Strong operating performance and cash flow
generation in challenging environment
Third Quarter 2024 Highlights
- Net sales of $915 million in the third quarter, down 5%
year-over-year
- Net income of $36 million, or $1.39 per diluted share, in the
third quarter, up 38% from the third quarter of 2023
- EBITDA of $85 million in the third quarter, or 9.3% of net
sales, up 8% year-over-year
- Operating profit margin of 5.9% in the third quarter, up from
4.8% in the third quarter of 2023
- Quarterly dividend of $1.05 per share paid, totaling $27
million in the third quarter
- Cash flows provided by operations of $402 million for the LTM
period ended September 30, 2024
- Strong liquidity position with $161 million of cash and cash
equivalents and $383 million of availability on revolving credit
facility at September 30, 2024
LCI Industries (NYSE: LCII), a leading supplier of engineered
components to the recreation and transportation markets, today
reported third quarter 2024 results.
"Despite a challenging RV and Marine industry backdrop, we
delivered a strong quarter with continued market share expansion,
increased operating margins, and robust operating cash flow which
has reached $402 million over the last twelve months. Share gains
were particularly strong across appliances, awnings, chassis,
furniture, and windows, which together represent more than 70% of
our total North American RV OEM business. These gains were fueled
by innovative products like the new line of CURT towing and
suspension products we showcased at the September Open House,”
commented Jason Lippert, LCI Industries’ President and Chief
Executive Officer. “As a result, our key customers have maintained
and increased the amount of Lippert content across their 2025 RV
models. At the same time, we believe our commitment to operational
excellence, including product quality and supply chain improvement
initiatives, drove further margin expansion. Looking ahead, we
believe we’re positioned to outperform as demand rebounds, powered
by our cutting-edge innovation and a prioritization of strategic
M&A to further enhance our diversification and long-term growth
potential.”
“I’d like to thank our team members for their dedication to
driving our business forward this quarter while working through a
challenging environment,” commented Ryan Smith, LCI Industries'
Group President - North America. “We remain focused on leveraging
our operational expertise and culture of innovation to support
long-term growth for Lippert.”
Third Quarter 2024 Results
Consolidated net sales for the third quarter of 2024 were $915.5
million, a decrease of 5% from 2023 third quarter net sales of
$959.3 million. Net income in the third quarter of 2024 was $35.6
million, or $1.39 per diluted share, compared to $25.9 million, or
$1.02 per diluted share, in the third quarter of 2023. EBITDA in
the third quarter of 2024 was $85.2 million, compared to EBITDA of
$78.9 million in the third quarter of 2023. Additional information
regarding EBITDA, as well as reconciliations 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 third quarter
of 2024 was primarily driven by lower sales to North American
marine and utility trailer OEMs and declines in wholesale shipments
of motorhome RV units, partially offset by increased North American
RV wholesale shipments of travel trailers and fifth-wheels and
market share gains in the automotive aftermarket.
October 2024 Results
October 2024 consolidated net sales were approximately $330
million, down 4% from October 2023, primarily due to an approximate
12% decline in marine sales and an approximate 3% decrease in North
American RV production compared to October 2023.
OEM Segment - Third Quarter Performance
OEM net sales for the third quarter of 2024 were $684.5 million,
a decrease of $44.0 million compared to the same period of 2023. RV
OEM net sales for the third quarter of 2024 were $422.0 million,
down 2% compared to the same prior year period, driven by a shift
in unit mix towards lower content single axle travel trailers and a
25% decrease in motorhome wholesale shipments, partially offset by
an 11% increase in North American travel trailer and fifth-wheel
wholesale shipments and market share gains. Adjacent Industries OEM
net sales for the third quarter of 2024 were $262.4 million, down
12% year-over-year, primarily due to lower sales to North American
marine and utility trailers OEMs, driven by current dealer
inventory levels, inflation, and elevated interest rates impacting
retail consumers. North American marine OEM net sales in the third
quarter of 2024 were $60.8 million, down 16% year-over-year.
Operating profit of the OEM Segment was $21.8 million in the
third quarter of 2024, or 3.2% of net sales, compared to $11.2
million, or 1.5% of net sales, in the same period in 2023. The
operating profit expansion of the OEM Segment for the quarter was
primarily driven by operational improvements, partially offset by
the impact of fixed costs spread over decreased sales.
