Diversification strategy and operational
execution supporting profitability
First Quarter 2023 Highlights
- Net sales of $973.3 million in the first quarter, down 41%
year-over-year
- Net income of $7.3 million, or $0.29 per diluted share, in the
first quarter, down 96% year-over-year
- EBITDA of $52.5 million, down 83% year-over-year
- Quarterly dividend of $1.05 per share paid totaling $26.6
million in the first quarter
- Continued execution of diversification strategy with North
American RV OEM net sales less than 48% of total net sales for
twelve months ended March 31, 2023
- Inventory reduction of $120 million versus prior quarter
Channel Categories
RV OEM
- Net sales of $400.1 million in the first quarter, down 62%
year-over-year, driven by a nearly 55% decline in North American
wholesale shipments for the quarter compared to same quarter in
2022
- Content per North American travel trailer and fifth-wheel RVs
for the twelve months ended March 31, 2023, increased 21%
year-over-year to $5,881
Adjacent Industries OEM
- Net sales of $358.1 million in the first quarter, up 1%,
year-over-year
- North American marine OEM net sales in the first quarter of
$119.3 million, down 6% year-over-year
- Content per North American power boat for the twelve months
ended March 31, 2023, decreased 3% year-over-year to $1,608
Aftermarket
- Net sales of $215.1 million in the first quarter, down 13%
year-over-year, driven by a decline in automotive aftermarket
sales
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 first quarter 2023 results.
“Despite challenging wholesale and OEM environments, we
delivered solid results in the first quarter of 2023, underscored
by robust content growth and strong sequential margin expansion
given current market conditions. Steadfast focus on our
diversification strategy and continued operational improvements
have positioned us to deliver sustained profitability, with
performance in our adjacent industries and aftermarket businesses
helping to partially offset the impact of lower RV OEM shipments.
Despite wholesale RV declines, revenue and content per unit are
substantially above pre-COVID levels. By leveraging our strong
R&D capabilities, we are aggressively working to expand market
share through product innovations to meet consumer demand for
high-quality, sophisticated content,” commented Jason Lippert, LCI
Industries’ President and Chief Executive Officer.
“As we navigate through this down cycle, largely driven by
recent overproduction within the industry, we remain confident in
the underlying strength of the outdoor lifestyle and are seeing
continued retail demand coming out of spring shows. We are
continuing to fortify our financial profile and have made
significant progress towards our plan to reduce inventories by $300
million this year, supporting enhanced cash generation. With the
efficiencies we’ve captured, combined with the continued
performance of our diversified portfolio, we believe we are poised
to continue our trajectory of strong performance and deliver
substantial margin growth when RV OEM production recovers,” Lippert
continued. “Our strong cultural foundation, veteran operational
leadership, and dedicated team members keep us on track in our
efforts to create long-term value for all stakeholders throughout
2023.”
First Quarter 2023 Results
Consolidated net sales for the first quarter of 2023 were $973.3
million, a decrease of 41 percent from 2022 first quarter net sales
of $1.6 billion. Net income in the first quarter of 2023 was $7.3
million, or $0.29 per diluted share, compared to net income of
$196.2 million, or $7.71 per diluted share, in the first quarter of
2022. EBITDA in the first quarter of 2023 was $52.5 million,
compared to EBITDA of $301.5 million in the first quarter of 2022.
Additional information regarding EBITDA, as well as a
reconciliation 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 2023 was primarily driven by decreased North American RV
wholesale shipments and decreased selling prices which are indexed
to select commodities, partially offset by acquisitions. Net sales
from acquisitions completed in the twelve months ended March 31,
2023 contributed approximately $28.5 million in the first quarter
of 2023.
The Company's average product content per travel trailer and
fifth-wheel RV for the twelve months ended March 31, 2023,
increased $1,027 to $5,881, compared to $4,854 for the twelve
months ended March 31, 2022. The content increase in towables was
primarily a result of organic growth, including pricing and new
product introductions, market share gains, and acquisitions.
April 2023 Results
April 2023 consolidated net sales were approximately $338
million, down 37 percent from April 2022, primarily due to an
approximate 51 percent decline in North American RV wholesale
shipments compared to April 2022. April 2023 results were favorably
impacted by our diversification efforts outside of the North
American RV market, which made up approximately 40 percent of April
2023 consolidated net sales.
