LCII 8-K
Lci Industries (LCII)
8-K
2022-11-01
For: 2022-11-01
View Original
Added on
April 10, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 1, 2022
| (Exact name of registrant as specified in its charter) | ||||||||||||||
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
| Registrant's telephone number, including area code: | ||||||||||||||
| N/A | ||||||||||||||
| (Former name or former address, if changed since last report) | ||||||||||||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On November 1, 2022, LCI Industries issued a press release setting forth LCI Industries' 2022 third quarter results. A copy of the press release is attached hereto as Exhibit 99.1.
An investor presentation that LCI Industries will refer to during its conference call to discuss the results is attached hereto as Exhibit 99.2 and will be posted on LCI Industries' investor relations website in advance of the call.
The foregoing information is furnished pursuant to Item 2.02, "Results of Operations and Financial Condition." Such information, including the Exhibits attached hereto, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
Exhibit Index
| Exhibit Number | Description | |||||||
Press Release dated November 1, 2022 | ||||||||
Investor Presentation dated November 1, 2022 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
LCI INDUSTRIES | |||||
(Registrant) | |||||
By: /s/ Brian M. Hall Brian M. Hall Chief Financial Officer | |||||
| Dated: | November 1, 2022 | ||||
Exhibit 99.1
FOR IMMEDIATE RELEASE |  | |||||||
Contact: Brian Hall, CFO | ||||||||
Phone: (574) 535-1125 | ||||||||
E Mail: [email protected] | ||||||||
LCI INDUSTRIES REPORTS THIRD QUARTER FINANCIAL RESULTS
Diversification strategy proving effective while delivering record content
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
Elkhart, Indiana - November 1, 2022 - 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 third quarter 2022 results.
“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.
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 buses; trailers used to haul boats, livestock, equipment, and other cargo; trucks; boats; 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, 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, 2021, 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 | |||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | Months | |||||||||||||||||||||||||
| (In thousands, except per share amounts) | |||||||||||||||||||||||||||||
| Net sales | $ | 1,132,079 | $ | 1,165,309 | $ | 4,312,797 | $ | 3,259,287 | $ | 5,526,207 | |||||||||||||||||||
| Cost of sales | 879,025 | 913,728 | 3,186,415 | 2,508,318 | 4,107,759 | ||||||||||||||||||||||||
| Gross profit | 253,054 | 251,581 | 1,126,382 | 750,969 | 1,418,448 | ||||||||||||||||||||||||
| Selling, general and administrative expenses | 165,479 | 162,557 | 550,317 | 466,532 | 728,410 | ||||||||||||||||||||||||
| Operating profit | 87,575 | 89,024 | 576,065 | 284,437 | 690,038 | ||||||||||||||||||||||||
| Interest expense, net | 6,910 | 4,667 | 19,353 | 10,844 | 24,875 | ||||||||||||||||||||||||
| Income before income taxes | 80,665 | 84,357 | 556,712 | 273,593 | 665,163 | ||||||||||||||||||||||||
| Provision for income taxes | 19,273 | 20,956 | 144,609 | 68,183 | 170,731 | ||||||||||||||||||||||||
| Net income | $ | 61,392 | $ | 63,401 | $ | 412,103 | $ | 205,410 | $ | 494,432 | |||||||||||||||||||
| Net income per common share: | |||||||||||||||||||||||||||||
