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LCI Industries Reports 2017 Second Quarter Results

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2017 Second Quarter Sales Increase $107 million to Record Quarter of $547 million

ELKHART, Ind., Aug. 4, 2017 /PRNewswire/ -- LCI Industries (NYSE: LCII) ("LCI", or the "Company"), a supplier of components for the leading original equipment manufacturers ("OEMs") of recreational vehicles ("RVs") and adjacent industries, and the related aftermarkets of those industries, today reported consolidated net sales in the second quarter of 2017 of $547 million, 24 percent higher than the 2016 second quarter net sales of $441 million. Net income was $40.1 million, or $1.59 per diluted share, for the second quarter ended June 30, 2017, compared to net income of $37.6 million, or $1.51 per diluted share, for the second quarter ended June 30, 2016.

The increase in year-over-year net sales reflects industry-wide growth in wholesale shipments of towable and motorized RVs by OEMs, which increased 17 percent and 11 percent, respectively, in the second quarter of 2017, enhanced by acquisitions completed by the Company over the twelve months ended June 30, 2017, which added $17 million in net sales in the second quarter of 2017. Organic growth accounted for 20 of the 24 percent growth in consolidated net sales for the second quarter and growth from acquisitions provided the remainder. Through continued focus on aftermarket channels for the Company's products, the Company increased net sales to the aftermarket in the second quarter of 2017 by 32 percent to $45 million.

"The RV industry growth trend in 2017 remains strong as second quarter wholesale RV shipments were up 15 percent," stated Jason Lippert, LCI's Chief Executive Officer. "RV sales momentum has continued as the industry attracts a new generation of RV enthusiasts, and orders appear to be strong going into the third quarter as dealer sentiment remains bullish and OEMs continue to add capacity to meet demand.  Additionally, we continue to see strong growth in our Aftermarket sales."

The health of the RV industry is determined by retail demand, which is up 11 percent through May, 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 2016 and midway through 2017, 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. Additionally, the RVIA's current forecast of wholesale unit shipments of approximately 472,000 units has been revised upward from its original Fall forecast of 411,000 for the full year 2017. The RVIA's forecast for 2018 is estimated to increase an additional three percent to approximately 487,000.

The Company's content per travel trailer and fifth-wheel RV for the twelve months ended June 30, 2017, increased $91 to $3,104, compared to the twelve months ended June 30, 2016, of $3,013. The Company's content per motorhome RV for the twelve months ended June 30, 2017, increased $152 to $2,072, compared to the twelve months ended June 30, 2016, of $1,920. The content increases are a combined result of organic growth, including new product introductions, as well as acquisitions and changes in the types of RVs produced industry-wide.

In July 2017, LCI's consolidated net sales reached approximately $150 million, 27 percent higher than July 2016. "As the industry prepares to meet the anticipated demand of the 2017 summer selling season, I am encouraged by July sales following up on a strong second quarter, and pleased to see Aftermarket sales up over 35 percent in July," said Jason Lippert.

"Our operating profit in the second quarter of 2017 improved to $63.0 million, compared to $59.4 million in the second quarter of 2016," said Scott Mereness, LCI's President. "Strong industry growth and accretive acquisitions completed over the last year have contributed to profit growth for the quarter. We continue to focus on cost management and investments in lean initiatives and other operational efficiencies to further improve operating margin while supporting the growth of the business."

Balance Sheet and Other Items
At June 30, 2017, the Company had a cash balance of $38 million, a decrease of $48 million from a cash balance of $86 million at the beginning of the year, primarily as a result of $68 million used for acquisitions, $43 million for capital expenditures and $25 million of dividend payments in the first six months of 2017.

Return on equity for the twelve months ended June 30, 2017, improved to 25.0 percent, from the 24.1 percent return on equity at June 30, 2016. Return on invested capital for the twelve months ended June 30, 2017, improved to 39.0 percent, from the 34.2 percent return on invested capital at June 30, 2016.

