First Quarter 2019 Highlights
-
Net sales of $592.2 million in the first quarter, a decrease of 9%
year-over-year -
Net income of $34.4 million or $1.38 per diluted share in the first
quarter -
Operating profit margin improved 260 bps from the fourth quarter of
2018 to 8.1% -
Content per travel trailer and fifth-wheel increased $187
year-over-year, or 6%, to $3,504 for the twelve months ended
March 31, 2019 -
Content per motorhome increased $172 year-over-year, or 7%, to $2,500
for the twelve months ended March 31, 2019 -
Adjacent Industries OEM sales grew to $169.9 million for the quarter,
up 19% year-over-year -
Aftermarket sales grew to $60.4 million for the quarter, up 20%
year-over-year -
International sales grew to $33.6 million for the quarter, up 49%
year-over-year - Quarterly dividend of $0.60 per share paid totaling $15.0 million
ELKHART, Ind.–(BUSINESS WIRE)–LCI Industries (NYSE: LCII) (“LCI”, or the “Company”), through its
wholly-owned subsidiary, Lippert Components, Inc., supplies domestically
and internationally, a broad array of engineered components for the
leading original equipment manufacturers (“OEMs”) in the recreation and
industrial product markets, and the related aftermarkets of those
industries, today reported first quarter 2019 results.
“We continue to execute on our diversification strategy, which delivered
high double-digit growth in our adjacent markets, aftermarket, and
international sales together which now make up 39 percent of our last
twelve months sales. This strategy has proven critical in the current
decreased volume operating environment in our Recreational Vehicle OEM
segment, as it offset wholesale shipments that were down roughly 30
percent during the quarter as dealers continue to normalize inventory
levels. We also remain steadfast in our efforts that are bearing fruit
to enhance overall operational efficiencies to mitigate higher material
costs, as operating margins, while lower year-over-year, outpaced our
expectations during the first quarter,” said LCI Industries’ Chief
Executive Officer, Jason Lippert. “As we enter the prime retail selling
season, we believe that channel inventories will move towards more
appropriate levels by the end of the second quarter. In the meantime, we
continue to pursue opportunities for content growth, acquisitions, and
market share gains, and are confident our strong leadership position in
RVs, as well as in our emerging businesses, will drive long-term
shareholder value.”
First Quarter 2019 Results
Consolidated net sales for the first quarter of 2019 were $592.2
million, a decline of nine percent from 2018 first quarter net sales of
$650.5 million. Net income in the first quarter of 2019 was $34.4
million, or $1.38 per diluted share, compared to net income of $47.3
million, or $1.86 per diluted share, in the first quarter of 2018.
The decrease in year-over-year net sales for the first quarter of 2019
reflects lower RV wholesale shipments as dealers normalize their
inventory levels, offset by continued growth in the Company’s Adjacent
Industries OEM, aftermarket, and international markets. Net sales from
acquisitions completed by the Company over the twelve months ended
March 31, 2019, contributed $31.2 million in the first quarter of 2019.
The Company’s content per travel trailer and fifth-wheel RV for the
twelve months ended March 31, 2019, increased $187 to $3,504, compared
to the twelve months ended March 31, 2018, of $3,317. The Company’s
content per motorhome RV for the twelve months ended March 31, 2019,
increased $172 to $2,500, compared to the twelve months ended March 31,
2018, of $2,328. The content increases are a result of organic growth,
including new product introductions, as well as acquisitions.
April 2019 Results
April 2019 consolidated net sales are approximately $218 million, down
8% from April 2018. Sales continue to be impacted by reduced production
rates by the RV OEMs.
Income Taxes
The Company’s effective tax rate was 24 percent for the quarter ended
March 31, 2019, higher than the comparable prior year period of 19
percent primarily due to a year over year reduction in the excess tax
benefits related to the vesting or exercise of equity-based compensation
awards.