| Basic | $ | 2.41 | $ | 2.51 | $ | 16.23 | $ | 8.14 | $ | 19.48 | |||||||||||||||||||
| Diluted | $ | 2.40 | $ | 2.49 | $ | 16.15 | $ | 8.10 | $ | 19.35 | |||||||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||||||||
| Basic | 25,447 | 25,286 | 25,398 | 25,247 | 25,380 | ||||||||||||||||||||||||
| Diluted | 25,600 | 25,417 | 25,520 | 25,371 | 25,548 | ||||||||||||||||||||||||
| Depreciation | $ | 17,989 | $ | 16,451 | $ | 53,953 | $ | 47,047 | $ | 71,660 | |||||||||||||||||||
| Amortization | $ | 14,258 | $ | 12,490 | $ | 42,013 | $ | 33,164 | $ | 56,415 | |||||||||||||||||||
| Capital expenditures | $ | 32,911 | $ | 31,867 | $ | 103,748 | $ | 73,872 | $ | 128,410 | |||||||||||||||||||
LCI INDUSTRIES
SEGMENT RESULTS
(unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | Last Twelve | |||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | Months | |||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||
| Net sales: | |||||||||||||||||||||||||||||
| OEM Segment: | |||||||||||||||||||||||||||||
| RV OEMs: | |||||||||||||||||||||||||||||
| Travel trailers and fifth-wheels | $ | 493,515 | $ | 602,429 | $ | 2,261,250 | $ | 1,633,059 | $ | 2,923,803 | |||||||||||||||||||
| Motorhomes | 82,922 | 63,259 | 261,656 | 193,105 | 327,546 | ||||||||||||||||||||||||
| Adjacent Industries OEMs | 335,983 | 280,593 | 1,062,374 | 801,021 | 1,350,358 | ||||||||||||||||||||||||
| Total OEM Segment net sales | 912,420 | 946,281 | 3,585,280 | 2,627,185 | 4,601,707 | ||||||||||||||||||||||||
| Aftermarket Segment: | |||||||||||||||||||||||||||||
| Total Aftermarket Segment net sales | 219,659 | 219,028 | 727,517 | 632,102 | 924,500 | ||||||||||||||||||||||||
| Total net sales | $ | 1,132,079 | $ | 1,165,309 | $ | 4,312,797 | $ | 3,259,287 | $ | 5,526,207 | |||||||||||||||||||
| Operating profit: | |||||||||||||||||||||||||||||
| OEM Segment | $ | 65,186 | $ | 64,136 | $ | 501,137 | $ | 206,757 | $ | 599,056 | |||||||||||||||||||
| Aftermarket Segment | 22,389 | 24,888 | 74,928 | 77,680 | 90,982 | ||||||||||||||||||||||||
| Total operating profit | $ | 87,575 | $ | 89,024 | $ | 576,065 | $ | 284,437 | $ | 690,038 | |||||||||||||||||||
| Depreciation and amortization: | |||||||||||||||||||||||||||||
| OEM Segment depreciation | $ | 14,213 | $ | 12,782 | $ | 43,090 | $ | 37,054 | $ | 56,880 | |||||||||||||||||||
| Aftermarket Segment depreciation | 3,776 | 3,669 | 10,863 | 9,993 | 14,780 | ||||||||||||||||||||||||
| Total depreciation | $ | 17,989 | $ | 16,451 | $ | 53,953 | $ | 47,047 | $ | 71,660 | |||||||||||||||||||
| OEM Segment amortization | $ | 10,472 | $ | 8,632 | $ | 30,668 | $ | 22,877 | $ | 40,672 | |||||||||||||||||||
| Aftermarket Segment amortization | 3,786 | 3,858 | 11,345 | 10,287 | 15,743 | ||||||||||||||||||||||||
| Total amortization | $ | 14,258 | $ | 12,490 | $ | 42,013 | $ | 33,164 | $ | 56,415 | |||||||||||||||||||
LCI INDUSTRIES
BALANCE SHEET INFORMATION
(unaudited)
| September 30, | December 31, | ||||||||||
| 2022 | 2021 | ||||||||||
| (In thousands) | |||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 23,403 | $ | 62,896 | |||||||
| Accounts receivable, net | 335,945 | 319,782 | |||||||||
| Inventories, net | 1,079,902 | 1,095,907 | |||||||||
| Prepaid expenses and other current assets | 66,236 | 88,300 | |||||||||
| Total current assets | 1,505,486 | 1,566,885 | |||||||||
| Fixed assets, net | 470,571 | 426,455 | |||||||||
| Goodwill | 551,615 | 543,180 | |||||||||