Jason Lippert concluded, "For the first time in the Company's history, we have reached $1 billion in revenue at the half-way point of the year; an extraordinary feat as we only reached $1 billion in total yearly revenue just over three years ago. Our continuing growth story is a testament to the focus of our 9,000 team members."

Conference Call & Webcast
LCI will provide an online, real-time webcast of its second quarter 2017 earnings conference call on the Company's website, www.lci1.com/investors, on Friday, August 4, 2017, 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 55158619. A replay of the webcast will also be available on LCI's website until the next quarterly conference call.

About LCI Industries

From 52 manufacturing and distribution facilities located throughout the United States and in Canada 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; pontoon 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, 2016, 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)














Six Months Ended


Three Months Ended





June 30,


June 30,


Last Twelve



2017


2016


2017


2016


Months

(In thousands, except per share amounts)






















Net sales


$   1,045,819


$     863,629


$     547,483


$     440,831


$   1,861,088

Cost of sales


790,718


638,284


416,396


323,927


1,402,429

Gross profit


255,101


225,345


131,087


116,904


458,659

Selling, general and administrative expenses


132,932


110,229


68,047


57,516


250,756

Operating profit


122,169


115,116


63,040


59,388


207,903

Interest expense, net


851


889


414


413


1,640

Income before income taxes


121,318


114,227


62,626


58,975


206,263

Provision for income taxes


38,036


40,699


22,489


21,406


66,838

Net income


$       83,282


$       73,528


$       40,137


$       37,569


$     139,425












Net income per common share:











Basic


$          3.34


$          3.00


$          1.61


$          1.52


$          5.61

Diluted


$          3.29


$          2.96


$          1.59


$          1.51


$          5.53












Weighted average common shares outstanding:











Basic


24,959


24,542


24,992


24,662


24,868

Diluted


25,296


24,822


25,305


24,916


25,191












Depreciation and amortization


$       25,530


$       22,190


$       13,289


$       11,247


$       49,507

Capital expenditures


$       43,276


$       12,971


$       31,256


$         6,513


$       73,515












 

 

LCI INDUSTRIES

SEGMENT RESULTS

(unaudited)














Six Months Ended


Three Months Ended





June 30,


June 30,


Last Twelve



2017


2016


2017


2016


Months

(In thousands)






















Net sales:











OEM Segment:











RV OEMs:











Travel trailers and fifth-wheels


$     687,525


$     573,055


$     357,251


$     289,686


$   1,214,352

Motorhomes


73,292


56,389


36,248


27,866


133,094

Adjacent industries OEMs


203,987


170,125


109,276


89,364


365,880

Total OEM Segment net sales


964,804


799,569


502,775


406,916


1,713,326

Aftermarket Segment:











Total Aftermarket Segment net sales


81,015


64,060


44,708


33,915


147,762

Total net sales


$   1,045,819


$     863,629


$     547,483


$     440,831


$   1,861,088












Operating Profit:











OEM Segment


$     110,842


$     105,053


$       56,445


$       54,402


$     186,639

Aftermarket Segment


11,327


10,063


6,595


4,986


21,264

Total operating profit


$     122,169


$     115,116


$       63,040


$       59,388


$     207,903












 

 

LCI INDUSTRIES

BALANCE SHEET INFORMATION

(unaudited)











June 30,



December 31,



2017


2016


2016

(In thousands)














ASSETS







Current assets







Cash and cash equivalents


$       37,961


$       78,560


$        86,170

Accounts receivable, net


130,514


102,355


57,374

Inventories, net


202,635


149,163


188,743

Prepaid expenses and other current assets


43,977


25,613


35,107

Total current assets


415,087


355,691


367,394

Fixed assets, net


203,204


151,250


172,748

Goodwill


122,275


93,831


89,198

Other intangible assets, net


138,876


114,000


112,943

Deferred taxes


31,864


29,391


31,989

Other assets


13,344


13,656


12,632

Total assets


$     924,650


$     757,819


$       786,904








LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities







Accounts payable, trade


$       80,596


$       53,330


$        50,616

Accrued expenses and other current liabilities


114,454


113,244


98,735

Total current liabilities


195,050


166,574


149,351

Long-term indebtedness


49,911


49,930


49,949

Other long-term liabilities


59,934


38,284


37,335

Total liabilities


304,895


254,788


236,635

Total stockholders' equity


619,755


503,031


550,269

Total liabilities and stockholders' equity


$     924,650


$     757,819


$       786,904








 

