Lci industries reports third quarter financial 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 third quarter 2022 results. “our results continue to demonstrate the effectiveness of our diversification strategy, which has positioned lippert to maintain strong performance during a downturn in rv demand. during the third quarter, we delivered growth in adjacent markets and leveraged our flexible cost structure to support profitability, as the rv industry adjusts to softened consumer demand and macroeconomic uncertainty,” commented jason lippert, lci industries’ president and chief executive officer. “the operational improvements we’ve implemented over the last several years have enabled us to nimbly balance capacity while maintaining our product quality, as wholesale rv production is expected to remain tempered in the near-term. other key end markets, including marine, motorhomes, manufactured housing, power sports, and the rv aftermarket continued to perform well, helping our overall business more effectively than if it was solely concentrated in the rv market. we remain confident in the underlying secular trends fueling popularity in the outdoor lifestyle and will keep investing in innovation throughout our portfolio to capture demand for technologically sophisticated products,” lippert continued. “with our strong, cohesive culture guided by our experienced leadership team, we believe we are well-positioned to manage through a challenging economic environment to advance our business and drive long-term shareholder value.” “the operational strength demonstrated by our teams proved critical to supporting our performance this quarter. we look forward to continuing this momentum as we continue to collaborate with our customers while achieving progress on strategic priorities,” commented ryan smith, group president – north america. third quarter 2022 results consolidated net sales for the third quarter of 2022 were $1.1 billion, a decrease of three percent from 2021 third quarter net sales of $1.2 billion. net income in the third quarter of 2022 was $61.4 million, or $2.40 per diluted share, compared to net income of $63.4 million, or $2.49 per diluted share, in the third quarter of 2021. ebitda in the third quarter of 2022 was $119.8 million, compared to ebitda of $118.0 million in the third quarter of 2021. additional information regarding ebitda, as well as a reconciliation of this non-gaap financial measure to the most directly comparable gaap financial measure, is provided in the "supplementary information - reconciliation of non-gaap measures" section below. the decrease in year-over-year net sales for the third quarter of 2022 was primarily driven by decreased north american rv wholesale shipments, partially offset by price realization, acquisitions, and an increase in net sales to oems in adjacent industries. net sales from acquisitions completed in the twelve months ended september 30, 2022 contributed approximately $39 million in the third quarter of 2022. the company's average product content per travel trailer and fifth-wheel rv for the twelve months ended september 30, 2022, increased $2,067 to $5,853, compared to $3,786 for the twelve months ended september 30, 2021. the content increase in towables was primarily a result of organic growth, including pricing and new product introductions, market share gains, and acquisitions. october 2022 results october 2022 consolidated net sales were approximately $345 million, down 24 percent from october 2021, demonstrating positive trends as the company moves into the last quarter of 2022, a testament to diversification efforts which are helping to offset the deceleration experienced in north american rv production. income taxes the company's effective tax rate was 23.9 percent for the quarter ended september 30, 2022, compared to 24.8 percent for the quarter ended september 30, 2021. the decrease in the effective tax rate was primarily due to the settlement of uncertain tax positions, partially offset by a decrease in the cash surrender value of life insurance. balance sheet and other items at september 30, 2022, the company's cash and cash equivalents balance was $23.4 million, compared to $62.9 million at december 31, 2021. the company used $103.7 million for capital expenditures, $76.3 million for dividend payments to shareholders, and $55.7 million for acquisitions in the nine months ended september 30, 2022. the company also made $156.1 million in net repayments under its revolving credit facility and $65.9 million in repayments under its shelf loan, term loan, and other borrowings in the nine months ended september 30, 2022. the company's outstanding long-term indebtedness, including current maturities, was $1.1 billion at september 30, 2022, and the company remained in compliance with its debt covenants. the company believes its current liquidity is adequate to meet operating needs for the foreseeable future. conference call & webcast lci industries will host a conference call to discuss its third quarter results on tuesday, november 1, 2022, at 8:30 a.m. eastern time, which may be accessed by dialing (844) 200-6205 for participants in the u.s. and (226) 828-7575 for those in canada or (929) 526-1599 for participants outside the u.s./canada using the required conference id 464745. 