May 7, 2021

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It's Your Traveling!

LCI Industries Reports Record First Quarter Results

ELKHART, Ind.–(BUSINESS WIRE)–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 first quarter 2021 results.

“We achieved a record $1 billion in revenue during the first quarter 2021, which is a watershed moment for Lippert and an extraordinary accomplishment considering the significant labor and supply chain headwinds the industry has faced. Our team’s agility, combined with our robust operational capabilities, allowed us to capitalize on the extraordinary demand across the outdoor recreation space to capture new growth opportunities and expand market share. At the same time, we amplified our efforts to deliver innovative products and enhance the customer experience, solidifying our position as a best-in-class supplier within the outdoor recreational community,” commented Jason Lippert, LCI Industries’ President and Chief Executive Officer. “The wave of customers continuing to stream into the RV lifestyle is fueling one of the largest replacement cycles the industry has ever seen. This will undoubtedly serve as an additional tailwind to our already successful and fast-growing aftermarket business, which has nearly tripled in size over the last three years. Given the millions of RVs entering the parts replacement cycle, we remain confident that this will continue to propel our aftermarket business over the next several years.”

“With heightened retail demand showing no signs of slowing and a long runway to get dealer inventories back to more normalized levels, Lippert is incredibly well-positioned as we move through 2021 and beyond. Our results over the last several quarters are a true testament to the strength of our leadership, team, and culture in withstanding operational turbulence and delivering superior performance,” continued Lippert. “I would like to thank all Lippert team members for their hard work in continuing to propel our business forward to drive value for our shareholders.”

First Quarter 2021 Results

Consolidated net sales for the first quarter of 2021 were $1.0 billion, an increase of 52 percent from 2020 first quarter net sales of $659.7 million. Net income in the first quarter of 2021 was $74.1 million, or $2.93 per diluted share, compared to net income of $28.2 million, or $1.12 per diluted share, in the first quarter of 2020. Adjusted EBITDA in the first quarter of 2021 was $125.9 million, compared to adjusted EBITDA of $75.1 million in the first quarter of 2020. Additional information regarding adjusted EBITDA, as well as a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure, are provided in the “Supplementary Information – Reconciliation of Non-GAAP Measures” section below.

The increase in year-over-year net sales for the first quarter of 2021 was primarily driven by record RV retail demand and strong Aftermarket sales growth. Net sales from acquisitions completed in 2020 and 2021 contributed approximately $41 million in the first quarter of 2021. Additionally, the start of the pandemic in the first quarter of 2020 had a negative impact on sales in that quarter.

The Company’s average product content per travel trailer and fifth-wheel RV, adjusted to remove Furrion sales from prior periods, for the twelve months ended March 31, 2021, increased $122 to $3,476, compared to $3,354 for the twelve months ended March 31, 2020. The content increase in towables was a result of organic growth, including new product introductions.

April 2021 Results

April 2021 consolidated net sales were approximately $365 million, up 522 percent from April 2020, as RV production increased significantly to meet elevated RV retail demand, and prior year comparative net sales were negatively impacted by COVID-19 shut-downs.

Balance Sheet and Other Items

At March 31, 2021, the Company’s cash and cash equivalents balance was $63.3 million, up from $51.8 million at December 31, 2020. The Company generated net cash flows from operations of $4.8 million and used $2.8 million for acquisitions, $18.9 million for dividend payments to shareholders, and $21.0 million for capital expenditures in the three months ended March 31, 2021. Cash flows from operations were negatively impacted by strategic investments in working capital to support record demand and mitigate future supply chain disruptions. The Company’s outstanding long-term indebtedness, including current maturities, was $793.8 million at March 31, 2021, and the Company remained in compliance with its debt covenants. The Company believes that its current liquidity is adequate to meet operating needs for the foreseeable future.