| Other intangible assets, net | 489,555 | 519,957 | |||||||||
| Operating lease right-of-use assets | 195,877 | 164,618 | |||||||||
| Other long-term assets | 55,867 | 66,999 | |||||||||
| Total assets | $ | 3,268,971 | $ | 3,288,094 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Current maturities of long-term indebtedness | $ | 22,089 | $ | 71,003 | |||||||
| Accounts payable, trade | 201,032 | 282,183 | |||||||||
| Current portion of operating lease obligations | 33,862 | 30,592 | |||||||||
| Accrued expenses and other current liabilities | 243,138 | 243,438 | |||||||||
| Total current liabilities | 500,121 | 627,216 | |||||||||
| Long-term indebtedness | 1,039,870 | 1,231,959 | |||||||||
| Operating lease obligations | 172,643 | 143,436 | |||||||||
| Deferred taxes | 26,816 | 43,184 | |||||||||
| Other long-term liabilities | 105,964 | 149,424 | |||||||||
| Total liabilities | 1,845,414 | 2,195,219 | |||||||||
| Total stockholders' equity | 1,423,557 | 1,092,875 | |||||||||
| Total liabilities and stockholders' equity | $ | 3,268,971 | $ | 3,288,094 | |||||||
LCI INDUSTRIES
SUMMARY OF CASH FLOWS
(unaudited)
| Nine Months Ended September 30, | |||||||||||
| 2022 | 2021 | ||||||||||
| (In thousands) | |||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 412,103 | $ | 205,410 | |||||||
| Adjustments to reconcile net income to cash flows provided by operating activities: | |||||||||||
| Depreciation and amortization | 95,966 | 80,211 | |||||||||
| Stock-based compensation expense | 20,564 | 20,295 | |||||||||
| Deferred taxes | (2,401) | — | |||||||||
| Other non-cash items | 1,174 | 5,418 | |||||||||
| Changes in assets and liabilities, net of acquisitions of businesses: | |||||||||||
| Accounts receivable, net | (18,128) | (140,768) | |||||||||
| Inventories, net | 26,508 | (253,031) | |||||||||
| Prepaid expenses and other assets | 31,304 | (28,274) | |||||||||
| Accounts payable, trade | (82,054) | 97,071 | |||||||||
| Accrued expenses and other liabilities | 471 | 25,961 | |||||||||
| Net cash flows provided by operating activities | 485,507 | 12,293 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | (103,748) | (73,872) | |||||||||
| Acquisitions of businesses | (55,709) | (154,544) | |||||||||
| Other investing activities | 2,137 | 11,544 | |||||||||
| Net cash flows used in investing activities | (157,320) | (216,872) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Vesting of stock-based awards, net of shares tendered for payment of taxes | (10,805) | (8,258) | |||||||||
| Proceeds from revolving credit facility | 844,900 | 832,493 | |||||||||
| Repayments under revolving credit facility | (1,001,040) | (912,547) | |||||||||
| Repayments under shelf loan, term loan, and other borrowings | (65,852) | (13,375) | |||||||||
| Proceeds from issuance of convertible notes | — | 460,000 | |||||||||
| Purchases of convertible note hedge contracts | — | (100,142) | |||||||||
| Proceeds from issuance of warrants concurrent with note hedge contracts | — | 48,484 | |||||||||
| Payment of debt issuance costs | — | (11,955) | |||||||||
| Payment of dividends | (76,273) | (64,425) | |||||||||
| Payment of contingent consideration and holdbacks related to acquisitions | (57,328) | (8,061) | |||||||||
| Other financing activities | 1,468 | 1,972 | |||||||||
| Net cash flows (used in) provided by financing activities | (364,930) | 224,186 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | (2,750) | 1,187 | |||||||||
