LCI Industries Reports Second Quarter Financial Results
Diversification and operational focus leads to sequential margin expansion
Second Quarter 2023 Highlights
-
Net sales of
in the second quarter, down$1.0 billion 34% year-over-year -
Net income of
, or$33 million per diluted share, in the second quarter, down$1.31 78% year-over-year -
EBITDA of
, down$88 million 65% year-over-year -
Continued execution of diversification strategy with North American RV OEM net sales less than
42% of total net sales for twelve months ended June 30, 2023 -
Inventory reduction of
year-to-date through June 30, 2023$200 million -
Net repayments of long-term indebtedness of
year-to-date through June 30, 2023.$179 million -
Quarterly dividend of
per share paid, totaling$1.05 in the second quarter$27 million
“Our operational focus and consistent execution on diversification have remained the cornerstone of our performance, supporting solid results in light of significant year-over-year drops in wholesale shipments. Execution on diversification has continued to pay off, with strength across our aftermarket, international, marine, transportation, and housing markets helping partially offset softer sales in North American RV. Specifically, we saw meaningful margin expansion in our Aftermarket segment for the quarter,” commented Jason Lippert, LCI Industries’ President and Chief Executive Officer. “Further, our leadership teams have been hard at work to right-size the business, implementing hundreds of continuous improvement projects, kicking off sourcing initiatives to capture lower raw material costs, and investing over
“We are continuing to flex operations to align capacity and labor with shifting OEM production schedules, while also supporting the areas of our business that remain strong. With significant inventory reductions year-to-date, we are generating sufficient cash to pay down debt and further strengthen our balance sheet amidst uncertain operating conditions,” Lippert continued.
“The demand environment is improving, with order forecasts trending slightly upwards from the last quarter, dealer destocking beginning to slow, and older inventory clearing out as the latest models enter the market. Millions more campers hit the road this Memorial Day and Fourth of July versus 2022, and with RV trips being almost
Second Quarter 2023 Results
Consolidated net sales for the second quarter of 2023 were
The decrease in year-over-year net sales for the second quarter of 2023 was primarily driven by decreased North American RV wholesale shipments and decreased selling prices which are indexed to select commodities, partially offset by acquisitions. Net sales from acquisitions completed in the twelve months ended June 30, 2023 contributed approximately
July 2023 Results
July 2023 consolidated net sales were approximately
OEM Segment
RV OEM
RV OEM net sales for the second quarter of 2023 were
Adjacent Industries OEM
Adjacent Industries OEM net sales for the second quarter of 2023 were
Aftermarket Segment
Aftermarket net sales for the second quarter of 2023 were
Income Taxes
The Company's effective tax rate was 25.6 percent for the quarter ended June 30, 2023, compared to 27.3 percent for the quarter ended June 30, 2022. The rate was benefited by an increase related to the cash surrender value of life insurance.
Balance Sheet and Other Items
At June 30, 2023, the Company's cash and cash equivalents balance was
The Company's outstanding long-term indebtedness, including current maturities, was
Conference Call & Webcast
LCI Industries will host a conference call to discuss its second quarter results on Tuesday, August 8, 2023, at 8:30 a.m. Eastern time, which may be accessed by dialing (833) 470-1428 for participants in the
A replay of the conference call will be available for two weeks by dialing (866) 813-9403 for participants in the
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, 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 COVID-19, or other future pandemics, the
LCI INDUSTRIES OPERATING RESULTS (unaudited) |
||||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
Last Twelve |