Conference Call & Webcast

Lippert will host a conference call to discuss its first quarter results on Tuesday, May 4, 2021, at 8:30 a.m. Eastern time, which may be accessed by dialing (877) 668-4883 for participants in the U.S./Canada or (825) 312-2360 for participants outside the U.S./Canada using the required conference ID 5717208. 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 (800) 585-8367 for participants in the U.S./Canada or (416) 621-4642 for participants outside the U.S./Canada and referencing access code 5717208. 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. 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; and other accessories. Additional information about Lippert 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, 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, 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, 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, 2020, 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

March 31,

 

Last Twelve

 

2021

 

2020

 

Months

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

1,000,258

 

$

659,670

 

$

3,136,754

Cost of sales

 

758,481

 

 

501,065

 

 

2,347,492

Gross profit

 

241,777

 

 

158,605

 

 

789,262

Selling, general and administrative expenses

 

140,346

 

 

114,339

 

 

509,163

Operating profit

 

101,431

 

 

44,266

 

 

280,099

Interest expense, net

 

2,705

 

 

5,197

 

 

10,961

Income before income taxes

 

98,726

 

 

39,069

 

 

269,138

Provision for income taxes

 

24,606

 

 

10,855

 

 

64,792

Net income

$

74,120

 

$

28,214

 

$

204,346

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

Basic

$

2.94

 

$

1.13

 

$

8.12

Diluted

$

2.93

 

$

1.12

 

$

8.07

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

 

25,193

 

 

25,075

 

 

25,171

Diluted

 

25,325

 

 

25,143

 

 

25,308

 

 

 

 

 

 

Depreciation and amortization

$

24,516

 

$

24,614

 

$

97,882

Capital expenditures

$

20,957

 

$

7,955

 

$

70,348

LCI INDUSTRIES

SEGMENT RESULTS

(unaudited)

 

 

Three Months Ended

March 31,

 

Last Twelve

 

2021

 

2020

 

Months

(In thousands)

 

 

 

 

 

Net sales:

 

 

 

 

 

OEM Segment:

 

 

 

 

 

RV OEMs:

 

 

 

 

 

Travel trailers and fifth-wheels

$

503,016

 

$

307,108

 

$

1,517,475

Motorhomes

 

62,593

 

 

38,087

 

 

182,602

Adjacent Industries OEMs

 

250,641

 

 

187,162

 

 

751,727

Total OEM Segment net sales

 

816,250

 

 

532,357

 

 

2,451,804

Aftermarket Segment:

 

 

 

 

 

Total Aftermarket Segment net sales

 

184,008

 

 

127,313

 

 

684,950

Total net sales

$

1,000,258

 

$

659,670

 

$

3,136,754

 

 

 

 

 

 

Operating profit:

 

 

 

 

 

OEM Segment

$

79,287

 

$

43,189

 

$

192,190

Aftermarket Segment (1)

 

22,144

 

 

1,077

 

 

87,909

Total operating profit

$

101,431

 

$

44,266

 

$

280,099

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

OEM Segment depreciation

$

12,188

 

$

12,060

 

$

47,892

Aftermarket Segment depreciation

 

2,996

 

 

3,140

 

 

12,200

Total depreciation

$

15,184

 

$

15,200

 

$

60,092

 

 

 

 

 

 

OEM Segment amortization

$

6,452

 

$

6,423

 

$

26,353

Aftermarket Segment amortization

 

2,880

 

 

2,991

 

 

11,437

Total amortization

$

9,332

 

$

9,414

 

$

37,790

 

(1) Results for the three months ended March 31, 2020 include a non-cash charge for inventory fair value step-up of $6.2 million related to CURT purchase accounting.

LCI INDUSTRIES

BALANCE SHEET INFORMATION

(unaudited)

 

 

March 31,

 

December 31,

 

2021

 

2020

(In thousands)

 

 

 

 

 

 

 

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

63,319

 

$

51,821

Accounts receivable, net of allowances of $6,478 and $5,642 at March 31, 2021 and December 31, 2020, respectively

 

405,395

 

 

268,625

Inventories, net

 

535,056

 

 

493,899

Prepaid expenses and other current assets

 

64,410

 

 

55,456

Total current assets

 

1,068,180

 

 

869,801

Fixed assets, net

 

392,713

 

 

387,218

Goodwill

 

454,382

 

 

454,728

Other intangible assets, net

 

407,599

 

 

420,885

Operating lease right-of-use assets

 

121,789

 

 

104,179

Other assets

 

55,810

 

