First Quarter 2019 Highlights
- Net sales of $592.2 million in the
first quarter, a decrease of 9% year-over-year
- Net income of $34.4 million or $1.38
per diluted share in the first quarter
- Operating profit margin improved 260
bps from the fourth quarter of 2018 to 8.1%
- Content per travel trailer and
fifth-wheel increased $187 year-over-year, or 6%, to $3,504 for the
twelve months ended March 31, 2019
- Content per motorhome increased $172
year-over-year, or 7%, to $2,500 for the twelve months ended
March 31, 2019
- Adjacent Industries OEM sales grew to
$169.9 million for the quarter, up 19% year-over-year
- Aftermarket sales grew to $60.4 million
for the quarter, up 20% year-over-year
- International sales grew to $33.6
million for the quarter, up 49% year-over-year
- Quarterly dividend of $0.60 per share
paid totaling $15.0 million
LCI Industries (NYSE: LCII) (“LCI”, or the “Company”), through
its wholly-owned subsidiary, Lippert Components, Inc., supplies
domestically and internationally, a broad array of engineered
components for the leading original equipment manufacturers
(“OEMs”) in the recreation and industrial product markets, and the
related aftermarkets of those industries, today reported first
quarter 2019 results.
“We continue to execute on our diversification strategy, which
delivered high double-digit growth in our adjacent markets,
aftermarket, and international sales together which now make up 39
percent of our last twelve months sales. This strategy has proven
critical in the current decreased volume operating environment in
our Recreational Vehicle OEM segment, as it offset wholesale
shipments that were down roughly 30 percent during the quarter as
dealers continue to normalize inventory levels. We also remain
steadfast in our efforts that are bearing fruit to enhance overall
operational efficiencies to mitigate higher material costs, as
operating margins, while lower year-over-year, outpaced our
expectations during the first quarter,” said LCI Industries’ Chief
Executive Officer, Jason Lippert. “As we enter the prime retail
selling season, we believe that channel inventories will move
towards more appropriate levels by the end of the second quarter.
In the meantime, we continue to pursue opportunities for content
growth, acquisitions, and market share gains, and are confident our
strong leadership position in RVs, as well as in our emerging
businesses, will drive long-term shareholder value.”
First Quarter 2019 Results
Consolidated net sales for the first quarter of 2019 were $592.2
million, a decline of nine percent from 2018 first quarter net
sales of $650.5 million. Net income in the first quarter of 2019
was $34.4 million, or $1.38 per diluted share, compared to net
income of $47.3 million, or $1.86 per diluted share, in the first
quarter of 2018.
The decrease in year-over-year net sales for the first quarter
of 2019 reflects lower RV wholesale shipments as dealers normalize
their inventory levels, offset by continued growth in the Company’s
Adjacent Industries OEM, aftermarket, and international markets.
Net sales from acquisitions completed by the Company over the
twelve months ended March 31, 2019, contributed $31.2
million in the first quarter of 2019.
The Company’s content per travel trailer and fifth-wheel RV for
the twelve months ended March 31, 2019, increased $187 to
$3,504, compared to the twelve months ended March 31, 2018, of
$3,317. The Company’s content per motorhome RV for the twelve
months ended March 31, 2019, increased $172 to $2,500,
compared to the twelve months ended March 31, 2018, of $2,328.
The content increases are a result of organic growth, including new
product introductions, as well as acquisitions.
April 2019 Results
April 2019 consolidated net sales are approximately $218
million, down 8% from April 2018. Sales continue to be impacted by
reduced production rates by the RV OEMs.
Income Taxes
The Company’s effective tax rate was 24 percent for the quarter
ended March 31, 2019, higher than the comparable prior
year period of 19 percent primarily due to a year over year
reduction in the excess tax benefits related to the vesting or
exercise of equity-based compensation awards.
Balance Sheet and Other Items
At March 31, 2019, the Company’s cash and cash
equivalents balance was $14.3 million, a decrease of
$0.6 million from its balance of $14.9 million at the
beginning of the year. The Company generated cash flow from
operations of $52.6 million and invested $24.4 million in
capital expenditures as well as $15.0 million for dividend
payments to shareholders for the three months ended
March 31, 2019. The Company’s outstanding debt was
$286.3 million at March 31, 2019.
