Continued execution on operational initiatives
drive growth
Third Quarter 2021 Highlights
- Net sales of $1.2 billion in the third quarter, an increase of
41% year-over-year
- Net income of $63.4 million, or $2.49 per diluted share, in the
third quarter
- Adjusted EBITDA of $118.1 million in the third quarter
- North American RV OEM sales grew to $626.5 million in the third
quarter, up 43% year-over-year, driven by record wholesale and
retail demand for the quarter
- Adjacent Industries OEM sales grew to $280.6 million in the
third quarter, up 55% year-over-year
- Aftermarket Segment sales grew to $219.0 million in the third
quarter, up 18% year-over-year
- Net sales from acquisitions in 2020 and 2021 contributed a
combined $79 million in the third quarter
- Content per travel trailer and fifth-wheel RV for the twelve
months ended September 30, 2021, increased 10% year-over-year to
$3,786
- Completed the acquisition of Furrion with $230 million of
projected annual sales
- Quarterly dividend of $0.90 per share, totaling $22.7 million
in the third quarter
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 and
transportation product markets, and the related aftermarkets of
those industries, today reported third quarter 2021 results.
"We posted strong results in the third quarter considering
significant cost pressures related to raw materials, freight, and
labor. Our teams have continued to do an excellent job in managing
the ongoing supply chain challenges to drive organic growth while
meeting commitments to our valued customers," commented Jason
Lippert, LCI Industries' President and Chief Executive Officer. "We
look forward to building on this progress with the addition of
Furrion, which will further enhance our product innovation
initiatives, while advancing our footprint into new markets,
allowing us to become a more dynamic supplier in the recreation
space globally."
"Historic levels of new consumers are continuing to take
advantage of the outdoor lifestyle, and our Aftermarket business is
poised to benefit from the repair, replacement, and upgrade cycles
for the record number of RVs currently entering the market. We also
remain focused on adding scalable capacity to meet this demand
through new automation projects and other operational initiatives.
These projects are designed to help us mitigate the impact of
heightened material costs and labor constraints to maintain
profitability," continued Lippert. "I am exceptionally proud of our
performance this quarter and would like to thank the LCI team
members for their dedication as we work to deliver value for
shareholders."
"The integration of Furrion is well underway, and we are excited
about the innovative product suite this acquisition brings. Our
goal is to inject more resources into research, development, and
innovation to introduce more great products to all of our markets,"
commented Ryan Smith, Group President - North America.
Third Quarter 2021 Results
Consolidated net sales for the third quarter of 2021 were $1.2
billion, an increase of 41 percent from 2020 third quarter net
sales of $827.7 million. Net income in the third quarter of 2021
was $63.4 million, or $2.49 per diluted share, compared to net
income of $68.3 million, or $2.70 per diluted share, in the third
quarter of 2020. Adjusted EBITDA in the third quarter of 2021 was
$118.1 million, compared to adjusted EBITDA of $119.4 million in
the third quarter of 2020. Additional information regarding
adjusted EBITDA, as well as a reconciliation of this non-GAAP
financial measure to the most directly comparable GAAP financial
measure, are provided in the "Supplementary Information -
Reconciliation of Non-GAAP Measures" section below.
The increase in year-over-year net sales for the third quarter
of 2021 was primarily driven by record RV retail demand and strong
Aftermarket sales growth. Net sales from acquisitions completed in
2020 and 2021 contributed approximately $79 million in the third
quarter of 2021.
The Company's average product content per travel trailer and
fifth-wheel RV for the twelve months ended September 30, 2021,
increased $358 to $3,786, compared to $3,428 for the twelve months
ended September 30, 2020, adjusted to remove Furrion sales from
prior periods. The content increase in towables was a result of
organic growth, including new product introductions.
October 2021 Results
October 2021 consolidated net sales were approximately $441
million, up 52 percent from October 2020, as production increased
significantly to meet elevated RV and marine retail demand.