Aftermarket Segment - Third Quarter Performance
Aftermarket net sales for the third quarter of 2024 were $231.0
million, in line with the same period in 2023. Resiliency in the
Aftermarket Segment was primarily driven by market share gains in
the automotive aftermarket, partially offset by lower volumes
within the RV aftermarket, which has been negatively impacted by
lower consumer discretionary spending. Operating profit of the
Aftermarket Segment was $32.1 million in the third quarter of 2024,
or 13.9% of net sales, compared to $34.4 million, or 14.9% of net
sales, in the same period in 2023. The operating profit contraction
of the Aftermarket Segment for the quarter was primarily driven by
increased labor costs due to product mix and increased facility
costs resulting from investments to expand capacity within the
automotive aftermarket, partially offset by decreased material
costs.
“Our automotive aftermarket business has continued to
outperform, delivering a 7.3% increase in sales to help offset
softness in the RV and Marine aftermarkets. We’re also capitalizing
on the growing demand for replacement and repair parts by providing
innovative content coupled with high quality service, setting us
apart for both dealers and consumers,” commented Jamie Schnur, LCI
Industries’ Group President – Aftermarket. “We look forward to
further expanding our presence in premium markets to support
Lippert’s long-term, profitable growth.”
Income Taxes
The Company's effective tax rate was 24.8% for the quarter ended
September 30, 2024, compared to 26.6% for the quarter ended
September 30, 2023. The decrease in the effective tax rate was
primarily due to a discrete tax benefit related to an increase in
the cash surrender value of company-owned life insurance policies
compared to the prior year period.
Balance Sheet and Other Items
At September 30, 2024, the Company's cash and cash equivalents
balance was $161.2 million, compared to $66.2 million at December
31, 2023. The Company used $80.2 million for dividend payments to
shareholders, $31.4 million for capital expenditures, and $20.0
million for an acquisition in the nine months ended September 30,
2024.
The Company's outstanding long-term indebtedness, including
current maturities, was $822.5 million at September 30, 2024, and
the Company was in compliance with its debt covenants. As of
September 30, 2024, the Company had $383.1 million of borrowing
availability under the revolving credit facility.
Conference Call & Webcast
LCI Industries will host a conference call to discuss its third
quarter results on Thursday, November 7, 2024, at 8:30 a.m. Eastern
time, which may be accessed by dialing (833) 470-1428 for
participants in the U.S. and (929) 526-1599 for participants
outside the U.S. using the required conference ID 630651. 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 (44)
204-525-0658 for participants outside the U.S. and referencing
access code 625624. 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 (NYSE: LCII), through its Lippert subsidiary, is
a global leader in supplying engineered components to the outdoor
recreation and transportation markets. We believe our innovative
culture, advanced manufacturing capabilities, and dedication to
enhancing the customer experience have established Lippert as a
reliable partner for both OEM and aftermarket customers. For more
information, visit www.lippert.com.
