LCI INDUSTRIES Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Yearly Highlights: 2024 was a strong year for LCI with $3.7 billion in revenue, down only 1% despite a challenging RV and marine backdrop. The company expanded market leadership in top product categories, saw 7% organic growth in the automotive aftermarket, increased EBITDA by $89 million, and had successful innovations like coil suspension and Furrion shelter conditioner technology. The partnership with Camping World had product sales up 62% in their stores.
• Industry Backdrop: The RV and marine backdrop was challenging in 2024 but showed improvement in 2025, with January RV sales up 17%.
• Business Performance by Market: RV OEM had 7% growth in 2024, aftermarket had 7% growth in the automotive segment, and adjacent markets faced challenges but had growth opportunities in various end markets.
• Financial Strategy: Strong operating cash flow of $370 million in 2024 allowed paying down $89 million in debt and reducing leverage to below 2x. The company aims to reach $5 billion in total revenue by 2027.

Segment Performance

• RV OEM: In 2024, net sales totaled $1.7 billion, up 7% from the prior year. The top 5 product categories (appliances, awnings, chassis, furniture, windows) accounted for 71% of North America RV OEM sales. For the fourth quarter of 2024, RV OEM net sales were $376 million, down 3% due to a 24% decrease in motor home wholesale shipments but offset by a 7% increase in North American travel trailer and fifth-wheel wholesale shipments. Content per towable RV unit was $5.97, up 1% year-over-year, with organic content increasing 1% sequentially and 2% year-over-year.
• Aftermarket: Net sales were $881 million for the full year 2024, roughly flat year-over-year. The automotive aftermarket saw 7% organic growth, contributing 54% of total aftermarket revenues. The Furrion suite of appliances contributed $56 million to aftermarket group sales in 2024, a 22% increase from 2023.
• Adjacent Markets: Net sales decreased 13% to $1.1 billion in 2024, primarily due to weak marine demand. Excluding North America Marine sales, adjacent markets were down 6%. The company gained traction in utility trailers, building products, etc., with growth opportunities in areas like off-road vehicles, school buses, and residential windows.

Guidance

• 2025 Projections: Projected wholesale shipments of 335,000 to 350,000 units, with over $100 million in additional RV OEM sales. Q1 2025 expected revenue flat year-over-year, with RV OEM sales up ~9% and softness in marine and international markets. Capital expenditures anticipated to be $50-70 million. Aim for 1.5 to 2x net debt to EBITDA and continue returning cash to shareholders.

Risks

• Tariffs: Uncertainty around steel and aluminum tariffs, with an estimated 50 basis point headwind that the company is working to mitigate.
• Mix Shift: Shift towards lower content single axle trailers affecting content per unit in RVs.
• Marine Market Volatility: Softness in the marine industry expected to continue in the first half of 2025.

Question and Answer

Q: Tariff question, level set on outlook, inventory levels, pass-through A: Jason Lippert and Lillian Etzkorn discussed tariffs, stating they are working to mitigate a ~50 basis point headwind from China tariffs, with steel and aluminum pass-through mechanisms already in place. Inventory levels related to single axle trailers were discussed, with expectation of normalization starting in Q2.

Q: Commentary on retail outlook for 2025 A: Jason Lippert noted a bullish outlook with potential for retail to be at the mid- to high end of the range, influenced by various moving parts including FEMA and retail demand trends Q: Marine market sentiment and rebound expectations A: Jason Lippert mentioned marine market is 1.5 years behind RV cycle, expecting second half rebound as dealers work through inventory and retail demand picks up Q: Tariffs and import mix A: Lillian Etzkorn explained import mix is outside North America, with supply chain management to mitigate tariff impacts, and pricing pass-through mechanisms in place for steel and aluminum tariffs