LCII - Earnings call transcript Q1 2018

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Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2018 LCI Industries Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today’s program is being recorded. I would now like to introduce your host for today’s program, Tyler Deur, Lambert, Edwards Investor Relations. ahead. go Please

Tyler Deur

on morning, and you XXXX Good with asked operations welcome the Brian including I’m to Edwards, of that CFO. Industries by Thanks, in be statements just quarter a involve management me of Hall, Scott and discussing to LCI’s quarter under everyone, first, but and Mereness, conference considered a Industries will today’s inform team, joined Management in risks and firm, and first Investor statements results uncertainties. they’ve Lippert, certain Deur LCI call made call. securities conference LCI today LCI’s may members CEO Jonathan. the moment, regarding Jason Relations laws and the the Director; number I’m Lambert, forward-looking and first call Tyler be its President;

cautions events the the of which there As by release, over other the factors to and results With which company in or materially after forward-looking turn Form disclaims The the Lippert. with are obligation or in law. that, the statements. forward-looking discussed reflect to any and beyond These earnings date the the I Jason like call except number undertaking many XX-K could SEC. required events the are a you made, Report Jason? its update Company’s control, and as to filings statements occur would forward-looking company on from those Annual circumstances to to of that are actual factors, its described Company’s that result, differ cause are statements

Jason Lippert

earnings everyone, morning, Tyler. first you, Good welcome XXXX. and to of Thank call LCI’s

$XXX million, XX% announce QX quarter with million same year. from revenues to the reaching up $XXX happy last quarter record or another up We’re from

sales one quarter the grew quarter OEM from $XXX year. or million from last approximately for up same $XXX XX% million in Our segment to

same earnings year. same from Our $XX from per per $X.XX per million aftermarket period. XX% the last $XX to grew from quarter or share share $X.XX Diluted segment the grew during to million, up share

announce We’re XX% April continued over nearly as happy growth a year. April or $XXX last sales QX, increase into totaled to sales million

past commodities is it to a quarters, environment. the an say we’ve challenging had Over two understatement

the steel approximately sources. aluminum purchases XXX% of now to years from has and administration adding September foreign producers. steel manufacturing they attempting the to XXX,XXX and claim these approximately jobs domestic XX%. every we around step and few almost In LCI in aluminum year, due terrace year, to has aluminum of they the field steel U.S. effects. some and of believe cost by purchase been good haven’t of recoup foreign risen Since tons manufacturers competition. policy more had between have cost with intentions steel This last along up some adverse able industry of risen aluminum able experts, While conversations even XX,XXX past that currently pass certainly the playing steel steel the our and the of of are and tons XX% and to over

these offset creative on understand increases related of late has some tariffs tide increase units our control. pass ways price our in a this of gone the address up early costs. this more increased It’s see of been has and customers alternative our at that plan last is increase finding impact getting magnitude, impact to difficult terrace always to business the We and and out along couple the year. rising the and steel QX help to initiated LCI’s tariff largely to of customers expect this significant in Our pressures the of quarters, recently We’ve impact margin that to steel QX. created QX of and

increases these currently retail consumers as their of a ultimately their are customers so dealers of as the lines, increases of possible. inflationary to passing some feel recontending receiving well process product they’re Our in through mitigating RVs the some as little of impact

as to and the continue lean members, around reducing continuous other and our help working additional toward and line. XXXX, LCI’s largest estimate will leadership automated million way continuous through on offset chassis million a in of $XX facility through XXXX. manufacture lean training the activities. to $XX we with more complete annual initiatives, we’re improvement costs run initiatives, over To we continue this initiatives. improvements in estimated we of business improvements, culture broke business in improvement. further iteration lean focus We completed that In our believe implementing making savings more increased some rate, We X,XXX towards the a automation our on We fully processing RV product lean and culture revolutionize move sets will chassis, team

design, classified supply company, the any safety are products and of a as we to on have is suite We continuing with distinct we an space, large XXXX, a more This and of industry our outside products where that at the engineering the robotics to develop period, serving staying teams. mobile focus RV of has engineered over leisure improved automations transportation expect to we value-added one quality as the we four-year focused be but investment recoup chassis the focus on commodity. many IP, a programs to have markets squarely products away the coupled RV a importantly, in the LCI on greater as have that would in Prior industries. more works highly provided LCI. components significantly today from as

in billion $X nearing OEM. are RV annualized towable outside markets revenues and We

revenues XX% In last were in of non-RV acquired $XXX million related. the fact,

growing in engineer company dependence lines product value-added as products with high product historical strategic Our vision these be organically on is well and order lines the as lessen to an to products. acquisitions

-- one into that divisions, Today, back million only company company in multiple manufacturing transportation, XX were mobile RV serving predominantly industry. RV steel outside of $XXX towable divisions have manufactured products almost think countries, industries years has serving $X that various revenues and grown leisure in you many ago, If around XX glass we OEM. just business to billion with a lines primarily and product the in we under and XX a

is utilized cargo commercial will more towards electric markets adjacent to we trucking manufacturing raw vehicles manufacturing we consider the the many processes robust and and outside with buses, our sets, and feel using major motion there of can’t trend heavy much systems, do. center, traditional utilizing R&D products as power marine, We a motors, trailers, a equipment and future and by to RV. and businesses materials steel, and in continue glass, skill our markets systems We Our fabric upholstery, hydraulic electronics manufacturing. aluminum,