 

LCI INDUSTRIES

SUMMARY OF CASH FLOWS

(unaudited)








Six Months Ended



June 30,



2017


2016

(In thousands)





Cash flows from operating activities:





Net income


$       83,282


$       73,528

Adjustments to reconcile net income to cash flows provided by operating activities:





Depreciation and amortization


25,530


22,190

Stock-based compensation expense


9,312


7,274

Other non-cash items


2,198


809

Changes in assets and liabilities, net of acquisitions of businesses:





Accounts receivable, net


(61,455)


(58,777)

Inventories, net


(6,804)


25,590

Prepaid expenses and other assets


(9,337)


(4,199)

Accounts payable, trade


22,542


21,496

Accrued expenses and other liabilities


32,476


45,440

Net cash flows provided by operating activities


97,744


133,351

Cash flows from investing activities:





Capital expenditures


(43,276)


(13,309)

Acquisitions of businesses, net of cash acquired


(67,876)


(34,237)

Proceeds from sales of fixed assets


265


337

Other investing activities


(8)


(237)

Net cash flows used for investing activities


(110,895)


(47,446)

Cash flows from financing activities:





Exercise of stock-based awards, net of shares tendered for payment of taxes


(7,543)


(1,144)

Proceeds from line of credit borrowings


-


81,458

Repayments under line of credit borrowings


-


(81,458)

Payment of dividends


(24,887)


(14,707)

Payment of contingent consideration related to acquisitions


(2,569)


(2,715)

Other financing activities


(59)


(1,084)

Net cash flows used for financing activities


(35,058)


(19,650)






Net (decrease) increase in cash and cash equivalents


(48,209)


66,255






Cash and cash equivalents at beginning of period


86,170


12,305

Cash and cash equivalents at end of period


$       37,961


$       78,560






 

 

LCI INDUSTRIES

SUPPLEMENTARY INFORMATION

(unaudited)















Six Months Ended


Three Months Ended






June 30,


June 30,


Last Twelve




2017


2016


2017


2016


Months


Industry Data(1)(in thousands of units):












Industry Wholesale Production:












Travel trailer and fifth-wheel RVs


217.4


190.0


115.9


99.2


390.1


Motorhome RVs


32.8


28.8


16.5


14.8


58.8


Industry Retail Sales:












Travel trailer and fifth-wheel RVs


210.1

(2)

185.7


137.5

(2)

122.8


377.1

(2)

Impact on dealer inventories


7.3

(2)

4.3


(21.6)

(2)

(23.6)


13.0

(2)

Motorhome RVs


27.6

(2)

24.3


16.5

(2)

14.8


50.0

(2)































Twelve Months Ended










June 30,










2017


2016




LCI Content Per Industry Unit Produced:












Travel trailer and fifth-wheel RV






$         3,104


$         3,013




Motorhome RV






$         2,072


$         1,920


































 

June 30,


December 31,








2017


2016


2016


Balance Sheet Data:












Current ratio






2.1


2.1


2.5


Total indebtedness to stockholders' equity






0.1


0.1


0.1


Days sales in accounts receivable






22.4


20.2


15.8


Inventory turns, based on last twelve months






7.8


7.0


7.5
































2017




Estimated Full Year Data:












Capital expenditures






$ 65 - $ 75 million




Depreciation and amortization






$ 55 - $ 60 million




Stock-based compensation expense






$ 19 - $ 21 million




Annual tax rate






33% - 34%














(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) June 2017 retail sales data for RVs has not been published yet, therefore 2017 retail data for RVs includes an estimate for June 2017 retail units. Retail sales data will likely be revised upwards in future months as various states report.

 

 

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SOURCE LCI Industries

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