Balance Sheet and Other Items
At March 31, 2019, the Company’s cash and cash equivalents balance was
$14.3 million, a decrease of $0.6 million from its balance of
$14.9 million at the beginning of the year. The Company generated cash
flow from operations of $52.6 million and invested $24.4 million in
capital expenditures as well as $15.0 million for dividend payments to
shareholders for the three months ended March 31, 2019. The Company’s
outstanding debt was $286.3 million at March 31, 2019.
Conference Call & Webcast
LCI will host a conference call to discuss its first quarter 2019
earnings on Tuesday, May 7, 2019, at 8:30 a.m. Eastern time, which may
be accessed by dialing (888) 525-0270 for participants in the
U.S./Canada or (704) 935-3405 for participants outside the U.S./Canada
using the required conference ID 1599587. In addition, an online,
real-time webcast, as well as a supplemental earnings presentation can
be accessed on the Company’s website, www.lci1.com/investors.
A replay of the conference call will be available for two weeks by
dialing (855) 859-2056 and referencing access code 1599587. A replay of
the webcast will also be available on LCI’s website until the next
quarterly conference call.
About LCI Industries
From over 65 manufacturing and distribution facilities located
throughout the United States and in Canada, Ireland, Italy, and the
United Kingdom, LCI Industries, through its wholly-owned subsidiary,
Lippert Components Inc., supplies, domestically and internationally, a
broad array of engineered components for the leading original equipment
manufacturers (“OEMs”) in the recreation and industrial product markets,
consisting of recreational vehicles (“RVs”) 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 components to the related
aftermarkets of these industries primarily by selling to retail dealers,
wholesale distributors, and service centers. LCI’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; furniture and
mattresses; entry, luggage, patio, and ramp doors; electric and manual
entry steps; awnings and awning accessories; electronic components;
televisions and sound systems; navigation systems; backup cameras;
appliances; and other accessories. Additional information about LCI and
its products can be found at www.lci1.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, 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), cash flow, and financial condition, 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, pricing pressures due to domestic and foreign competition,
costs and availability of 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, employee benefits, employee 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, 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, 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, 2018, and in the Company’s subsequent
filings with the Securities and Exchange Commission. 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 | |||||||||
| March 31, | Last Twelve | ||||||||
| 2019 | 2018 | Months | |||||||
| (In thousands, except per share amounts) | |||||||||
| Net sales | $ | 592,172 | $ | 650,492 | $ | 2,417,487 | |||
| Cost of sales | 459,578 | 509,759 | 1,905,282 | ||||||
| Gross profit | 132,594 | 140,733 | 512,205 | ||||||
| Selling, general and administrative expenses | 84,839 | 80,913 | 325,482 | ||||||
| Operating profit | 47,755 | 59,820 | 186,723 | ||||||
| Interest expense, net | 2,507 | 1,101 | 7,842 | ||||||
| Income before income taxes | 45,248 | 58,719 | 178,881 | ||||||