| Net (decrease) increase in cash and cash equivalents | (39,493) | 20,794 | |||||||||
| Cash and cash equivalents at beginning of period | 62,896 | 51,821 | |||||||||
| Cash and cash equivalents cash at end of period | $ | 23,403 | $ | 72,615 | |||||||
LCI INDUSTRIES
SUPPLEMENTARY INFORMATION
(unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
| September 30, | September 30, | Last Twelve | ||||||||||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | Months | ||||||||||||||||||||||||||||
Industry Data(1) (in thousands of units): | ||||||||||||||||||||||||||||||||
| Industry Wholesale Production: | ||||||||||||||||||||||||||||||||
| Travel trailer and fifth-wheel RVs | 73.4 | 136.0 | 359.3 | 401.0 | 489.6 | |||||||||||||||||||||||||||
| Motorhome RVs | 15.3 | 13.3 | 45.8 | 42.4 | 59.6 | |||||||||||||||||||||||||||
| Industry Retail Sales: | ||||||||||||||||||||||||||||||||
| Travel trailer and fifth-wheel RVs | 102.4 | (2) | 131.0 | 325.1 | (2) | 426.1 | 401.7 | (2) | ||||||||||||||||||||||||
| Impact on dealer inventories | (29.0) | (2) | 5.0 | 34.2 | (2) | (25.1) | 87.9 | (2) | ||||||||||||||||||||||||
| Motorhome RVs | 11.5 | (2) | 14.1 | 38.4 | (2) | 44.4 | 49.4 | (2) | ||||||||||||||||||||||||
| Twelve Months Ended | ||||||||||||||||||||||||||||||||
| September 30, | ||||||||||||||||||||||||||||||||
| 2022 | 2021 | |||||||||||||||||||||||||||||||
| Lippert Content Per Industry Unit Produced: | ||||||||||||||||||||||||||||||||
| Travel trailer and fifth-wheel RV | $ | 5,853 | $ | 3,786 | ||||||||||||||||||||||||||||
| Motorhome RV | $ | 3,806 | $ | 2,732 | ||||||||||||||||||||||||||||
| September 30, | December 31, | |||||||||||||||||||||||||||||||
| 2022 | 2021 | 2021 | ||||||||||||||||||||||||||||||
Balance Sheet Data (debt availability in millions): | ||||||||||||||||||||||||||||||||
Remaining availability under the revolving credit facility (3) | $ | 369.2 | $ | 267.2 | $ | 168.3 | ||||||||||||||||||||||||||
| Days sales in accounts receivable, based on last twelve months | 28.0 | 30.9 | 30.6 | |||||||||||||||||||||||||||||
| Inventory turns, based on last twelve months | 3.8 | 5.7 | 5.0 | |||||||||||||||||||||||||||||
| 2022 | ||||||||||||||||||||||||||||||||
| Estimated Full Year Data: | ||||||||||||||||||||||||||||||||
| Capital expenditures | $110 - $130 million | |||||||||||||||||||||||||||||||
| Depreciation and amortization | $130 - $140 million | |||||||||||||||||||||||||||||||
| Stock-based compensation expense | $25 - $30 million | |||||||||||||||||||||||||||||||
Annual tax rate | 25% - 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 2022 retail sales data for RVs has not been published yet, therefore 2022 retail data for RVs includes an estimate for September 2022 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||
| Net income | $ | 61,392 | $ | 63,401 | $ | 412,103 | $ | 205,410 | |||||||||||||||
| Interest expense, net | 6,910 | 4,667 | 19,353 | 10,844 | |||||||||||||||||||
| Provision for income taxes | 19,273 | 20,956 | 144,609 | 68,183 | |||||||||||||||||||
| Depreciation expense | 17,989 | 16,451 | 53,953 | 47,047 | |||||||||||||||||||
| Amortization expense | 14,258 | 12,490 | 42,013 | 33,164 | |||||||||||||||||||
| EBITDA | $ | 119,822 | $ | 117,965 | $ | 672,031 | $ | 364,648 | |||||||||||||||
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 and nine month periods ended September 30, 2022 and 2021. 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.
