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Share Name | Share Symbol | Market | Type |
---|---|---|---|
LCI Industries | NYSE:LCII | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
1.70 | 1.62% | 106.84 | 108.285 | 106.29 | 107.28 | 138,050 | 01:00:00 |
☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
13-3250533
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
incorporation or organization)
|
Identification Number)
|
|
|
3501 County Road 6 East
|
46514
|
Elkhart, Indiana
|
(Zip Code)
|
(Address of principal executive offices)
|
|
|
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Page
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PART I
–
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PART II
–
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EXHIBIT 31.1 - SECTION 302 CEO CERTIFICATION
|
|
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EXHIBIT 31.2 - SECTION 302 CFO CERTIFICATION
|
|
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|
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EXHIBIT 32.1 - SECTION 906 CEO CERTIFICATION
|
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EXHIBIT 32.2 - SECTION 906 CFO CERTIFICATION
|
|
|
Three Months Ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
(In thousands, except per share amounts)
|
|
|
|
||||
|
|
|
|
||||
Net sales
|
$
|
498,336
|
|
|
$
|
422,798
|
|
Cost of sales
|
374,322
|
|
|
314,357
|
|
||
Gross profit
|
124,014
|
|
|
108,441
|
|
||
Selling, general and administrative expenses
|
64,885
|
|
|
52,713
|
|
||
Operating profit
|
59,129
|
|
|
55,728
|
|
||
Interest expense, net
|
437
|
|
|
476
|
|
||
Income before income taxes
|
58,692
|
|
|
55,252
|
|
||
Provision for income taxes
|
15,547
|
|
|
19,293
|
|
||
Net income
|
$
|
43,145
|
|
|
$
|
35,959
|
|
|
|
|
|
||||
Net income per common share:
|
|
|
|
||||
Basic
|
$
|
1.73
|
|
|
$
|
1.46
|
|
Diluted
|
$
|
1.71
|
|
|
$
|
1.45
|
|
|
|
|
|
||||
Weighted average common shares outstanding:
|
|
|
|
||||
Basic
|
24,906
|
|
|
24,567
|
|
||
Diluted
|
25,255
|
|
|
24,794
|
|
|
Three Months Ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
(In thousands)
|
|
|
|
||||
|
|
|
|
||||
Consolidated net income
|
$
|
43,145
|
|
|
$
|
35,959
|
|
Other comprehensive income:
|
|
|
|
||||
Net foreign currency translation adjustment
|
349
|
|
|
—
|
|
||
Total comprehensive income
|
$
|
43,494
|
|
|
$
|
35,959
|
|
|
March 31,
|
|
December 31,
|
||||||||
|
2017
|
|
2016
|
|
2016
|
||||||
(In thousands, except per share amount)
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
ASSETS
|
|
|
|
|
|
||||||
Current assets
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
64,381
|
|
|
$
|
27,917
|
|
|
$
|
86,170
|
|
Accounts receivable, net
|
131,108
|
|
|
104,695
|
|
|
57,374
|
|
|||
Inventories, net
|
189,020
|
|
|
165,184
|
|
|
188,743
|
|
|||
Prepaid expenses and other current assets
|
37,456
|
|
|
23,408
|
|
|
35,107
|
|
|||
Total current assets
|
421,965
|
|
|
321,204
|
|
|
367,394
|
|
|||
Fixed assets, net
|
178,922
|
|
|
150,378
|
|
|
172,748
|
|
|||
Goodwill
|
98,105
|
|
|
86,112
|
|
|
89,198
|
|
|||
Other intangible assets, net
|
114,311
|
|
|
109,347
|
|
|
112,943
|
|
|||
Deferred taxes
|
26,882
|
|
|
29,391
|
|
|
31,989
|
|
|||
