Executing on diversification strategy to drive
outperformance
Second Quarter 2022 Highlights
- Net sales of $1.5 billion in the second quarter, up 40%
year-over-year
- Net income of $154.5 million, or $6.06 per diluted share, in
the second quarter, up $86.6 million, or 128%, year-over-year
- EBITDA of $250.7 million, up $130.0 million, or 108%,
year-over-year
- Quarterly dividend of $1.05 per share paid totaling $26.7
million in the second quarter
North American RV OEM (57% of net
sales last twelve months)
- Net sales of $864.3 million in the second quarter, up 58%
year-over-year, driven by wholesale shipments and market share
gains
- Content per travel trailer and fifth-wheel RV for the twelve
months ended June 30, 2022, increased 49% year-over-year to a
record $5,382
North American Adjacent Industries
OEM (20% of net sales last twelve months)
- Net sales of $323.7 million in the second quarter, up 39%
year-over-year
- North American marine OEM net sales of $132.4 million, up 44%
year-over-year
- Content per power boat for the twelve months ended June 30,
2022, increased 71% year-over-year to a record $1,848
North American Aftermarket (16% of
net sales last twelve months)
- Net sales of $240.2 million in the second quarter, up 14%
year-over-year
International Industries (7% of net
sales last twelve months)
- Net sales of $107.9 million in the second quarter, up 5%
year-over-year
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 second quarter 2022 results.
"We continued to execute on strategic priorities to deliver
strong results in the second quarter, highlighted by robust revenue
and EBITDA growth as we navigate a challenging operating
environment. Our culture of innovation and operational excellence
has supported our expansion in the Aftermarket, Marine, and RV OEM
markets while assisting us to meet consumer demand for quality,
technologically sophisticated products," commented Jason Lippert,
LCI Industries' President and Chief Executive Officer.
"While RV inventories stabilize, we are confident in our ability
to keep driving content and market share gains both within and
outside RV OEM. The widespread availability of peer-to-peer
rentals, along with increasing costs of airfare and hotel lodging,
have made camping, boating, and RVing attractive options for
vacationing. We believe our diverse portfolio has positioned us for
long-term growth as we capture tailwinds related to the ongoing
popularity of the outdoor lifestyle," Lippert continued. "I am
proud of the hard work shown by our teams in driving our strong
performance to help us generate further shareholder value."
"I also want to thank our team members for their commitment to
delivering best-in-class products to our customers. Through these
efforts, we continue to drive profitable growth while solidifying
LCI's position as an industry leader in the range of markets we
serve," commented Ryan Smith, Group President - North America.
Second Quarter 2022 Results
Consolidated net sales for the second quarter of 2022 were $1.5
billion, an increase of 40 percent from 2021 second quarter net
sales of $1.1 billion. Net income in the second quarter of 2022 was
$154.5 million, or $6.06 per diluted share, compared to net income
of $67.9 million, or $2.67 per diluted share, in the second quarter
of 2021. EBITDA in the second quarter of 2022 was $250.7 million,
compared to EBITDA of $120.7 million in the second quarter of 2021.
Additional information regarding EBITDA, as well as a
reconciliation of this non-GAAP financial measure to the most
directly comparable GAAP financial measure, is provided in the
"Supplementary Information - Reconciliation of Non-GAAP Measures"
section below.
The increase in year-over-year net sales for the second quarter
of 2022 was primarily driven by price realization, market share
gains, acquisitions, and increased wholesale shipments. Net sales
from acquisitions completed in the twelve months ended June 30,
2022 contributed approximately $81 million in the second quarter of
2022.
The Company's average product content per travel trailer and
fifth-wheel RV for the twelve months ended June 30, 2022, increased
$1,761 to $5,382, compared to $3,621 for the twelve months ended
June 30, 2021. The content increase in towables was primarily a
result of organic growth, including pricing and new product
introductions, market share gains, and acquisitions.
July 2022 Results
July 2022 consolidated net sales were approximately $368.4
million, up 5 percent from July 2021, demonstrating positive trends
as the Company moves into the second half 2022, a testament to
diversification efforts which are helping to offset the
deceleration experienced in North American RV production.
Income Taxes
The Company's effective tax rate was 27.3 percent for the
quarter ended June 30, 2022, compared to 25.0 percent for the
quarter ended June 30, 2021. The increase in the effective tax rate
was primarily due to a decrease in the cash surrender value of life
insurance plus a discrete tax adjustment in the current year period
for an acquisition-related tax election.
Balance Sheet and Other Items
At June 30, 2022, the Company's cash and cash equivalents
balance was $55.0 million, compared to $62.9 million at December
31, 2021. The Company used $70.8 million for capital expenditures,
$51.8 million for acquisitions, and $49.6 million for dividend
payments to shareholders in the six months ended June 30, 2022. The
Company also made $107.1 million in net repayments under its
revolving credit facility and $60.9 million in repayments under its
shelf loan, term loan, and other borrowings in the six months ended
June 30, 2022.