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 (929) 458-6194 for participants in the u.s. and (226) 828-7578 for those in canada or (204) 525-0658 for participants outside the u.s./canada and referencing access code 932786. 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, as well as direct to retail customers via the internet. 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; appliances; air conditioners; televisions and sound systems; tankless water heaters; and other accessories. additional information about lippert and its products can be found at www.lippert.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, covenant compliance, 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, the russia-ukraine war, and heightened tensions between china and taiwan 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, 2021, 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 september 30, nine months ended september 30, last twelve 2022 2021 2022 2021 months (in thousands, except per share amounts) net sales $ 1,132,079 $ 1,165,309 $ 4,312,797 $ 3,259,287 $ 5,526,207 cost of sales 879,025 913,728 3,186,415 2,508,318 4,107,759 gross profit 253,054 251,581 1,126,382 750,969 1,418,448 selling, general and administrative expenses 165,479 162,557 550,317 466,532 728,410 operating profit 87,575 89,024 576,065 284,437 690,038 interest expense, net 6,910 4,667 19,353 10,844 24,875 income before income taxes 80,665 84,357 556,712 273,593 665,163 provision for income taxes 19,273 20,956 144,609 68,183 170,731 net income $ 61,392 $ 63,401 $ 412,103 $ 205,410 $ 494,432 net income per common share: basic $ 2.41 $ 2.51 $ 16.23 $ 8.14 $ 19.48 diluted $ 2.40 $ 2.49 $ 16.15 $ 8.10 $ 19.35 weighted average common shares outstanding: basic 25,447 25,286 25,398 25,247 25,380 diluted 25,600 25,417 25,520 25,371 25,548 depreciation $ 17,989 $ 16,451 $ 53,953 $ 47,047 $ 71,660 amortization $ 14,258 $ 12,490 $ 42,013 $ 33,164 $ 56,415 capital expenditures $ 32,911 $ 31,867 $ 103,748 $ 73,872 $ 128,410 lci industries segment results (unaudited) three months ended september 30, nine months ended september 30, last twelve 2022 2021 2022 2021 months (in thousands) net sales: oem segment: rv oems: travel trailers and fifth-wheels $ 493,515 $ 602,429 $ 2,261,250 $ 1,633,059 $ 2,923,803 motorhomes 82,922 63,259 261,656 193,105 327,546 adjacent industries oems 335,983 280,593 1,062,374 801,021 1,350,358 total oem segment net sales 912,420 946,281 3,585,280 2,627,185 4,601,707 aftermarket segment: total aftermarket segment net sales 219,659 219,028 727,517 632,102 924,500 total net sales $ 1,132,079 $ 1,165,309 $ 4,312,797 $ 3,259,287 $ 5,526,207 operating profit: oem segment $ 65,186 $ 64,136 $ 501,137 $ 206,757 $ 599,056 aftermarket segment 22,389 24,888 74,928 77,680 90,982 total operating profit $ 87,575 $ 89,024 $ 576,065 $ 284,437 $ 690,038 depreciation and amortization: oem segment depreciation $ 14,213 $ 12,782 $ 43,090 $ 37,054 $ 56,880 aftermarket segment depreciation 3,776 3,669 10,863 9,993 14,780 total depreciation $ 17,989 $ 16,451 $ 53,953 $ 47,047 $ 71,660 oem segment amortization $ 10,472 $ 8,632 $ 30,668 $ 22,877 $ 40,672 aftermarket segment amortization 3,786 3,858 11,345 10,287 15,743 total amortization $ 14,258 $ 12,490 $ 42,013 $ 33,164 $ 56,415 lci industries balance sheet information (unaudited) september 30, december 31, 2022 2021 (in thousands) assets current assets cash and cash equivalents $ 23,403 $ 62,896 accounts receivable, net 335,945 319,782 inventories, net 1,079,902 1,095,907 prepaid expenses and other current assets 66,236 88,300 total current assets 1,505,486 1,566,885 fixed assets, net 470,571 426,455 goodwill 551,615 543,180 other intangible assets, net 489,555 519,957 operating lease right-of-use assets 195,877 164,618 other long-term assets 55,867 66,999 total assets $ 3,268,971 $ 3,288,094 liabilities and stockholders' equity current liabilities current maturities of long-term indebtedness $ 22,089 $ 71,003 accounts payable, trade 201,032 282,183 current portion of operating lease obligations 33,862 30,592 accrued expenses and other current liabilities 243,138 243,438 total current liabilities 500,121 627,216 long-term indebtedness 1,039,870 1,231,959 operating lease obligations 172,643 143,436 deferred taxes 26,816 43,184 other long-term liabilities 105,964 149,424 total liabilities 1,845,414 2,195,219 total stockholders' equity 1,423,557 1,092,875 total liabilities and stockholders' equity $ 3,268,971 $ 3,288,094 lci industries summary of