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| 8-K - 8-K - LCI INDUSTRIES | lciiform8k-q217earnrel.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE |  | |
Contact: Brian Hall, CFO | ||
Phone: (574) 535-1125 | ||
E Mail: LCII@lci1.com | ||
LCI INDUSTRIES REPORTS 2017 SECOND QUARTER RESULTS
2017 Second Quarter Sales Increase $107 million to Record Quarter of $547 million
Elkhart, Indiana - August 4, 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 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.
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“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.
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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)
Six Months Ended June 30, | Three Months Ended 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 | |||||||||
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LCI INDUSTRIES
SEGMENT RESULTS
(unaudited)
Six Months Ended June 30, | Three Months Ended 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 | |||||||||
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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 | |||||
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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 | |||
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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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