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LCI Industries Reports First Quarter Financial Results
LCI Industries (NYSE: LCII) which, through its wholly-owned subsidiary, Lippert Components, Inc. ("Lippert"), supplies, domestically and internationally, a broad array of highly engineered components for the leading original equipment manufacturers ("OEMs") in the recreation and transportation markets, and the related aftermarkets of those industries, today reported first quarter 2024 results.
"We delivered solid results in the first quarter, starting the year with healthy EBITDA generation and margin expansion supported by our strong operational focus and improved material costs. As we continue to diversify our business, strength in some of our growing markets like automotive aftermarket, housing, and our transportation businesses has consistently lifted profitability while adding a layer of durable, countercyclical revenue streams. We believe that our diversified markets will remain important drivers of Lippert's profitable growth into the future," commented Jason Lippert, LCI Industries' President and Chief Executive Officer. "We are seeing signs of recovery in North American RV and expect a gradual improvement in production heading further into the year, led by towables where we typically provide the majority of our innovative RV content. Further, introductions of advanced products like our transformational ABS system are embedding us even deeper with key OEMs across our markets, creating opportunities for long-term content growth and serving as the catalyst for approximately $200 million in new business commitments for 2024."
"We are committed to making continued operational improvements across our footprint, with a focus on creating flexible capacity while reducing costs. We continue to reduce inventory and focus on cash generation as we progress through the year. With our fortified balance sheet, we will continue investing in R&D and innovation while pursuing strategic growth opportunities and returning capital to shareholders," continued Mr. Lippert. "Looking ahead, we are well-positioned to capture market share gains and advance our competitive position throughout 2024."
"I would like to thank all of the Lippert teams for their incredible dedication to serving our customers and improving our business as we work through lingering headwinds," commented Ryan Smith, LCI Industries' Group President - North America. "Through our operational expertise, steeped in a culture of product quality and innovation, we will continue to facilitate sustainable growth for Lippert well into the future."
First Quarter 2024 Results
Consolidated net sales for the first quarter of 2024 were $968.0 million, a decrease of 1% from 2023 first quarter net sales of $973.3 million. Net income in the first quarter of 2024 was $36.5 million, or $1.44 per diluted share, compared to $7.3 million, or $0.29 per diluted share, in the first quarter of 2023. EBITDA in the first quarter of 2024 was $90.3 million, compared to EBITDA of $52.5 million in the first quarter of 2023. Additional information regarding EBITDA, as well as reconciliations 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 first quarter of 2024 was primarily driven by lower North American marine production levels and decreased selling prices which are indexed to select commodities, mostly offset by increased North American RV wholesale shipments.
April 2024 Results
April 2024 consolidated net sales were approximately $378 million, up 12% from April 2023, primarily due to an approximate 17% increase in North American RV production, partially offset by an approximate 33% decline in marine sales compared to April 2023.
OEM Segment - First Quarter Performance
OEM net sales for the first quarter of 2024 were $758.3 million, an increase of $0.1 million compared to the same period of 2023. RV OEM net sales for the first quarter of 2024 were $459.6 million, up 15% compared to the same prior year period, driven by a 9% increase in North American RV wholesale shipments, partially offset by decreased selling prices which are indexed to select commodities. Adjacent Industries OEM net sales for the first quarter of 2024 were $298.7 million, down 17% year-over-year, primarily due to lower sales to North American marine OEMs. North American marine OEM net sales in the first quarter of 2024 were $65.4 million, down 45% year-over-year.
Operating profit of the OEM Segment was $32.8 million in the first quarter of 2024, or 4.3% of net sales, compared to an operating loss of $0.7 million, or (0.1)%, in the same period in 2023. The operating profit of the OEM Segment for the quarter was primarily driven by decreased material commodity and freight costs.
Aftermarket Segment - First Quarter Performance
Aftermarket net sales for the first quarter of 2024 were $209.7 million, down 3% year-over-year, primarily driven by lower volumes within marine markets and the impacts of inflation and elevated interest rates on consumers' discretionary spending, partially offset by growth in the automotive aftermarket driven by market share gains. Operating profit of the Aftermarket Segment was $24.8 million in the first quarter of 2024, or 11.8% of net sales, compared to an operating profit of $20.8 million, or 9.7%, in the same period in 2023. The operating profit expansion of the Aftermarket Segment for the quarter was primarily driven by decreased commodity and freight costs as well as pricing changes to targeted products.