cash flows (unaudited) nine months ended september 30, 2022 2021 (in thousands) cash flows from operating activities: net income $ 412,103 $ 205,410 adjustments to reconcile net income to cash flows provided by operating activities: depreciation and amortization 95,966 80,211 stock-based compensation expense 20,564 20,295 deferred taxes (2,401 ) — other non-cash items 1,174 5,418 changes in assets and liabilities, net of acquisitions of businesses: accounts receivable, net (18,128 ) (140,768 ) inventories, net 26,508 (253,031 ) prepaid expenses and other assets 31,304 (28,274 ) accounts payable, trade (82,054 ) 97,071 accrued expenses and other liabilities 471 25,961 net cash flows provided by operating activities 485,507 12,293 cash flows from investing activities: capital expenditures (103,748 ) (73,872 ) acquisitions of businesses (55,709 ) (154,544 ) other investing activities 2,137 11,544 net cash flows used in investing activities (157,320 ) (216,872 ) cash flows from financing activities: vesting of stock-based awards, net of shares tendered for payment of taxes (10,805 ) (8,258 ) proceeds from revolving credit facility 844,900 832,493 repayments under revolving credit facility (1,001,040 ) (912,547 ) repayments under shelf loan, term loan, and other borrowings (65,852 ) (13,375 ) proceeds from issuance of convertible notes — 460,000 purchases of convertible note hedge contracts — (100,142 ) proceeds from issuance of warrants concurrent with note hedge contracts — 48,484 payment of debt issuance costs — (11,955 ) payment of dividends (76,273 ) (64,425 ) payment of contingent consideration and holdbacks related to acquisitions (57,328 ) (8,061 ) other financing activities 1,468 1,972 net cash flows (used in) provided by financing activities (364,930 ) 224,186 effect of exchange rate changes on cash and cash equivalents (2,750 ) 1,187 net (decrease) increase in cash and cash equivalents (39,493 ) 20,794 cash and cash equivalents at beginning of period 62,896 51,821 cash and cash equivalents cash at end of period $ 23,403 $ 72,615 lci industries supplementary information (unaudited) three months ended nine months ended september 30, september 30, last twelve 2022 2021 2022 2021 months industry data(1) (in thousands of units): industry wholesale production: travel trailer and fifth-wheel rvs 73.4 136.0 359.3 401.0 489.6 motorhome rvs 15.3 13.3 45.8 42.4 59.6 industry retail sales: travel trailer and fifth-wheel rvs 102.4 (2 ) 131.0 325.1 (2 ) 426.1 401.7 (2 ) impact on dealer inventories (29.0 ) (2 ) 5.0 34.2 (2 ) (25.1 ) 87.9 (2 ) motorhome rvs 11.5 (2 ) 14.1 38.4 (2 ) 44.4 49.4 (2 ) twelve months ended september 30, 2022 2021 lippert content per industry unit produced: travel trailer and fifth-wheel rv $ 5,853 $ 3,786 motorhome rv $ 3,806 $ 2,732 september 30, december 31, 2022 2021 2021 balance sheet data (debt availability in millions): remaining availability under the revolving credit facility (3) $ 369.2 $ 267.2 $ 168.3 days sales in accounts receivable, based on last twelve months 28.0 30.9 30.6 inventory turns, based on last twelve months 3.8 5.7 5.0 2022 estimated full year data: capital expenditures $110 - $130 million depreciation and amortization $130 - $140 million stock-based compensation expense $25 - $30 million annual tax rate 25% - 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) september 2022 retail sales data for rvs has not been published yet, therefore 2022 retail data for rvs includes an estimate for september 2022 retail units. retail sales data will likely be revised upwards in future months as various states report. (3) remaining availability under the revolving credit facility is subject to covenant restrictions. lci industries supplementary information reconciliation of non-gaap measures (unaudited) the following table reconciles net income to ebitda. three months ended september 30, nine months ended september 30, 2022 2021 2022 2021 (in thousands) net income $ 61,392 $ 63,401 $ 412,103 $ 205,410 interest expense, net 6,910 4,667 19,353 10,844 provision for income taxes 19,273 20,956 144,609 68,183 depreciation expense 17,989 16,451 53,953 47,047 amortization expense 14,258 12,490 42,013 33,164 ebitda $ 119,822 $ 117,965 $ 672,031 $ 364,648 in addition to reporting financial results in accordance with u.s. gaap, the company has provided the non-gaap performance measure of ebitda to illustrate and improve comparability of its results from period to period. ebitda is defined as net income before interest expense, net, provision for income taxes, depreciation expense, and amortization expense during the three and nine month periods ended september 30, 2022 and 2021. the company considers this non-gaap measure 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 measure is not in accordance with, nor is it a substitute for, gaap measures, and it may not be comparable to similarly titled measures used by other companies.
