LCI Industries Reports Q4, Full Year 2023 Financial Results – RVBusiness – Breaking RV Industry News
ELKHART, Ind. – LCI Industries (NYSE: LCII) which, through its wholly-owned subsidiary, Lippert Components, Inc. (Lippert), supplies, domestically and internationally, a broad array of highly engineered components for the leading original equipment manufacturers (OEMs) in the recreation and transportation markets, and the related aftermarkets of those industries, today reported fourth quarter and full year 2023 results.
Fourth Quarter 2023 Highlights
- Net sales of $838 million in the fourth quarter, down 6% year-over-year
- Net loss of $2 million, or $(0.09) per diluted share, in the fourth quarter, an improvement of 86% year-over-year
- Aftermarket Segment net sales grew 10% year-over-year and operating profit improved by $15 million
- EBITDA of $36 million in the fourth quarter, up 248% year-over-year
Full Year 2023 Highlights
- Net sales of $3.8 billion, down 27% year-over-year
- Net income of $64 million, or $2.52 per diluted share, down 84% year-over-year
- EBITDA of $255 million, down 63% year-over-year
- Continued execution of diversification strategy with Aftermarket Segment and Adjacent Industries OEM net sales exceeding 56% of total net sales for the year ended December 31, 2023
- Inventory reduction of $261 million
- Cash flows from operating activities of $527 million
- Net repayments of indebtedness of $277 million
- Returned $106 million to shareholders through quarterly dividends in 2023
“Throughout the year, our consistent execution on diversification priorities and steadfast commitment to operational discipline has supported our performance despite continued softness in the RV and marine markets. Remarkable strength in our Aftermarket business, where we continued to see robust performance, coupled with solid results and leadership in our other diversified businesses, significantly contributed to our profitability as we navigate a challenging industry environment. Our focus on operational improvement and investments in automation leave us well-positioned to drive profitable growth when production starts to normalize in 2024,” Jason Lippert, LCI Industries’ president and chief executive officer, stated in a release.
“Further, through our world-class R&D capabilities and culture of innovation, we will continue introducing sophisticated new products,” he continued. “Our 2023 product launches introduced some great additions to our portfolio, such as independent suspension axles, anti-lock braking systems, our new 4000 series windows with integrated blinds, as well as our new leveling systems for towables and motor homes. These new products differentiate us from our competition and will add solid organic content growth and market share expansion. Demonstrating this strength, we have nearly $200 million in net new business commitments in 2024. We are entering the new year with a solid balance sheet, reinforced by recent working capital improvements and a focus on cash generation. We plan to continue to invest strategically and are confident in the mid- to long-term profitable growth of our business.”
“January 2024 sales outpaced January 2023 levels by 13% as we started to see business increase as dealers begin to replenish inventories. February orders are also pacing ahead of prior year, reflecting the positive dealer and consumer sentiment from the RV shows,” commented Ryan Smith, LCI Industries’ Group President – North America. “I’d like to thank all of our team members for their unwavering commitment to driving our business forward as we work to generate value for our customers and shareholders.”
Fourth Quarter 2023 Results
Consolidated net sales for the fourth quarter of 2023 were $837.5 million, a decrease of 6% from 2022 fourth quarter net sales of $894.3 million. Net loss in the fourth quarter of 2023 was $2.4 million, or $(0.09) per diluted share, compared to a net loss of $17.1 million, or $(0.68) per diluted share, in the fourth quarter of 2022. EBITDA in the fourth quarter of 2023 was $35.6 million, compared to EBITDA of $10.2 million in the fourth quarter of 2022.
The decrease in year-over-year net sales for the fourth quarter of 2023 was primarily driven by lower North American marine production levels, decreased selling prices which are indexed to select commodities, and decreased North American RV wholesale shipments, partially offset by growth in Aftermarket net sales and net sales from recent acquisitions. Net sales from acquisitions completed in the twelve months ended December 31, 2023 contributed approximately $11.0 million in the fourth quarter of 2023.
Full Year 2023 Results
Consolidated net sales for the full year 2023 were $3.8 billion, a decrease of 27% from full year 2022 net sales of $5.2 billion. Net income for the full year 2023 was $64.2 million, or $2.52 per diluted share, compared to net income of $395.0 million, or $15.48 per diluted share, for the full year 2022. EBITDA for the year ended December 31, 2023 was $255.2 million, compared to EBITDA of $682.2 million for the year ended December 31, 2022. 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 (loss), is provided in the “Supplementary Information – Reconciliation of Non-GAAP Measures” section below.