Conference Call & Webcast
LCI will host a conference call to discuss its first quarter
2019 earnings on Tuesday, May 7, 2019, at 8:30 a.m. Eastern
time, which may be accessed by dialing (888) 525-0270 for
participants in the U.S./Canada or (704) 935-3405 for participants
outside the U.S./Canada using the required conference ID 1599587.
In addition, an online, real-time webcast, as well as a
supplemental earnings presentation can be accessed on the Company’s
website, www.lci1.com/investors.
A replay of the conference call will be available for two weeks
by dialing (855) 859-2056 and referencing access code 1599587. A
replay of the webcast will also be available on LCI’s website until
the next quarterly conference call.
About LCI Industries
From over 65 manufacturing and distribution facilities located
throughout the United States and in Canada, Ireland, Italy, and the
United Kingdom, LCI Industries, through its wholly-owned
subsidiary, Lippert Components Inc., supplies, domestically and
internationally, a broad array of engineered components for the
leading original equipment manufacturers (“OEMs”) in the recreation
and industrial product markets, consisting of recreational vehicles
(“RVs”) and adjacent industries, including buses; trailers used to
haul boats, livestock, equipment, and other cargo; trucks; boats;
trains; manufactured homes; and modular housing. The Company also
supplies components to the related aftermarkets of these industries
primarily by selling to retail dealers, wholesale distributors, and
service centers. LCI’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; furniture and
mattresses; entry, luggage, patio, and ramp doors; electric and
manual entry steps; awnings and awning accessories; electronic
components; televisions and sound systems; navigation systems;
backup cameras; appliances; and other accessories. Additional
information about LCI and its products can be found at www.lci1.com.
Forward-Looking Statements
This press release contains certain “forward-looking statements”
with respect to our financial condition, results of operations,
business strategies, operating efficiencies or synergies,
competitive position, growth opportunities, acquisitions, plans and
objectives of management, markets for the Company’s common stock,
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), cash flow, and financial condition, 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, pricing pressures
due to domestic and foreign competition, costs and availability of
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, employee benefits, employee 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, 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, 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, 2018, and
in the Company’s subsequent filings with the Securities and
Exchange Commission. 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 March 31, Last Twelve 2019
2018 Months (In thousands, except per share amounts) Net
sales $ 592,172 $ 650,492 $ 2,417,487 Cost of sales 459,578 509,759
1,905,282 Gross profit 132,594 140,733 512,205 Selling, general and
administrative expenses 84,839 80,913 325,482 Operating profit
47,755 59,820 186,723 Interest expense, net 2,507 1,101 7,842
Income before income taxes 45,248 58,719 178,881 Provision for
income taxes 10,882 11,383 43,300 Net income $ 34,366 $ 47,336 $
135,581 Net income per common share: Basic $ 1.38 $ 1.88 $
5.40 Diluted $ 1.38 $ 1.86 $ 5.35 Weighted average common
shares outstanding: Basic 24,914 25,149 25,120 Diluted 24,929
25,465 25,350 Depreciation and amortization $ 18,449 $
15,275 $ 70,700 Capital expenditures $ 24,442 $ 26,004 $ 118,265
LCI INDUSTRIES SEGMENT RESULTS
(unaudited)
Three Months Ended March 31, Last Twelve 2019
2018 Months (In thousands) Net sales: OEM Segment: RV OEMs: Travel
trailers and fifth-wheels $ 316,871 $ 404,957 $ 1,352,644
Motorhomes 45,000 52,915 179,382 Adjacent Industries OEMs 169,909
142,307 642,191 Total OEM Segment net sales 531,780 600,179
2,174,217 Aftermarket Segment: Total Aftermarket Segment net sales
60,392 50,313 243,270 Total net sales $ 592,172 $ 650,492 $
2,417,487 Operating profit: OEM Segment $ 40,408 $ 53,940 $
153,944 Aftermarket Segment 7,347 5,880 32,779 Total operating
profit $ 47,755 $ 59,820 $ 186,723
LCI INDUSTRIES BALANCE