Forward-Looking Statements
This press release contains certain "forward-looking statements"
with respect to our financial condition, results of operations,
profitability, margins, 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 production levels, 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, commodity prices, addressable markets, 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 future pandemics, geopolitical
tensions, armed conflicts, or natural disasters 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, 2023, 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
2024
2023
2024
2023
Months
(In thousands, except per share
amounts)
Net sales
$
915,497
$
959,315
$
2,938,070
$
2,947,264
$
3,775,614
Cost of sales
695,539
748,367
2,227,761
2,332,125
2,904,254
Gross profit
219,958
210,948
710,309
615,139
871,360
Selling, general and administrative
expenses
166,070
165,358
508,206
494,332
666,636
Operating profit
53,888
45,590
202,103
120,807
204,724
Interest expense, net
6,516
10,325
23,799
30,968
33,255
Income before income taxes
47,372
35,265
178,304
89,839
171,469
Provision for income taxes
11,760
9,378
44,984
23,267
40,526
Net income
$
35,612
$
25,887
$
133,320
$
66,572
$
130,943
Net income per common share:
Basic
$
1.40
$
1.02
$
5.24
$
2.63
$
5.15
Diluted
$
1.39
$
1.02
$
5.23
$
2.62
$
5.14
Weighted average common shares
outstanding:
Basic
25,480
25,340
25,436
25,293
25,420
Diluted
25,558
25,504
25,477
25,405
25,498
Depreciation
$
17,390
$
18,857
$
53,911
$
55,974
$
72,630
Amortization
$
13,882
$
14,412
$
42,089
$
42,844
$
56,320
Capital expenditures
$
10,062
$
15,978
$
31,390
$
50,060
$
43,539
LCI INDUSTRIES
SEGMENT RESULTS
(unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
Last Twelve
2024
2023
2024
2023
Months
(In thousands)
Net sales:
OEM Segment:
RV OEMs:
Travel trailers and fifth-wheels
$
369,212
$
363,573
$
1,186,324
$
1,032,866
$
1,508,843
Motorhomes
52,800
65,669
185,258
206,404
248,210
Adjacent Industries OEMs
262,449
299,225
867,315
1,006,378
1,139,938
Total OEM Segment net sales
684,461
728,467
2,238,897
2,245,648
2,896,991
Aftermarket Segment:
Total Aftermarket Segment net sales
231,036
230,848
699,173
701,616
878,623
Total net sales
$
915,497
$
959,315
$
2,938,070
$
2,947,264
$
3,775,614
Operating profit:
OEM Segment
$
21,825
$
11,165
$
105,223
$
29,086
$
93,498
Aftermarket Segment
32,063
34,425
96,880
91,721
111,226
Total operating profit
$
53,888
$
45,590
$
202,103
$
120,807
$
204,724
Depreciation and amortization:
OEM Segment depreciation
$
13,270
$
14,835
$
41,038
$
43,840
$
55,596
Aftermarket Segment depreciation
4,120
4,022
12,873
12,134
17,034
Total depreciation
$
17,390
$
18,857
$
53,911
$
55,974
$
72,630
OEM Segment amortization
$
9,996
$
10,550
$
30,426
$
31,204
$
40,802
Aftermarket Segment amortization
3,886
3,862
11,663
11,640
15,518
Total amortization
$
13,882
$
14,412
$
42,089
$
42,844
$
56,320
LCI INDUSTRIES
BALANCE SHEET
INFORMATION
(unaudited)
September 30,
December 31,
2024
2023
(In thousands)
ASSETS
Current assets
Cash and cash equivalents
$
161,184
$
66,157
Accounts receivable, net
319,166
214,707
Inventories, net
705,439
768,407
Prepaid expenses and other current
assets
59,084
67,599
Total current assets
1,244,873
1,116,870
Fixed assets, net
443,349
465,781
Goodwill
593,882
589,550
Other intangible assets, net
412,818
448,759
Operating lease right-of-use assets
233,225
245,388
Other long-term assets
96,817
92,971
Total assets
$
3,024,964
$
2,959,319
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term
indebtedness
$
222
$
589
Accounts payable, trade
193,636
183,697
Current portion of operating lease
obligations
39,035
36,269
Accrued expenses and other current
liabilities
199,081
174,437
Total current liabilities
431,974
394,992
Long-term indebtedness
822,322
846,834
Operating lease obligations
207,937
222,680
Deferred taxes
28,631
32,345
Other long-term liabilities
115,778
107,432
Total liabilities
1,606,642
1,604,283
Total stockholders' equity
1,418,322
1,355,036
Total liabilities and stockholders'
equity
$
3,024,964
$
2,959,319
LCI INDUSTRIES
SUMMARY OF CASH FLOWS
(unaudited)
Nine Months Ended
September 30,
2024
2023
(In thousands)
Cash flows from operating activities:
Net income
$
133,320
$
66,572
Adjustments to reconcile net income to