resources approximately it. products have these one, our Aftermarket We’ve relevant the $XXX organization our call key allocated We the staying here. are businesses and million, automation resources significant newer RVs the jump association for last the XXXX, And billion parts the the XX% trend our has challenges despite research many the weather year-to-date as in and quarter buyers are billion to are every OEM parts XX% for encouraging is most factor significant XX, sales the and we’ve In features every continue mobile lifestyle will this We Other to incredibly period. estimated the plans, product for opportunity around demographic QX than parts the will younger pipeline KOA on the we best growth innovative that record our this XXX,XXX to renting. $X.X run industry’s most of replacement fun. for have that operational, our coupled great buyers camper. $XX option with continuing been our deal to rose upwards with is millennial create has areas. not a up camp and develop this And been months that XXXX in generation lifestyle capacity. of center other units increasing development, the believe million markets. this that in positive year, business run we over outdoors in to the as of we a boomers shipments. years, quarter important, the since larger be factors do year. RV nearing reported XXXX great baby sales enhancing the XX% up X the an field. the through products into and younger care add We centers sales industry. to high attractive XX% the to to this customers buying wholesale interesting the is will Retail people bright statistic as through replacement Though RV demographic thing enter to XX% confidence, still units, shows of at some more and same manufacturers put continue us continue which for is that in U.S. is well new and continue serviceable bring that keeping the our market these these what and recently appeal sales million service [Indiscernible] production the biggest as in profit the growth and generation, service believe all to that aftermarket to services a rent, all retails through new factors to XXXX, credit still year. already availability a advanced long-term numbers. good in and be households margin the age continues alongside In The more will from XX division. XXXX, to of five believe XX% RV be as number. approximately friends, or XXXX. industry last added millennial’s thousands study resources aftermarket new America’s able sales RVIA own to We strong, report to growing adjacent of and consumer market and going feel on momentum in alone GenX. LCI same aftermarket make had and will to more that experience an and the customers shipments own Equally and vehicles to these assist XX% customer believe for in why quarter and three support part lead the RVIA the this were lifestyle are totaled and important decade. continued last camping. the LCI fact service Midwest. in reported of up from industry our and after increase for believe floor also and new increased grow and in a and for facts will XX% diversity as used same month their The Others with customer it’s significant RV XX meaningful others we’ve KOA big operating engineering, shipment that wholesale $X.X future are on of aftermarket over family, estimates recent XXX,XXX of industry pointing about which going OEM campers first to millennial increase buyers also of The direction. economy all a XX-year numbers industry strong to backlog

encouraging for which have fueling content is smaller market and And last every in growth, this LCI content results. RV especially continues are the units we entry-level yield and to in existing year innovation product through As decade, evolution. should increase over this a

And unit per In we $XXX of to fact, on our through our increase in product period. R&D. feel development the this was new point content success directly last the towable’s

made distinct every competition. and over year have advantage we’ve we a it’s in our R&D significant We investments believe

R&D, water RV. to product ever. in is support new based OEM development is engineered have and list our brands European XX new Furrion had organic solutions In our professionals, several aftermarkets. most of new we’ve through Furrion coming at these will of outside we’ll million market $XXX are the and dedicated development industries. extatic product on the products to review the months, for and represent of pipeline lines product traditional important opportunity markets. we refrigerators, look note research exciting development showroom very that new many new launch start most other received and about for a marine, than to hot It’s great these customers caravan, were feedback of customer And in commitments exciting line for market over the other these to lines. introduction exciting customers shipping our in that of of our These core the see product and we in world products products more these conditioners have that the our and Last our larger of product and we We opportunities. QX of heaters. week, and the Probably also adjacent the our of unveil our bus air It’s than project already will

earnings last we engineering call, acquisition, the history. our spoke ago and about window designing, XXX just was primarily and to Made Made North and Taylor products OEM supplies markets founded solutions for the is types Taylor American European in glass line largest a manufacturing On for marine product sector. little in bit years known it company and of also aftermarket marine presence it’s where boats. all data is in for a month It windshield the well-known and

credibility well quickly. window UTB We we as any the glass intend over in our $XXX in Taylor in of branding marine the brand gives Made Made Made anticipate is Another industrial savings. to with leadership because incredibly supply team, strong and leverage significant Taylor and synergies of solutions Taylor as much of And the for instant of solutions product name and a material products. to Taylor with the that We way to anticipated manufacturers million leadership products revenue glass many synergies are possible our year cross-selling, team, and market. marine engineer all we as contributing realizing market equipment part as talented these strong the cross brand this and Made

glass Hehr and the for glass over Taylor industries. approximate to trailer been conversion the supplying years in provides and International. addition Hehr bus, QX, with van acquired of trucking in In products RV, and growth has we XX trailing Hehr team hear family LCI all Made We Made our to also LCI bottom window the continued business and With the XX-month of to impact members growing million Taylor sales forward of we an purchase, of the have expect immediate to business. time to $XX the line at look and the to our LCI as welcome all I products of thank the our strives window of our follow will this teams the thank discuss closing, LCI to the And appreciate support. teams we turn To In LCI in we and engineered financial that. business to Brian their the results. CFO to all greatly for in for teams for great occasion continued through suppliers to challenges of more continually our customers, quarter them will I now one loyalty rise detail North QX America. preeminent and to questions. the become our then Hall, with want at heavy

Brian Hall

Thanks, morning everyone. good Jason. And

additional Over the some next color few will results. regarding the minutes, I financial provide

the manufactured RVs, over was acquisitions few, Our million and base for the RV Sales motorized consolidated XX% just is towable in quarter. at of content content to of the year-over-year OEMs XX%, homes quarter, XX% increased unit, per quarter XXXX over a And the the note of manufacturers increased $XX respectively. the per Organic RVs remainder it’s to million to five XX-months reflecting and million important original our compared million of increase towable $XXX to XX% of RV $XXX while million. X%, $X,XXX It million years. $XXX March more entry-level growth the just sales now and attributable contributors the six were just growth just OEMs that in grew The by customer over key per almost awnings, of furniture, making Aftermarket which with quarter, grew under million OEM��s over greatest the $XX with industry first $XXX ended accounted contributing growth per more the growth first RV Sales was have over in market was continued were The adjacent per to It show RV to Partially, and to for increase boats, acquired to name XXXX. of sales remainder. the the products in XX% over an our growth. to gains $XX just and shipments the equipment $X,XXX than per towable motorized Net and rate to serve. for growth shift increased content our of the in to of note of XX, products, revenues XX% up to net three unit organic buses to Furrion quarter of sales to unit of strong first to leveling the industry content growth, years year-over-year almost XXX%. largest that is The $XX which $XXX wholesale as Sales account the largest increased increase the for million. acquisitions, increase $XXX continued sales. tripled $XX less in years. been sales XX% XX%, to share Furrion we carry sales strong approximately second over offset Segment important XX%, in industries is for the increased unit our Growth, International in $XXX towards for to program. unit. increase. is unit content million for and continued increased increased Motorized XXXX, tend unit. sales that per content school have

international from XX-Q Form of quarter and report excluded in within sales on our detail described are content Our more our computations per are unit.