|||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Months |
|||||
(In thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|||||
Net sales |
$ |
1,014,639 |
|
$ |
1,536,150 |
|
$ |
1,987,949 |
|
$ |
3,180,718 |
|
$ |
4,014,374 |
Cost of sales |
|
796,519 |
|
|
1,127,065 |
|
|
1,583,758 |
|
|
2,307,390 |
|
|
3,210,222 |
Gross profit |
|
218,120 |
|
|
409,085 |
|
|
404,191 |
|
|
873,328 |
|
|
804,152 |
Selling, general and administrative expenses |
|
162,946 |
|
|
190,296 |
|
|
328,974 |
|
|
384,838 |
|
|
664,397 |
Operating profit |
|
55,174 |
|
|
218,789 |
|
|
75,217 |
|
|
488,490 |
|
|
139,755 |
Interest expense, net |
|
10,249 |
|
|
6,191 |
|
|
20,643 |
|
|
12,443 |
|
|
35,773 |
Income before income taxes |
|
44,925 |
|
|
212,598 |
|
|
54,574 |
|
|
476,047 |
|
|
103,982 |
Provision for income taxes |
|
11,499 |
|
|
58,068 |
|
|
13,889 |
|
|
125,336 |
|
|
19,034 |
Net income |
$ |
33,426 |
|
$ |
154,530 |
|
$ |
40,685 |
|
$ |
350,711 |
|
$ |
84,948 |
|
|
|
|
|
|
|
|
|
|
|||||
Net income per common share: |
|
|
|
|
|
|
|
|
|
|||||
Basic |
$ |
1.32 |
|
$ |
6.07 |
|
$ |
1.61 |
|
$ |
13.82 |
|
$ |
3.35 |
Diluted |
$ |
1.31 |
|
$ |
6.06 |
|
$ |
1.60 |
|
$ |
13.76 |
|
$ |
3.34 |
|
|
|
|
|
|
|
|
|
|
|||||
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|||||
Basic |
|
25,329 |
|
|
25,438 |
|
|
25,273 |
|
|
25,377 |
|
|
25,326 |
Diluted |
|
25,437 |
|
|
25,518 |
|
|
25,359 |
|
|
25,483 |
|
|
25,458 |
|
|
|
|
|
|
|
|
|
|
|||||
Depreciation |
$ |
18,867 |
|
$ |
18,010 |
|
$ |
37,117 |
|
$ |
35,964 |
|
$ |
73,993 |
Amortization |
$ |
14,183 |
|
$ |
13,897 |
|
$ |
28,432 |
|
$ |
27,755 |
|
$ |
57,049 |
Capital expenditures |
$ |
16,923 |
|
$ |
28,800 |
|
$ |
34,082 |
|
$ |
70,837 |
|
$ |
93,886 |
LCI INDUSTRIES SEGMENT RESULTS (unaudited) |
||||||||||||||
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
Last Twelve |
|||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Months |
|||||
(In thousands) |
|
|
|
|
|
|
|
|
|
|||||
Net sales: |
|
|
|
|
|
|
|
|
|
|||||
OEM Segment: |
|
|
|
|
|
|
|
|
|
|||||
RV OEMs: |
|
|
|
|
|
|
|
|
|
|||||
Travel trailers and fifth-wheels |
$ |
338,739 |
|
$ |
814,509 |
|
$ |
669,292 |
|
$ |
1,767,735 |
|
$ |
1,519,143 |
Motorhomes |
|
71,185 |
|
|
91,480 |
|
|
140,736 |
|
|
178,734 |
|
|
301,098 |
Adjacent Industries OEMs |
|
349,084 |
|
|
370,289 |
|
|
707,152 |
|
|
726,391 |
|
|
1,339,950 |
Total OEM Segment net sales |
|
759,008 |
|
|
1,276,278 |
|
|
1,517,180 |
|
|
2,672,860 |
|
|
3,160,191 |
Aftermarket Segment: |
|
|
|
|
|
|
|
|
|
|||||
Total Aftermarket Segment net sales |
|
255,631 |
|
|
259,872 |
|
|
470,769 |
|
|
507,858 |
|
|
854,183 |
Total net sales |
$ |
1,014,639 |
|
$ |
1,536,150 |
|
$ |
1,987,949 |
|
$ |
3,180,718 |
|
$ |
4,014,374 |
|
|
|
|
|
|
|
|
|
|
|||||
Operating profit: |
|
|
|
|
|
|
|
|
|
|||||
OEM Segment |
$ |
18,642 |
|
$ |
190,577 |
|
$ |
17,921 |
|
$ |
435,951 |
|
$ |
61,120 |
Aftermarket Segment |
|
36,532 |
|
|
28,212 |
|
|
57,296 |
|
|
52,539 |
|
|
78,635 |
Total operating profit |
$ |
55,174 |
|
$ |
218,789 |
|
$ |
75,217 |
|
$ |
488,490 |
|
$ |
139,755 |
|
|
|
|
|
|
|
|
|
|
|||||
Depreciation and amortization: |
|
|
|
|
|
|
|
|
|
|||||
OEM Segment depreciation |
$ |
14,655 |
|
$ |
14,376 |
|
$ |
29,004 |
|
$ |
28,878 |
|
$ |
58,293 |
Aftermarket Segment depreciation |
|
4,212 |
|
|
3,634 |
|
|
8,113 |
|
|
7,086 |
|
|
15,700 |
Total depreciation |
$ |
18,867 |
|
$ |
18,010 |
|
$ |
37,117 |
|
$ |
35,964 |
|
$ |
73,993 |
|
|
|
|
|
|
|
|
|
|
|||||
OEM Segment amortization |
$ |
10,204 |
|
$ |
10,053 |
|
$ |
20,654 |
|
$ |
20,197 |
|
$ |
41,710 |
Aftermarket Segment amortization |
|
3,979 |
|
|
3,844 |
|
|
7,778 |
|
|
7,558 |
|
|
15,339 |
Total amortization |
$ |
14,183 |
|
$ |
13,897 |
|
$ |
28,432 |
|
$ |
27,755 |
|
$ |
57,049 |
LCI INDUSTRIES BALANCE SHEET INFORMATION (unaudited) |
|||||||
|
June 30, |
|
December 31, |
||||
|
2023 |
|
2022 |
||||
(In thousands) |
|
|
|
||||
|
|
|
|
||||
ASSETS |
|
|
|
||||
Current assets |
|
|
|
||||
Cash and cash equivalents |
$ |
22,094 |
|
$ |
47,499 |
||
Accounts receivable, net |
|
299,469 |
|
|
214,262 |
||
Inventories, net |
|
830,020 |
|
|
1,029,705 |
||
