LCI Industries, through its wholly-owned subsidiary Lippert Components, Inc. (“Lippert”), provides a wide range of highly engineered components for leading original equipment manufacturers (OEMs) in the recreation and transportation markets, both domestically and internationally. The company has reported its financial results for the second quarter of 2024.
Jason Lippert, President and CEO of LCI Industries, remarked, “We achieved strong results this quarter, with revenue growth in our towable RV OEM, Aftermarket, and certain Adjacent OEM segments, while expanding our operating profit margin by over 300 basis points compared to the same period last year. Our strategy of diversification continues to buffer against market fluctuations and support our margins, with innovation driving content growth. Expanding into new product markets has also broadened our reach, opening up over $12 billion in addressable opportunities. We remain well-positioned to benefit when the RV market rebounds and retail demand improves.”
Lippert continued, “We are generating substantial cash flow through disciplined working capital management, having reduced inventories by $142 million over the past year, and optimizing our manufacturing footprint. Our efforts to enhance operational efficiency and drive profitability are paying off. We plan to use these results to continue reducing debt and investing in growth opportunities.”
Ryan Smith, Group President – North America, added, “Our team’s hard work has led to solid performance amid a challenging environment. By focusing on our core strategic pillars—customer service, safety, quality, culture, leadership, and innovation—we are achieving profitable growth and reinforcing our leading position in the recreation industry.”
For the second quarter of 2024, consolidated net sales were $1.1 billion, a 4% increase from $1.0 billion in the same period of 2023. Net income was $61.2 million, or $2.40 per diluted share, compared to $33.4 million, or $1.31 per diluted share, in the second quarter of 2023. EBITDA was $122.6 million, up from $88.2 million in the previous year. Further details on EBITDA and its reconciliation to net income are provided in the “Supplementary Information – Reconciliation of Non-GAAP Measures” section below.
The year-over-year increase in net sales for Q2 2024 was primarily driven by higher North American RV wholesale shipments of travel trailers and fifth-wheels, and market share gains in the automotive aftermarket. This was partially offset by a decrease in North American marine sales volume.
In July 2024, consolidated net sales reached approximately $311 million, a 6% increase from July 2023. This was largely due to a 15% rise in North American RV production, partially countered by a 16% decline in marine sales compared to the previous year.
OEM net sales for Q2 2024 were $796.1 million, up $37.1 million from the same period in 2023. RV OEM net sales reached $490.0 million, a 20% increase, driven by a 15% rise in North American travel trailer and fifth-wheel wholesale shipments, higher selling prices indexed to select commodities, and market share gains. Adjacent Industries OEM net sales were $306.2 million, down 12% year-over-year, due to reduced sales to North American marine and utility trailers OEMs, influenced by dealer inventory levels, inflation, and rising interest rates. North American marine OEM net sales were $64.2 million, down 33% year-over-year.
Operating profit for the OEM Segment was $50.6 million in Q2 2024, or 6.4% of net sales, compared to $18.6 million, or 2.5% of net sales, in the same period of 2023. This increase was primarily due to lower material and freight costs.
Aftermarket net sales were $258.4 million, up 1% year-over-year, driven by market share gains in the automotive aftermarket, despite lower volumes in marine and RV aftermarkets due to reduced consumer discretionary spending. Operating profit for the Aftermarket Segment was $40.0 million, or 15.5% of net sales, compared to $36.5 million, or 14.3% of net sales, in the same period of 2023. The increase in operating profit was driven by reduced material and freight costs, partly offset by higher labor costs and investments to expand capacity in the automotive aftermarket.
Jamie Schnur, Group President – Aftermarket, commented, “Our Aftermarket business remains strong, delivering solid margin expansion. The strength in the automotive aftermarket and the record number of RVs entering the repair and upgrade cycle have been key drivers. We aim to continue delivering profitable growth and expanding our presence in premium markets.”
The effective tax rate for the quarter ended June 30, 2024, was 26.0%, up from 25.6% for the same period in 2023, primarily due to a discrete tax expense related to the surrender of certain company-owned life insurance policies.
As of June 30, 2024, the Company’s cash and cash equivalents were $130.4 million, up from $66.2 million at December 31, 2023. The Company allocated $53.5 million for dividend payments, $21.3 million for capital expenditures, and $20.0 million for an acquisition in the first half of 2024.
Inventory reduction efforts continued, improving cash generation and working capital. The net inventory balance was $687.9 million, down from $768.4 million at December 31, 2023, and $830.0 million at June 30, 2023.
Long-term indebtedness, including current maturities, was $829.7 million at June 30, 2024, with the Company in compliance with its debt covenants. The Company had $130.4 million in cash and cash equivalents and $373.1 million in borrowing availability under its revolving credit facility.
LCI Industries will host a conference call to discuss its second quarter results on Tuesday, August 6, 2024, at 8:30 a.m. Eastern Time. Participants can access the call by dialing (833) 470-1428 in the U.S. or (929) 526-1599 internationally, using conference ID 439054. Due to high call volumes, hold times may be up to 15 minutes. A real-time webcast and supplemental earnings presentation will be available on the Company’s website at www.investors.lci1.com.
A replay of the conference call will be available for two weeks by dialing (866) 813-9403 in the U.S. or (44) 204-525-0658 internationally, with access code 716397. The webcast replay will be available on the Company’s website following the call.