cash flows provided by operating activities:
Depreciation and amortization
96,000
98,818
Stock-based compensation expense
13,961
14,027
Other non-cash items
4,927
4,611
Changes in assets and liabilities, net of
acquisitions of businesses:
Accounts receivable, net
(102,127
)
(121,914
)
Inventories, net
81,166
246,155
Prepaid expenses and other assets
(1,491
)
31,237
Accounts payable, trade
8,333
54,817
Accrued expenses and other liabilities
29,599
(5,060
)
Net cash flows provided by operating
activities
263,688
389,263
Cash flows from investing activities:
Capital expenditures
(31,390
)
(50,060
)
Acquisitions of businesses
(19,957
)
(25,851
)
Other investing activities
781
4,284
Net cash flows used in investing
activities
(50,566
)
(71,627
)
Cash flows from financing activities:
Vesting of stock-based awards, net of
shares tendered for payment of taxes
(9,120
)
(9,591
)
Proceeds from revolving credit
facility
86,248
248,900
Repayments under revolving credit
facility
(87,766
)
(414,554
)
Repayments under term loan and other
borrowings
(26,357
)
(45,767
)
Payment of dividends
(80,191
)
(79,744
)
Payment of contingent consideration and
holdbacks related to acquisitions
(2
)
(31,857
)
Other financing activities
—
(834
)
Net cash flows used in financing
activities
(117,188
)
(333,447
)
Effect of exchange rate changes on cash
and cash equivalents
(907
)
(446
)
Net increase (decrease) in cash and cash
equivalents
95,027
(16,257
)
Cash and cash equivalents at beginning of
period
66,157
47,499
Cash and cash equivalents at end of
period
$
161,184
$
31,242
LCI INDUSTRIES
SUPPLEMENTARY
INFORMATION
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
Last Twelve
2024
2023
2024
2023
Months
Industry Data(1) (in thousands of
units):
Industry Wholesale Production:
Travel trailer and fifth-wheel RVs
68.5
61.5
224.0
195.8
287.4
Motorhome RVs
7.7
10.3
26.9
35.8
37.0
Industry Retail Sales:
Travel trailer and fifth-wheel RVs
84.1
(2)
92.0
248.1
(2)
273.0
301.8
(2)
Impact on dealer inventories
(15.6
)
(2)
(30.5
)
(24.1
)
(2)
(77.2
)
(14.4
)
(2)
Motorhome RVs
10.2
(2)
11.7
31.8
(2)
37.3
39.8
(2)
Twelve Months Ended
September 30,
2024
2023
Lippert Content Per Industry Unit
Produced:
Travel trailer and fifth-wheel RV
$
5,147
$
5,191
Motorhome RV
$
3,768
$
3,705
September 30,
December 31,
2024
2023
2023
Balance Sheet Data (debt availability in
millions):
Remaining availability under the revolving
credit facility (3)
$
383.1
$
178.5
$
245.3
Days sales in accounts receivable, based
on last twelve months
30.6
29.2
30.1
Inventory turns, based on last twelve
months
3.9
3.3
3.5
2024
Estimated Full Year Data:
Capital expenditures
$35 - $45 million
Depreciation and amortization
$125 - $135 million
Stock-based compensation expense
$17 - $22 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 2024 retail sales data for RVs
has not been published yet, therefore 2024 retail data for RVs
includes an estimate for September 2024 retail units. Retail sales
data have historically been 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 and net income as a percentage of net sales to EBITDA as
a percentage of net sales.
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
(In thousands)
Net income
$
35,612
$
25,887
$
133,320
$
66,572
Interest expense, net
6,516
10,325
23,799
30,968
Provision for income taxes
11,760
9,378
44,984
23,267
Depreciation expense
17,390
18,857
53,911
55,974
Amortization expense
13,882
14,412
42,089
42,844
EBITDA
$
85,160
$
78,859
$
298,103
$
219,625
Net sales
$
915,497
$
959,315
$
2,938,070
$
2,947,264
Net income as a percentage of net
sales
3.9
%
2.7
%
4.5
%
2.3
%
EBITDA as a percentage of net sales
9.3
%
8.2
%
10.1
%
7.5
%
In addition to reporting financial results in accordance with
U.S. GAAP, the Company has provided the non-GAAP performance
measures of EBITDA and EBITDA as a percentage of net sales 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 nine month periods ended
September 30, 2024 and 2023. 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. These measures are not in
accordance with, nor are they substitutes 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/20241107937464/en/
Lillian D. Etzkorn, CFO Phone: (574) 535-1125 E
Mail: LCII@lci1.com
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