LCI Industries Q3 Sales, Income Slightly Lower

RV Business

ELKHART, Ind – LCI Industries (NYSE: LCII) which, through its wholly-owned subsidiary, Lippert Components Inc., supplies a broad array of highly engineered components for the leading original equipment manufacturers in the recreation, transportation and related aftermarkets, today (Nov. 1) reported third quarter 2022 results.

Third Quarter 2022 Highlights

Net sales of $1.1 billion in the third quarter, down $33.2 million, or 3%, year-over-year
Net income of $61.4 million, or $2.40 per diluted share, in the third quarter, down $2.0 million, or 3%, year-over-year
EBITDA of $119.8 million, up $1.9 million, or 2%, year-over-year
Quarterly dividend of $1.05 per share paid totaling $26.7 million in the third quarter

North American RV OEM (56% of net sales last twelve months)

Net sales of $541.2 million in the third quarter, down $85.3 million, or 14%, year-over-year, driven by a nearly 40% decline in industry wholesale shipments
Content per travel trailer and fifth-wheel RV for the twelve months ended September 30, 2022, increased 55% year-over-year to a record $5,853

North American Adjacent Industries OEM (21% of net sales last twelve months)

Net sales of $295.2 million in the third quarter, up $48.6 million, or 20%, year-over-year
North American marine OEM net sales of $125.1 million, up 22% year-over-year
Content per power boat for the twelve months ended September 30, 2022, increased 46% year-over-year to $1,792

North American Aftermarket (16% of net sales last twelve months)

Net sales of $203.1 million in the third quarter, down $1.5 million, or 1%, year-over-year
Decline in automotive aftermarket sales largely offset by strength in RV aftermarket sales

International Industries (7% of net sales last twelve months)

Net sales of $92.6 million in the third quarter, up $5.0 million, or 6%, year-over-year

Jason Lippert

“Our results continue to demonstrate the effectiveness of our diversification strategy, which has positioned Lippert to maintain strong performance during a downturn in RV demand. During the third quarter, we delivered growth in adjacent markets and leveraged our flexible cost structure to support profitability, as the RV industry adjusts to softened consumer demand and macroeconomic uncertainty,” commented Jason Lippert, LCI Industries’ president and chief executive officer.

“The operational improvements we’ve implemented over the last several years have enabled us to nimbly balance capacity while maintaining our product quality, as wholesale RV production is expected to remain tempered in the near-term. Other key end markets, including marine, motorhomes, manufactured housing, power sports, and the RV aftermarket continued to perform well, helping our overall business more effectively than if it was solely concentrated in the RV market. We remain confident in the underlying secular trends fueling popularity in the outdoor lifestyle and will keep investing in innovation throughout our portfolio to capture demand for technologically sophisticated products,” Lippert continued. “With our strong, cohesive culture guided by our experienced leadership team, we believe we are well-positioned to manage through a challenging economic environment to advance our business and drive long-term shareholder value.”

“The operational strength demonstrated by our teams proved critical to supporting our performance this quarter. We look forward to continuing this momentum as we continue to collaborate with our customers while achieving progress on strategic priorities,” commented Ryan Smith, Group President – North America.

Third Quarter 2022 Results

Consolidated net sales for the third quarter of 2022 were $1.1 billion, a decrease of three percent from 2021 third quarter net sales of $1.2 billion. Net income in the third quarter of 2022 was $61.4 million, or $2.40 per diluted share, compared to net income of $63.4 million, or $2.49 per diluted share, in the third quarter of 2021. EBITDA in the third quarter of 2022 was $119.8 million, compared to EBITDA of $118.0 million in the third 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 decrease in year-over-year net sales for the third quarter of 2022 was primarily driven by decreased North American RV wholesale shipments, partially offset by price realization, acquisitions, and an increase in net sales to OEMs in adjacent industries. Net sales from acquisitions completed in the twelve months ended September 30, 2022 contributed approximately $39 million in the third quarter of 2022.

The company’s average product content per travel trailer and fifth-wheel RV for the twelve months ended September 30, 2022, increased $2,067 to $5,853, compared to $3,786 for the twelve months ended September 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.

October 2022 Results

October 2022 consolidated net sales were approximately $345 million, down 24 percent from October 2021, demonstrating positive trends as the company moves into the last quarter of 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 23.9 percent for the quarter ended September 30, 2022, compared to 24.8 percent for the quarter ended September 30, 2021. The decrease in the effective tax rate was primarily due to the settlement of uncertain tax positions, partially offset by a decrease in the cash surrender value of life insurance.

Balance Sheet and Other Items

At September 30, 2022, the company’s cash and cash equivalents balance was $23.4 million, compared to $62.9 million at December 31, 2021. The company used $103.7 million for capital expenditures, $76.3 million for dividend payments to shareholders, and $55.7 million for acquisitions in the nine months ended September 30, 2022. The company also made $156.1 million in net repayments under its revolving credit facility and $65.9 million in repayments under its shelf loan, term loan, and other borrowings in the nine months ended September 30, 2022.

The company’s outstanding long-term indebtedness, including current maturities, was $1.1 billion at September 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 third quarter results on Tuesday, November 1, 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 464745. 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 932786. A replay of the webcast will be available on the company’s website immediately following the conclusion of the call.

Source: https://rvbusiness.com/lci-industries-q3-sales-income-slightly-lower/