The decrease in year-over-year net sales was primarily driven by a nearly 39% decrease in North American RV wholesale shipments, decreased selling prices which are indexed to select commodities, and lower North American marine production levels, partially offset by net sales from recent acquisitions. Net sales from acquisitions completed in 2022 and 2023 contributed approximately $73.6 million in 2023.
January 2024 Results
January 2024 consolidated net sales were approximately $308 million, up 13% from January 2023, primarily due to an approximate 57% increase in North American RV production, partially offset by an approximate 44% decline in marine sales compared to January 2023.
OEM Segment – Fourth Quarter Performance
OEM net sales for the fourth quarter of 2023 were $658.1 million, down 10% year-over-year, primarily driven by lower North American marine production levels, decreased selling prices which are indexed to select commodities, and a reduction in North American RV wholesale shipments. RV OEM net sales for the fourth quarter of 2023 were $388.9 million, down 10% compared to the same prior year period, driven by decreased selling prices which are indexed to select commodities and a 3% reduction in North American RV wholesale shipments. Adjacent Industries OEM net sales for the fourth quarter of 2023 were $269.2 million, down 9% year-over-year, primarily due to lower sales to North American marine OEMs. North American marine OEM net sales in the fourth quarter of 2023 were $64.6 million, down 41% year-over-year.
Operating loss of the OEM Segment was $11.7 million in the fourth quarter of 2023, or (1.8)% of net sales, compared to an operating loss of $22.0 million, or (3.0)%, in the same period in 2022. The operating loss of the OEM Segment for the quarter was driven by decreased selling prices which are indexed to select commodities and the impact of fixed costs on reduced sales.
Aftermarket Segment – Fourth Quarter Performance
Aftermarket net sales for the fourth quarter of 2023 were $179.4 million, up 10% year-over-year, as distribution channel inventories stabilized. Operating profit of the Aftermarket Segment was $14.3 million in the fourth quarter of 2023, or 8.0% of net sales, compared to an operating loss of $1.1 million, or (0.6)%, in the same period in 2022. The operating profit expansion of the Aftermarket Segment for the quarter was driven by decreased commodity costs and leveraging of fixed costs over larger sales and production volume.
“We delivered strong aftermarket operating profits for the year as we continued to capture solid demand for repair, replacement, and upgrades across our end markets. Aftermarket remains a key growth driver for Lippert and a critical piece of our diversification strategy, providing counter cyclical support in a volatile environment,” Jamie Schnur, LCI Industries’ Group President – Aftermarket commented. “We look forward to leveraging our industry-leading service teams and innovative product offerings to continue this momentum in the new year.”
Income Taxes
The Company’s effective tax rate was 22.7% and 65.2% for the year and quarter ended December 31, 2023, respectively, compared to 24.8% and 45.2% for the year and quarter ended December 31, 2022, respectively. Due to certain operating losses in the fourth quarters of 2023 and 2022, discrete adjustments related to an increase in the life insurance contract assets had a proportionally larger impact on the tax rate in those periods. Fourth quarter and full year 2023 rates both benefited from a reduction in the effective state tax rate compared to fourth quarter and full year 2022.
Balance Sheet and Other Items
At December 31, 2023, the Company’s cash and cash equivalents balance was $66.2 million, compared to $47.5 million at December 31, 2022. The Company used $106.3 million for dividend payments to shareholders, $62.2 million for capital expenditures, and $25.9 million for acquisitions in the twelve months ended December 31, 2023. The Company also made $215.9 million in net repayments under its revolving credit facility and $61.1 million in repayments under its term loan and other borrowings in the twelve months ended December 31, 2023.
The Company’s outstanding long-term indebtedness, including current maturities, was $847.4 million at December 31, 2023, and the Company was in compliance with its debt covenants.
Conference Call & Webcast
LCI Industries will host a conference call to discuss its fourth quarter results on Tuesday, February 13, 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 216951. 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 584031. A replay of the webcast will be available on the Company’s website immediately following the conclusion of the call.
