First Quarter 2020 Highlights
- Net sales of $659.7 million in the first quarter, an increase
of 11% year-over-year
- Net income declined $6.2 million, or 17.9%, to $28.2 million,
or $1.12 per diluted share in the first quarter
- Adjusted net income declined $1.5 million, or 4.4%, to $32.9
million, or $1.31 per diluted share, in the first quarter,
excluding a non-cash charge recognized in cost of sales related to
the inventory fair value step-up for CURT, net of tax
- Adjusted EBITDA increased $8.9 million, or 13.5%, to $75.1
million in the first quarter
- Content per travel trailer and fifth-wheel RVs, adjusted to
remove Furrion sales from prior periods, increased $89
year-over-year, or 3%, to $3,354 for the twelve months ended March
31, 2020
- Content per motorhome, adjusted to remove Furrion sales from
prior periods, deceased $110 year-over-year, or 5%, to $2,327 for
the twelve months ended March 31, 2020
- Adjacent industries OEM sales grew to $187.2 million, an
increase of 10% year-over-year
- Aftermarket Segment sales grew to $127.3 million, an increase
of 111% year-over-year
- International sales grew to $60.9 million, an increase of 81%
year-over-year
- Completed the acquisition of Polyplastic Group for $95.8
million
- Quarterly dividend of $0.65 per share paid totaling $16.3
million
LCI Industries (NYSE: LCII) which, through its wholly-owned
subsidiary, Lippert Components, Inc. ("LCI"), supplies a broad
array of highly engineered components for the leading original
equipment manufacturers ("OEMs") in the recreation and
transportation product markets, and the related aftermarkets of
those industries, today reported first quarter 2020 results.
“We delivered an 11% increase in revenues during the first
quarter of 2020, despite the about-face in demand that occurred
late in the quarter. As we began the year, RV retail sales trended
positively, largely outperforming industry expectations. In
addition, our diversification strategy continued to bear fruit as
we saw strong growth across our adjacent markets, aftermarket, and
international businesses,” commented Jason Lippert, LCI Industries'
President and Chief Executive Officer. “I am incredibly proud of
our team for not only its superior execution during the quarter,
but also the quick reaction to adjust to the production halt at
most of our OEM customers, as well as many of our facilities across
North America and Europe. As the world changed before our eyes, we
took the crucial steps to protect the health and safety of our team
members and implement cost management initiatives in an effort to
help mitigate long-term impacts to the business.”
“The long-term fundamentals of our business are strong. Summer
travel plans are being significantly altered for most consumers as
air travel, cruise ships, and hotels are likely going to be less
popular, at least in the near term. As a result, the outdoor
recreational products business is expected to accelerate. RVs and
boats provide attractive alternatives to vacation more safely as
families are eager to get out of the house. At the same time, RVing
and boating offer a great solution to social distancing for
families that want to travel the country and experience the great
outdoors. In this new normal, our strong competitive position and
innovative products have supported better-than-expected results for
April as well as OEM orders already received for May,” continued
Mr. Lippert. “In the near-term, we remain focused on navigating the
current environment, advancing our diversification strategy,
successfully integrating our latest acquisitions, and maintaining
our investment in R&D. We feel confident we have the necessary
infrastructure, balance sheet, and leadership to navigate this
crisis and emerge a stronger company.”
First Quarter 2020 Results
Consolidated net sales for the first quarter of 2020 were $659.7
million, an increase of 11 percent from 2019 first quarter net
sales of $592.2 million. Net income in the first quarter of 2020
was $28.2 million, or $1.12 per diluted share, compared to net
income of $34.4 million, or $1.38 per diluted share, in the first
quarter of 2019. Adjusted net income in the first quarter of 2020
was $32.9 million, or $1.31 per diluted share, excluding a non-cash
charge recognized in cost of sales related to the inventory fair
value step-up for CURT, net of tax. Adjusted EBITDA in the first
quarter of 2020 was $75.1 million, compared to adjusted EBITDA of
$66.2 million in the first quarter of 2019. Additional information
regarding adjusted net income, adjusted diluted net income per
common share, and adjusted EBITDA, as well as reconciliations of
these non-GAAP financial measures to the most directly comparable
GAAP financial measures, are provided in the "Supplementary
Information - Reconciliation of Non-GAAP Measures" section
below.
The increase in year-over-year net sales for the first quarter
of 2020 reflects acquisitions and organic growth across the
Company's adjacent industries OEM, aftermarket and international
markets, partially offset by the impact of customer shutdowns in
response to the spread of COVID-19. Net sales from acquisitions
completed by the Company contributed $99.5 million in the first
quarter of 2020.