profits. to Turning

as well. QX XX% commodity. XXXX have Aluminum Company’s source higher to from of increased the have foam the since XX.X% tariffs over over the XXXX costs increases the Steel we Material the for and quarter steel costs, primarily And and over significantly margins XX aluminum. months. costs steel, second increased even past profit gross Our is largest increased new first and for on have of QX increased quarter. since aluminum experience XX%

commodity based increases more been have gains. than While initiatives the offset implemented, in pricing have the cost further inflation several

will and effect adjustments have onto X. price our April timing results. on of The the negative a adjustments Additional impact go June had X, short-term

costs to facility chassis growth. relating continued the over profit sales XX.X% business handle quarter XX to the school sales – by XXXX of in train new school as as business as XXXX. well and have margins of we basis XX% In have costs affected quarter window Operating addition, year-over-year. points first in certain moves relocating These decreased incurred in start-up of to from expenses a percentage first bus

XXXX, in and acquisitions higher SG&A profile. impacted cost has transaction negatively – by profile Our expense somewhat and been related completed certain a including higher

increases than during the offset operating share they However, the by quarter. the other the increased previously of and earnings $X.XX stock-based first QX of leverage prior $X.X $X more diluted compared while quarter incremental partially increase the material per sales, share year. cost QX to XXXX, share for million by over labor compensation to The over the Non-cash as $X.XX when gain offset resulted increased non-cash first million depreciation in XXXX. in and per mentioned. amortization from quarter in profit the compared increased were per to

and income not was excess benefiting of composition, tax Our Tax the depressed although, of was rate equity-based The and favorably Tax favorable benefit rate was from Act. compared valuation stock impacted market as Jobs the benefits from the Cuts impact the tax due the to XXXX, by new Law. effective XX.X%, to the when

to strong. XXXX full flow remain We the to effective are tax XX% the full year. The be and company’s for cash estimating position financial year XX% rate

investments. through focus to putting work our to disciplined capital continue We strategic on

million capital $XXX $XXX returning position million the March and for in of with the to our of million shareholder acquisitions, dividend. a business XX. million expenditures in ended quarter cash While $XX at our of using $XX debt form net – We for

EBITDA – questions. X.X position ready investments. relative entertain Jonathan, an remarks. the flexibility you. provides prepared ample end are to was and our future provides current us of That we Thank is leverage only Our to for times,

Operator

Thompson comes from Certainly. [Operator line question first Instructions] from of Research Our Group. the Kathryn Thompson

Your question please.

Kathryn Thompson

thank for Hi, taking my you questions today.

two of impact not on prepared perhaps and even rough aluminum. prepared more that’s inflation, and the for a is average spend? in But you total at, aluminum to the little on could you. sold, to quantify bucket, of color overall a it’s get way full steel the clarity pulling a string inflation frame Thank the the goods annual steel up what very a Maybe year? you the gave way little Just on appreciated on your commentary. quarter like Or your first materials following much are bit We raw – bit to the to those further cost would for the of material looking putting spend? on

Brian Hall

Hi, Kathryn. This is Brian. I’ll start.

– spend. estimate those material I mean, I We numbers. of aluminum roughly, over would and XX% haven’t steel provided be say XX% that to – our I typically detailed would

Scott Mereness

in on dollars based close $XXX its annually call. that tonnage on So Jason provided million to that the

about those a $XXX talking commodities, two we’re between roughly. million spent So

you cost and when can impact look look calculate the on at have inflation, the the and input the you So P&L. can – our tonnage delta that those take at you cost those

Kathryn Thompson

Okay.

In – year. terms the so made this you of acquisitions two

You’ve years? like is JV Furrion, the what us underframe separate integration if maybe outline few been XX calendar some just contributed for have more have in the Because really on acquisitions these than that, color next acquisitions? able been next But opportunity the the to for for that to a and what months. it help terms be is two been opportunity you of little more the more which but XXXX bit you over there give and contribution is going could

Jason Lippert

for good business support help and their had Two robust added the some they the management less Kathryn, acquisition, solid manufacturing. really Taylor will but companies. start. at let team it’s Jason. But standalone, manufacturing very plant Made, more a Hehr overarching as with as capture different or other them we’ve with start team. synergies. and standalone not structure were with We’ve levels I’ll company, the they that strong management a operate Well, resources a resources totally to a

with on integrating of five they right we’ve we’re that or of around that case, those now, Hehr. got the one ours. in four at – have facilities some So consolidations consolidations plant going is looking total And –

needs work focus But it going are the lot first bought lot cleanup the we in past. drove our kind months. we the and a line businesses that the of opportunities both and six usually synergies, no And companies pull So certainly we San especially a in a on of couple in integration materials, lot ago, just of really, of work. to companies, years together a with the – take and we of

can So some color. Scott additional provide

Scott Mereness

Kathryn, so I Europe, can including decent last the are in Made visit had the two acquisition. prior opportunity to of Taylor the months over few cross-selling the plants, a to And abundant. customers opportunities one amount the at tell development plants you the of I the things that