Other assets
|
12,616
|
|
|
12,610
|
|
|
12,632
|
|
|||
Total assets
|
$
|
852,801
|
|
|
$
|
709,042
|
|
|
$
|
786,904
|
|
|
|
|
|
|
|
||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||||||
Current liabilities
|
|
|
|
|
|
||||||
Accounts payable, trade
|
$
|
70,225
|
|
|
$
|
48,392
|
|
|
$
|
50,616
|
|
Dividend payable
|
—
|
|
|
7,344
|
|
|
—
|
|
|||
Accrued expenses and other current liabilities
|
101,020
|
|
|
99,654
|
|
|
98,735
|
|
|||
Total current liabilities
|
171,245
|
|
|
155,390
|
|
|
149,351
|
|
|||
Long-term indebtedness
|
49,905
|
|
|
49,920
|
|
|
49,949
|
|
|||
Other long-term liabilities
|
47,171
|
|
|
36,334
|
|
|
37,335
|
|
|||
Total liabilities
|
268,321
|
|
|
241,644
|
|
|
236,635
|
|
|||
|
|
|
|
|
|
||||||
Stockholders’ equity
|
|
|
|
|
|
||||||
Common stock, par value $.01 per share
|
276
|
|
|
272
|
|
|
274
|
|
|||
Paid-in capital
|
189,536
|
|
|
166,772
|
|
|
185,981
|
|
|||
Retained earnings
|
425,584
|
|
|
329,821
|
|
|
395,279
|
|
|||
Accumulated other comprehensive loss
|
(1,449
|
)
|
|
—
|
|
|
(1,798
|
)
|
|||
Stockholders’ equity before treasury stock
|
613,947
|
|
|
496,865
|
|
|
579,736
|
|
|||
Treasury stock, at cost
|
(29,467
|
)
|
|
(29,467
|
)
|
|
(29,467
|
)
|
|||
Total stockholders’ equity
|
584,480
|
|
|
467,398
|
|
|
550,269
|
|
|||
Total liabilities and stockholders’ equity
|
$
|
852,801
|
|
|
$
|
709,042
|
|
|
$
|
786,904
|
|
|
Three Months Ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
(In thousands)
|
|
|
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
43,145
|
|
|
$
|
35,959
|
|
Adjustments to reconcile net income to cash flows provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
12,241
|
|
|
10,943
|
|
||
Stock-based compensation expense
|
3,902
|
|
|
3,140
|
|
||
Excess tax benefits from stock-based compensation
|
5,239
|
|
|
—
|
|
||
Other non-cash items
|
1,139
|
|
|
(166
|
)
|
||
Changes in assets and liabilities, net of acquisitions of businesses:
|
|
|
|
||||
Accounts receivable, net
|
(71,155
|
)
|
|
(63,286
|
)
|
||
Inventories, net
|
1,847
|
|
|
8,497
|
|
||
Prepaid expenses and other assets
|
(2,181
|
)
|
|
(2,197
|
)
|
||
Accounts payable, trade
|
18,146
|
|
|
18,692
|
|
||
Accrued expenses and other liabilities
|
10,433
|
|
|
32,116
|
|
||
Net cash flows provided by operating activities
|
22,756
|
|
|
43,698
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(12,020
|
)
|
|
(6,458
|
)
|
||
Acquisitions of businesses, net of cash acquired
|
(10,689
|
)
|
|
(18,100
|
)
|
||
Proceeds from sales of fixed assets
|
119
|
|
|
234
|
|
||
Other investing activities
|
80
|
|
|
(151
|
)
|
||
Net cash flows used for investing activities
|
(22,510
|
)
|
|
(24,475
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Exercise of stock-based awards, net of shares tendered for payment of taxes
|
(7,650
|
)
|
|
(3,196
|
)
|
||
Proceeds from line of credit borrowings
|
—
|
|
|
81,458
|
|
||
Repayments under line of credit borrowings
|
—
|
|
|
(81,458
|
)
|
||
Payment of dividends
|
(12,442
|
)
|
|
—
|
|
||
Payment of contingent consideration related to acquisitions
|
(1,884
|
)
|
|
(415
|
)
|
||
Other financing activities
|
(59
|
)
|
|
—
|
|
||
Net cash flows used for financing activities
|
(22,035
|
)
|
|
(3,611
|
)
|
