Lci Industries Reports 2017 Fourth Quarter and Full Year Results
February 8, 2018
2017 Sales Grow $469 Million to a Record of $2.1 Billion
• Record net sales of $2.1 billion in 2017 driven by industry growth and growth in content per unit
• Net sales of $547 million in the fourth quarter, a 36 percent year-over-year increase
• GAAP diluted EPS of $0.68 in the fourth quarter and $5.24 in 2017, including a one-time non-cash charge related to U.S. tax reform
• Adjusted diluted EPS of $1.20 in the fourth quarter and $5.76 in 2017, excluding a $13.2 million ($0.52 per diluted share) one-time non-cash charge related to U.S. tax reform
• Content per travel trailer and fifth-wheel RV increased $241 to $3,263 in 2017
• Content per motorhome RV increased $208 to $2,219 in 2017
• The January 26th acquisition of Taylor Made Group is expected to add $154 million of net sales in 2018
**Elkhart, Indiana - February 8, 2018 -**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 fourth quarter and full-year 2017 results.
“We exceeded $2.1 billion in net sales in 2017, just four years after reaching $1 billion,” stated Jason Lippert, LCI’s Chief Executive Officer. “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 11,000 team members.”
“The RV industry growth trend in 2017 remained strong as wholesale RV shipments were up 19 percent in the fourth quarter,” continued Jason Lippert. “RV sales momentum has continued as the industry attracts a new generation of RV enthusiasts, supported by strong economic growth and the expected economic tailwind of the recent tax law changes. Orders appear to be strong going into 2018 as dealer sentiment remains bullish, as evidenced by the recent Tampa RV show, and OEMs continue to add capacity to meet demand. We also continue to see strong growth in our aftermarket and adjacent market sales. Aftermarket sales reached $171 million in 2017, up 31 percent from 2016. We remain optimistic, as January 2018 consolidated net sales are approximately $205 million, 35 percent higher than January 2017.”
“Strong industry growth and new products drove our 2017 growth,” said Scott Mereness, LCI’s President. “Our content per travel trailer and fifth-wheel increased 8 percent year-over-year, the largest annual increase since 2012, and our content per motorhome increased 10 percent year-over-year, representing our fourth straight year of double-digit content growth for motorhomes. Recent acquisitions contributed $42 million in net sales in 2017, and we anticipate the recent acquisition of Taylor Made Group will add revenue of $154 million in 2018.”
Fourth Quarter 2017 Results
Consolidated net sales for the fourth quarter of 2017 were $547 million, a 36 percent increase over 2016 fourth quarter net sales of $403 million. Net income in the fourth quarter of 2017 was $17.5 million, or $0.68 per diluted share, compared to net income of $26.3 million, or $1.05 per diluted share, in the fourth quarter of 2016. Net income in the fourth quarter of 2017 included a one-time non-cash charge of $13.2 million ($0.52 per diluted share) related to the estimated impact of the Tax Cuts and Jobs Act (the “TCJA”). Excluding the estimated impact of the TCJA, adjusted net income was $30.7 million, or $1.20 per diluted share, in the fourth quarter of 2017 compared to $26.3 million, or $1.05 per diluted share, in the fourth quarter of 2016, as referenced in the “Supplementary Information Non-GAAP Measures” section.
The increase in year-over-year net sales reflects industry-wide growth in wholesale shipments of towable and motorized RVs by OEMs, which increased 20 percent and 16 percent, respectively, in the fourth 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 December 31, 2017 contributed $20 million in the fourth quarter of 2017. The organic growth rate was 31 percent for the fourth quarter and acquisitions provided the remainder of the 36 percent increase. Through continued focus on aftermarket channels for the Company’s products, the Company increased net sales to the aftermarket in the fourth quarter of 2017 by 36 percent to $41 million.
The health of the RV industry is determined by retail demand, which is up 11 percent through November, 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 eleven 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. The RVIA’s current forecast for 2018 estimates a year-over-year increase of three percent to approximately 521,000 units.