I shares you at canvas, with a think the and that they potential. that’s market high look that from share low canvas, market when market first on a foremost, have,

due furniture as that both product Secondly, our gotten furniture fine line, we’ve product they the be would opportunity the when possibly with segment would you of explore least other to very they interested, the that to like some just the look at all there tune portion the is either to feedback furniture health the of us and furniture. far building positive industry, as line strength at that or marine

road. to canvas furniture products coming sell standpoint, us allow additional we’re the be be are cross-selling that’s then products I market into will there that But from exploring. exciting would Marine Furrion a two you market. that would into tell the the Furrion new So opportunities further really that down little And some bit the that will and

Jason Lippert

that, strong Made very thing aftermarket. the in other one add the group, Taylor I’d And

with the are business their marine. over sales and I XX% total of aftermarket think they

of going in. well-established our into their they help to they’re expedite they’re turbocharge So us and some aftermarket, products

Kathryn Thompson

Okay. that Glad XXXX. RV been And year a to terms early final your you give on Could Thank just production in industry more on with focus came into current perspective that the as lot you. there’s demand is close inventory of question levels? of levels. least on really matching industry at last

Jason Lippert

a there bit record it’s year. Well, a obviously has else everybody but the is of part what overselling little over with of little the of a an been broken saying, bit early like sound probably

statistics days that the how the But single-digits that likelihood side And short-term. feedback and things the RV that’s for determine they’re from said high. to of wholesale the or to up as retails feedback dealers how will come they’re lot which their them XX out much. very There I favorable, stays in based GDP trying eat excess business is entry-level green But most with the all is the dealers, of the available will have look a and being there, going inventory, single very is what’s given of there that credit, feel OEMs is on OEMs year. all lower like and of be getting like cost many strong their the or to some indicators As are forward. and us is at the question sales financing that’s digit. retail high – answer key they retail the quick catch and this X% with products the looks manageable, think products all given camping the of along out And is whether days on high have lights key key and XX days respect XX a

Kathryn Thompson

much. very you Thank

Brian Hall

Kathryn, looking at wholesale one you when look numbers, March at other note we’re just there, March. quick to

of a XX-month of XXXX, March units through XXXX period, So XXX,XXX for March wholesale.

that gives a So you bit if little trailing the on wholesale. color at on XX-months of least

Kathryn Thompson

Okay, you. thank

Operator

you. Thank

next line CL the of King. Scott Stember question Our from from comes

please. Your question

Scott Stember

working cost try you it’s at net the for is strip there talking taking increase out customers? top could for like end a to put Or you the how affects whether when as to how whether it’s these are ways about questions. that with OEMs Thanks the interaction you’re be for difficult Thanks. OEMs talked ways that a you LCI? you? looking or gains line maybe decontenting with just And about through far the large that. also the the to it talking Can very same Whether guys. with this in talk of tariff compensated, is through morning, day, my of your Jason, negative share other product? price some from on things about obviously, a perspective. you Good about Could as

Jason Lippert

in tough. a this remarks, but Yes, we increase lag OEMs opening mean, being there’s didn’t of reasonable. the they’re and we have don’t said a environment increasing steel understand, understand But been very increases lot the of that mean, very create pricing aluminum. they give. I But that like I like it, I the pricing my cost around and they

to for over customers, when all the with out features contenting, features the nodding, leveling worked you But see excited exciting we to sting people is is they’re period. sell can’t So stuff lot help customers drive of can products the one last key are entry system. that a can’t get that a us, with is, a and we steel decontent fortunately to going all are the that of can customers with the and products. And cases a sell aren’t the about. trailers. door that work We They that But They some not like is the the lot try window you customers I And aluminum. the can reasonable those it thing away, again, the going control tell Where or leveling going what all exciting to our so make and month we lot can of sell. for buying about. special to around don’t and right reasons our and staff implementation get our OEMs they or around sell to products. we they benefits customer they of in make excited of we an make a certain the system, decontent LCI good that, it stuff point of comes through

of products that supply to engineer with around doing we’re help might customers. of some key we cost that partners around engineering And out with existing products some and of get reengineer creative her of So right we now. our some

stuff and I supply high just a supply don’t helps. it that changing customer So type item products commodity look a of commodity from of not items. that going a item lot to out cost lower to a but commodity things pulling hope we commodity moving be lot I we that customers at entails might that RV it think consumers notice, things, retail when a cost don’t

Scott Stember

of to sense. Yeah, I lot a there’s and increases. price yeah, giving trying I’m pieces a know moving just get

You’re it’s movement to of but… prices the way the on obviously lose how fast and given some going, going up

Jason Lippert

been add me going me but let little to add bit you, of to the Well, sorry commodities a since of – last have been interrupted kind let that have going that – up September.

the So last the and numbers up. content six where the scenarios eight have at to we’re you look our and OEMs months been looking at over contending

features and important that a we just are just going help what I that’s affect got thing And exciting might similar on that think how talking looking it’s sign trailers. benefits features, to I the the sell to us. about offer good at contenting

Scott Mereness

motorhomes Jason non-towable Jason And growth and terms terms quick markets, biggest different in six towable, in talked number almost in years content the towable one XX already the biggest are our we’ve of on for to terms – close but year growth. in times five about been growth two our numbers what of those said all average content growth had but Scott of we just comment second more has product in years one this, the content in on revenue that side, more again of

market, left products one to traction put finally trailer they’re of with about take controlled have we feel we the and the these not runny in next the regardless does so last industry do. and what for created addressable starting continue of And only us retail sale ton opportunity are been the that Furrion a talking couple up numbers to quarters regardless whole to huge. short-term five but of is of have that industry we we have versus going leveling numbers years. terms feel that And market three the playout like the what we like are that travel We to strategy that in over way going of our to

positive going to a be several next it’s So good the years. over very

So…

Jason Lippert

of and content billion at but that’s a I in heaters and products look air the we’re And launching, like big few conditioners refrigerators content some and launching, water ones, a the they’re other items of Furrion over that I big named mean good and stuff. pretty $X.X