||
|
|
|
|
||||
Net (decrease) increase in cash and cash equivalents
|
(21,789
|
)
|
|
15,612
|
|
||
|
|
|
|
||||
Cash and cash equivalents at beginning of period
|
86,170
|
|
|
12,305
|
|
||
Cash and cash equivalents at end of period
|
$
|
64,381
|
|
|
$
|
27,917
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid during the period for interest
|
$
|
483
|
|
|
$
|
521
|
|
Cash paid during the period for income taxes, net of refunds
|
$
|
2,072
|
|
|
$
|
122
|
|
Purchase of property and equipment in accrued expenses
|
$
|
2,212
|
|
|
$
|
459
|
|
|
Common
Stock
|
Paid-in
Capital
|
Retained
Earnings
|
Accumulated Other Comprehensive Loss
|
Treasury
Stock
|
Total
Stockholders’
Equity
|
||||||||||||
(In thousands, except shares and per share amounts)
|
|
|
|
|
|
|
||||||||||||
Balance - December 31, 2016
|
$
|
274
|
|
$
|
185,981
|
|
$
|
395,279
|
|
$
|
(1,798
|
)
|
$
|
(29,467
|
)
|
$
|
550,269
|
|
Net income
|
—
|
|
—
|
|
43,145
|
|
—
|
|
—
|
|
43,145
|
|
||||||
Issuance of 155,641 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes
|
2
|
|
(7,652
|
)
|
—
|
|
—
|
|
—
|
|
(7,650
|
)
|
||||||
Stock-based compensation expense
|
—
|
|
3,902
|
|
—
|
|
—
|
|
—
|
|
3,902
|
|
||||||
Issuance of 63,677 deferred stock units relating to prior year compensation
|
—
|
|
6,907
|
|
—
|
|
—
|
|
—
|
|
6,907
|
|
||||||
Other comprehensive loss
|
—
|
|
—
|
|
—
|
|
349
|
|
—
|
|
349
|
|
||||||
Cash dividend ($0.50 per share)
|
—
|
|
—
|
|
(12,442
|
)
|
—
|
|
—
|
|
(12,442
|
)
|
||||||
Dividend equivalents on stock-based awards
|
—
|
|
398
|
|
(398
|
)
|
—
|
|
—
|
|
—
|
|
||||||
Balance - March 31, 2017
|
$
|
276
|
|
$
|
189,536
|
|
$
|
425,584
|
|
$
|
(1,449
|
)
|
$
|
(29,467
|
)
|
$
|
584,480
|
|
Cash consideration net of cash acquired
|
$
|
5,767
|
|
Contingent consideration
|
4,922
|
|
|
Total fair value of consideration given
|
$
|
10,689
|
|
|
|
||
Customer relationships
|
$
|
3,189
|
|
Other identifiable intangible assets
|
1,329
|
|
|
Net tangible assets
|
557
|
|
|
Total fair value of net assets acquired
|
$
|
5,075
|
|
|
|
||
Goodwill (not tax deductible)
|
$
|
5,614
|
|
Cash consideration
|
$
|
8,100
|
|
|
|
||
Customer relationships
|
$
|
3,700
|
|
Net other assets
|
2,378
|
|
|
Total fair value of net assets acquired
|
$
|
6,078
|
|
|
|
||
Goodwill (tax deductible)
|
$
|
2,022
|
|
Cash consideration
|
$
|
10,000
|
|
|
|
||
Customer relationships
|
$
|
8,100
|
|
Net tangible assets
|
1,307
|
|
|
Total fair value of net assets acquired
|
$
|
9,407
|
|
|
|
||
Goodwill (tax deductible)
|
$
|
593
|
|
(In thousands)
|
OEM Segment
|
|
Aftermarket Segment
|
|
Total
|
||||||
Net balance – December 31, 2016
|
$
|
74,663
|
|
|
$
|
14,535
|
|
|
$
|
89,198
|
|
Acquisitions – 2017
|
5,614
|
|
|
—
|
|
|
5,614
|
|
|||
Other
|
3,286
|
|
|
7
|
|
|
3,293
|
|
|||
Net balance – March 31, 2017
|
$
|
83,563
|
|
|
$
|
14,542
|
|
|
$
|
98,105
|
|
(In thousands)
|
Gross
Cost |
|
Accumulated
Amortization |
|
Net
Balance |
|
Estimated Useful
Life in Years |
||||||||
Customer relationships
|
$
|
113,513
|
|
|
$
|
34,704
|
|
|
$
|
78,809
|
|
|
6
|
to
|
16
|
Patents
|
57,347
|
|
|
34,850
|
|
|
22,497
|
|
|
3
|
to
|
19
|
|||
Tradenames
|
9,741
|
|
|
4,494
|
|
|
5,247
|
|
|
3
|
to
|
15
|
|||
Non-compete agreements
|
6,076