LCI Industries Q3 2022 Earnings Conference Call November 1, 2022 1
FORWARD-LOOKING STATEMENTS This presentation contains certain “forward-looking statements” with respect to our financial condition, results of operations, 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 presentation 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 the Company's 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 presentation 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 presentation, the impacts of COVID-19, or other future pandemics, and the Russia-Ukraine War 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, 2021, and in the Company’s subsequent filings with the Securities and Exchange Commission. Readers of this presentation 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. This presentation includes certain non-GAAP financial measures, such as EBITDA and net debt to EBITDA leverage. These non-GAAP financial measures should not be considered a substitute for the comparable GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure are included in the presentation. 2
Ongoing Innovation ■ Innovating to drive market share gains through new product introductions, enhancing portfolio to meet customer demand for advanced offerings Third Quarter 2022 Highlights Financial Performance ■ Net sales of $1.1 billion with net income of $61.4 million in the third quarter ■ 2% increase in EBITDA1 Maintaining focus on diversification while driving content expansion Executing on Diversification ■ Strength across businesses helping offset declines in RV OEM ■ Increased market share in Aftermarket, Marine, and other adjacencies Record Content Growth ■ 55% growth in content per travel trailer and fifth-wheel RV2 supported by continued organic expansion ■ 46% growth in content per power boat2 3 1 Additional information regarding EBITDA, as well as reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure, is provided in the Appendix 2 For twelve months ended September 30, 2022
Quarterly Performance • 91,800 units shipped in Q3 2022 as retail demand softens • Q3 2022 North American RV OEM sales down (14)% YoY • Current 2022 forecast of 480 - 500k units implies 45-50% decrease in wholesale shipments in H2 2022 compared to record shipments in H1 2022 RV OEM RV Wholesale/Retail/Inventory Change Retail Wholesale Inventory Linear (Inventory) Q11 9 Q21 9 Q31 9 Q41 9 Q12 0 Q22 0 Q32 0 Q42 0 Q12 1 Q22 1 Q32 1 Q42 1 Q12 2 Q22 2 Q32 2 0 50,000 100,000 150,000 200,000 250,000 (80,000) (60,000) (40,000) (20,000) — 20,000 40,000 60,000 80,000 Content per Wholesale Unit • Travel trailer and fifth-wheel RV content of $5,853 for Q3 2022 (LTM basis) • Increase of 55% over the comparable prior year period 4 $665,688 $576,437 Q3 2021 Q3 2022 Net Sales ($ in thousands)
Quarterly Performance • Q3 2022 NA Adjacent Industries sales up 20% YoY • Growth in marine and other adjacent industries continues to support effective diversification • New product introduction in marine supporting content expansion ◦ 46% growth in content per power boat (LTM basis) • Building out Captain’s customer support group, boasting 1,000+ group members ADJACENT MARKETS 5 Net Sales ($ in thousands) $280,593 $335,983 Q3 2021 Q3 2022
Quarterly Performance • Q3 2022 sales flat YoY • Decline in automotive aftermarket sales largely offset by strength in RV and marine aftermarket sales • Ongoing portfolio expansion supported by innovative Furrion catalog • Customer experience leading towards innovative offerings by 1x1 engagement AFTERMARKET 6 $219,028 $219,659 Q3 2021 Q3 2022 Net Sales ($ in thousands)
Quarterly Performance • Q3 2022 sales up 6% YoY • Diversified end market growth in rail and marine continue to propel international growth • Experiencing different consumer demand than North American business, offering geographic diversification • Maintaining focus on introducing popular European products in North American markets INTERNATIONAL BUSINESS 7 Net Sales ($ in thousands) $87,652 $92,629 Q3 2021 Q3 2022