"We achieved another quarter of strong profitability in Aftermarket, expanding operating margins by over 200 basis points. Robust demand from the automotive aftermarket, in addition to the growing need for repair, replacement, and upgrades in RV and other adjacencies we serve, are providing a strong tailwind for the business," Jamie Schnur, LCI Industries' Group President - Aftermarket commented. "As Jason mentioned, Aftermarket is consistently supporting Lippert's overall profitability in a challenging environment. We are excited to continue this progress, providing our customers with best-in-class service and innovative new products, as we head further into 2024."
Income Taxes
The Company's effective tax rate was 24.3% for the quarter ended March 31, 2024, compared to 24.8% for the quarter ended March 31, 2023. The decrease in the effective tax rate was primarily due to decreases in non-deductible executive compensation costs and effective state tax rates.
Balance Sheet and Other Items
At March 31, 2024, the Company's cash and cash equivalents balance was $22.6 million, compared to $66.2 million at December 31, 2023. The Company used $26.7 million for dividend payments to shareholders and $8.6 million for capital expenditures in the three months ended March 31, 2024.
The Company remained focused on inventory reductions to improve cash generation and optimize working capital in the first quarter. As of March 31, 2024, the Company's net inventory balance was $734.4 million, down from $768.4 million at December 31, 2023 and $909.4 million at March 31, 2023.
The Company's outstanding long-term indebtedness, including current maturities, was $855.3 million at March 31, 2024, and the Company was in compliance with its debt covenants.
Conference Call & Webcast
LCI Industries will host a conference call to discuss its first quarter results on Wednesday, May 8, 2024, at 8:30 a.m. Eastern time, which may be accessed by dialing (833) 470-1428 for participants in the U.S. and (929) 526-1599 for participants outside the U.S. using the required conference ID 327802. 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 (44) 204-525-0658 for participants outside the U.S. and referencing access code 453124. 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 and transportation 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 production levels, 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, addressable markets, 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 disasters on the global economy and 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, 2023, 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 Last Twelve
March 31,
--------------------------------------------------------------------------------
2024 2023 Months
-------------------- ---------- -------------------- ---------- ------------------------------
(In thousands, except per share amounts)
Net sales $ 968,029 $ 973,310 $ 3,779,527
Cost of sales 744,123 787,239 2,965,502
-------------------- ---------- -------------------- ---------- -------------------- ----------
223,906 186,071 814,025
Gross profit
Selling, general and administrative expenses 166,295 166,028 653,029
-------------------- ---------- -------------------- ---------- -------------------- ----------
57,611 20,043 160,996
Operating profit
Interest expense, net 9,321 10,394 39,351
-------------------- ---------- -------------------- ---------- -------------------- ----------
48,290 9,649 121,645
Income before income taxes
Provision for income taxes 11,745 2,390 28,164
-------------------- ---------- -------------------- ---------- -------------------- ----------
$ 36,545 $ 7,259 $ 93,481
Net income
==================== ========== ==================== ========== ==================== ==========
Net income per common share:
$ 1.44 $ 0.29 $ 3.69
Basic
$ 1.44 $ 0.29 $ 3.67
Diluted
Weighted average common shares outstanding:
25,374 25,228 25,350
Basic
25,389 25,293 25,468
Diluted
Depreciation $ 18,585 $ 18,250 $ 75,028
Amortization $ 14,104 $ 14,249 $ 56,930
LCI INDUSTRIES
SEGMENT RESULTS
(unaudited)
Three Months Ended Last Twelve
March 31,
-------------------------------------------------------------------------------------------------
2024 2023 Months
-------------------- ---------- -------------------- ------- -------------------- ------------------------------
(In thousands)
Net sales:
OEM Segment:
RV OEMs:
$ 390,763 $ 330,553 $ 1,419,063
Travel trailers and fifth-wheels
68,838 69,551 268,643
Motorhomes
298,710 358,069 1,216,174
Adjacent Industries OEMs