The Company's content per travel trailer and fifth-wheel RV,
adjusted to remove Furrion sales from prior periods, for the twelve
months ended March 31, 2020, increased $89 to $3,354, compared to
$3,265 for the twelve months ended March 31, 2019. The content
increase in towables was a result of organic growth, including new
product introductions, partially offset by price reductions. The
Company's content per motorhome RV, adjusted to remove Furrion
sales from prior periods, for the twelve months ended March 31,
2020, decreased $110 to $2,327, compared to $2,437 for the twelve
months ended March 31, 2019. The content decrease in motorhomes was
primarily a result of the wholesale mix shifting to smaller
units.
April 2020 Results
April 2020 consolidated net sales were approximately $52
million, down 76 percent from April 2019 as the majority of our
manufacturing locations were closed during the month.
Current expectations are that many of the OEM customers we
supply are planning to resume operations in early May 2020 at
reduced capacity to fulfill retail dealer backlog orders. The
Company resumed operations to varying degrees for the majority of
its facilities on May 4, 2020, to meet the demand requirements of
its customers. The current plans are subject to change as the
ultimate duration and impact of the COVID-19 outbreak on the
Company's and its customers' operations is presently unclear. The
anticipated increase in sales, along with the significant cost
reduction actions taken by the Company, are expected to result in
positive cash flows for May, offsetting the net cash outflow
resulting from production suspensions in April.
Income Taxes
The Company's effective tax rate was 27.8 percent for the
quarter ended March 31, 2020, compared to 24.0 percent for the
quarter ended March 31, 2019. The effective tax rate was higher
primarily due to a year-over-year reduction in the excess tax
benefits related to the vesting of equity-based compensation
awards, a reduction of income before income taxes, and an increase
in non-deductible expenses.
Balance Sheet and Other Items
At March 31, 2020, the Company's cash and cash equivalents
balance was $98.0 million, up from the balance of $35.4 million at
the beginning of the year. The Company generated cash flows from
operations of $44.8 million and used $95.8 million for
acquisitions, $16.3 million for dividend payments to shareholders,
and $8.0 million in capital expenditures for the three months ended
March 31, 2020. The Company's outstanding debt was $768.8 million
at March 31, 2020, and the Company remained in compliance with its
debt covenants. The Company believes it has adequate liquidity to
meet operating needs for the foreseeable future.
Conference Call & Webcast
LCI will host a conference call to discuss its first quarter
results on Tuesday, May 5, 2020, at 8:30 a.m. Eastern time, which
may be accessed by dialing (877) 668-4883 for participants in the
U.S./Canada or (825) 312-2360 for participants outside the
U.S./Canada using the required conference ID 7579507. 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 (800) 585-8367 for participants in the U.S./Canada or
(416) 621-4642 for participants outside the U.S./Canada and
referencing access code 7579507. A replay of the webcast will be
available on the Company's website immediately following the
conclusion of the call.
About LCI Industries
From over 90 manufacturing and distribution facilities located
throughout North America and Europe, LCI Industries, through its
wholly-owned subsidiary, LCI, supplies, domestically and
internationally, a broad array of highly engineered components for
the leading OEMs in the recreation and transportation product
markets, consisting of recreational vehicles 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
engineered 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; entry,
luggage, patio, and ramp doors; furniture and mattresses; electric
and manual entry steps; awnings and awning accessories; towing
products; truck accessories; electronic components; 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,
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, consumer demand, integration of acquisitions,
R&D investments, and resumption of normal operations, 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, 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, 2019, 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 March 31,
Last Twelve
2020
2019
Months
(In thousands, except per share
amounts)
Net sales
$
659,670
$