The Company’s content per travel trailer and fifth-wheel RV for the twelve months ended December 31, 2017, increased $241 to $3,263, compared to the twelve months ended December 31, 2016, of $3,022. This is the largest increase in five years for travel trailer and fifth-wheel RV content. The Company’s content per motorhome RV for the twelve months ended December 31, 2017, increased $208 to $2,219, compared to the twelve months ended December 31, 2016, of $2,011. The content increases are a result of organic growth, including new product introductions.
2017 Full-Year Results
Consolidated net sales for the year ended December 31, 2017 increased to a record $2.1 billion, 28 percent higher than the net sales for the year ended December 31, 2016 of $1.7 billion. Acquisitions completed by the Company in 2017 added $42 million in net sales in 2017. An 18 percent increase in industry-wide wholesale shipments of travel trailers and fifth-wheel RVs, LCI’s primary OEM market, as well as increased content per RV unit, positively impacted net sales growth in 2017. Further, the Company organically increased sales to adjacent industries and the aftermarket.
Net income for the full-year 2017 increased to $132.9 million, or $5.24 per diluted share, up from net income of $129.7 million, or $5.20 per diluted share, in 2016. Net income in 2017 included a one-time non-cash charge of $13.2 million ($0.52 per diluted share) related to the estimated impact of the TCJA. Excluding the estimated impact of the TCJA, adjusted net income was $146.1 million, or $5.76 per diluted share, in 2017 compared to $129.7 million or $5.20 per diluted share in 2016, as referenced in the “Supplementary Information Non-GAAP Measures” section.
The Company’s effective tax rate was 60 percent and 38 percent for the quarter and year ended December 31, 2017, compared to 35 percent for the quarter and year ended December 31, 2016. During the quarter ended December 31, 2017, the Company recorded a one-time non-cash charge of $13.2 million ($0.52 per diluted share in the fourth quarter and $0.52 per diluted share in 2017) related to enactment of the TCJA which resulted in the re-measurement of certain deferred tax assets using the lower U.S. corporate income tax rate. Excluding the one-time charge, the Company’s effective tax rate was 30 percent and 31 percent for the quarter and year ended December 31, 2017, as referenced in the “Supplementary Information Non-GAAP Measures” section.
The one-time charge related to the TCJA is a provisional amount based on the Company’s current estimates. The final impact of the TCJA is subject to adjustment during the measurement period of up to one year following the December 2017 enactment of the TCJA, as provided by recent SEC guidance, and may differ materially due to factors such as further revisions to the Company’s calculations, changes in interpretations and assumptions that the Company has made, additional guidance that may be issued by the U.S. Government, and actions the Company may take, among other items.
Balance Sheet and Other Items
At December 31, 2017, the Company’s cash balance was $26 million, a decrease of $60 million from its cash balance of $86 million at the beginning of the year, primarily as a result of $61 million used for acquisitions, $87 million for capital expenditures and $51 million of dividend payments in 2017, offset by operating cash flows. The Company’s outstanding debt was $50 million at December 31, 2017 and December 31, 2016.
Conference Call & Webcast
LCI will provide an online, real-time webcast of its fourth quarter 2017 earnings conference call on the Company’s website, www.lci1.com/investors, on Thursday, February 8, 2018, 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 5989615. A replay of the webcast will also be available on LCI’s website until the next quarterly conference call.
From over 140 manufacturing and distribution facilities located throughout North America, Africa and Europe, Lippert™ supplies a broad array of highly engineered components for the leading manufacturers of recreational vehicles and prefab homes. It also operates in adjacent markets, including marine, bus, industrial vehicles and trains. Lippert™ also serves a wide range of aftermarket segments, providing high quality products for the caravanning, automotive and marine industries. With over 15,000 team members, and a diverse portfolio of best-in-class brands, Lippert™ adopts a team-based business philosophy and has proven that, by putting people first, the possibilities for growth and development are truly endless.
3501 County Road 6 East
Elkhart, IN 46514