-------------------- ---------- -------------------- ------- -------------------- -------------------- ----------
758,311 758,173 2,903,880
Total OEM Segment net sales
Aftermarket Segment:
209,718 215,137 875,647
Total Aftermarket Segment net sales
-------------------- ---------- -------------------- ------- -------------------- -------------------- ----------
$ 968,029 $ 973,310 $ 3,779,527
Total net sales
==================== ========== ==================== ======= ==================== ==================== ==========
Operating profit (loss):
$ 32,836 $ (721 ) $ 50,918
OEM Segment
24,775 20,764 110,078
Aftermarket Segment
-------------------- ---------- -------------------- ------- -------------------- -------------------- ----------
$ 57,611 $ 20,043 $ 160,996
Total operating profit
==================== ========== ==================== ======= ==================== ==================== ==========
Depreciation and amortization:
$ 14,035 $ 14,350 $ 58,082
OEM Segment depreciation
4,550 3,900 16,946
Aftermarket Segment depreciation
-------------------- ---------- -------------------- ------- -------------------- -------------------- ----------
$ 18,585 $ 18,250 $ 75,028
Total depreciation
==================== ========== ==================== ======= ==================== ==================== ==========
$ 10,280 $ 10,450 $ 41,409
OEM Segment amortization
3,824 3,799 15,521
Aftermarket Segment amortization
-------------------- ---------- -------------------- ------- -------------------- -------------------- ----------
LCI INDUSTRIES
BALANCE SHEET INFORMATION
(unaudited)
March 31, December 31,
2024 2023
------------------------------ ------------------------------
(In thousands)
ASSETS
Current assets
$ 22,625 $ 66,157
Cash and cash equivalents
344,406 214,707
Accounts receivable, net
734,360 768,407
Inventories, net
68,068 67,599
Prepaid expenses and other current assets
-------------------- ---------- -------------------- ----------
1,169,459 1,116,870
Total current assets
Fixed assets, net 454,071 465,781
Goodwill 587,791 589,550
Other intangible assets, net 432,728 448,759
Operating lease right-of-use assets 242,442 245,388
Other long-term assets 94,845 92,971
-------------------- ---------- -------------------- ----------
$ 2,981,336 $ 2,959,319
Total assets
==================== ========== ==================== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
$ 568 $ 589
Current maturities of long-term indebtedness
193,933 183,697
Accounts payable, trade
37,322 36,269
Current portion of operating lease obligations
177,217 174,437
Accrued expenses and other current liabilities
-------------------- ---------- -------------------- ----------
409,040 394,992
Total current liabilities
Long-term indebtedness 854,774 846,834
Operating lease obligations 218,236 222,680
Deferred taxes 31,211 32,345
Other long-term liabilities 111,191 107,432
-------------------- ---------- -------------------- ----------
1,624,452 1,604,283
Total liabilities
1,356,884 1,355,036
Total stockholders' equity
-------------------- ---------- -------------------- ----------
LCI INDUSTRIES
SUMMARY OF CASH FLOWS
(unaudited)
Three Months Ended
March 31,
--------------------------------------------------------------------------------------------------------------------------
2024 2023
-------------------- -------------- -------------------- -------------------- -------- --------------------
(In thousands)
Cash flows from operating activities:
$ 36,545 $ 7,259
Net income
Adjustments to reconcile net income to cash flows (used in) provided by operating activities:
32,689 32,499
Depreciation and amortization
4,327 4,695
Stock-based compensation expense
1,107 877
Other non-cash items
Changes in assets and liabilities, net of acquisitions of businesses:
(131,059 ) (123,072 )
Accounts receivable, net
32,892 131,708
Inventories, net
(2,392 ) 5,577
Prepaid expenses and other assets
12,038 25,822
Accounts payable, trade
6,199 (10,689 )
Accrued expenses and other liabilities
-------------------- -------------- -------------------- -------------------- -------- --------------------
(7,654 ) 74,676
Net cash flows (used in) provided by operating activities
Cash flows from investing activities:
(8,608 ) (17,159 )
Capital expenditures
-- (6,250 )
Acquisitions of businesses
173 1,960
Other investing activities
-------------------- -------------- -------------------- -------------------- -------- --------------------
(8,435 ) (21,449 )
Net cash flows used in investing activities
Cash flows from financing activities:
(9,040 ) (8,888 )
Vesting of stock-based awards, net of shares tendered for payment of taxes
86,248 165,300