592,172
$
2,438,980
Cost of sales
501,065
459,578
1,873,767
Gross profit
158,605
132,594
565,213
Selling, general and administrative
expenses
114,339
84,839
368,492
Operating profit
44,266
47,755
196,721
Interest expense, net
5,197
2,507
11,486
Income before income taxes
39,069
45,248
185,235
Provision for income taxes
10,855
10,882
44,878
Net income
$
28,214
$
34,366
$
140,357
Net income per common share:
Basic
$
1.13
$
1.38
$
5.60
Diluted
$
1.12
$
1.38
$
5.58
Weighted average common shares
outstanding:
Basic
25,075
24,914
25,046
Diluted
25,143
24,929
25,154
Depreciation and amortization
$
24,614
$
18,449
$
81,523
Capital expenditures
$
7,955
$
24,442
$
41,715
LCI INDUSTRIES
SEGMENT RESULTS
(unaudited)
Three Months Ended March 31,
Last Twelve
2020
2019
Months
(In thousands)
Net sales:
OEM Segment:
RV OEMs:
Travel trailers and fifth-wheels
$
307,108
$
316,871
$
1,266,955
Motorhomes
38,087
45,000
148,710
Adjacent Industries OEMs
187,162
169,909
676,813
Total OEM Segment net sales
532,357
531,780
2,092,478
Aftermarket Segment:
Total Aftermarket Segment net sales
127,313
60,392
346,502
Total net sales
$
659,670
$
592,172
$
2,438,980
Operating profit:
OEM Segment
$
43,189
$
40,408
$
168,071
Aftermarket Segment (1)
1,077
7,347
28,650
Total operating profit
$
44,266
$
47,755
$
196,721
Depreciation and amortization:
OEM Segment depreciation
$
12,060
$
11,470
$
46,610
Aftermarket Segment depreciation
3,140
1,109
7,611
Total depreciation
$
15,200
$
12,579
$
54,221
OEM Segment amortization
$
6,423
$
5,239
$
21,971
Aftermarket Segment amortization
2,991
631
5,331
Total amortization
$
9,414
$
5,870
$
27,302
(1) March 31, 2020 results include a
non-cash charge for inventory fair value step-up of $6.2 million
related to CURT purchase accounting.
LCI INDUSTRIES
BALANCE SHEET
INFORMATION
(unaudited)
March 31,
December 31,
2020
2019
(In thousands)
ASSETS
Current assets
Cash and cash equivalents
$
97,999
$
35,359
Accounts receivable, net of allowances of
$4,568 and $3,144 at March 31, 2020 and December 31, 2019,
respectively
280,952
199,976
Inventories, net
350,514
393,607
Prepaid expenses and other current
assets
39,934
41,849
Total current assets
769,399
670,791
Fixed assets, net
372,113
366,309
Goodwill
399,360
351,114
Other intangible assets, net
377,932
341,426
Operating lease right-of-use assets
101,968
98,774
Other assets
30,441
34,181
Total assets
$
2,051,213
$
1,862,595
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term
indebtedness
$
18,299
$
17,883
Accounts payable, trade
137,792
99,262
Current portion of operating lease
obligations
23,389
21,693
Accrued expenses and other current
liabilities
120,557
132,420
Total current liabilities
300,037
271,258
Long-term indebtedness
750,519
612,906
Operating lease obligations
81,871
79,848
Deferred taxes
47,600
35,740
Other long-term liabilities
63,383
62,171
Total liabilities
1,243,410
1,061,923
Total stockholders’ equity
807,803
800,672
Total liabilities and stockholders’
equity
$
2,051,213
$
1,862,595
LCI INDUSTRIES
SUMMARY OF CASH FLOWS
(unaudited)
Three Months Ended March 31,
2020
2019
(In thousands)
Cash flows from operating activities:
Net income
$
28,214
$
34,366
Adjustments to reconcile net income to
cash flows provided by operating activities:
Depreciation and amortization
24,614
18,449
Stock-based compensation expense
3,295
3,733
Other non-cash items
(2,231)
611
Changes in assets and liabilities, net of
acquisitions of businesses:
Accounts receivable, net
(74,776)
(57,753)
Inventories, net
40,883
16,052
Prepaid expenses and other assets
6,350
10,268
Accounts payable, trade
31,878
11,581
Accrued expenses and other liabilities
(13,468)
15,278
Net cash flows provided by operating
activities
44,759
52,585
Cash flows from investing activities:
Capital expenditures
(7,955)
(24,442)
Acquisitions of businesses, net of cash
acquired
(95,766)
—
Other investing activities
1,972
61
Net cash flows used in investing
activities
(101,749)
(24,381)
Cash flows from financing activities:
Vesting of stock-based awards, net of
shares tendered for payment of taxes
(4,517)
(6,348)
Proceeds from revolving credit facility
borrowings
247,154
175,660
Repayments under revolving credit facility
borrowings
(102,330)
(182,720)
Repayments under term loan borrowings
(3,750)
—
Payment of dividends
(16,321)
(14,999)
Other financing activities
(391)
(157)
Net cash flows provided by (used in)
financing activities
119,845
(28,564)
Effect of exchange rate changes on cash
and cash equivalents
(215)
(251)
Net increase (decrease) in cash and cash
equivalents