|
|
|
3,230
|
|
|
2,846
|
|
|
3
|
to
|
6
|
|||
Other
|
309
|
|
|
84
|
|
|
225
|
|
|
2
|
to
|
12
|
|||
Purchased research and development
|
4,687
|
|
|
—
|
|
|
4,687
|
|
|
Indefinite
|
|||||
Other intangible assets
|
$
|
191,673
|
|
|
$
|
77,362
|
|
|
$
|
114,311
|
|
|
|
|
|
(In thousands)
|
Gross
Cost |
|
Accumulated
Amortization |
|
Net
Balance |
|
Estimated Useful
Life in Years |
||||||||
Customer relationships
|
$
|
110,784
|
|
|
$
|
32,414
|
|
|
$
|
78,370
|
|
|
6
|
to
|
16
|
Patents
|
56,468
|
|
|
34,066
|
|
|
22,402
|
|
|
3
|
to
|
19
|
|||
Tradenames
|
10,041
|
|
|
5,667
|
|
|
4,374
|
|
|
3
|
to
|
15
|
|||
Non-compete agreements
|
5,852
|
|
|
2,975
|
|
|
2,877
|
|
|
3
|
to
|
6
|
|||
Other
|
309
|
|
|
76
|
|
|
233
|
|
|
2
|
to
|
12
|
|||
Purchased research and development
|
4,687
|
|
|
—
|
|
|
4,687
|
|
|
Indefinite
|
|||||
Other intangible assets
|
$
|
188,141
|
|
|
$
|
75,198
|
|
|
$
|
112,943
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
||||||||
(In thousands)
|
2017
|
|
2016
|
|
2016
|
||||||
Raw materials
|
$
|
156,363
|
|
|
$
|
136,310
|
|
|
$
|
155,044
|
|
Work in process
|
9,004
|
|
|
7,859
|
|
|
7,509
|
|
|||
Finished goods
|
23,653
|
|
|
21,015
|
|
|
26,190
|
|
|||
Inventories, net
|
$
|
189,020
|
|
|
$
|
165,184
|
|
|
$
|
188,743
|
|
|
March 31,
|
|
December 31,
|
||||||||
(In thousands)
|
2017
|
|
2016
|
|
2016
|
||||||
Fixed assets, at cost
|
$
|
350,081
|
|
|
$
|
298,355
|
|
|
$
|
337,362
|
|
Less accumulated depreciation and amortization
|
171,159
|
|
|
147,977
|
|
|
164,614
|
|
|||
Fixed assets, net
|
$
|
178,922
|
|
|
$
|
150,378
|
|
|
$
|
172,748
|
|
|
March 31,
|
|
December 31,
|
||||||||
(In thousands)
|
2017
|
|
2016
|
|
2016
|
||||||
Employee compensation and benefits
|
$
|
31,202
|
|
|
$
|
30,900
|
|
|
$
|
47,459
|
|
Current portion of accrued warranty
|
20,397
|
|
|
18,185
|
|
|
20,393
|
|
|||
Taxes payable
|
14,624
|
|
|
17,508
|
|
|
41
|
|
|||
Customer rebates
|
10,440
|
|
|
9,735
|
|
|
9,329
|
|
|||
Other
|
24,357
|
|
|
23,326
|
|
|
21,513
|
|
|||
Accrued expenses and other current liabilities
|
$
|
101,020
|
|
|
$
|
99,654
|
|
|
$
|
98,735
|
|
(In thousands)
|
2017
|
|
2016
|
|
|
||||
Balance at beginning of period
|
$
|
32,393
|
|
|
$
|
26,204
|
|
|
|
Provision for warranty expense
|
5,306
|
|
|
5,477
|
|
|
|
||
Warranty liability from acquired businesses
|
—
|
|
|
125
|
|
|
|
||
Warranty costs paid
|
(4,590
|
)
|
|
(3,692
|
)
|
|
|
||
Balance at end of period
|
33,109
|
|
|
28,114
|
|
|
|
||
Less long-term portion
|
12,712
|
|
|
9,929
|
|
|
|
||
Current portion of accrued warranty
|
$
|
20,397
|
|
|
$
|
18,185
|
|
|
|
(In thousands)
|
2017
|
|
2016
|
||||
Balance at beginning of period
|
$
|
9,241
|
|
|
$
|
10,840
|
|
Acquisitions
|
4,922
|
|
|
—
|
|
||
Payments
|
(1,884
|
)
|
|
(415
|
)
|
||
Accretion
(a)
|
292
|
|
|
239
|
|
||
Fair value adjustments
(a)
|
815
|
|
|
(366
|
)
|
||
Balance at end of the period
(b)
|
13,386
|
|
|
10,298
|
|
||
Less current portion in accrued expenses and other current liabilities
|
(5,797
|
)
|
|
(5,073
|
)
|
||
Total long-term portion in other long-term liabilities
|
$
|
7,589
|
|
|
$
|
5,225
|
|
(a)
|
Recorded in selling, general and administrative expense in the Condensed Consolidated Statements of Income.