| Provision for income taxes | 10,882 | 11,383 | 43,300 | ||||||
| Net income | $ | 34,366 | $ | 47,336 | $ | 135,581 | |||
| Net income per common share: | |||||||||
| Basic | $ | 1.38 | $ | 1.88 | $ | 5.40 | |||
| Diluted | $ | 1.38 | $ | 1.86 | $ | 5.35 | |||
| Weighted average common shares outstanding: | |||||||||
| Basic | 24,914 | 25,149 | 25,120 | ||||||
| Diluted | 24,929 | 25,465 | 25,350 | ||||||
| Depreciation and amortization | $ | 18,449 | $ | 15,275 | $ | 70,700 | |||
| Capital expenditures | $ | 24,442 | $ | 26,004 | $ | 118,265 | |||
| LCI INDUSTRIES | |||||||||
| SEGMENT RESULTS | |||||||||
|
(unaudited) |
|||||||||
| Three Months Ended | |||||||||
| March 31, | Last Twelve | ||||||||
| 2019 | 2018 | Months | |||||||
| (In thousands) | |||||||||
| Net sales: | |||||||||
| OEM Segment: | |||||||||
| RV OEMs: | |||||||||
| Travel trailers and fifth-wheels | $ | 316,871 | $ | 404,957 | $ | 1,352,644 | |||
| Motorhomes | 45,000 | 52,915 | 179,382 | ||||||
| Adjacent Industries OEMs | 169,909 | 142,307 | 642,191 | ||||||
| Total OEM Segment net sales | 531,780 | 600,179 | 2,174,217 | ||||||
| Aftermarket Segment: | |||||||||
| Total Aftermarket Segment net sales | 60,392 | 50,313 | 243,270 | ||||||
| Total net sales | $ | 592,172 | $ | 650,492 | $ | 2,417,487 | |||
| Operating profit: | |||||||||
| OEM Segment | $ | 40,408 | $ | 53,940 | $ | 153,944 | |||
| Aftermarket Segment | 7,347 | 5,880 | 32,779 | ||||||
| Total operating profit | $ | 47,755 | $ | 59,820 | $ | 186,723 | |||
| LCI INDUSTRIES | ||||||
| BALANCE SHEET INFORMATION | ||||||
|
(unaudited) |
||||||
| March 31, | December 31, | |||||
| 2019 | 2018 | |||||
| (In thousands) | ||||||
| ASSETS | ||||||
| Current assets | ||||||
| Cash and cash equivalents | $ | 14,317 | $ | 14,928 | ||
|
Accounts receivable, net of allowances of $2,451 and $1,895 at March 31, 2019 and December 31, 2018, respectively |
179,417 | 121,812 | ||||
| Inventories, net | 324,522 | 340,615 | ||||
| Prepaid expenses and other current assets | 34,840 | 49,296 | ||||
| Total current assets | 553,096 | 526,651 | ||||
| Fixed assets, net | 335,049 | 322,876 | ||||
| Goodwill | 178,336 | 180,168 | ||||
| Other intangible assets, net | 171,267 | 176,342 | ||||
| Operating lease right-of-use assets | 65,373 | — | ||||
| Deferred taxes | 8,393 | 10,948 | ||||
| Other assets | 31,037 | 26,908 | ||||
| Total assets | $ | 1,342,551 | $ | 1,243,893 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
| Current liabilities | ||||||
| Accounts payable, trade | $ | 89,805 | $ | 78,354 | ||
| Current portion of operating lease obligations | 14,801 | — | ||||
| Accrued expenses and other current liabilities | 110,605 | 99,228 | ||||
| Total current liabilities | 215,211 | 177,582 | ||||
| Long-term indebtedness | 286,311 | 293,528 | ||||
| Operating lease obligations | 53,455 | — | ||||
| Other long-term liabilities | 65,895 | 66,528 | ||||
| Total liabilities | 620,872 | 537,638 | ||||
| Total stockholders’ equity | 721,679 | 706,255 | ||||
| Total liabilities and stockholders’ equity | $ | 1,342,551 | $ | 1,243,893 | ||
| LCI INDUSTRIES | ||||||
| SUMMARY OF CASH FLOWS | ||||||
|
(unaudited) |
||||||
| Three Months Ended | ||||||
| March 31, | ||||||
| 2019 | 2018 | |||||
| (In thousands) | ||||||
| Cash flows from operating activities: | ||||||
| Net income | $ | 34,366 | $ | 47,336 | ||
|
Adjustments to reconcile net income to cash flows provided by (used in) operating activities: |
||||||
| Depreciation and amortization | 18,449 | 15,275 | ||||