Proceeds from revolving credit facility
(76,927 ) (201,385 )
Repayments under revolving credit facility
(5 ) (5,276 )
Repayments under term loan and other borrowings
(26,721 ) (26,563 )
Payment of dividends
(2 ) (12 )
Other financing activities
-------------------- -------------- -------------------- -------------------- -------- --------------------
(26,447 ) (76,824 )
Net cash flows used in financing activities
Effect of exchange rate changes on cash and cash equivalents (996 ) (437 )
-------------------- -------------- -------------------- -------------------- -------- --------------------
(43,532 ) (24,034 )
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period 66,157 47,499
-------------------- -------------- -------------------- -------------------- -------- --------------------
LCI INDUSTRIES
SUPPLEMENTARY INFORMATION
(unaudited)
Three Months Ended
March 31, Last Twelve
-----------------------------------------------------------------------------------------------
2024 2023 Months
-------------------- ---------- -------------------- ------ -------------------- ----------------------------------------------
Industry Data(1) (in thousands of units):
Industry Wholesale Production:
73.5 62.7 269.9
Travel trailer and fifth-wheel RVs
10.4 13.4 42.9
Motorhome RVs
Industry Retail Sales:
66.4 (2 ) 71.8 321.1 (2 )
Travel trailer and fifth-wheel RVs
7.1 (2 ) (9.1 ) (51.2 ) (2 )
Impact on dealer inventories
9.9 (2 ) 11.0 44.1 (2 )
Motorhome RVs
------------------------------------------------------------------ ------------------------------ ------------------- ---------------------------------------------- -------------------- ---------------------------------------------- -------------------
Twelve Months Ended
March 31,
-----------------------------------------------------------------------------------------------
2024 2023
-------------------- ---------- -------------------- ------ --------------------
Lippert Content Per Industry Unit Produced:
$ 5,097 $ 5,861
Travel trailer and fifth-wheel RV
$ 3,656 $ 3,993
Motorhome RV
------------------------------------------------------------------ ------------------------------ ------------------- ---------------------------------------------- -------------------- ---------------------------------------------- -------------------
March 31, December 31,
-----------------------------------------------------------------------------------------------
2024 2023 2023
-------------------- ---------- -------------------- ------ -------------------- -------------------- ------ --------------------
Balance Sheet Data (debt availability in millions):
$ 153.8 $ 318.2 $ 245.3
Remaining availability under the revolving credit facility (3)
30.5 27.9 30.1
Days sales in accounts receivable, based on last twelve months
3.7 3.3 3.5
Inventory turns, based on last twelve months
------------------------------------------------------------------ ------------------------------ ------------------- ---------------------------------------------- -------------------- ---------------------------------------------- -------------------
2024
--------------------------------------------------------------------------- --------------------
Estimated Full Year Data:
$55 - $75 million
Capital expenditures
$130 - $140 million
Depreciation and amortization
$18 - $23 million
Stock-based compensation expense
24% - 26%
Annual tax rate
(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) March 2024 retail sales data for RVs has not been published yet, therefore 2024 retail data for RVs includes an estimate for March 2024 retail units. Retail sales data will likely be revised upwards in future months as various states report.
LCI INDUSTRIES
SUPPLEMENTARY INFORMATION
RECONCILIATION OF NON-GAAP MEASURES
(unaudited)
The following table reconciles net income to EBITDA.
Three Months Ended March 31,
--------------------------------------------------------------------------------
2024 2023
-------------------- ---------- -------------------- ----------
(In thousands)
Net income $ 36,545 $ 7,259
9,321 10,394
Interest expense, net
11,745 2,390
Provision for income taxes
18,585 18,250
Depreciation expense
14,104 14,249
Amortization expense
-------------------- ---------- -------------------- ----------
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 month periods ended March 31, 2024 and 2023. 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/20240508012644/en/
SOURCE: LCI Industries
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Lillian D. Etzkorn, CFO (574) 535-1125 LCII@lci1.com
COMTEX_452057824/1006/2024-05-08T07:00:01