INNOVATION AS A CULTURE Innovating to drive record content expansion Continuously developing new product innovations to meet increasing demand for technologically-advanced products 8 Independent Suspension Gate Defender Jack ABS (Anti-Lock Brake) System OneControl On-The-Go Ladder Temp & Propane Sensors Furrion Power Cord Set
GROWTH STRATEGY Investing in innovation to win market share Allocating Capital to Areas with the Highest Growth Return • Investment in the business, with focus on automation projects • Reduce leverage • Return capital to shareholders • Execute strategic acquisitions Continue Execution of our Diversification Strategy • Benefit from continued sales growth in end markets unaffected by macroeconomic conditions to produce adequate cash flow • Reinvest back into these markets to further stability and growth during volatile economic times Leveraging Strengths to Win Market Share • Growing market leadership in adjacent markets, international markets, and the aftermarket segment through enhanced engineering innovation • Consistent content per unit growth in the RV OEM industry • Unlocking cross-selling opportunities through new acquisitions 9
Operating Margin 7.6% 7.7% Third Quarter 2021 Third Quarter 2022 (in th ou sa nd s) Consolidated Net Income $63,401 $61,392 Third Quarter 2021 Third Quarter 2022 (in th ou sa nd s) EBITDA* $117,965 $119,822 Third Quarter 2021 Third Quarter 2022 Q3 2022 FINANCIAL PERFORMANCE * Additional information regarding EBITDA, as well as reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure, is provided in the Appendix. (in th ou sa nd s) Consolidated Net Sales $1,165,309 $1,132,079 Third Quarter 2021 Third Quarter 2022 10
As of and for the nine months ended September 30 LIQUIDITY AND CASH FLOW 2022 2021 Cash and Cash Equivalents $23M $73M Remaining Availability under Revolving Credit Facility(1) $369M $267M Capital Expenditures $104M $74M Dividends $76M $64M Debt / Net Income (TTM) 2.1x 4.3x Net Debt/EBITDA (TTM) 1.3x(2) 2.2x(3) Cash from Operating Activities $486M $12M (1) Remaining availability under the revolving credit facility is subject to covenant restrictions. (2) Net Debt/EBITDA ratio is a non-GAAP financial measure and is calculated as follows: Debt of $1,062M, less Cash of $23M, resulted in Net Debt of $1,039M at September 30, 2022, divided by Earnings Before Interest, Taxes, Depreciation, and Amortization, "EBITDA" (Net Income of $494M adding back Interest of $25M, Taxes of $171M, and Depreciation and Amortization of $128M), resulting in $818M EBITDA for the twelve months ended September 30, 2022. The GAAP debt / Net income ratio was $1,062M / $494M or 2.1x. (3) Net Debt/EBITDA ratio is a non-GAAP financial measure and is calculated as follows: Debt of $1,086M, less Cash of $73M, resulted in Net Debt of $1,014M at September 30, 2021, divided by EBITDA (Net Income of $254M, adding back Interest of $13M, Taxes of $80M, and Depreciation and Amortization of $105M), resulting in $453M EBITDA for the twelve months ended September 30, 2021. The GAAP debt / Net income ratio was $1,086M / $254M or 4.3x. 11
EBITDA Reconciliation of Non-GAAP Measures APPENDIX EBITDA is a non-GAAP performance measure included to illustrate and improve comparability of its results from period to period. EBITDA is defined as net income before interest expense, provision for income taxes, depreciation and amortization expense. The Company considers this non-GAAP measure in evaluating and managing the Company's operations and believes that discussion of results adjusted for these items is meaningful to investors because it provides a useful analysis of ongoing underlying operating trends. The adjusted measures are not in accordance with, nor are they a substitute for, GAAP measures, and they may not be comparable to similarly titled measures used by other companies. Three Months Ended September 30, ($ in thousands) 2022 2021 Net Income $ 61,392 $ 63,401 Interest Expense, Net 6,910 4,667 Provision for Income Taxes 19,273 20,956 Depreciation and Amortization 32,247 28,941 EBITDA $ 119,822 $ 117,965 12
13