Prepaid expenses and other current assets |
|
83,662 |
|
|
99,310 |
||
Total current assets |
|
1,235,245 |
|
|
1,390,776 |
||
Fixed assets, net |
|
478,885 |
|
|
482,185 |
||
Goodwill |
|
584,312 |
|
|
567,063 |
||
Other intangible assets, net |
|
477,307 |
|
|
503,320 |
||
Operating lease right-of-use assets |
|
241,146 |
|
|
247,007 |
||
Other long-term assets |
|
59,502 |
|
|
56,561 |
||
Total assets |
$ |
3,076,397 |
|
$ |
3,246,912 |
||
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
||||
Current liabilities |
|
|
|
||||
Current maturities of long-term indebtedness |
$ |
27,712 |
|
$ |
23,086 |
||
Accounts payable, trade |
|
182,637 |
|
|
143,529 |
||
Current portion of operating lease obligations |
|
35,004 |
|
|
35,447 |
||
Accrued expenses and other current liabilities |
|
196,099 |
|
|
219,238 |
||
Total current liabilities |
|
441,452 |
|
|
421,300 |
||
Long-term indebtedness |
|
915,756 |
|
|
1,095,888 |
||
Operating lease obligations |
|
217,979 |
|
|
222,478 |
||
Deferred taxes |
|
26,900 |
|
|
30,580 |
||
Other long-term liabilities |
|
103,413 |
|
|
95,658 |
||
Total liabilities |
|
1,705,500 |
|
|
1,865,904 |
||
Total stockholders' equity |
|
1,370,897 |
|
|
1,381,008 |
||
Total liabilities and stockholders' equity |
$ |
3,076,397 |
|
$ |
3,246,912 |
LCI INDUSTRIES SUMMARY OF CASH FLOWS (unaudited) |
|||||||
|
Six Months Ended June 30, |
||||||
|
2023 |
|
2022 |
||||
(In thousands) |
|
|
|
||||
Cash flows from operating activities: |
|
|
|
||||
Net income |
$ |
40,685 |
|
|
$ |
350,711 |
|
Adjustments to reconcile net income to cash flows provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
|
65,549 |
|
|
|
63,719 |
|
Stock-based compensation expense |
|
9,080 |
|
|
|
13,701 |
|
Deferred taxes |
|
— |
|
|
|
(2,401 |
) |
Other non-cash items |
|
2,192 |
|
|
|
2,025 |
|
Changes in assets and liabilities, net of acquisitions of businesses: |
|
|
|
||||
Accounts receivable, net |
|
(80,952 |
) |
|
|
(95,479 |
) |
Inventories, net |
|
209,346 |
|
|
|
(51,811 |
) |
Prepaid expenses and other assets |
|
11,607 |
|
|
|
25,746 |
|
Accounts payable, trade |
|
37,949 |
|
|
|
5,312 |
|
Accrued expenses and other liabilities |
|
(21,891 |
) |
|
|
36,448 |
|
Net cash flows provided by operating activities |
|
273,565 |
|
|
|
347,971 |
|
Cash flows from investing activities: |
|
|
|
||||
Capital expenditures |
|
(34,082 |
) |
|
|
(70,837 |
) |
Acquisitions of businesses |
|
(25,851 |
) |
|
|
(51,789 |
) |
Other investing activities |
|
4,344 |
|
|
|
2,204 |
|
Net cash flows used in investing activities |
|
(55,589 |
) |
|
|
(120,422 |
) |
Cash flows from financing activities: |
|
|
|
||||
Vesting of stock-based awards, net of shares tendered for payment of taxes |
|
(9,585 |
) |
|
|
(10,773 |
) |
Proceeds from revolving credit facility |
|
234,200 |
|
|
|
729,400 |
|
Repayments under revolving credit facility |
|
(402,726 |
) |
|
|
(836,500 |
) |
Repayments under shelf loan, term loan, and other borrowings |
|
(10,703 |
) |
|
|
(60,902 |
) |
Payment of dividends |
|
(53,154 |
) |
|
|
(49,572 |
) |
Payment of contingent consideration and holdbacks related to acquisitions |
|
(517 |
) |
|
|
(6,039 |
) |
Other financing activities |
|
(834 |
) |
|
|
(4 |
) |
Net cash flows used in financing activities |
|
(243,319 |
) |
|
|
(234,390 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
(62 |
) |
|
|
(1,067 |
) |
Net decrease in cash and cash equivalents |
|
(25,405 |
) |
|
|
(7,908 |
) |
Cash and cash equivalents at beginning of period |
|
47,499 |
|
|
|
62,896 |
|
Cash and cash equivalents cash at end of period |
$ |
22,094 |
|
|
$ |
54,988 |
|
LCI INDUSTRIES SUPPLEMENTARY INFORMATION (unaudited) |
||||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
|
|
|
||||||||||
|
June 30, |
|
June 30, |
|
Last Twelve |
|
||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
Months |
|
||||||
Industry Data(1) (in thousands of units): |
|
|
|
|
|
|
|
|
|
|
||||||
Industry Wholesale Production: |
|
|
|
|
|
|
|
|
|
|
||||||
Travel trailer and fifth-wheel RVs |
71.6 |
|
|
133.8 |
|
|
132.8 |
|
|
|
286.2 |
|
|
268.2 |
|
|
Motorhome RVs |
12.1 |
|
|
14.8 |
|
|
25.5 |
