ELKHART — LCI Industries today reported consolidated net sales in the first quarter of 2017 of $498 million, 18 percent higher than the 2016 first quarter net sales of $423 million.
Net income was $43.1 million, or $1.71 per diluted share, for the first quarter ended March 31 compared to net income of $36.0 million, or $1.45 per diluted share, for the first quarter ended March 31, 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 12 percent and 16 percent, respectively, in the first quarter of 2017, enhanced by acquisitions completed by the company over the twelve 12 ended March 31 which added $17 million in net sales in the first quarter of 2017.
Organic growth accounted for 14 of the 18 percent growth in consolidated net sales for the first 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 first quarter of 2017 by more than 20 percent to $36 million
“Continuing the industry growth trend from 2016 first quarter wholesale travel trailers were up over 12 percent and fifth-wheels were up over 10 percent,” said Jason Lippert, LCI’s chief executive officer. “Travel trailer sales momentum has continued as the industry attracts a new generation of RV enthusiasts.”
The health of the RV industry is determined by retail demand, which is up over 12 percent through February, as reported by Statistical Surveys, and will likely be revised upwards in future months as various states report, the release explained.
Based on the retail sales strength experienced through 2016 and into 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 446,000 units has been revised upward from its original fall forecast of 411,000 for the full year 2017.
The company’s content per travel trailer and fifth-wheel RV for the 12 months ended March 31 increased $80 to $3,058, compared to the 12 months ended March 31, 2016, of $2,978. The company’s content per motorhome RV for the twelve months ended March 31 increased $164 to $2,022, compared to the twelve months ended March 31 2016, of $1,858.
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 April 2017, LCI’s consolidated net sales reached approximately $167 million, 15 percent higher than April 2016.
“As the industry prepares to meet the anticipated demand of the 2017 spring and summer selling seasons, I am encouraged by April sales following up on a strong first quarter,” said Lippert.
“Our operating profit in the first quarter of 2017 improved to $59.1 million, compared to $55.7 million in the first 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 March 31, the company had a net cash position of $15 million, a decrease of $21 million from a net cash position of $36 million at the beginning of the year, primarily as a result of $11 million used for acquisitions, $12 million for capital expenditures and $12 million of dividend payments in the first quarter of 2017.
The effective tax rate for the three months ended March 31 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 12 months ended March 31 improved to 26.0 percent, from the 21.6 percent return on equity in March 31, 2016. Return on invested capital for the 12 months ended March 31 improved to 40.4 percent, from the 29.2 percent return on invested capital in March 31, 2016.
“We are working more than ever on continuously improving our organization by developing leaders, not just managers, and focusing on how we touch the lives of our employees,” said Lippert. “We’ve also made a commitment to give back 100,000 hours in service as a company to our communities, while maintaining a focus on our customers by raising the bar for service and product development.
“We believe these initiatives will benefit everyone at LCI, and the response from our people has been uplifting,” he explained. “We believe taking corporate culture and leadership to a new level will continue to have a positive impact on employee attrition and engagement, which ultimately impacts quality, safety and the efficiency of our operations.
“We are committed in our efforts to develop, engineer and build great products, as well as improving our service to all customer channels, so that each day we are the supplier of choice for the industries we serve,” he added.
SOURCE: Lippert Components press release