The Company's outstanding long-term indebtedness, including
current maturities, was $1.1 billion at June 30, 2022, and the
Company remained in compliance with its debt covenants. The Company
believes 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 second
quarter results on Tuesday, August 2, 2022, at 8:30 a.m. Eastern
time, which may be accessed by dialing (844) 200-6205 for
participants in the U.S. and (226) 828-7575 for those in Canada or
(929) 526-1599 for participants outside the U.S./Canada using the
required conference ID 428868. 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 (929) 458-6194 for participants in the U.S. and (226)
828-7578 for those in Canada or (204) 525-0658 for participants
outside the U.S./Canada and referencing access code 242022. 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, 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,
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, and the Russia-Ukraine War 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, 2021, 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 June 30,
Six Months Ended June 30,
Last Twelve
2022
2021
2022
2021
Months
(In thousands, except per share
amounts)
Net sales
$
1,536,150
$
1,093,720
$
3,180,718
$
2,093,978
$
5,559,437
Cost of sales
1,127,065
836,109
2,307,390
1,594,590
4,142,462
Gross profit
409,085
257,611
873,328
499,388
1,416,975
Selling, general and administrative
expenses
190,296
163,629
384,838
303,975
725,488
Operating profit
218,789
93,982
488,490
195,413
691,487
Interest expense, net
6,191
3,472
12,443
6,177
22,632
Income before income taxes
212,598
90,510
476,047
189,236
668,855
Provision for income taxes
58,068
22,621
125,336
47,227
172,414
Net income
$
154,530
$
67,889
$
350,711
$
142,009
$
496,441
Net income per common share:
Basic
$
6.07
$
2.69
$
13.82
$
5.63
$
19.59
Diluted
$
6.06
$
2.67
$
13.76
$
5.60
$
19.47
Weighted average common shares
outstanding:
Basic
25,438
25,275
25,377
25,230
25,340
Diluted
25,518
25,385
25,483
25,351
25,503
Depreciation
$
18,010
$
15,412
$
35,964
$
30,597
$
70,122
Amortization
$
13,897
$
11,342
$
27,755
$
20,673
$
54,646
Capital expenditures
$
28,800
$
21,048
$
70,837
$
42,005
$
127,366
LCI INDUSTRIES
SEGMENT RESULTS
(unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
Last Twelve
2022
2021
2022
2021
Months
(In thousands)
Net sales:
OEM Segment:
RV OEMs:
Travel trailers and fifth-wheels
$
814,509
$
527,614
$
1,767,735
$
1,030,630
$
3,032,717
Motorhomes
91,480
67,253
178,734
129,846
307,883
Adjacent Industries OEMs
370,289
269,787
726,391
520,428
1,294,968
Total OEM Segment net sales
1,276,278
864,654
2,672,860
1,680,904
4,635,568
Aftermarket Segment:
Total Aftermarket Segment net sales
259,872
229,066
507,858
413,074
923,869
Total net sales
$
1,536,150
$
1,093,720
$
3,180,718
$
2,093,978
$
5,559,437
Operating profit:
OEM Segment
$
190,577
$
63,334
$
435,951
$
142,621
$
598,006
Aftermarket Segment
28,212
30,648
52,539
52,792
93,481
Total operating profit
$
218,789
$
93,982
$
488,490
$
195,413
$
691,487
Depreciation and amortization:
OEM Segment depreciation
$
14,376
$
12,081
$
28,878
$
24,768
$
55,449
Aftermarket Segment depreciation
3,634
3,331
7,086
5,829
14,673
Total depreciation
$
18,010
$
15,412
$
35,964
$
30,597
$
70,122
OEM Segment amortization
$
10,053
$
7,806
$
20,197
$
14,258
$
38,832
Aftermarket Segment amortization
3,844
3,536
7,558
6,415
15,814
Total amortization
$
13,897
$
11,342
$
27,755
$
20,673
$
54,646
LCI INDUSTRIES
BALANCE SHEET
INFORMATION
(unaudited)
June 30,
December 31,
2022
2021
(In thousands)
ASSETS
Current assets
Cash and cash equivalents
$
54,988
$
62,896
Accounts receivable, net
417,033
319,782
Inventories, net
1,155,171
1,095,907
Prepaid expenses and other current
assets
70,510
88,300
Total current assets
1,697,702
1,566,885
Fixed assets, net
456,517
426,455
Goodwill
554,828
543,180
Other intangible assets, net
512,752
519,957
Operating lease right-of-use assets
203,221
164,618
Other long-term assets
57,676
66,999
Total assets
$
3,482,696
$
3,288,094
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term
indebtedness
$
20,979
$
71,003
Accounts payable, trade
287,659
282,183
Current portion of operating lease
obligations
34,167
30,592
Accrued expenses and other current
liabilities
295,438
243,438
Total current liabilities
638,243
627,216
Long-term indebtedness