Balance Sheet and Other Items
At September 30, 2021, the Company's cash and cash equivalents
balance was $72.6 million, up from $51.8 million at December 31,
2020. The Company generated net cash flows from operations of $12.3
million and used $154.5 million for acquisitions, $73.9 million for
capital expenditures, and $64.4 million for dividend payments to
shareholders in the nine months ended September 30, 2021. Cash
flows from operations were partially offset by strategic
investments in working capital to support record demand and
mitigate future supply chain disruptions.
The Company's outstanding long-term indebtedness, including
current maturities, was $1.1 billion at September 30, 2021, and the
Company remained in compliance with its debt covenants. The Company
believes that its current liquidity is adequate to meet operating
needs for the foreseeable future.
Conference Call & Webcast
LCI Industries will host a conference call to discuss its third
quarter results on Tuesday, November 2, 2021, 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 7996875.
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 (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 7996875. 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 product markets, consisting primarily 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. 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; 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,
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, 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, 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, 2020, 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
2021
2020
2021
2020
Months
(In thousands, except per share
amounts)
Net sales
$
1,165,309
$
827,729
$
3,259,287
$
2,013,164
$
4,042,289
Cost of sales
913,728
606,290
2,508,318
1,504,378
3,094,016
Gross profit
251,581
221,439
750,969
508,786
948,273
Selling, general and administrative
expenses
162,557
127,006
466,532
349,305
600,383
Operating profit
89,024
94,433
284,437
159,481
347,890
Interest expense, net
4,667
1,948
10,844
10,843
13,454
Income before income taxes
84,357
92,485
273,593
148,638
334,436
Provision for income taxes
20,956
24,138
68,183
38,891
80,333
Net income
$
63,401
$
68,347
$
205,410
$
109,747
$
254,103
Net income per common share:
Basic
$
2.51
$
2.72
$
8.14
$
4.37
$
10.07
Diluted
$
2.49
$
2.70
$
8.10
$
4.35
$
10.01
Weighted average common shares
outstanding:
Basic
25,286
25,162
25,247
25,125
25,233
Diluted
25,417
25,313
25,371
25,220
25,376
Depreciation and amortization
$
28,941
$
24,567
$
80,211
$
73,366
$
104,825
Capital expenditures
$
31,867
$
14,114
$
73,872
$
28,663
$
102,555
LCI INDUSTRIES
SEGMENT RESULTS
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
Last Twelve
2021
2020
2021
2020
Months
(In thousands)
Net sales:
OEM Segment:
RV OEMs:
Travel trailers and fifth-wheels
$
602,429
$
417,050
$
1,633,059
$
936,676
$
2,017,950
Motorhomes
63,259
44,441
193,105
107,241
243,960
Adjacent Industries OEMs
280,593
180,563
801,021
498,306
990,963
Total OEM Segment net sales
946,281
642,054
2,627,185
1,542,223
3,252,873
Aftermarket Segment:
Total Aftermarket Segment net sales
219,028
185,675
632,102
470,941
789,416
Total net sales
$
1,165,309
$
827,729
$
3,259,287
$
2,013,164
$
4,042,289
Operating profit:
OEM Segment
$
64,136
$
65,533
$
206,757
$
110,485
$
252,364
Aftermarket Segment (1)
24,888
28,900
77,680
48,996
95,526
Total operating profit
$
89,024
$
94,433
$
284,437
$
159,481
$
347,890
Depreciation and amortization:
OEM Segment depreciation
$
12,782
$
11,911
$
37,054
$
35,460
$
49,357
Aftermarket Segment depreciation
3,669
2,860
9,993
9,442
12,896
Total depreciation
$
16,451
$
14,771
$
47,047
$
44,902
$
62,253
OEM Segment amortization
$
8,632
$
6,928
$
22,877
$
19,671
$
29,531
Aftermarket Segment amortization
3,858
2,868
10,287
8,793
13,041
Total amortization
$
12,490
$
9,796
$
33,164
$
28,464
$
42,572
(1) Results for the 2021 periods include a
non-cash charge for inventory fair value step-up of $0.2 million
for the third quarter and $0.8 million for the first nine months of
2021 related to Ranch Hand purchase accounting. Results for the
2020 periods include a non-cash charge for inventory fair value
step-up of $0.4 million for the third quarter of 2020 and $7.3
million for the first nine months of 2020 related to CURT purchase
accounting.
