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| 8-K - 8-K - LCI INDUSTRIES | lciiform8k-q317earnrel.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE |  | |
Contact: Brian Hall, CFO | ||
Phone: (574) 535-1125 | ||
E Mail: LCII@lci1.com | ||
LCI INDUSTRIES REPORTS 2017 THIRD QUARTER RESULTS
2017 Third Quarter Sales Increase $142 million to Record Quarter of $555 million
Elkhart, Indiana - November 2, 2017 - 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 for the third quarter of 2017 of $555 million, 35 percent higher than the 2016 third quarter net sales of $412 million. Net income was $32.1 million, or $1.26 per diluted share, for the third quarter ended September 30, 2017, compared to net income of $29.8 million, or $1.19 per diluted share, for the third quarter ended September 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 26 percent and 13 percent, respectively, in the third quarter of 2017, enhanced by solid growth in content per unit and acquisitions. Net sales from acquisitions completed by the Company over the twelve months ended September 30, 2017 contributed $24 million in the third quarter of 2017. The organic growth rate was 29 percent for the third quarter and acquisitions provided the remainder of the 35 percent increase. Through continued focus on aftermarket channels for the Company’s products, the Company increased net sales to the aftermarket in the third quarter of 2017 by 34 percent to $49 million.
“The RV industry growth trend in 2017 remains strong as third quarter wholesale RV shipments were up 24 percent,” stated Jason Lippert, LCI’s Chief Executive Officer. “RV sales momentum has continued as the industry attracts a new generation of RV enthusiasts, supported by strong economic growth. Orders appear to be strong going into the final 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. We are expecting October 2017 consolidated net sales to reach approximately $205 million, 40% higher than October 2016.”
The health of the RV industry is determined by retail demand, which is up 11 percent through August, 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 the first nine months of 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 480,000 units for the full year 2017 has been revised upward from its original Fall 2016 forecast of 411,000 units. The RVIA’s current forecast for 2018 estimates an increase of an additional two percent to approximately 491,000 units.
The Company’s content per travel trailer and fifth-wheel RV for the twelve months ended September 30, 2017, increased $147 to $3,172, compared to the twelve months ended September 30, 2016, of $3,025. This is the largest increase in seven quarters for travel trailer and fifth-wheel RV content. The Company’s content per motorhome RV for the twelve months ended September 30, 2017, increased $195 to $2,152, compared to the twelve months ended September 30, 2016, of $1,957. 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.
“Our operating profit in the third quarter of 2017 improved 6 percent to $47.9 million,” said Scott Mereness, LCI’s President. “Strong industry growth and accretive acquisitions completed over the last year have contributed to profit
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growth for the quarter. We continue to focus on cost management as well as investments in lean initiatives and other operational efficiencies to further improve operating margin while maintaining on-time deliveries to support the growth of the business.”
The improvement in the Company’s operating results were partially offset by continued increases in input costs, primarily steel, aluminum and direct labor. Aluminum costs have increased in excess of 20 percent over the prior year. Labor continues to remain a challenge with Elkhart County unemployment rates at less than three percent. As a result of these increased input costs, the Company has enacted price increases, which are anticipated to fully impact the first quarter of 2018. Additionally, the Company has implemented a number of cost saving initiatives, resulting in severance charges of $1.3 million or $0.03 per diluted share in the third quarter of 2017. These initiatives, along with the price increases, are expected to improve operating income by approximately $38 million annually, or 1.9 percent of operating margin, on the Company’s current run rate.
Balance Sheet and Other Items
At September 30, 2017, the Company’s cash balance was $20 million, a decrease of $66 million from its cash balance of $86 million at the beginning of the year, primarily as a result of $68 million used for acquisitions, $60 million for capital expenditures and $37 million of dividend payments in the first nine months of 2017, offset by operating cash flows. The Company’s outstanding debt was $50 million at September 30, 2017 and December 31, 2016.
