LCI Industries Q4 FY2025 earnings call

• Jason Lippert noted the company's strong results with 15% top - line growth and margin expansion in the fourth quarter. The company capitalized on opportunities across various end markets through leveraging competitive strengths. On the OEM side, there was growth in different segments with focus on innovation. The aftermarket saw growth driven by the OEM sales platform and investment in service infrastructure. There were also profitability initiatives with operating margin improvement. Lillian Etzkorn detailed the financial results, including consolidated net sales growth, OEM and aftermarket performance, margin details, balance sheet strength, and capital allocation. She also provided the outlook for 2026 regarding industry shipments, market outlooks, and financial guidance for revenue, operating margin, and EPS.

OEM segment: Net sales in the fourth quarter increased by 18% to $737,000,000. RV OEM revenue saw a 17% rise, driven by market share gains, increased sales of newer products, and a favorable mix shift towards higher - content units. The other OEM end markets (transportation, marine, housing) achieved a 21% year - over - year net sales growth, reaching $297,000,000, with an 8% organic basis. This growth was mainly due to market share gains and content growth in North American utility trailer, bus, and marine OEM customers, with bus - related content contributing $31,000,000 of year - over - year growth. Aftermarket: Net sales grew by 8% year over year to $196,000,000 in the fourth quarter, primarily propelled by product innovation and increased demand for upgrade and service parts as more units entered the upgrade and repair cycle. Auto aftermarket: There are significant opportunities emerging from First Brands' operational challenges and bankruptcy. In terms of margins, the fourth quarter consolidated operating profit was $35,000,000, with a 180 basis points margin expansion to 3.8%. Consolidated net sales in the fourth quarter were $933,000,000, up 16% year over year. Adjusted EBITDA grew robustly by approximately 53% to $70,000,000, with a 7.5% margin.

• For 2026, industry RV wholesale shipments are expected to range between 335,000 - 350,000 units, while the marine industry is forecasted to be flat to up in low single digits. The transportation market is expected to be flat, with the benefit of sales from acquisitions of Friedman Seating and TransAir. The housing industry is projected to have low - single - digit growth. Aftermarket is estimated to have mid - single - digit growth. Consolidated 2026 revenue is expected to be between $4.2 - $4.3 billion, operating margin in the range of 7.5% - 8%, and adjusted diluted EPS between $8.25 - $9.25. The company plans to consolidate eight to ten facilities in 2026 in addition to the five consolidated in 2025. There will be $60 - $80,000,000 of capital expenditures for business investment and innovation, and continued return of capital to shareholders through dividends and share repurchases while maintaining a target leverage ratio of 1.5 to 2.0 times net debt to EBITDA.

Q: How sensitive is the 2026 outlook to rate cuts?

A: The company is not factoring rate cuts into the range, but rate cuts would be helpful as growth is predicated on market share gains and other factors discussed.

Q: Bridge the difference between 2026 guide and normal run rate?

A: The industry came down from a monster high, and it will be a slow out of the cycle. The midpoint of the 2026 RV wholesale shipment forecast is around 345, and the near - term normalized midpoint is expected to be between 375 - 415.

Q: Trade - up activity and mix shift in retail?

A: Larger dealers are doing decent, but small and mid - sized dealers are struggling. Weather also affected some stores.

Q: Aftermarket profit and auto aftermarket brands?

A: There are headwinds on auto aftermarket pricing, but the aftermarket is doing well on the RV side with new products and market share. There are big opportunities on the automotive aftermarket due to First Brands' bankruptcy.

Q: First quarter guidance cadence?

A: January is indicative of the first quarter, with a 4% year - over - year growth, and operating margin will not start at 7.5% - 8% but step in later in the year.

Q: Puts and takes in 2026 guidance?

A: There is organic growth, potential divestitures of lower - margin products, and content gains.

Q: Industry outlook for RV wholesale shipments being softer than late October?

A: Mid and small - sized dealers are hesitant, and bigger guys are cautious, with macro factors needed to improve for a stronger outlook.

Q: First quarter outlook compared to fourth quarter?

A: Dealer and OEM discipline is causing a slower start, waiting for retail numbers to pick up.

Q: RV trade - up cycle?

A: Typically 3 - 5 years, with quicker trade cycles for entry - level RVs.

Q: Affordability impact on the RV industry?

A: OEMs are focused on ASPs, aluminum costs are a headwind, but the industry is working with customers on good - better - best philosophies.

Q: Margin guide and its drivers?

A: Consolidations, incremental revenue margins, and fixed cost absorption are key drivers of the margin expansion.

Q: Single axle mix shipments and 2026 outlook?

A: The fourth quarter single axle mix was at ~21%, bouncing around 19% - 21%, with January showing a decline in single axles and an increase in fifth wheels.