|
(b)
|
Amounts represent the fair value of estimated remaining payments. The total estimated remaining payments as of
March 31, 2017
are
$17.8 million
undiscounted. The liability for contingent consideration expires at various dates through September 2029. Certain of the contingent consideration arrangements are subject to a maximum payment amount, while the remaining arrangements have no maximum contingent consideration.
|
|
July 2016 - June 2017
|
$ 90 million
|
|
|
|
July 2017 - June 2018
|
$127 million
|
|
|
|
July 2018 - June 2019
|
$172 million
|
|
|
|
March 31,
|
|
December 31,
|
|||||
(In thousands)
|
2017
|
|
2016
|
|
2016
|
|||
Common stock authorized
|
75,000
|
|
|
75,000
|
|
|
75,000
|
|
Common stock issued
|
27,590
|
|
|
27,189
|
|
|
27,434
|
|
Treasury stock
|
2,684
|
|
|
2,684
|
|
|
2,684
|
|
|
Three Months Ended
March 31, |
||||
(In thousands)
|
2017
|
|
2016
|
||
Weighted average shares outstanding for basic earnings per share
|
24,906
|
|
|
24,567
|
|
Common stock equivalents pertaining to stock-based awards
|
349
|
|
|
227
|
|
Weighted average shares outstanding for diluted earnings per share
|
25,255
|
|
|
24,794
|
|
(In thousands, except per share data)
|
Per Share
|
|
Record Date
|
|
Payment Date
|
|
Total Paid
|
||||
First Quarter 2016
|
$
|
0.30
|
|
|
04/01/16
|
|
04/15/16
|
|
$
|
7,344
|
|
Second Quarter 2016
|
0.30
|
|
|
06/06/16
|
|
06/17/16
|
|
7,363
|
|
||
Third Quarter 2016
|
0.30
|
|
|
08/19/16
|
|
09/02/16
|
|
7,371
|
|
||
Fourth Quarter 2016
|
0.50
|
|
|
11/28/16
|
|
12/09/16
|
|
12,359
|
|
||
Total 2016
|
$
|
1.40
|
|
|
|
|
|
|
$
|
34,437
|
|
|
|
|
|
|
|
|
|
||||
First Quarter 2017
|
$
|
0.50
|
|
|
03/06/17
|
|
03/17/17
|
|
$
|
12,442
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||||
(In thousands)
|
Total
|
Level 1
|
Level 2
|
Level 3
|
|
Total
|
Level 1
|
Level 2
|
Level 3
|
||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Unrealized gain on derivative
instruments |
$
|
1,728
|
|
$
|
—
|
|
$
|
1,728
|
|
$
|
—
|
|
|
$
|
2,296
|
|
$
|
—
|
|
$
|
2,296
|
|
$
|
—
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Contingent consideration
|
$
|
13,386
|
|
$
|
—
|
|
$
|
—
|
|
$
|
13,386
|
|
|
$
|
9,241
|
|
$
|
—
|
|
$
|
—
|
|
$
|
9,241
|
|
|
2017
|
|
2016
|
||||||||||||
(In thousands)
|
Carrying
Value |
|
Non-Recurring
Losses/(Gains) |
|
Carrying
Value |
|
Non-Recurring
Losses/(Gains) |
||||||||
Vacant owned facilities
|
$
|
2,485
|
|
|
$
|
—
|
|
|
$
|
2,527
|
|
|
$
|
—
|
|
Net assets of acquired businesses
|
5,075
|
|
|
—
|
|
|
15,485
|
|
|
—
|
|
||||
Total assets
|
$
|
7,560
|
|
|
$
|
—
|
|
|
$
|
18,012
|
|
|
$
|
—
|
|
Information relating to segments follows for the:
|
|
|
|
||||
|
Three Months Ended
March 31, |
||||||
(In thousands)
|
2017
|
|
2016
|
||||
Net sales:
|
|
|
|
||||
OEM Segment:
|
|
|
|
||||
RV OEMs:
|
|
|
|
||||
Travel trailers and fifth-wheels
|
$
|
330,274
|
|
|
$
|
283,369
|
|
Motorhomes