LCI INDUSTRIES
BALANCE SHEET
INFORMATION
(unaudited)
September 30,
December 31,
2021
2020
(In thousands)
ASSETS
Current assets
Cash and cash equivalents
$
72,615
$
51,821
Accounts receivable, net of allowances of
$7,454 and $5,642 at September 30, 2021 and December 31, 2020,
respectively
394,766
268,625
Inventories, net
790,651
493,899
Prepaid expenses and other current
assets
102,434
55,456
Total current assets
1,360,466
869,801
Fixed assets, net
421,053
387,218
Goodwill
568,885
454,728
Other intangible assets, net
518,300
420,885
Operating lease right-of-use assets
164,142
104,179
Other assets
55,339
61,220
Total assets
$
3,088,185
$
2,298,031
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term
indebtedness
$
74,311
$
17,831
Accounts payable, trade
297,347
184,931
Current portion of operating lease
obligations
28,751
25,432
Accrued expenses and other current
liabilities
283,722
188,200
Total current liabilities
684,131
416,394
Long-term indebtedness
1,012,078
720,418
Operating lease obligations
143,839
82,707
Deferred taxes
56,309
53,833
Other long-term liabilities
160,688
116,353
Total liabilities
2,057,045
1,389,705
Total stockholders’ equity
1,031,140
908,326
Total liabilities and stockholders’
equity
$
3,088,185
$
2,298,031
LCI INDUSTRIES
SUMMARY OF CASH FLOWS
(unaudited)
Nine Months Ended September
30,
2021
2020
(In thousands)
Cash flows from operating activities:
Net income
$
205,410
$
109,747
Adjustments to reconcile net income to
cash flows provided by operating activities:
Depreciation and amortization
80,211
73,366
Stock-based compensation expense
20,295
13,646
Other non-cash items
5,418
1,818
Changes in assets and liabilities, net of
acquisitions of businesses:
Accounts receivable, net
(140,768
)
(103,209
)
Inventories, net
(253,031
)
24,423
Prepaid expenses and other assets
(28,274
)
(29,489
)
Accounts payable, trade
97,071
68,379
Accrued expenses and other liabilities
25,961
53,806
Net cash flows provided by operating
activities
12,293
212,487
Cash flows from investing activities:
Capital expenditures
(73,872
)
(28,663
)
Acquisitions of businesses, net of cash
acquired
(154,544
)
(94,909
)
Other investing activities
11,544
3,972
Net cash flows used in investing
activities
(216,872
)
(119,600
)
Cash flows from financing activities:
Vesting of stock-based awards, net of
shares tendered for payment of taxes
(8,258
)
(4,807
)
Proceeds from revolving credit
facility
832,493
285,827
Repayments under revolving credit
facility
(912,547
)
(273,130
)
Repayments under term loan and other
borrowings
(13,375
)
(15,385
)
Proceeds from issuance of convertible
notes
460,000
—
Purchases of convertible note hedge
contracts
(100,142
)
—
Proceeds from issuance of warrants
concurrent with note hedge contracts
48,484
—
Payment of debt issuance costs
(11,955
)
—
Payment of dividends
(64,425
)
(51,535
)
Payment of contingent consideration and
holdbacks related to acquisitions
(8,061
)
(9
)
Other financing activities
1,972
(167
)
Net cash flows provided by (used in)
financing activities
224,186
(59,206
)
Effect of exchange rate changes on cash
and cash equivalents
1,187
(853
)
Net increase in cash and cash
equivalents
20,794
32,828
Cash and cash equivalents at beginning of
period
51,821
35,359
Cash and cash equivalents cash at end of
period
$
72,615
$
68,187
LCI INDUSTRIES
SUPPLEMENTARY
INFORMATION
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
Last Twelve
2021
2020
2021
2020
Months
Industry Data(1) (in thousands of
units):