 

61,220

Total assets

$

2,500,473

 

$

2,298,031

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities

 

 

 

Current maturities of long-term indebtedness

$

67,154

 

$

17,831

Accounts payable, trade

 

232,481

 

 

184,931

Current portion of operating lease obligations

 

24,794

 

 

25,432

Accrued expenses and other current liabilities

 

210,559

 

 

188,200

Total current liabilities

 

534,988

 

 

416,394

Long-term indebtedness

 

726,608

 

 

720,418

Operating lease obligations

 

101,677

 

 

82,707

Deferred taxes

 

55,563

 

 

53,833

Other long-term liabilities

 

122,050

 

 

116,353

Total liabilities

 

1,540,886

 

 

1,389,705

Total stockholders’ equity

 

959,587

 

 

908,326

Total liabilities and stockholders’ equity

$

2,500,473

 

$

2,298,031

LCI INDUSTRIES

SUMMARY OF CASH FLOWS

(unaudited)

 

 

Three Months Ended

March 31,

 

2021

 

2020

(In thousands)

 

 

 

Cash flows from operating activities:

 

 

 

Net income

$

74,120

 

 

$

28,214

 

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

 

 

 

Depreciation and amortization

 

24,516

 

 

 

24,614

 

Stock-based compensation expense

 

7,436

 

 

 

3,295

 

Other non-cash items

 

1,318

 

 

 

(2,231

)

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

 

 

 

Accounts receivable, net

 

(139,245

)

 

 

(74,776

)

Inventories, net

 

(41,170

)

 

 

40,883

 

Prepaid expenses and other assets

 

(3,328

)

 

 

6,350

 

Accounts payable, trade

 

49,644

 

 

 

31,878

 

Accrued expenses and other liabilities

 

31,556

 

 

 

(13,468

)

Net cash flows provided by operating activities

 

4,847

 

 

 

44,759

 

Cash flows from investing activities:

 

 

 

Capital expenditures

 

(20,957

)

 

 

(7,955

)

Acquisitions of businesses, net of cash acquired

 

(2,779

)

 

 

(95,766

)

Other investing activities

 

(605

)

 

 

1,972

 

Net cash flows used in investing activities

 

(24,341

)

 

 

(101,749

)

Cash flows from financing activities:

 

 

 

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

 

(7,767

)

 

 

(4,517

)

Proceeds from revolving credit facility

 

208,863

 

 

 

247,154

 

Repayments under revolving credit facility

 

(141,489

)

 

 

(102,330

)

Repayments under term loan and other borrowings

 

(3,889

)

 

 

(3,750

)

Payment of dividends

 

(18,939

)

 

 

(16,321

)

Payment of contingent consideration and holdbacks related to acquisitions

 

(2,792

)

 

 

 

Other financing activities

 

 

 

 

(391

)

Net cash flows provided by financing activities

 

33,987

 

 

 

119,845

 

Effect of exchange rate changes on cash and cash equivalents

 

(2,995

)

 

 

(215

)

Net increase in cash and cash equivalents

 

11,498

 

 

 

62,640

 

Cash and cash equivalents at beginning of period

 

51,821

 

 

 

35,359

 

Cash and cash equivalents cash at end of period

$

63,319

 

 

$

97,999

 

LCI INDUSTRIES

SUPPLEMENTARY INFORMATION

(unaudited)

 

 

Three Months Ended

 

 

 

 

March 31,

 

Last Twelve

 

 

2021

 

 

2020

 

Months

 

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

 

 

 

 

 

 

 

Industry Wholesale Production:

 

 

 

 

 

 

 

Travel trailer and fifth-wheel RVs

 

131.2

 

 

 

88.0

 

 

423.2

 

 

Motorhome RVs

 

14.3

 

 

 

10.1

 

 

44.9

 

 

Industry Retail Sales:

 

 

 

 

 

 

 

Travel trailer and fifth-wheel RVs

 

96.9

 

(2)

 

74.8

 

 

474.7

 

(2)

Impact on dealer inventories

 

34.3

 

(2)

 

13.2

 

 

(51.5

)

(2)

Motorhome RVs

 

9.0

 

(2)

 

