5,192
$
5,862
Motorhome RV
$
3,705
$
3,807
September 30,
December 31,
2023
2022
2022
Balance Sheet Data (debt availability in
millions):
Remaining availability under the revolving
credit facility (3)
$
178.5
$
369.2
$
306.5
Days sales in accounts receivable, based
on last twelve months
29.2
28.0
27.5
Inventory turns, based on last twelve
months
3.3
3.8
3.5
2023
Estimated Full Year Data:
Capital expenditures
$55 - $60 million
Depreciation and amortization
$130 - $135 million
Stock-based compensation expense
$18 - $20 million
Annual tax rate
24% - 26%
(1)
Industry wholesale production data for
travel trailer and fifth-wheel RVs and motorhome RVs provided by
the Recreation Vehicle Industry Association. Industry retail sales
data provided by Statistical Surveys, Inc.
(2)
September 2023 retail sales data for RVs
has not been published yet, therefore 2023 retail data for RVs
includes an estimate for September 2023 retail units. Retail sales
data will likely be revised upwards in future months as various
states report.
(3)
Remaining availability under the revolving
credit facility is subject to covenant restrictions.
LCI INDUSTRIES
SUPPLEMENTARY
INFORMATION
RECONCILIATION OF NON-GAAP
MEASURES
(unaudited)
The following table reconciles net income
to EBITDA.
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
(In thousands)
Net income
$
25,887
$
61,392
$
66,572
$
412,103
Interest expense, net
10,325
6,910
30,968
19,353
Provision for income taxes
9,378
19,273
23,267
144,609
Depreciation expense
18,857
17,989
55,974
53,953
Amortization expense
14,412
14,258
42,844
42,013
EBITDA
$
78,859
$
119,822
$
219,625
$
672,031
In addition to reporting financial results in accordance with
U.S. GAAP, the Company has provided the non-GAAP performance
measure of EBITDA to illustrate and improve comparability of its
results from period to period. EBITDA is defined as net income
before interest expense, net, provision for income taxes,
depreciation expense, and amortization expense during the three and
nine month periods ended September 30, 2023 and 2022. The Company
considers this non-GAAP measure in evaluating and managing the
Company's operations and believes that discussion of results
adjusted for these items is meaningful to investors because it
provides a useful analysis of ongoing underlying operating trends.
The measure is not in accordance with, nor is it a substitute for,
GAAP measures, and it may not be comparable to similarly titled
measures used by other companies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231107675406/en/
Lillian D. Etzkorn, CFO Phone: (574) 535-1125 E
Mail: LCII@lci1.com
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