Income Taxes
The Company's effective tax rate was 24.8 percent for the
quarter ended March 31, 2023, compared to 25.5 percent for the
quarter ended March 31, 2022. The rate was benefited by an increase
in the benefit related to the cash surrender value of life
insurance.
Balance Sheet and Other Items
At March 31, 2023, the Company's cash and cash equivalents
balance was $23.5 million, compared to $47.5 million at December
31, 2022. The Company used $26.6 million for dividend payments to
shareholders, $17.2 million for capital expenditures, and $6.3
million for acquisitions in the three months ended March 31, 2023.
The Company also made $36.1 million in net repayments under its
revolving credit facility and $5.3 million in repayments under its
term loan and other borrowings in the three months ended March 31,
2023.
The Company's outstanding long-term indebtedness, including
current maturities, was $1.1 billion at March 31, 2023, 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 first
quarter results on Tuesday, May 9, 2023, at 8:30 a.m. Eastern time,
which may be accessed by dialing (833) 470-1428 for participants in
the U.S. and (404) 975-4839 for participants outside the U.S. using
the required conference ID 489509. 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 (929)
458-6194 for participants outside the U.S. and referencing access
code 129639. 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 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 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, the Russia-Ukraine war, and heightened tensions between
China and Taiwan 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, 2022, 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
2023
2022
Months
(In thousands, except per share
amounts)
Net sales
$
973,310
$
1,644,568
$
4,535,885
Cost of sales
787,239
1,180,325
3,540,768
Gross profit
186,071
464,243
995,117
Selling, general and administrative
expenses
166,028
194,542
691,747
Operating profit
20,043
269,701
303,370
Interest expense, net
10,394
6,252
31,715
Income before income taxes
9,649
263,449
271,655
Provision for income taxes
2,390
67,268
65,603
Net income
$
7,259
$
196,181
$
206,052
Net income per common share:
Basic
$
0.29
$
7.75
$
8.13
Diluted
$
0.29
$
7.71
$
8.09
Weighted average common shares
outstanding:
Basic
25,228
25,329
25,353
Diluted
25,293
25,461
25,478
Depreciation
$
18,250
$
17,954
$
73,136
Amortization
$
14,249
$
13,858
$
56,764
Capital expenditures
$
17,159
$
42,037
$
105,763
LCI INDUSTRIES
SEGMENT RESULTS
(unaudited)
Three Months Ended March 31,
Last Twelve
2023
2022
Months
(In thousands)
Net sales:
OEM Segment:
RV OEMs:
Travel trailers and fifth-wheels
$
330,553
$
953,226
$
1,994,912
Motorhomes
69,551
87,254
321,394
Adjacent Industries OEMs
358,069
356,102
1,361,155
Total OEM Segment net sales
758,173
1,396,582
3,677,461
Aftermarket Segment:
Total Aftermarket Segment net sales
215,137
247,986
858,424
Total net sales
$
973,310
$
1,644,568
$
4,535,885
Operating (loss) profit:
OEM Segment
$
(721
)
$
245,374
$
233,055
Aftermarket Segment
20,764
24,327
70,315
Total operating profit
$
20,043
$
269,701
$
303,370
Depreciation and amortization:
OEM Segment depreciation
$
14,350
$
14,502
$
58,014
Aftermarket Segment depreciation
3,900
3,452
15,122
Total depreciation
$
18,250
$
17,954
$
73,136
OEM Segment amortization
$
10,450
$
10,144
$
41,559
Aftermarket Segment amortization
3,799
3,714
15,205
Total amortization
$
14,249
$
13,858
$
56,764
LCI INDUSTRIES
BALANCE SHEET
INFORMATION
(unaudited)
March 31,
December 31,
2023
2022
(In thousands)
ASSETS
Current assets
Cash and cash equivalents
$
23,465
$
47,499
Accounts receivable, net
340,305
214,262
Inventories, net
909,385
1,029,705
Prepaid expenses and other current
assets
91,624
99,310
Total current assets
1,364,779
1,390,776
Fixed assets, net
480,904
482,185
Goodwill
566,178
567,063
Other intangible assets, net
491,415
503,320
Operating lease right-of-use assets
248,575
247,007
Other long-term assets
57,516
56,561
Total assets
$
3,209,367
$
3,246,912
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term