Return on equity and return on invested capital for the twelve months ended September 30, 2017, were 24.2 percent and 36.5 percent, respectively.
Jason Lippert concluded, “For the first time in the Company’s history, we have reached $2 billion in revenue for the last twelve months, just four years from achieving $1 billion. We are achieving record top and bottom line numbers, and we are doing it at a time when labor and materials environments are particularly challenging. Our continuing growth story is a testament to the focus of our more than 9,000 team members.”
Conference Call & Webcast
LCI will provide an online, real-time webcast of its third quarter 2017 earnings conference call on the Company’s website, www.lci1.com/investors, on Thursday, November 2, 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 1422666. 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.
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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.
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LCI INDUSTRIES
OPERATING RESULTS
(unaudited)
Nine Months Ended September 30, | Three Months Ended September 30, | Last Twelve | |||||||||||||||||
2017 | 2016 | 2017 | 2016 | Months | |||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||
Net sales | $ | 1,600,633 | $ | 1,275,999 | $ | 554,814 | $ | 412,370 | $ | 2,003,532 | |||||||||
Cost of sales | 1,224,312 | 945,104 | 433,594 | 306,820 | 1,529,203 | ||||||||||||||
Gross profit | 376,321 | 330,895 | 121,220 | 105,550 | 474,329 | ||||||||||||||
Selling, general and administrative expenses | 206,225 | 170,641 | 73,293 | 60,412 | 263,637 | ||||||||||||||
Operating profit | 170,096 | 160,254 | 47,927 | 45,138 | 210,692 | ||||||||||||||
Interest expense, net | 1,162 | 1,285 | 311 | 396 | 1,555 | ||||||||||||||
Income before income taxes | 168,934 | 158,969 | 47,616 | 44,742 | 209,137 | ||||||||||||||
Provision for income taxes | 53,514 | 55,597 | 15,478 | 14,898 | 67,418 | ||||||||||||||
Net income | $ | 115,420 | $ | 103,372 | $ | 32,138 | $ | 29,844 | $ | 141,719 | |||||||||
Net income per common share: | |||||||||||||||||||
Basic | $ | 4.62 | $ | 4.20 | $ | 1.28 | $ | 1.21 | $ | 5.68 | |||||||||
Diluted | $ | 4.56 | $ | 4.15 | $ | 1.26 | $ | 1.19 | $ | 5.60 | |||||||||
Weighted average common shares outstanding: | |||||||||||||||||||
Basic | 24,993 | 24,587 | 25,060 | 24,724 | 24,951 | ||||||||||||||
Diluted | 25,332 | 24,882 | 25,459 | 25,060 | 25,289 | ||||||||||||||
Depreciation and amortization | $ | 39,856 | $ | 33,720 | $ | 14,326 | $ | 11,530 | $ | 52,303 | |||||||||
Capital expenditures | $ | 60,342 | $ | 21,927 | $ | 17,066 | $ | 8,956 | $ | 81,625 | |||||||||
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LCI INDUSTRIES
SEGMENT RESULTS
(unaudited)
Nine Months Ended September 30, | Three Months Ended September 30, | Last Twelve | |||||||||||||||||
2017 | 2016 | 2017 | 2016 | Months | |||||||||||||||
(In thousands) | |||||||||||||||||||
Net sales: | |||||||||||||||||||
OEM Segment: | |||||||||||||||||||
RV OEMs: | |||||||||||||||||||
Travel trailers and fifth-wheels | $ | 1,045,465 | $ | 836,634 | $ | 357,940 | $ | 263,579 | $ | 1,308,713 | |||||||||
Motorhomes | 114,887 | 85,762 | 41,595 | 29,373 | 145,316 | ||||||||||||||
Adjacent industries OEMs | 310,373 | 253,088 | 106,386 | 82,963 | 389,303 | ||||||||||||||