SHEET INFORMATION
(unaudited)
March 31, December 31, 2019 2018 (In thousands)
ASSETS Current assets Cash and cash equivalents $ 14,317 $
14,928 Accounts receivable, net of allowances of $2,451 and $1,895
at March 31, 2019 and December 31, 2018, respectively 179,417
121,812 Inventories, net 324,522 340,615 Prepaid expenses and other
current assets 34,840 49,296 Total current assets 553,096 526,651
Fixed assets, net 335,049 322,876 Goodwill 178,336 180,168 Other
intangible assets, net 171,267 176,342 Operating lease right-of-use
assets 65,373 — Deferred taxes 8,393 10,948 Other assets 31,037
26,908 Total assets $ 1,342,551 $ 1,243,893 LIABILITIES AND
STOCKHOLDERS’ EQUITY Current liabilities Accounts payable, trade $
89,805 $ 78,354 Current portion of operating lease obligations
14,801 — Accrued expenses and other current liabilities 110,605
99,228 Total current liabilities 215,211 177,582 Long-term
indebtedness 286,311 293,528 Operating lease obligations 53,455 —
Other long-term liabilities 65,895 66,528 Total liabilities 620,872
537,638 Total stockholders’ equity 721,679 706,255 Total
liabilities and stockholders’ equity $ 1,342,551 $ 1,243,893
LCI
INDUSTRIES SUMMARY OF CASH FLOWS
(unaudited)
Three Months Ended March 31, 2019 2018 (In thousands)
Cash flows from operating activities: Net income $ 34,366 $ 47,336
Adjustments to reconcile net income to cash flows provided by (used
in) operating activities: Depreciation and amortization 18,449
15,275 Stock-based compensation expense 3,733 5,543 Other non-cash
items 611 (1,127) Changes in assets and liabilities, net of
acquisitions of businesses: Accounts receivable, net (57,753)
(71,073) Inventories, net 16,052 (17,232) Prepaid expenses and
other assets 10,268 (3,185) Accounts payable, trade 11,581 8,114
Accrued expenses and other liabilities 15,278 11,246 Net cash flows
provided by (used in) operating activities 52,585 (5,103) Cash
flows from investing activities: Capital expenditures (24,442)
(26,004) Acquisitions of businesses, net of cash acquired —
(138,570) Proceeds from note receivable — 155 Other investing
activities 61 (35) Net cash flows used in investing activities
(24,381) (164,454) Cash flows from financing activities: Vesting of
stock-based awards, net of shares tendered for payment of taxes
(6,348) (14,085) Proceeds from revolving credit facility borrowings
175,660 474,000 Repayments under revolving credit facility
borrowings (182,720) (297,000) Payment of dividends (14,999)
(13,858) Other financing activities (157) (556) Net cash flows
(used in) provided by financing activities (28,564) 148,501 Effect
of exchange rate changes on cash and cash equivalents (251) — Net
decrease in cash and cash equivalents (611) (21,056) Cash and cash
equivalents at beginning of period 14,928 26,049 Cash and cash
equivalents at end of period $ 14,317 $ 4,993
LCI INDUSTRIES
SUPPLEMENTARY INFORMATION
(unaudited)
Three Months Ended March 31, Last Twelve 2019 2018
Months Industry Data(1) (in thousands of units): Industry Wholesale
Production: Travel trailer and fifth-wheel RVs 84.7 116.9 382.8
Motorhome RVs 12.7 17.5 52.8 Industry Retail Sales: Travel trailer
and fifth-wheel RVs 79.5
(2)
81.6 418.6
(2)
Impact on dealer inventories 5.2
(2)
35.3 (35.8)
(2)
Motorhome RVs 9.3
(2)
11.9 49.3
(2)
Twelve Months Ended March 31, 2019 2018 LCI Content Per Industry
Unit Produced: Travel trailer and fifth-wheel RV $ 3,504 $ 3,317
Motorhome RV $ 2,500 $ 2,328
March 31, December 31, 2019 2018 2018
Balance Sheet Data: Current ratio 2.6 2.6 3.0 Total indebtedness to
stockholders’ equity 0.4 0.3 0.4 Days sales in accounts receivable
27.1 23.7 27.7 Inventory turns, based on last twelve months 5.8 7.4
7.5
2019 Estimated Full Year Data: Capital expenditures $ 55 - $ 65
million Depreciation and amortization $ 73 - $ 78 million
Stock-based compensation expense $ 15 - $ 17 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) March 2019 retail sales data for RVs has not been published
yet, therefore 2019 retail data for RVs includes an estimate for
March 2019 retail units. Retail sales data will likely be revised
upwards in future months as various states report.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190507005122/en/
Brian Hall, CFO(574) 535-1125LCII@lci1.com
LCI Industries (NYSE:LCII)
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