indebtedness
$
25,450
$
23,086
Accounts payable, trade
169,883
143,529
Current portion of operating lease
obligations
35,516
35,447
Accrued expenses and other current
liabilities
205,182
219,238
Total current liabilities
436,031
421,300
Long-term indebtedness
1,055,625
1,095,888
Operating lease obligations
224,451
222,478
Deferred taxes
31,405
30,580
Other long-term liabilities
102,344
95,658
Total liabilities
1,849,856
1,865,904
Total stockholders' equity
1,359,511
1,381,008
Total liabilities and stockholders'
equity
$
3,209,367
$
3,246,912
LCI INDUSTRIES
SUMMARY OF CASH FLOWS
(unaudited)
Three Months Ended March 31,
2023
2022
(In thousands)
Cash flows from operating activities:
Net income
$
7,259
$
196,181
Adjustments to reconcile net income to
cash flows provided by operating activities:
Depreciation and amortization
32,499
31,812
Stock-based compensation expense
4,695
6,517
Other non-cash items
877
1,771
Changes in assets and liabilities, net of
acquisitions of businesses:
Accounts receivable, net
(123,072
)
(240,404
)
Inventories, net
131,708
(31,278
)
Prepaid expenses and other assets
5,577
20,495
Accounts payable, trade
25,822
57,808
Accrued expenses and other liabilities
(10,689
)
92,024
Net cash flows provided by operating
activities
74,676
134,926
Cash flows from investing activities:
Capital expenditures
(17,159
)
(42,037
)
Acquisitions of businesses
(6,250
)
(50,089
)
Other investing activities
1,960
(219
)
Net cash flows used in investing
activities
(21,449
)
(92,345
)
Cash flows from financing activities:
Vesting of stock-based awards, net of
shares tendered for payment of taxes
(8,888
)
(10,569
)
Proceeds from revolving credit
facility
165,300
372,400
Repayments under revolving credit
facility
(201,385
)
(330,600
)
Repayments under shelf loan, term loan,
and other borrowings
(5,276
)
(55,642
)
Payment of dividends
(26,563
)
(22,870
)
Payment of contingent consideration and
holdbacks related to acquisitions
—
(2,031
)
Other financing activities
(12
)
(4
)
Net cash flows used in financing
activities
(76,824
)
(49,316
)
Effect of exchange rate changes on cash
and cash equivalents
(437
)
(712
)
Net decrease in cash and cash
equivalents
(24,034
)
(7,447
)
Cash and cash equivalents at beginning of
period
47,499
62,896
Cash and cash equivalents cash at end of
period
$
23,465
$
55,449
LCI INDUSTRIES
SUPPLEMENTARY
INFORMATION
(unaudited)
Three Months Ended
March 31,
Last Twelve
2023
2022
Months
Industry Data(1) (in thousands of
units):
Industry Wholesale Production:
Travel trailer and fifth-wheel RVs
61.2
152.2
330.8
Motorhome RVs
13.4
15.8
56.0
Industry Retail Sales:
Travel trailer and fifth-wheel RVs
71.7
(2)
95.0
366.2
(2)
Impact on dealer inventories
(10.5
)
(2)
57.2
(35.4
)
(2)
Motorhome RVs
10.7
(2)
13.0
46.0
(2)
Twelve Months Ended
March 31,
2023
2022
Lippert Content Per Industry Unit
Produced:
Travel trailer and fifth-wheel RV
$
5,881
$
4,854
Motorhome RV
$
3,985
$
3,144
March 31,
December 31,
2023
2022
2022
Balance Sheet Data (debt availability in
millions):
Remaining availability under the revolving
credit facility (3)
$
318.2
$
129.8
$
306.5
Days sales in accounts receivable, based
on last twelve months
27.9
29.2
27.5
Inventory turns, based on last twelve
months
3.3
4.7
3.5
2023
Estimated Full Year Data:
Capital expenditures
$80 - $100 million
Depreciation and amortization
$130 - $140 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) March 2023 retail sales data for RVs
has not been published yet, therefore 2023 retail data for RVs
includes an estimate for March 2023 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 March 31,
2023
2022
(In thousands)
Net income
$
7,259
$
196,181
Interest expense, net
10,394
6,252
Provision for income taxes
2,390
67,268
Depreciation expense
18,250
17,954
Amortization expense
14,249
13,858
EBITDA
$
52,542
$
301,513
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, 2023 and 2022. 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/20230509005302/en/
Lillian D. Etzkorn, CFO Phone: (574) 535-1125 E
Mail: LCII@lci1.com
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