Scott Stember

do it. how and is lot heavy, perspective. it somewhat running a made moderate on that are the labor benefits when I That’s about you of will a guys albeit And to you positive very up labor has Got still things to have just hot If hard talk mean guys maybe labor. find front, the been helpful. nicely, from

Jason Lippert

of Say positive benefits again. Scott? Would you what, say

Scott Stember

as catch if I – that breath the well about a was you – be your standpoint How talking production they basically, gives productivity levels, guys still might bit. while from from… a a chance do moderate it to little

Jason Lippert

down, as I that as Sure, – are impact our exponential poll our time lever complaining know our yeah, tell about first people much the X% are much flows or when breaks as an or margins. area up in you over comes complaining about to tapped that hours so as you – labor to on around has being volumes obviously would we’re unemployment.

not small the working people There out lot X,XXX not XX lined is almost treated here on just with at over last we’re focus three that doors. people. culture years and fish a because people getting whether Our facilities county just little loving over up of are has and well bowl our [indiscernible] there they’re

world fast the around work. things the at doing So we’re right gets when

think experienced getting So place. And and our come the on – that into are that has. toughness finding we other either burn that lot labor places haven’t other I in businesses a of at people

Scott Stember

did last impressive Hehr. for It quarter. the being the like Made All be the XX% there that for May what framework quick number just is organic very of number up give and obviously right, you April? for a than Taylor to XX%, one us one, be just looks seems more April and the

Brian Hall

Brian. quarter it in is accurate. a The it’s first is to all numbers what that think to Yeah, the This bit, for close the are was roughly are quarter. mean, little for Made I well, one about Scott. It’s Hare first quarter. Hey, thing and your Taylor not

be mid, to have of organic it’s for for pick low that So low-XX% all numbers, there little But as April. in from number. the a you up roughly in, bit the April would probably of the month

Scott Stember

organic, taking all mid Thanks questions. to Low my I it. for That’s got have.

Jason Lippert

Thanks Scott.

Operator

Thank you.

line of Our from next Baird. comes Kennison Craig from question the

Your question please.

Craig Kennison

I taking margin end guess, really, target about hold to you. just I’m of XXXX the for I seemingly I questions if share guess, are what you in growth? for wanted you well. your with, how guidance with out you kind of as And Thanks wondering margin start of XXXX? could think XX% willing the to posted the Brian, And margin low EBIT feel you reach? prior you relative to that, my do

Brian Hall

Craig. Thanks,

are don’t your reasonable. I As But guidance. give traditionally, you think know, expectations we

the the and inflation’s range in little think certainly, can to the the think just into I to improvement, even to gets show back – steel difficult up into especially we ranges curves at we price some so when first albeit of once we’re you XXXX. half there. But commodity that steep can back our been increases get given profitability we that to we and be then, year, forward back to comparable start good going we’re on the in it that the target, be here half what a point, back better long-term to your half. And how think than the looking aluminum the do pick get half. But would and maybe,

Craig Kennison

price on it than there any role margin? pursue your you as aftermarket your increase, plays then price that OEM an and there easier to in raise offsetting And dynamic the is a in is customers,

Scott Mereness

environment, a difficult fortunately, this increases. we But Craig, likes type I nobody mean, increase. price that we So, is, are both through and we predict-min solution from this a timing willing what are is out listen customers price – understand always have what Scott. to of to and to with work us of and a sit standpoint. quantity pass take It’s what and and for that works the down faced

people’s OEM think they’re being margin a bit that little within versus But aftermarket. said, I the segment different whole are from a aftermarket is personalities I even lot think So higher. don’t – the profile

little So point the I of view might bit be from there aftermarket think a relaxed more situation.

Jason Lippert

prices as point materials But industry it’s not we’re too and in notice up they will to as of thing generally at period, all a to the just add of because and business the make didn’t figure on and a opportunity been – add isn’t that are reviewed creatively how pricing. increases, price whether confident much dealers QX a contenting the time. certain a going And I inflationary to there. that’s really the that we But going price mix change the year that’s that’s challenging timing that on It’s retail expecting customers our the where out payment. to come more into price will a go it’s a I’m create whether products it I’d that to every aftermarket product did. back customers really

Craig Kennison

And more motorhomes Thanks. growth did That people the figures? towables. I to role The put question to thereby price maybe that been second, be, average market, decline extent And per is a context unit. and of your would evidence facing a as entry-level guess selling you’ve the yet, been I those units grow guess able then on unit. that a enter in I And bright ASPs in any spot certainly content there their the first, the content facing a Are as shifting union? in for per buy we’re ASPs, and still maybe then of the in to pressure to related a down second seeing industry here. unit acquisitions headwinds in those decline was a kind quarter decline that’s know play both bottom people more young in prices? in and you’ve what broader you

Scott Mereness

take, the I’ll Scott. I’ll is the So take first question. this part of

back and everything on real that as towable far to then of furniture would exception Lexington some both the that had with of go the your motorhomes in kind quick? acquisition, majority you of the part relation the revenue the else be the content question, side So to And side as the of motorized organic. can we second numbers

Craig Kennison

in decline selling Sorry. because I buying prices, young you’ve average are broader people know a units. facing entry-level

at unit content give look a than unit will grow headwind rather it’s average hard And you a price see more to at positive? content when of what of tailwind of you point you going down. wondering, per a unit? for is So actually I’m per as unit price you the turn average that the would

Scott Mereness

run that Well, as industry retail much I points for consumers. a found level dealers new think, and OEMs finding the ultimately our the so have some in of because entry volumes result up the price

keep coming of Furrion press a has product I through to a air I’d relatively refrigerators of to has go runway think there’s content stuff and and our – left. lot launches the feel organic it through like But new our we and big points be got find some back price low really going continue ticket R&D opening we’ve a there. to that, conditioners, some again,