|
37,044
|
|
|
28,523
|
|
||
Adjacent industries OEMs
|
94,711
|
|
|
80,761
|
|
||
Total OEM Segment net sales
|
462,029
|
|
|
392,653
|
|
||
Aftermarket Segment:
|
|
|
|
||||
Total Aftermarket Segment net sales
|
36,307
|
|
|
30,145
|
|
||
Total net sales
|
$
|
498,336
|
|
|
$
|
422,798
|
|
Operating profit:
|
|
|
|
||||
OEM Segment
|
$
|
54,397
|
|
|
$
|
50,651
|
|
Aftermarket Segment
|
4,732
|
|
|
5,077
|
|
||
Total operating profit
|
$
|
59,129
|
|
|
$
|
55,728
|
|
● Steel chassis and related components
|
● Furniture and mattresses
|
● Axles and suspension solutions
|
● Electric and manual entry steps
|
● Slide-out mechanisms and solutions
|
● Awnings and awning accessories
|
● Thermoformed bath, kitchen and other products
|
● Electronic components
|
● Vinyl, aluminum and frameless windows
|
● Appliances
|
● Manual, electric and hydraulic stabilizer and
leveling systems |
● Televisions, sound systems, navigation
systems and backup cameras |
● Entry, luggage, patio and ramp doors
|
● Other accessories
|
•
|
An estimated
5,300
unit
increase
in retail demand in the first
three
months of
2017
, or
eight percent
, as compared to the same period of
2016
. In addition, retail demand is typically revised upward over the subsequent quarter by approximately five to ten percent, primarily due to delayed RV registrations.
|
•
|
RV dealers seasonally increasing inventory levels by an estimated
33,300
units in the first
three
months of
2017
, higher
than the increase in inventory levels of
27,900
units in the same period of
2016
.
|
|
|
|
|
|
|
|
|
|
Estimated
|
||
|
Wholesale
|
|
Retail
|
|
Unit Impact on
|
||||||
|
Units
|
|
Change
|
|
Units
|
|
Change
|
|
Dealer Inventories
|
||
Quarter ended March 31, 2017
(1)
|
101,500
|
|
|
12%
|
|
68,200
|
|
|
8%
|
|
33,300
|
Quarter ended December 31, 2016
|
90,300
|
|
|
20%
|
|
58,200
|
|
|
17%
|
|
32,100
|
Quarter ended September 30, 2016
|
82,400
|
|
|
20%
|
|
108,600
|
|
|
9%
|
|
(26,200)
|
Quarter ended June 30, 2016
|
99,200
|
|
|
12%
|
|
122,600
|
|
|
9%
|
|
(23,400)
|
Twelve months ended March 31, 2017
(1)
|
373,400
|
|
|
15%
|
|
357,600
|
|
|
10%
|
|
15,800
|
|
|
|
|
|
|
|
|
|
|
||
Quarter ended March 31, 2016
|
90,800
|
|
|
11%
|
|
62,900
|
|
|
15%
|
|
27,900
|
Quarter ended December 31, 2015
|
75,000
|
|
|
4%
|
|
49,900
|
|
|
16%
|
|
25,100
|
Quarter ended September 30, 2015
|
68,700
|
|
|
5%
|
|
99,500
|
|
|
13%
|
|
(30,800)
|
Quarter ended June 30, 2015
|
88,900
|
|
|
4%
|
|
112,800
|
|
|
13%
|
|
(23,900)
|
Twelve months ended March 31, 2016
|
323,400
|
|
|
6%
|
|
325,100
|
|
|
14%
|
|
(1,700)
|
(1)
|
Retail sales data for
March
2017
has not been published; therefore retail and dealer inventory data includes a Company estimate for retail units sold in
March
.
|
•
|
Enclosed trailers. According to Statistical Surveys, approximately 189,000 and 183,000 enclosed trailers were sold in
2016
and
2015
, respectively.