Total OEM Segment net sales | 1,470,725 | 1,175,484 | 505,921 | 375,915 | 1,843,332 | ||||||||||||||
Aftermarket Segment: | |||||||||||||||||||
Total Aftermarket Segment net sales | 129,908 | 100,515 | 48,893 | 36,455 | 160,200 | ||||||||||||||
Total net sales | $ | 1,600,633 | $ | 1,275,999 | $ | 554,814 | $ | 412,370 | $ | 2,003,532 | |||||||||
Operating profit: | |||||||||||||||||||
OEM Segment | $ | 151,867 | $ | 144,102 | $ | 41,025 | $ | 39,049 | $ | 188,615 | |||||||||
Aftermarket Segment | 18,229 | 16,152 | 6,902 | 6,089 | 22,077 | ||||||||||||||
Total operating profit | $ | 170,096 | $ | 160,254 | $ | 47,927 | $ | 45,138 | $ | 210,692 | |||||||||
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LCI INDUSTRIES
BALANCE SHEET INFORMATION
(unaudited)
September 30, | December 31, | ||||||||||
2017 | 2016 | 2016 | |||||||||
(In thousands) | |||||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 19,762 | $ | 95,060 | $ | 86,170 | |||||
Accounts receivable, net | 139,144 | 89,626 | 57,374 | ||||||||
Inventories, net | 229,763 | 161,312 | 188,743 | ||||||||
Prepaid expenses and other current assets | 45,384 | 28,572 | 35,107 | ||||||||
Total current assets | 434,053 | 374,570 | 367,394 | ||||||||
Fixed assets, net | 210,304 | 153,167 | 172,748 | ||||||||
Goodwill | 123,001 | 93,925 | 89,198 | ||||||||
Other intangible assets, net | 134,761 | 109,553 | 112,943 | ||||||||
Deferred taxes | 32,380 | 29,208 | 31,989 | ||||||||
Other assets | 21,277 | 14,095 | 12,632 | ||||||||
Total assets | $ | 955,776 | $ | 774,518 | $ | 786,904 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities | |||||||||||
Accounts payable, trade | $ | 88,148 | $ | 55,681 | $ | 50,616 | |||||
Accrued expenses and other current liabilities | 109,849 | 97,733 | 98,735 | ||||||||
Total current liabilities | 197,997 | 153,414 | 149,351 | ||||||||
Long-term indebtedness | 49,918 | 49,940 | 49,949 | ||||||||
Other long-term liabilities | 60,805 | 39,796 | 37,335 | ||||||||
Total liabilities | 308,720 | 243,150 | 236,635 | ||||||||
Total stockholders’ equity | 647,056 | 531,368 | 550,269 | ||||||||
Total liabilities and stockholders’ equity | $ | 955,776 | $ | 774,518 | $ | 786,904 | |||||
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LCI INDUSTRIES
SUMMARY OF CASH FLOWS
(unaudited)
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
(In thousands) | |||||||
Cash flows from operating activities: | |||||||
Net income | $ | 115,420 | $ | 103,372 | |||
Adjustments to reconcile net income to cash flows provided by operating activities: | |||||||
Depreciation and amortization | 39,856 | 33,720 | |||||
Stock-based compensation expense | 15,042 | 11,421 | |||||
Deferred taxes | — | 183 | |||||
Other non-cash items | 3,655 | 1,728 | |||||
Changes in assets and liabilities, net of acquisitions of businesses: | |||||||
Accounts receivable, net | (69,720 | ) | (46,028 | ) | |||
Inventories, net | (33,780 | ) | 13,451 | ||||
Prepaid expenses and other assets | (18,662 | ) | (7,659 | ) | |||
Accounts payable, trade | 29,856 | 23,827 | |||||
Accrued expenses and other liabilities | 27,192 | 30,093 | |||||
Net cash flows provided by operating activities | 108,859 | 164,108 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (60,342 | ) | (21,927 | ) | |||