|
|
|
30.7 |
|
|
53.2 |
|
|
Industry Retail Sales: |
|
|
|
|
|
|
|
|
|
|
||||||
Travel trailer and fifth-wheel RVs |
105.3 |
|
(2) |
129.6 |
|
|
176.7 |
|
(2) |
|
224.6 |
|
|
341.7 |
|
(2) |
Impact on dealer inventories |
(33.7 |
) |
(2) |
4.2 |
|
|
(43.9 |
) |
(2) |
|
61.6 |
|
|
(73.5 |
) |
(2) |
Motorhome RVs |
13.0 |
|
(2) |
14.0 |
|
|
23.8 |
|
(2) |
|
27.1 |
|
|
45.1 |
|
(2) |
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
Twelve Months Ended |
|
|
|
||||||||
|
|
|
|
|
June 30, |
|
|
|
||||||||
|
|
|
|
|
2023 |
|
2022 |
|
|
|
||||||
Lippert Content Per Industry Unit Produced: |
|
|
|
|
|
|
|
|||||||||
Travel trailer and fifth-wheel RV |
|
|
|
|
$ |
5,487 |
|
|
$ |
5,379 |
|
|
|
|||
Motorhome RV |
|
|
|
|
$ |
3,760 |
|
|
$ |
3,557 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
June 30, |
|
December 31, |
|
||||||||
|
|
|
|
|
2023 |
|
2022 |
|
2022 |
|
||||||
Balance Sheet Data (debt availability in millions): |
|
|
|
|
|
|
|
|||||||||
Remaining availability under the revolving credit facility (3) |
|
$ |
270.0 |
|
|
$ |
286.7 |
|
$ |
306.5 |
|
|
||||
Days sales in accounts receivable, based on last twelve months |
|
|
28.4 |
|
|
|
28.2 |
|
|
27.5 |
|
|
||||
Inventory turns, based on last twelve months |
|
|
3.2 |
|
|
|
4.3 |
|
|
3.5 |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
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2023 |
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Estimated Full Year Data: |
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Capital expenditures |
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Depreciation and amortization |
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Stock-based compensation expense |
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Annual tax rate |
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(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) |
June 2023 retail sales data for RVs has not been published yet, therefore 2023 retail data for RVs includes an estimate for June 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) |
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The following table reconciles net income to EBITDA. |
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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(In thousands) |
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Net income |
$ |
33,426 |
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$ |
154,530 |
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$ |
40,685 |
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$ |
350,711 |
Interest expense, net |
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10,249 |
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6,191 |
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20,643 |
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12,443 |
Provision for income taxes |
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11,499 |
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58,068 |
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13,889 |
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|
125,336 |
Depreciation expense |
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18,867 |
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18,010 |
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37,117 |
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35,964 |
Amortization expense |
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14,183 |
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13,897 |
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28,432 |
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27,755 |
EBITDA |
$ |
88,224 |
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$ |
250,696 |
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$ |
140,766 |
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$ |
552,209 |
In addition to reporting financial results in accordance with |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230808453389/en/
Contact: Lillian D. Etzkorn, CFO
Phone: (574) 535-1125
E Mail: LCII@lci1.com
Source: LCI Industries