|
•
|
Pontoon boats. Statistical Surveys also reported approximately 49,600 and 45,400 pontoon boats were sold in
2016
and
2015
, respectively.
|
•
|
School buses. According to Wards Communications and R.L. Polk & Co., there were approximately 32,800 and 29,600 school buses sold in
2016
and
2015
, respectively.
|
•
|
Manufactured housing. According to the Institute for Building Technology and Safety, there were approximately 81,100 and 70,500 manufactured home wholesale shipments in
2016
and
2015
, respectively.
|
•
|
Consolidated net sales in the
first
quarter of
2017
increased to
$498 million
,
18 percent
higher than consolidated net sales for the
first
quarter of
2016
of
$423 million
. Acquisitions completed by the Company over the twelve months ended
March 31, 2017
, added
$17 million
in net sales in the
first
quarter of
2017
. The
twelve percent
increase in industry-wide wholesale shipments of travel trailer and fifth-wheel RVs, LCI’s primary OEM market, as well as increased content per RV unit, positively impacted net sales growth in the
first
quarter of
2017
. Further, the Company organically increased sales to adjacent industries and the aftermarket.
|
•
|
Net income for the
first
quarter of
2017
increased to
$43.1 million
, or
$1.71
per diluted share, up from net income of
$36.0 million
, or
$1.45
per diluted share, compared to the
first
quarter of
2016
.
|
•
|
Consolidated operating profits during the
first
quarter of
2017
increased
six percent
, to
$59.1 million
from
$55.7 million
in the
first
quarter of
2016
. Operating profit margin decreased to
12 percent
in the
first
quarter of
2017
from
13 percent
compared to the
first
quarter of
2016
.
|
•
|
Labor and material costs increased during the
first
quarter of
2017
, however the Company continues to take actions to improve its cost structure. The Company seeks to continuously manage its labor cost, particularly indirect labor, while supporting the growth of the business. Lean manufacturing teams continue working to reduce cost and
|
•
|
The cost of aluminum and steel used in certain of the Company’s manufactured components declined during the first half of 2016; however, certain commodities experienced cost increases in the second half of 2016 and the first quarter of 2017 from market low points. Raw material costs continue to fluctuate and are expected to remain volatile.
|
•
|
In February 2017, the Company acquired
100 percent
of the outstanding shares of Sessa Klein S.p.A. (“Sessa Klein”), a manufacturer of highly engineered side window systems for both high speed and commuter trains, located near Varese, Italy.
The purchase price was
$8.5 million
paid at closing, plus contingent consideration based on future sales by this operation.
|
•
|
The effective tax rate for the three months ended March 31, 2017, was substantially lower than the comparable prior year period, primarily due to the recognition of excess tax benefits attributable to the adoption by the Company of Accounting Standards Update 2016-09, which simplified several aspects of the accounting for share-based payment transactions, including income tax consequences. The excess tax benefit equated to $5.2 million recognized in the first quarter of 2017.
|
•
|
Return on equity for the twelve months ended
March 31, 2017
, which is calculated by taking net income over equity, improved to 26.0 percent, from the 21.6 percent return on equity in
March 31, 2016
.
|
•
|
In March 2017, the Company paid a quarterly dividend of $0.50 per share, aggregating to
$12.4 million
.
|
(In thousands)
|
2017
|
|
2016
|
|
Change
|
|||||
RV OEMs:
|
|
|
|
|
|
|||||
Travel trailers and fifth-wheels
|
$
|
330,274
|
|
|
$
|
283,369
|
|
|
17
|
%
|
Motorhomes
|
37,044
|
|
|
28,523
|
|
|
30
|
%
|
||
Adjacent industries OEMs
|
94,711
|
|
|
80,761
|
|
|
17
|
%
|
||
Total OEM Segment net sales
|
$
|
462,029
|
|
|
$
|
392,653
|
|
|
18
|
%
|
|
2017
|
|
2016
|
|
Change
|
|||
Travel trailer and fifth-wheel RVs
|
101,500
|
|
|
90,800
|
|
|
12
|
%
|
Motorhomes
|
16,300
|
|
|
14,000
|
|
|
16
|
%
|
Content per:
|
2017
|
|
2016
|
|
Change
|
|||||
Travel trailer and fifth-wheel RV
|
$
|
3,058
|
|
|
$
|
2,978
|
|
|
3
|
%
|
Motorhome
|
$
|
2,022
|
|
|
$
|
1,858
|
|
|
9
|
%
|
•
|
Better fixed cost absorption by spreading fixed costs over a
$69 million
larger sales base.
|
•
|
Increased sales to Adjacent Industries OEMs.
|
•
|
Sales mix changes and pricing changes of products, including increased sales of fifth-wheel products which have a higher margin.
|
•
|
Investments over the past several years to increase capacity and improve operating efficiencies. Further, the Company has implemented efficiency improvements, including lean manufacturing initiatives, increased use of automation and employee retention initiatives.