1,101,787
1,231,959
Operating lease obligations
179,854
143,436
Deferred taxes
28,376
43,184
Other long-term liabilities
140,079
149,424
Total liabilities
2,088,339
2,195,219
Total stockholders' equity
1,394,357
1,092,875
Total liabilities and stockholders'
equity
$
3,482,696
$
3,288,094
LCI INDUSTRIES
SUMMARY OF CASH FLOWS
(unaudited)
Six Months Ended June 30,
2022
2021
(In thousands)
Cash flows from operating activities:
Net income
$
350,711
$
142,009
Adjustments to reconcile net income to
cash flows provided by operating activities:
Depreciation and amortization
63,719
51,270
Stock-based compensation expense
13,701
13,859
Deferred taxes
(2,401
)
—
Other non-cash items
2,025
4,305
Changes in assets and liabilities, net of
acquisitions of businesses:
Accounts receivable, net
(95,479
)
(142,489
)
Inventories, net
(51,811
)
(115,314
)
Prepaid expenses and other assets
25,746
(16,401
)
Accounts payable, trade
5,312
71,144
Accrued expenses and other liabilities
36,448
15,476
Net cash flows provided by operating
activities
347,971
23,859
Cash flows from investing activities:
Capital expenditures
(70,837
)
(42,005
)
Acquisitions of businesses
(51,789
)
(103,858
)
Other investing activities
2,204
(566
)
Net cash flows used in investing
activities
(120,422
)
(146,429
)
Cash flows from financing activities:
Vesting of stock-based awards, net of
shares tendered for payment of taxes
(10,773
)
(7,925
)
Proceeds from revolving credit
facility
729,400
554,693
Repayments under revolving credit
facility
(836,500
)
(719,747
)
Repayments under shelf loan, term loan,
and other borrowings
(60,902
)
(8,652
)
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
(4
)
(11,844
)
Payment of dividends
(49,572
)
(41,678
)
Payment of contingent consideration and
holdbacks related to acquisitions
(6,039
)
(4,387
)
Net cash flows (used in) provided by
financing activities
(234,390
)
168,802
Effect of exchange rate changes on cash
and cash equivalents
(1,067
)
(92
)
Net (decrease) increase in cash and cash
equivalents
(7,908
)
46,140
Cash and cash equivalents at beginning of
period
62,896
51,821
Cash and cash equivalents cash at end of
period
$
54,988
$
97,961
LCI INDUSTRIES
SUPPLEMENTARY
INFORMATION
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
Last Twelve
2022
2021
2022
2021
Months
Industry Data(1) (in thousands of
units):
Industry Wholesale Production:
Travel trailer and fifth-wheel RVs
133.7
133.8
285.9
265.0
552.3
Motorhome RVs
14.8
14.8
30.6
29.1
57.6
Industry Retail Sales:
Travel trailer and fifth-wheel RVs
125.6
(2)
180.5
218.7
(2)
295.0
426.0
(2)
Impact on dealer inventories
8.1
(2)
(46.7
)
67.2
(2)
(30.0
)
126.3
(2)
Motorhome RVs
14.0
(2)
17.0
26.9
(2)
30.3
51.9
(2)
Twelve Months Ended
June 30,
2022
2021
Lippert Content Per Industry Unit
Produced:
Travel trailer and fifth-wheel RV
$
5,382
$
3,621
Motorhome RV
$
3,569
$
2,644
June 30,
December 31,
2022
2021
2021
Balance Sheet Data (debt availability in
millions):
Remaining availability under the revolving
credit facility (3)
$
286.7
$
372.6
$
168.3
Days sale in accounts receivable, based on
last twelve months
28.2
31.3
30.6
Inventory turns, based on last twelve
months
4.3
6.1
5.0
2022
Estimated Full Year Data:
Capital expenditures
$120 - $140 million
Depreciation and amortization
$130 - $140 million
Stock-based compensation expense
$25 - $30 million
Annual tax rate
25% - 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) June 2022 retail sales data for RVs has not been published
yet, therefore 2022 retail data for RVs includes an estimate for
June 2022 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)
The following table reconciles net income
to EBITDA.
Three Months Ended June 30,
Six Months Ended June 30,
2022
2021
2022
2021
(In thousands)
Net income
$
154,530
$
67,889
$
350,711
$
142,009
Interest expense, net
6,191
3,472
12,443
6,177
Provision for income taxes
58,068
22,621
125,336
47,227
Depreciation expense
18,010
15,412
35,964
30,597
Amortization expense
13,897
11,342
27,755
20,673
EBITDA
$
250,696
$
120,736
$
552,209
$
246,683
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 and
six month periods ended June 30, 2022 and 2021. 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/20220802005196/en/
Brian Hall, CFO (574) 535-1125 LCII@lci1.com
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