8.9

 

 

44.4

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended

 

 

 

 

March 31,

 

 

 

 

2021

 

 

2020

 

 

 

Lippert Content Per Industry Unit Produced: (3)

 

 

 

 

 

 

 

Travel trailer and fifth-wheel RV

$

3,476

 

 

$

3,354

 

 

 

Motorhome RV

$

2,525

 

 

$

2,327

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

2021

 

 

2020

 

2020

 

Balance Sheet Data (debt availability in millions):

 

 

 

 

 

 

 

Remaining availability under the debt facilities (4)

$

292.4

 

 

$

341.7

 

$

352.2

 

 

Days sales in accounts receivable, based on last twelve months

 

31.4

 

 

 

26.6

 

 

31.6

 

 

Inventory turns, based on last twelve months

 

5.8

 

 

 

5.5

 

 

5.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

Estimated Full Year Data:

 

 

 

 

 

 

 

Capital expenditures

$130 – $150 million

 

 

 

Depreciation and amortization

$100 – $110 million

 

 

 

Stock-based compensation expense

$20 – $30 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 2021 retail sales data for RVs has not been published yet, therefore 2021 retail data for RVs includes an estimate for March 2021 retail units. Retail sales data will likely be revised upwards in future months as various states report.

(3) The content figures presented were adjusted to remove Furrion sales from prior periods, as the Furrion distribution and supply agreement was terminated effective December 31, 2019.

(4) Remaining availability under the debt facilities is subject to covenant restrictions and, in the case of $150 million of such availability, the lender’s discretion.

LCI INDUSTRIES

SUPPLEMENTARY INFORMATION

RECONCILIATION OF NON-GAAP MEASURES

(unaudited)

 

The following table reconciles net income to adjusted net income and diluted net income per common share to adjusted diluted net income per common share.

 

 

Three Months Ended March 31,

 

2021

 

2020

(In thousands, except per share amounts)

 

 

 

Net income

$

74,120

 

$

28,214

 

Non-cash charge for inventory fair value step-up

 

 

 

6,243

 

Income tax impact of inventory fair value step-up

 

 

 

(1,518

)

Adjusted net income

$

74,120

 

$

32,939

 

 

 

 

 

Diluted net income per common share

$

2.93

 

$

1.12

 

Non-cash charge for inventory fair value step-up

 

 

 

0.25

 

Income tax impact of inventory fair value step-up

 

 

 

(0.06

)

Adjusted diluted net income per common share

$

2.93

 

$

1.31

 

 

 

 

 

The following table reconciles net income to EBITDA and Adjusted EBITDA.

 

 

Three Months Ended March 31,

 

2021

 

2020

(In thousands)

 

 

 

Net income

$

74,120

 

$

28,214

 

Interest expense, net

 

2,705

 

 

5,197

 

Provision for income taxes

 

24,606

 

 

10,855

 

Depreciation expense

 

15,184

 

 

15,200

 

Amortization expense

 

9,332

 

 

9,414

 

EBITDA

 

125,947

 

 

68,880

 

Non-cash charge for inventory fair value step-up

 

 

 

6,243

 

Adjusted EBITDA

$

125,947

 

$

75,123

 

In addition to reporting financial results in accordance with U.S. GAAP, the Company has provided the non-GAAP performance measures of adjusted net income, adjusted diluted net income per common share, and adjusted EBITDA to illustrate and improve comparability of its results from period to period. Adjusted net income is defined as net income adjusted for items that impact the comparability of the Company’s results from period to period, which consisted of the inventory fair value step-up from the acquisition of CURT and related tax impacts during the three month period ended March 31, 2020. Adjusted diluted net income per common share is defined as net income per common share adjusted for items that impact the comparability of the Company’s results from period to period, which consisted of the inventory fair value step-up from the acquisition of CURT and related tax impacts during the three month period ended March 31, 2020. Adjusted EBITDA is defined as net income before interest expense, net, provision for income taxes, depreciation and amortization expense, and other adjustments made in order to present comparable results from period to period, which consisted of the inventory fair value step-up from the acquisition of CURT during the three month period ended March 31, 2020. The Company considers these non-GAAP measures 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.