LCI Industries Reports Third Quarter Financial Results – RVBusiness – Breaking RV Industry News

ELKHART, Ind. – LCI Industries (NYSE: LCII), through its wholly-owned subsidiary, Lippert Components Inc. (Lippert), today reported third quarter 2023 results.

“Our commitment to diversification and operational discipline continues to support our performance in a volatile macro environment. The strength we are seeing in our diversified businesses, highlighted by substantial margin expansion in Aftermarket, greatly contributes to the long-term growth and profitability prospects of Lippert, helping us weather challenges far better than if we competed solely in the RV OEM space,” commented Jason Lippert, LCI Industries’ President and Chief Executive Officer. “With our diverse set of manufacturing capabilities, continuous new product launches, and broad industry and customer portfolios serving as significant differentiators, we have continued to drive organic content growth even as we have seen selling prices decline. Just in the last four years, we have added sales of $0.9 billion from acquisitions and another $1 billion in organic sales growth. Further, through the investments made in our facilities and teams over the years, we have established strong manufacturing capabilities allowing us to develop deep customer relationships, solidifying Lippert’s position as a leader across the outdoor recreation space. Additionally, new business commitments for 2024 across our businesses total approximately $185 million. We believe these are tremendous organic growth and market share wins for next year.”

“We have an incredibly experienced team that has led our business through downturns like this one in the past and each time we have come out stronger as a result of their great leadership. With our strong balance sheet, reinforced by the substantial inventory reductions we have made throughout the year, we believe we are well-positioned to manage through near-term challenges and capture growth opportunities once conditions improve,” Lippert continued. “I want to thank all of the Lippert team members worldwide for their dedication and hard work this quarter as we navigate challenging conditions and focus on generating sustained value for all our stakeholders.”

Third Quarter 2023 Results

Consolidated net sales for the third quarter of 2023 were $1.0 billion, a decrease of 15% from 2022 third quarter net sales of $1.1 billion. Net income in the third quarter of 2023 was $25.9 million, or $1.02 per diluted share, compared to net income of $61.4 million, or $2.40 per diluted share, in the third quarter of 2022. EBITDA in the third quarter of 2023 was $78.9 million, compared to EBITDA of $119.8 million in the third 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 third quarter of 2023 was primarily driven by decreased North American RV wholesale shipments, lower North American marine production levels, and decreased selling prices which are indexed to select commodities, partially offset by acquisitions. Net sales from acquisitions completed in the twelve months ended September 30, 2023 contributed approximately $16.9 million in the third quarter of 2023.

October 2023 Results

October 2023 consolidated net sales were approximately $344 million, down 1% from October 2022, primarily due to an approximate 10% decline in North American RV wholesale shipments and an approximate 3% decline due to decreased selling prices which are indexed to select commodities compared to October 2022. October 2023 results were favorably impacted by our diversification efforts, including 15% growth in adjacent markets and 5% growth in the Aftermarket Segment compared to October 2022.

OEM Segment

OEM net sales for the third quarter of 2023 were $728.5 million, down 20% year-over-year, primarily driven by a 21% reduction in North American wholesale shipments, decreased selling prices which are indexed to select commodities, and lower North American marine production levels. Operating profit of the OEM Segment was $11.2 million in the third quarter of 2023, or 1.5% of net sales, compared to $65.2 million, or 7.1%, in the same period in 2022. The operating profit 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.

RV OEM

RV OEM net sales for the third quarter of 2023 were $429.2 million, down 26% compared to the same prior year period, driven by a 21% decline in North American wholesale shipments.

Adjacent Industries OEM

Adjacent Industries OEM net sales for the third quarter of 2023 were $299.2 million, down 11% year-over-year, primarily due to lower sales to North American marine OEMs. North American marine OEM net sales in the third quarter of 2023 were $72.5 million, down 42% year-over-year.

Aftermarket Segment

Aftermarket net sales for the third quarter of 2023 were $230.8 million, up 5% year-over-year, as distribution channel inventories stabilized. Operating profit of the Aftermarket Segment was $34.4 million in the third quarter of 2023, or 14.9% of net sales, compared to $22.4 million, or 10.2%, 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.

Income Taxes

The company’s effective tax rate was 26.6% for the quarter ended September 30, 2023, compared to 23.9% for the quarter ended September 30, 2022. The rate was impacted by a decrease to the life insurance contract assets related to the deferred compensation plan.

Balance Sheet and Other Items

At September 30, 2023, the company’s cash and cash equivalents balance was $31.2 million, compared to $47.5 million at December 31, 2022. The company used $79.7 million for dividend payments to shareholders, $50.1 million for capital expenditures, and $25.9 million for acquisitions in the nine months ended September 30, 2023. The company also made $165.7 million in net repayments under its revolving credit facility and $45.8 million in repayments under its term loan and other borrowings in the nine months ended September 30, 2023.

The company’s outstanding long-term indebtedness, including current maturities, was $908.8 million at September 30, 2023, and the company was in compliance with its debt covenants.

Conference Call & Webcast

LCI Industries will host a conference call to discuss its third quarter results on Tuesday, November 7, 2023, at 8:30 a.m. Eastern time, which may be accessed by dialing (833) 470-1428 for participants in the U.S. and (646) 904-5544 for participants outside the U.S. using the required conference ID 356208. 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 105381. A replay of the webcast will be available on the company’s website immediately following the conclusion of the call.