Acquisitions of businesses, net of cash acquired | (67,876 | ) | (34,237 | ) | |||
Proceeds from sales of fixed assets | 348 | 533 | |||||
Other investing activities | (105 | ) | (316 | ) | |||
Net cash flows used for investing activities | (127,975 | ) | (55,947 | ) | |||
Cash flows from financing activities: | |||||||
Exercise of stock-based awards, net of shares tendered for payment of taxes | (7,313 | ) | 409 | ||||
Proceeds from line of credit borrowings | 9,715 | 81,458 | |||||
Repayments under line of credit borrowings | (9,715 | ) | (81,458 | ) | |||
Payment of dividends | (37,346 | ) | (22,078 | ) | |||
Payment of contingent consideration related to acquisitions | (2,574 | ) | (2,719 | ) | |||
Other financing activities | (59 | ) | (1,018 | ) | |||
Net cash flows used for financing activities | (47,292 | ) | (25,406 | ) | |||
Net (decrease) increase in cash and cash equivalents | (66,408 | ) | 82,755 | ||||
Cash and cash equivalents at beginning of period | 86,170 | 12,305 | |||||
Cash and cash equivalents at end of period | $ | 19,762 | $ | 95,060 | |||
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LCI INDUSTRIES
SUPPLEMENTARY INFORMATION
(unaudited)
Nine Months Ended | Three Months Ended | ||||||||||||||||
September 30, | September 30, | Last Twelve | |||||||||||||||
2017 | 2016 | 2017 | 2016 | Months | |||||||||||||
Industry Data(1) (in thousands of units): | |||||||||||||||||
Industry Wholesale Production: | |||||||||||||||||
Travel trailer and fifth-wheel RVs | 321.3 | 272.4 | 103.9 | 82.4 | 411.6 | ||||||||||||
Motorhome RVs | 47.3 | 41.6 | 14.5 | 12.8 | 60.5 | ||||||||||||
Industry Retail Sales: | |||||||||||||||||
Travel trailer and fifth-wheel RVs | 324.5 | (2) | 294.4 | 113.7 | (2) | 108.7 | 382.8 | (2) | |||||||||
Impact on dealer inventories | (3.2 | ) | (2) | (22.0 | ) | (9.8 | ) | (2) | (26.3 | ) | 28.8 | (2) | |||||
Motorhome RVs | 42.3 | (2) | 37.5 | 13.8 | (2) | 13.2 | 51.6 | (2) | |||||||||
Twelve Months Ended | |||||||||||||||||
September 30, | |||||||||||||||||
2017 | 2016 | ||||||||||||||||
LCI Content Per Industry Unit Produced: | |||||||||||||||||
Travel trailer and fifth-wheel RV | $ | 3,172 | $ | 3,025 | |||||||||||||
Motorhome RV | $ | 2,152 | $ | 1,957 | |||||||||||||
September 30, | December 31, | ||||||||||||||||
2017 | 2016 | 2016 | |||||||||||||||
Balance Sheet Data: | |||||||||||||||||
Current ratio | 2.2 | 2.4 | 2.5 | ||||||||||||||
Total indebtedness to stockholders' equity | 0.1 | 0.1 | 0.1 | ||||||||||||||
Days sales in accounts receivable | 22.5 | 19.4 | 15.8 | ||||||||||||||
Inventory turns, based on last twelve months | 7.8 | 7.3 | 7.5 | ||||||||||||||
2017 | |||||||||||||||||
Estimated Full Year Data: | |||||||||||||||||
Capital expenditures | $ 70 - $ 80 million | ||||||||||||||||
Depreciation and amortization | $ 55 - $ 60 million | ||||||||||||||||
Stock-based compensation expense | $ 19 - $ 21 million | ||||||||||||||||
Annual tax rate | 32% - 33% | ||||||||||||||||
(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 2017 retail sales data for RVs has not been published yet, therefore 2017 retail data for RVs includes an estimate for September 2017 retail units. Retail sales data will likely be revised upwards in future months as various states report.
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