Brian Hall

a it, to Gen I say millennials an Y, in they Gen go that would that be maybe yes, would with that pure that have they between demographics, have and yourself still at you of that to more their increase up. that X, profile therefore, stay their XXs, every And expensive year, be guess you attracted but would in set when units. you millennials making we younger when age, look assumptions profile, income would their you income

And lot have runway get pricing be and pricing and lot more to they now right first-time power future So will you there’s says have of a in and buyers the the in to themselves. older the look income continue and demographics at say, of young that a that market.

think for long-term well growth situation. content a that bodes I

Jason Lippert

the appliance that’s such give keep because time in ovens, taken and we’ve a the Furrion XX%. to take substantial you just over of going on the gone add a But launch content, big at part relatively And a on our quick to you last of look – ovens, market opportunity. you back in nearly short

consumers is things customer and that. demanding to are provides can they’re which to same OneControl, at. going grow. their Travel continued only have building some look a with some unit other is or product that going at leveling retailer the versions the and of every the every And is mean customers product things of you Bluetooth we capability Bluetooth at point some and to of So do thing are which the technology we’re of that I these that and that go other launching, have products lines, lot then going in like a want runway. to the

Craig Kennison

you. Hey Thank that helps.

Jason Lippert

Craig. Thanks,

Operator

you. Thank

comes line question next Securities. the of from Our Daniel from CJS Moore

please. question Your

Daniel Moore

Good morning.

in did the hear say think are in little I that Can quarter? the of And some to those a startup you bit? elaborate – lingering heard those about right? those cost into Or quarter, discreet impacted I Brian, I think we XX margins QX. you that should bps

Brian Hall

Hey, some primarily which quarter. that Dan. the When I once was those in Europe, more that XX some impact into Yes, make quarter. business, basis the train for – we just the launched we’ve that been in this would And got contracts. than look to that’s business has – impacted for to was time with – be the on of us to points we over dealing taken able new execute you window build bids A, here U.S. the and the a then the infrastructure needed at

to be train continue as gain share we’ve are them windows school there. So would windows, market that some more example, bus but ongoing, of one

them with. So lot to – cost and to have overtime. Then bit lot of that it gain moved takes the startup and little drag And takes facilities. efficiencies. into a and taken to then the a industry out to the taken course, and facilities of the a of just time efficiencies initial the deal new a them products of as little and we business had through the grow, It we’ve chassis continue gain same of some work

is few there points basis and well, – well. impacted as others are those XX So that’s what then there

year anticipate continue the We’re and certainly on. all focused we’d decline of to as those continues those to on

Daniel Moore

helpful. That’s maybe just touch then base And on aftermarket. Okay. the

in over follow-up. presentation outlook you big market you? I aftermarket But And like for what opportunity. call next, total regardless like. it the next the gross in quick And one into think years, the a shipments looks of wholesale maybe to have can of chart look few what Your bring three that years, one

Jason Lippert

inside opportunity. Yes, show two will Yes, market right chart to market happen the now be updated those potential opportunity, That acquisitions we -- include we quarter. growth which marine $XXX aftermarket on being the million our

than include that include not products very that -- be talked any we today, that, updated That of to conservative that and -- of we year. being at fringe we at products that, does and sell industries yet other last said, that might that today been about we it’s we’ve looking the slide that customers we So haven’t doesn’t or industries. who end has that’s adjacent was but our opportunities other who have aftermarket

the up should that So acquisitions. expect to do as go more we average and I number more think investor adjacent continue to

new that build adjacent to a it industries aftermarket through it to and heavy going build also content. going we’re organically, We’re has finding

to number good we is, lot $XXX news is future. that So have continue to what million it’s I in think a be going the the But today. the bigger

Brian Hall

AC significant a Jason would opportunity has be as that lines Yes, product couple a to those and well, reapers mentioned name aftermarket impact just more. in units on

Jason Lippert

and Jason like is think And in OEM from aftermarket business, to the customers – shop anymore, different one made difference eggs new I shop. buying, OEMs put to with the they’re are because RVS, and I They got think their business, the more very, not very the opportunity, stop they the basket. this thousands thousands parts service in used and of deal for and are willing components RVs have one

project really But a left. everybody April obviously, good, source aftermarket three runway a we’re our it are like of channels, the don’t for out lot – higher, years. reliable feels hard for And in and really to area. becoming there’s runway sales that the we it’s seems in So

Daniel Moore

more further going are XXX? that increases that the price QX? were in seen at on far encapsulate Or sort June, is we’ve of based The those we helpful. in so It’s that where inflation do

Jason Lippert

some the – to gone steel don’t I up, can. going – a started cost our remember month back in captured that don’t whatever when Yes, recover of indexed, as things products, we We so that, quick lag some we just like we three away, trying have of XXXX, either. it that much costs as have And we’re and up. flat just give

right it it we and in XXXX, back normalize, when we don’t the give back impact the margin we where saw So we starts some away. that in We take on give then to don’t – And had it away. way inflation, because way down. pricing

some what that trying at the So to passed we’re as they are of But high and reasonable. stay along that’s in time, today. as prices cost where that’s aren’t much the we we’ll And going to getting as impact as June have can July. capture

not months trying It’s we around where at. So to – it. are about head feel tough get good three everybody’s we just

Daniel Moore

yeah, ahead, I’m helpful and – It’s last go sorry.

Brian Hall

I just compared been first that, steel comment. stable say since a they’ve if look was at quarter, second make of going relatively the you just I throughout prices as escalating quarter. to start to would the rapidly the

I So say would if you better the that in just that some going flatter use have would fact been been to way There softening on cover of just up, we in fact data the June still answer because of majority those increases points, aluminum. I at a but as the gone the there’s we’ve have still what the of has of believe least that question, seen than increases.