The Company has also reduced direct labor attrition which improves efficiency and reduces other costs associated with workforce turnover.
|
•
|
Lower group health claims. The Company actively works to manage and reduce these costs, however, these costs remain subject to fluctuation.
|
•
|
Higher material costs for certain raw materials. Steel and aluminum costs increased in the first quarter of 2017. Material costs are subject to global supply and demand forces and are expected to remain volatile.
|
•
|
Higher labor costs. While the Company seeks to continuously manage its labor cost, it has added staff to support the growth of the business. The results also reflect variable compensation increases based on achieving profitability targets.
|
•
|
Fixed costs which were approximately $2 million to $3 million higher than in the
first
quarter of
2016
.
Over the past couple of years, the Company made significant investments in manufacturing capacity, both facilities and personnel, to prepare for the expected increase in net sales in
2017
and beyond. In addition to investments in fixed costs to expand manufacturing capacity, the Company has made improvements in marketing, human resources, engineering, customer service and other critical departments. The Company also added the teams from acquired businesses, as well as amortization costs of intangible assets related to those businesses.
|
(In thousands)
|
2017
|
|
2016
|
|
Change
|
|||||
Total Aftermarket Segment net sales
|
$
|
36,307
|
|
|
$
|
30,145
|
|
|
20
|
%
|
(In thousands)
|
2017
|
|
2016
|
||||
Net cash flows provided by operating activities
|
$
|
22,756
|
|
|
$
|
43,698
|
|
Net cash flows used for investing activities
|
(22,510
|
)
|
|
(24,475
|
)
|
||
Net cash flows used for financing activities
|
(22,035
|
)
|
|
(3,611
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
$
|
(21,789
|
)
|
|
$
|
15,612
|
|
•
|
A $28.6 million increase in accounts payable and accrued expenses and other liabilities in the first
three
months of
2017
compared to a $50.8 million increase in the same period of
2016
, primarily due to timing of these payments.
|
•
|
A
$71.2 million
seasonal increase in accounts receivable in the first
three
months of
2017
compared to a
$63.3 million
increase in the same period of
2016
, primarily due to increased net sales partially offset by the timing
|
•
|
A smaller decrease in the change for inventories of $6.7 million in first
three
months of
2017
compared to the same period of
2016
. Inventory turnover for the twelve months ended
March 31, 2017
increased to 7.7 turns compared to 6.8 turns for the same period of
2016
. The Company is working to improve inventory turnover, however, inventory turns may trend lower due to growth in product categories such as imported furniture and Furrion electronics.
|
•
|
A
$7.2 million
increase
in net income in first
three
months of
2017
compared to the same period of
2016
.
|
a)
|
Evaluation of Disclosure Controls and Procedures
|
b)
|
Changes in Internal Control over Financial Reporting
|
1)
|
31.1 Certification of Chief Executive Officer required by Rule 13a-14(a). Exhibit 31.1 is filed herewith.
|
2)
|
31.2 Certification of Chief Financial Officer required by Rule 13a-14(a). Exhibit 31.2 is filed herewith.
|
3)
|
32.1 Certification of Chief Executive Officer required by Rule 13a-14(b) and Section 1350 Chapter 63 of Title 18 of the United States Code. Exhibit 32.1 is filed herewith.
|
4)
|
32.2 Certification of Chief Financial Officer required by Rule 13a-14(b) and Section 1350 Chapter 63 of Title 18 of the United States Code. Exhibit 32.2 is filed herewith.
|
5)
|
101 Interactive Data Files.
|
LCI INDUSTRIES
|
|
Registrant
|
|
|
|
|
|
By
|
/s/ Brian M. Hall
|
Brian M. Hall
|
|
Chief Financial Officer
|
|
May 9, 2017
|
1 Year LCI Industries Chart |
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