| Stock-based compensation expense | 3,733 | 5,543 | ||||
| Other non-cash items | 611 | (1,127) | ||||
| Changes in assets and liabilities, net of acquisitions of businesses: | ||||||
| Accounts receivable, net | (57,753) | (71,073) | ||||
| Inventories, net | 16,052 | (17,232) | ||||
| Prepaid expenses and other assets | 10,268 | (3,185) | ||||
| Accounts payable, trade | 11,581 | 8,114 | ||||
| Accrued expenses and other liabilities | 15,278 | 11,246 | ||||
| Net cash flows provided by (used in) operating activities | 52,585 | (5,103) | ||||
| Cash flows from investing activities: | ||||||
| Capital expenditures | (24,442) | (26,004) | ||||
| Acquisitions of businesses, net of cash acquired | — | (138,570) | ||||
| Proceeds from note receivable | — | 155 | ||||
| Other investing activities | 61 | (35) | ||||
| Net cash flows used in investing activities | (24,381) | (164,454) | ||||
| Cash flows from financing activities: | ||||||
|
Vesting of stock-based awards, net of shares tendered for payment of taxes |
(6,348) | (14,085) | ||||
| Proceeds from revolving credit facility borrowings | 175,660 | 474,000 | ||||
| Repayments under revolving credit facility borrowings | (182,720) | (297,000) | ||||
| Payment of dividends | (14,999) | (13,858) | ||||
| Other financing activities | (157) | (556) | ||||
| Net cash flows (used in) provided by financing activities | (28,564) | 148,501 | ||||
| Effect of exchange rate changes on cash and cash equivalents | (251) | — | ||||
| Net decrease in cash and cash equivalents | (611) | (21,056) | ||||
| Cash and cash equivalents at beginning of period | 14,928 | 26,049 | ||||
| Cash and cash equivalents at end of period | $ | 14,317 | $ | 4,993 | ||
| LCI INDUSTRIES | |||||||||
| SUPPLEMENTARY INFORMATION | |||||||||
|
(unaudited) |
|||||||||
| Three Months Ended | |||||||||
| March 31, | Last Twelve | ||||||||
| 2019 | 2018 | Months | |||||||
| Industry Data(1) (in thousands of units): | |||||||||
| Industry Wholesale Production: | |||||||||
| Travel trailer and fifth-wheel RVs | 84.7 | 116.9 | 382.8 | ||||||
| Motorhome RVs | 12.7 | 17.5 | 52.8 | ||||||
| Industry Retail Sales: | |||||||||
| Travel trailer and fifth-wheel RVs | 79.5 |
(2) |
81.6 | 418.6 |
(2) |
||||
| Impact on dealer inventories | 5.2 |
(2) |
35.3 | (35.8) |
(2) |
||||
| Motorhome RVs | 9.3 |
(2) |
11.9 | 49.3 |
(2) |
||||
| Twelve Months Ended | |||||||||
| March 31, | |||||||||
| 2019 | 2018 | ||||||||
| LCI Content Per Industry Unit Produced: | |||||||||
| Travel trailer and fifth-wheel RV | $ | 3,504 | $ | 3,317 | |||||
| Motorhome RV | $ | 2,500 | $ | 2,328 | |||||
| March 31, | December 31, | ||||||||
| 2019 | 2018 | 2018 | |||||||
| Balance Sheet Data: | |||||||||
| Current ratio | 2.6 | 2.6 | 3.0 | ||||||
| Total indebtedness to stockholders’ equity | 0.4 | 0.3 | 0.4 | ||||||
| Days sales in accounts receivable | 27.1 | 23.7 | 27.7 | ||||||
| Inventory turns, based on last twelve months | 5.8 | 7.4 | 7.5 | ||||||
| 2019 | |||||||||
| Estimated Full Year Data: | |||||||||
| Capital expenditures | $ 55 – $ 65 million | ||||||||
| Depreciation and amortization | $ 73 – $ 78 million | ||||||||
| Stock-based compensation expense | $ 15 – $ 17 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) March 2019 retail sales data for RVs has not been
published yet, therefore 2019 retail data for RVs includes an estimate
for March 2019 retail units. Retail sales data will likely be revised
upwards in future months as various states report.
Contacts
Brian Hall, CFO
(574) 535-1125
[email protected]