Daniel Moore

then lastly. Got it. And

early kind robotics the as more bit Just the start on RV supply labor-intensive. products perhaps chassis of new your margins drive Are other continue more for the you across manufacturing look in, got a the to going little you of obviously, the with along color. bit and efforts, automation and a being the there industry overtime? Thanks facility using is opportunities to automation labor

Jason Lippert

recently, motion acquired. There’s lots lean when of ones made traditionally of we’ve opportunities that the or buying we activity make have place. as acquisitions, don’t in firstly, all over we’re we automation to company continuous continue or some remember the just improvement the And any bigger

for So those good all are us. opportunities

existing the still newer have happening opportunities with that’s facilities. we And So acquisitions. at of of some a lot

input people continues industries of are we and into technology outside us lot what show to and having change on As a are your facilities doing. come use

on robust surprised not keep might County OEM and in these to lot Elkhart them we’re supply investment projects, return to moving we get per the on that, most and in side, can by side. forward. any than the much to we’re continue capita of where going the county country, so investing good has not there’s the other But a You the on be automation, fact especially more but robots,

to some really trying We are experience. good get

Brian Hall

of particular really at size other to that list to There important there. be many at able what comes issue want a comment to projects we from probably look one be down we scope. within of time buy particular -- There’s think XX might and when might five how in do -- to one that that buy of our might one the year. calendar pick internal be we at I

successfully, we’re on And think of it, to making when so, it do going I we big that we those projects. sure mindful that be doing take

those could expect we’ll you throw that do focused that to think we not be to necessarily at those on trying and of for we’re off. able But years I So get making tons few several are while come. to a doing sure kicked the right,

Jason Lippert

Does that question? your answer

Daniel Moore

Yes, it does. Appreciated you. thank

Operator

[Operator from Sidoti Instructions] & the Steve Our comes Company. line from question of next O’Hara

question Your please.

Steve O’Hara

Hi, good morning.

Jason Lippert

Hi, Steve.

Steve O��Hara

going I tougher little mean question to about maybe price way I or the steel parts is some of decreases increases you’re cost price be to steel much the of a mean, the forward? pay like would to any easier. the cetera, or but for the et the what of it’s just effort any labor the a better But is for effort maybe would where steel. things have I calculate index I is price more x exact through. maybe to mean there think -- there exact assume a and cost engineering for your paying calculate buyer I it’s got higher and passthrough for I a we the that, lower? your has more for it it chassis flows make

Jason Lippert

knowing They little talk be Steve, we waves just question, of a surprised pounds, through about thing of sell, that couple that their they with couple XX impact when you with on I the their was And have real to the small and get products days. I bit to small answering bucks, the in thousand bill to size was about to we a going cost, think thing. sell. on out don’t the dealer of that’s and helpful just really chassis in a But network figure product you’re is price then moving want work considering some scope these talking end. customer’s aren’t that to needle one little It how some steel the need would products the time the parts. of a they get think, of more

of timing I some So there. think drives the what that’s

Brian Hall

having in been direction not of pricing, situation But index. Steve, certainly try some formulate of one type think the the I comment, other – commodity is like XX have on way to we And this XX year a it. to is to situation. XX pricing again, game type at moving say a look products probably our to to year XX right plan

a it that the – – to need basis it’s be to we usually that up dealt that longer time mechanisms we commodity that market think given and pricing I slight be time down goal this around. market on one-off see, But term would in with the that the have appropriately.

Jason Lippert

not relationship a their got what the – when The we’ve focused our when needed, key the get we’ve And with is we got customers. we’re get long-term. of relationship and really needed. say-so. understand is, let there we trusting got And we’ve on got the we to great a they job price bit, there. – our got do I business, they feel they the customers part mean so drive to good process we’re because little what run we’ve Like the majority a we

Steve O’Hara

Okay. on benefit a away way mean fall, let commodity customers when you up, don’t take roll they’re take then and been pain I cost the as it And you willing the you of up? the term, I to you willing as get guess they to let have historically kind in then and maybe, you right back rise just short when hurt the talked about make give

Jason Lippert

yeah. Absolutely,

products it we’ve moved the years. you we think years, when And think engineered that done if at bit margins, better have we’re than I our at results historical last little look few the towards historical X%. you right I more look But that. shows over around EBIT and a

have to to try to it can. we we’re industries serve our So, the challenging continue to to and And fight pricing work and our we we favor margins. customers’ situations, products favor these going we’re going of when for to better best continue for all engineered grade the types

Steve O’Hara

$XXX I Okay, thank thought Made year, say for you million, the the said then Made, you. Taylor And Taylor but on this just did revenue wrong? you maybe that’s

Jason Lippert

yeah. Yeah, That’s…

Steve O’Hara

mean… Okay. And I just

Jason Lippert

for was That this the projection area.

Steve O’Hara

Okay.

million I right? year, $XXX last think that you did

Brian Hall

Yeah.

when the as look And that. Brian far look calendar to a standpoint, million rate at million of million $XXX as kind when higher only you so think not you it’s current even range. $XXX number going to $XXX forward like than run I a

Steve O’Hara

all right. Okay,

Okay.

talking So XXXX? ownership than rather about you’re your calendar period

Jason Lippert

Correct, correct.

Steve O’Hara

I’m Okay, okay. sorry.

very you Okay. much. perfect, all right. Thank

Jason Lippert

You bet.