Industry Wholesale Production:
Travel trailer and fifth-wheel RVs
136.0
110.1
401.0
264.8
516.1
Motorhome RVs
13.3
11.3
42.4
28.3
54.8
Industry Retail Sales:
Travel trailer and fifth-wheel RVs
126.3
(2)
159.1
420.9
(2)
366.7
510.3
(2)
Impact on dealer inventories
9.7
(2)
(49.0)
(19.9)
(2)
(101.9)
5.8
(2)
Motorhome RVs
13.1
(2)
18.2
42.7
(2)
41.2
54.6
(2)
Twelve Months Ended
September 30,
2021
2020
Lippert Content Per Industry Unit
Produced: (3)
Travel trailer and fifth-wheel RV
$
3,786
$
3,428
Motorhome RV
$
2,732
$
2,399
September 30,
December 31,
2021
2020
2020
Balance Sheet Data (debt availability in
millions):
Remaining availability under the debt
facilities (4)
$
417.2
$
460.9
$
352.2
Days sales in accounts receivable, based
on last twelve months
30.9
30.8
31.6
Inventory turns, based on last twelve
months
5.7
5.7
5.7
2021
Estimated Full Year Data:
Capital expenditures
$130 - $150 million
Depreciation and amortization
$110 - $120 million
Stock-based compensation expense
$25 - $30 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 2021 retail sales data for
RVs has not been published yet, therefore 2021 retail data for RVs
includes an estimate for September 2021 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.
(4) Remaining availability under the debt
facilities is subject to covenant restrictions and, in the case of
$150 million of such availability, the lender's discretion.
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 September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
(In thousands, except per share
amounts)
Net income
$
63,401
$
68,347
$
205,410
$
109,747
Non-cash charge for inventory fair value
step-up
179
388
790
7,286
Income tax impact of inventory fair value
step-up
(44
)
(94
)
(194
)
(1,772
)
Adjusted net income
$
63,536
$
68,641
$
206,006
$
115,261
Diluted net income per common share
$
2.49
$
2.70
$
8.10
$
4.35
Non-cash charge for inventory fair value
step-up
0.01
0.02
0.03
0.29
Income tax impact of inventory fair value
step-up
(0.00
)
(0.00
)
(0.01
)
(0.07
)
Adjusted diluted net income per common
share
$
2.50
$
2.72
$
8.12
$
4.57
The following table reconciles net income
to EBITDA and Adjusted EBITDA.
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
(In thousands)
Net income
$
63,401
$
68,347
$
205,410
$
109,747
Interest expense, net
4,667
1,948
10,844
10,843
Provision for income taxes
20,956
24,138
68,183
38,891
Depreciation expense
16,451
14,771
47,047
44,902
Amortization expense
12,490
9,796
33,164
28,464
EBITDA
117,965
119,000
364,648
232,847
Non-cash charge for inventory fair value
step-up
179
388
790
7,286
Adjusted EBITDA
$
118,144
$
119,388
$
365,438
$
240,133
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 acquisitions
of Ranch Hand and CURT and related tax impacts during the three and
nine month periods ended September 30, 2021 and 2020, respectively.
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 acquisitions
of Ranch Hand and CURT and related tax impacts during the three and
nine month periods ended September 30, 2021 and 2020, respectively.
Adjusted EBITDA is defined as net income before interest expense,
net, 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 acquisitions of Ranch Hand and CURT
during the three and nine month periods ended September 30, 2021
and 2020, respectively. 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/20211102005230/en/
Brian Hall, CFO Phone: (574) 535-1125 E Mail:
LCII@lci1.com
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