ELKHART, Ind. — LCI Industries has reported third quarter 2018 results. The company also announced that its board of directors has authorized the repurchase of up to $150 million worth of LCI’s common stock.
“We achieved 9 percent sales growth in the third quarter, despite a 12 percent decline in RV wholesale shipments compared to the same quarter of the prior year,” said LCI’s CEO Jason Lippert. “Our continued sales growth is reflective of our ongoing strategy to diversify our business into adjacent markets, the aftermarket segment and international sales, which now make up 34 percent of our last twelve months sales, up from 28 percent one year ago. October 2018 consolidated net sales are approximately $212 million, up one percent from October 2017, despite a slowing of RV OEM production levels as they continue to balance dealer inventory levels.”
“Our content per travel trailer and fifth-wheel increased nine percent year-over-year, and our content per motorhome increased 15 percent year-over-year, representing our fourth straight year of double-digit content growth for motorhomes,” said Scott Mereness, LCI’s president. “We continue to manage costs in today’s volatile commodity environment with cost pressures driven by tariffs and tariff speculation.”
Third Quarter 2018 Results
Consolidated net sales for the third quarter of 2018 were $604 million, a nine percent increase over 2017 third quarter net sales of $555 million. Net income in the third quarter of 2018 was $33.8 million, or $1.33 per diluted share, compared to net income of $32.1 million, or $1.26 per diluted share, in the third quarter of 2017.
The increase in year-over-year net sales reflects growth in the Company’s adjacent industries OEM, aftermarket and international markets, despite the short-term correction in recreational vehicle (“RV”) OEM wholesale shipments as dealers normalize their inventory levels. Net sales from acquisitions completed by the Company over the twelve months ended September 30, 2018, contributed $56 million in the third quarter of 2018.
The Company’s content per travel trailer and fifth-wheel RV for the twelve months ended September 30, 2018, increased $284 to $3,456, compared to the twelve months ended September 30, 2017, of $3,172. The Company’s content per motorhome RV for the twelve months ended September 30, 2018, increased $328 to $2,480, compared to the twelve months ended September 30, 2017, of $2,152. The content increases are a result of organic growth, including new product introductions, as well as acquisitions.
The Company’s effective tax rate was 23 percent for the quarter ended September 30, 2018, compared to 33 percent for the quarter ended September 30, 2017. The decrease in effective tax rate was driven by the newly enacted tax rates from the Tax Cut and Jobs Act.
Balance Sheet and Other Items
At September 30, 2018, the Company’s cash and cash equivalents balance was $18 million, a decrease of $8 million from its balance of $26 million at the beginning of the year. The Company generated cash flow from operations of $108 million and invested $93 million in capital expenditures for the nine months ended September 30, 2018. Other cash outflows included $157 million for acquisitions and $44 million for dividend payments to shareholders, and were funded primarily by net borrowings of $190 million on the Company’s line of credit for the nine months ended September 30, 2018. The Company’s outstanding debt was $244 million at September 30, 2018.
Stock Repurchase Program
The Company announced today that its Board of Directors has authorized a new $150 million stock repurchase program over the next three years.
“This repurchase program demonstrates the Board of Directors’ and senior management’s continued confidence in LCI’s long-term strategy and future performance. Our strong operating cash flows, balance sheet and borrowing capacity allow us to maintain a balanced capital allocation strategy, which includes investments in future growth, potential acquisitions, research and development, debt repayments and providing returns to shareholders through dividends and share repurchases,” said Lippert.
The timing of stock repurchases and the number of shares will depend upon the market conditions and other factors. Share repurchases, if any, will be made in the open market and in privately negotiated transactions in accordance with applicable securities laws. The stock repurchase program may be modified, suspended or terminated at any time by the Board of Directors. Repurchases under the stock repurchase program will be funded from the Company’s existing cash and cash equivalents, future cash flows and its existing revolving line of credit.
SOURCE: LCI press release