Operator

Thank you.

of Research. question next from Our Northcoast Seth comes line from the Woolf

Your please. question

Seth Woolf

appreciate it. I Thanks for my questions. guys. Hey taking

Jason Lippert

Seth. Hey,

Seth Woolf

to you curious. the curious, for off I just and February? estimate that been retail your released for I’m hasn’t revisions just Hey. estimates any yet. making a you provide is guys it future that Are start assumption that there I wanted January Or March? through just does March your was from Just include number sales methodology

Jason Lippert

surveys. that number, get look side, a tell ways. on at you through couple customers We get measurings retail and I’d But we No. adjustments they the that we’re different in obviously our feedback you OEM any of that not retail statistical making daily. do same their the in

a results touch day pretty two see some in be these to them with them stat lag you surveys. seeing saw going XX-day we I basis, we asking the first typically we’re guys have and we’re that on in as with don’t every mean like what daily we’re So consistent months.

in in registrations a their far. and so that get on day feels that And what feedback they and we’re making good months. with it’s we saw first every sure of the trend So couple consistent

Seth Woolf

it your – Have based less retail very month little April. guys from Okay, the same different more has solid still the in on what it a conversations? over these good. is recently, Or of momentum bit I you seen guess or you of been seen? momentum concern anything more have

Jason Lippert

high and other saying It Yeah. their then the [indiscernible] mid-to-high everybody like about talking day single-digit what retail confidence is that there seems seeing is is on a digits number. and single note a

So all now points we’ve that evidence to got range. right

Seth Woolf

we I guess talk Okay, but a there’s percentage content wondering you look – excellent. strong sales on of price I by organic how this I what at, the if it’s of driven sales know for topic. big much, All if were could growth, guess about was a how pricing, I as quarter? unit their or just to organic right. moving really increases much

Brian Hall

market This Seth. would – price our was towables, Brian. I the than growth. is the less significant of $XX approximately Thanks, $XXX on of estimate increases

Seth Woolf

That June great. great. for how could and much price it the of that? helps, really these That’s add increases Yeah, that’s Any helps. to Okay, X sense X at that helpful. April future or

Brian Hall

at Not time. this

Seth Woolf

helpful. That’s Okay.

to your you guess vehicles impact. talked sitting a So, maybe, meeting, pricing, with the about way down on you’re the the lot you’re in so just create how would I you’re minimize that customers a to decontent trying ways and guys then retail

you aside result the got from already what’s price and out consumer price to work to hopper, the increase in the any when price what the see as decontenting? increases figure the a try retail increases commodity have you net of So of the done may you’ve that retail your price inflation – out

Jason Lippert

That I closer customers engage can’t all the that the or they’ll XX% X% different but to coming consumer. with different the were sorts because open of include doesn’t sure the some all tell ranges unadjusted get new the type or about talk of we OEM the some I’ve to heard all increase you specifically, in months, house as there’s and the for over released. price decontenting of models points,

that So probably. a point would just quick be there

Seth Woolf

Okay, from ahead great. one a kind thinking And then the just last me little of bit.

stronger lot than I think a of April, see. for were to people number fantastic So looking

part. any driven you first is it’s little products there think of you then low-to-mid June but desegregate I much other organic to That’s is could that occurring other make, on, you How the by a growth. probably the April you prebuying there So that’s increase? going the Xst do think ahead price try that being increase? And the of is more? get to prebuying bit with difficult with Xst any price Wondering, if XX% that of chassis, said some

Jason Lippert

can mixed that you don’t that the And Brian customers our kind question. of we – point. that tell customers have on answer I’d don’t prebuy

Brian Hall

price it to is part I of a April. look it. content I mean on head, enough then of quarter that But driven of all would it’s that is the the it top certainly, at I similar have industry. still most first very at impact and my on don’t growth

Brian Hall

said. what Seth, one typically ground customers adhered has what the to products our look that. the on to when at you keep Lippert follow-up Jason

you look So can’t like process that. the to have or room be the to think revenue anything don’t and have they our don’t do able they at that

never a situation like stuff. with our So there’s that

Seth Woolf

Okay. been been Yeah, have violent have just curious, swings commodity on costs. because these some the

reverse implies we the low stuff, you on at overbuilding And question there talked about is there guys are dealers the of lead that I shorter. the year the so back think just X% we the talk, possible of kind house, seasonality, lower in digits see year, think just with historical on the come comps the times retail is is, could we the in double shipments customers noisy seasonal and it that I norms, referenced little April this still back to that high as the if good when a about go the a comes so I sit and in guess wasn’t your had pattern of in even half Does wintertime. we capacity about growth, rest me that they feel for been get the RVIA and has question problem is single some last there open plus to the the moderation, outlook, – shipment, availability ordering So like make sense? with OEM it year? it tell

Brian Hall

it’s the long scenario. these yeah, a always like Yeah. buying – of are period it’s dealers’ habits things a – possible performed time. But over Certainly,

make they to start not guess in fall a look whether at that that’s in three are X our is, are that the up But our XX% coming the about market point camp. the that air things campaign. approach last are move-up So at buying lot million different and this in opportunities years, we’re time. campers in I’d point to These the really I underestimating, of RVs and diversity talking new to households looking

at the lifestyle So points. price campaign positive a of with the there’s and affordable level lot the just statistics entry along popularity RV and opportunities RV and floor population a between of growth plan

lot a good like habits just of out some and the of there, So that. passed things maybe upside buying

and is we’ll story about some I think the got that. retail make – we more watch probably there’s if I after then for year. that just numbers, the – tells retail rest the talking strong, we keep But think to and those retail of assumptions educated

Jason Lippert

comment more back quick become a other a we heard one at call. Patrick’s the look going be, the back certainly feel half there half, comp the the when they’re think bit in would situation. little like But week I to last that’s little difficult on you

agree at to little to when that looking comps it’s So a bit the comps we see think I favorable. probably, specifically more those difficult look – you’re

Seth Woolf

forward guys. yeah. Okay, you, eye And it. an [indiscernible]. We’ll on keep Thank to I look

Operator

does the further like the This for program remarks. you. any Thank Lippert to back conclude of question-and-answer to hand program. session today’s Jason I’d

Jason Lippert

quarter’s will you. call. joining in see for the Just call thank everybody on us And Thank today. you want next to we conference

Operator

ladies today’s participation gentlemen conference. conclude your does you, for program. the in This Thank

may disconnect. day. You Good now

LCI Industries (LCII) 4 May 182018 Q1 Earnings call transcript