LCI Industries Reports 2018 First Quarter Results

ELKHART, Ind., May 4, 2018 /PRNewswire/ -- LCI Industries (NYSE: LCII) ("LCI", or the "Company"), through its wholly-owned subsidiary, Lippert Components, Inc., supplies engineered products for the leading original equipment manufacturers ("OEMs") of leisure and mobile transportation and adjacent industries, and the related aftermarkets of those industries, today reported first quarter 2018 results.

"We experienced strong sales growth in our engineered products for leisure and mobile transportation as reflected in our record $650 million sales for the first quarter," said LCI's CEO, Jason Lippert. "We also continue to see strong growth in our aftermarket and adjacent OEM market sales, aided by recent acquisitions. Adjacent OEM market sales grew to $142 million for the quarter, up 50 percent from the first quarter of 2017. Aftermarket sales rose to $50 million in the first quarter of 2018, up 39 percent from the first quarter of 2017. We remain optimistic, as April 2018 consolidated net sales are approximately $245 million, 46 percent higher than April 2017. Our continuing growth story is a testament to the focus of our more than 11,000 team members. Industry growth continued its trend from 2017 and remained strong as wholesale recreational vehicle ("RVs") shipments were up 13 percent in the first quarter. Sales momentum has continued as the industry attracts a new generation of RV enthusiasts, supported by strong economic growth and consumer confidence. Orders remain strong as dealer sentiment remains bullish and OEMs continue to add capacity to meet demand."

"Our content per travel trailer and fifth-wheel increased eight percent year-over-year, the largest annual increase since 2012, and our content per motorhome increased 15 percent year-over-year, representing our fourth straight year of double-digit content growth for motorhomes," said Scott Mereness, LCI's President. "We continue to invest in lean manufacturing and automation to improve the efficiency of our operations and meet industry growth demands while managing one of the most volatile commodities environments in recent history due to the new steel and aluminum tariffs. Although operating margin improved from the last two quarters of 2017, raw materials inflation, at least partially caused by the new tariffs, more than offset the margin improvement from our operational and pricing initiatives. Additional price increases will take effect in the coming months and we continue to work with our customers to implement our cost-based pricing strategies."

First Quarter 2018 Results

Consolidated net sales for the first quarter of 2018 were $650 million, a 31 percent increase over 2017 first quarter net sales of $498 million. Net income in the  first quarter of 2018 was $47.3 million, or $1.86 per diluted share, compared to net income of $43.1 million, or $1.71 per diluted share, in the first quarter of 2017.

The increase in year-over-year net sales reflects industry-wide growth in wholesale shipments of towable and motorized RVs by OEMs, which increased 15 percent and seven percent, respectively, in the first quarter of 2018, enhanced by solid growth in content per unit and acquisitions. Net sales from acquisitions completed by the Company over the twelve months ended March 31, 2018, contributed $53 million in the first quarter of 2018. The organic growth rate was 20 percent for the first quarter and acquisitions provided the remainder of the 31 percent increase. Through continued focus on aftermarket channels for the Company's products, the Company increased net sales to the aftermarket in the first quarter of 2018 by 39 percent to $50 million.

The health of the RV industry is determined by retail demand, which is up eight percent through February 2018, as reported by Statistical Surveys, Inc., and will likely be revised upwards in future months as various states report. Based on the retail sales strength experienced through early 2018, as well as sales order backlogs reported by RV OEMs at record levels, the current outlook from several RV OEMs and their dealer networks remains very positive. The Recreation Vehicle Industry Association's current forecast for 2018 estimates a year-over-year increase of seven percent to approximately 540,000 units.

The Company's content per travel trailer and fifth-wheel RV for the twelve months ended March 31, 2018, increased $259 to $3,317, compared to the twelve months ended March 31, 2017, of $3,058. This is the largest increase in five years for travel trailer and fifth-wheel RV content. The Company's content per motorhome RV for the twelve months ended March 31, 2018, increased $306 to $2,328, compared to the twelve months ended March 31, 2017, of $2,022. The content increases are a result of organic growth, including new product introductions, as well as acquisitions.

Income Taxes

The Company's effective tax rate was 19 percent for the quarter ended March 31, 2018, compared to 26 percent for the quarter ended March 31, 2017. The decrease in effective tax rate was driven by the newly enacted tax rates from the Tax Cut and Job's Act, offset by a reduction in excess tax benefit from prior year.

Balance Sheet and Other Items

At March 31, 2018, the Company's cash and cash equivalents balance was $5 million, a decrease of $21 million from its cash and cash equivalents balance of $26 million at the beginning of the year, primarily as a result of $139 million used for acquisitions, $26 million for capital expenditures and $14 million of dividend payments in 2018. The Company's outstanding debt was $226 million at March 31, 2018.

Conference Call & Webcast

LCI will provide an online, real-time webcast of its first quarter 2018 earnings conference call on the Company's website, www.lci1.com/investors, on Friday, May 4, 2018, at 11:00 a.m. Eastern time.

Institutional investors can access the call via the password-protected site, StreetEvents (www.streetevents.com). A replay of the call will be available for two weeks by dialing (855) 859-2056 and referencing access code 2346679. 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, the United Kingdom, Ireland and Italy, LCI Industries, through its wholly-owned subsidiary, Lippert Components, Inc., supplies, domestically and internationally, a broad array of components for the leading original equipment manufacturers of recreational vehicles; 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, 2017, 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.

SOURCE LCI Industries