62,640
(611)
Cash and cash equivalents at beginning of
period
35,359
14,928
Cash and cash equivalents at end of
period
$
97,999
$
14,317
LCI INDUSTRIES
SUPPLEMENTARY
INFORMATION
(unaudited)
Three Months Ended
March 31,
Last Twelve
2020
2019
Months
Industry Data(1) (in thousands of
units):
Industry Wholesale Production:
Travel trailer and fifth-wheel RVs
88.0
84.8
352.7
Motorhome RVs
10.1
12.8
44.0
Industry Retail Sales:
Travel trailer and fifth-wheel RVs
78.9
(2)
77.4
399.8
(2)
Impact on dealer inventories
9.1
(2)
7.4
(47.1)
(2)
Motorhome RVs
9.6
(2)
9.7
45.8
(2)
Twelve Months Ended
March 31,
2020
2019
LCI Content Per Industry Unit Produced:
(3)
Travel trailer and fifth-wheel RV
$
3,354
$
3,265
Motorhome RV
$
2,327
$
2,437
March 31,
December 31,
2020
2019
2019
Balance Sheet Data:
Current ratio
2.6
3.0
2.5
Total indebtedness to stockholders'
equity
0.9
0.4
0.8
Days sales in accounts receivable, based
on last twelve months
26.6
24.2
24.2
Inventory turns, based on last twelve
months
5.5
6.2
6.2
2020
Estimated Full Year Data:
Capital expenditures
$ 20 - $ 30 million
Depreciation and amortization
$ 95 - $ 105 million
Stock-based compensation expense
$ 13 - $ 18 million
Annual tax rate
25% - 27%
(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 2020 retail sales data for RVs
has not been published yet, therefore 2020 retail data for RVs
includes an estimate for March 2020 retail units. Retail sales data
will likely be revised upwards in future months as various states
report.
(3) The content figures presented were
adjusted to remove Furrion sales from prior periods, as the Furrion
distribution and supply agreement was terminated effective December
31, 2019.
LCI INDUSTRIES
SUPPLEMENTARY
INFORMATION
RECONCILIATION OF NON-GAAP
MEASURES
(unaudited)
The following table reconciles net income
to adjusted net income and diluted net income per common share to
adjusted diluted net income per common share.
Three Months Ended March 31,
2020
2019
(In thousands, except per share
amounts)
Net income
$
28,214
$
34,366
Non-cash charge for inventory fair value
step-up
6,243
—
Income tax impact of inventory fair value
step-up
(1,518
)
—
Adjusted net income
$
32,939
$
34,366
Diluted net income per common share
$
1.12
$
1.38
Non-cash charge for inventory fair value
step-up
0.25
—
Income tax impact of inventory fair value
step-up
(0.06
)
—
Adjusted diluted net income per common
share
$
1.31
$
1.38
The following table reconciles net income
to EBITDA and Adjusted EBITDA.
Three Months Ended March 31,
2020
2019
(In thousands)
Net income
$
28,214
$
34,366
Interest expense, net
5,197
2,507
Provision for income taxes
10,855
10,882
Depreciation expense
15,200
12,579
Amortization expense
9,414
5,870
EBITDA
68,880
66,204
Non-cash charge for inventory fair value
step-up
6,243
—
Adjusted EBITDA
$
75,123
$
66,204
In addition to reporting financial results in accordance with
U.S. GAAP, the Company has provided the non-GAAP performance
measures of adjusted net income, adjusted diluted net income per
common share, and adjusted EBITDA to illustrate and improve
comparability of its results from period to period. Adjusted net
income is defined as net income adjusted for items that impact the
comparability of the Company's results from period to period, which
consisted of the inventory fair value step-up from the acquisition
of CURT and related tax impacts during the three months ended March
31, 2020. Adjusted diluted net income per common share is defined
as net income per common share adjusted for items that impact the
comparability of the Company's results from period to period, which
consisted of the inventory fair value step-up from the acquisition
of CURT and related tax impacts during the three months ended March
31, 2020. Adjusted EBITDA is defined as net income before interest
expense, provision for income taxes, depreciation and amortization
expense, and other adjustments made in order to present comparable
results from period to period, which consisted of the inventory
fair value step-up from the acquisition of CURT during the three
months ended March 31, 2020. The Company considers these non-GAAP
measures 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 adjusted measures are not
in accordance with, nor are they a substitute for, GAAP measures,
and they may not be comparable to similarly titled measures used by
other companies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200505005164/en/
Brian Hall, CFO (574) 535-1125 LCII@lci1.com
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