LCII - Earnings call transcript Q2 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q2 2020 LCI Industries Earnings Conference Call. I would now like to hand the conference over to Victoria Sivrais. Please go ahead.

Victoria Sivrais

Good morning, everyone, and welcome to LCI Industries Second Quarter 2020 Conference Call. I am joined on the call today by the members of LCI’s management team, including Jason Lippert, President, CEO and Director; and Brian Hall, Executive Vice President and CFO. their just discussing moment. be will results a in Management may that to made LCI But number statements of operations involve like uncertainties. laws you the Industries considered certain securities under its risks regarding first, I’d a call inform statements and forward-looking conference in and and be today’s

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

Jason Lippert

Good facilities delivered than the Europe results to Quarter the LCI morning, quarter. for weeks production in suspended quarter, due across our the better the second COVID-XX despite U.S. majority the expected to Call. Earnings of everyone, at and five of XXXX welcome We Second and first

driven a strong well in RVs production $XXX retail Revenues positive results quarter deliver This fundamentals quarter, That driven traditional Markets consumers with the businesses RV half RVs quarter. down the little have quarter. demand strong and the for Adjacent and our demand quarter said, demand exceptional this to to in of remain period, of help getaways. combined including May, Aftermarket boating and largely allowed vehicles to There's resumed June record month International strong retail likely for cashflow to early by in production high in and recreational decline. the in latter profitable and the choice. beginning safe second the compared for shutdowns prior in and need XX% of outdoor us boats July, the were and the the go-to the RV as in million revenue that doubt as the outdoor rebound for vacation become also growth we products The away find increased consumers safe and As vacations recovered recovery alternatives demand in long-term offset in sought of rapidly, and by to social retail summer options is of allow the the soon. anytime XXXX distancing industries activities and not going that alternative to as

both consumer said of to financing, people year, increasingly to term quality RV a and all are this the off innovative products, Americans first-time made high an current the restaurants, we'll road RVIA survey lifestyle the drawn as of American hesitant and Leveraging able near for capture us. many XX% report we the available our in uptick hotels over To trip With to for. favorable take that RV RV, and convenience have likely While consumers vehicle they, of confident at of recent recent looking solid providing are start reputation to led highlight along in The be from reported months. addition gasoline demand that low are months, interest make consist XX that an incredible prices road a of with and safety with said are this amenities a many significant a on encouraging for vacations and the using RV's trip for travel this next million decision amount trend, RV restaurants buyers a people both statistic are even while they'll an restrictions, beyond. recent in rates XX into these of AAA road. people will stop the

production start sales of for were consumer of with the As by in demand and the RV shutdowns retail year-over-year million year-over-year in OEM LCI. the up quarter. been quarter, at more temporary the weaker down $XXX sales recovery to June, We've the RV than a XX% encouraged result for XX% demand

Our in would an two XX% higher revenue in output history, XXXX. July company were place the than at all-time in us And rate for June biggest months addition, sales July run July and ever high rates over these with XXXX XXXX.

wholesale keep prior that facilities in the periods, prior increased demand operating of X% $XXXX. adjusted sales to Despite a coronavirus. beginning lower are increased to and remove side, to in Furrion adding environment quarter, capacity per outbreak had been closed reopening with the from production the up content of RV to towable On OEMs are year-over-year, the

product content is level share driven RV, year-over-year per in decreased motorhome $XXXX, innovation C sustained mix and in entry RVs gains. a market units. smaller to driven new towards by Our Class increase Content by continued X% shift towable wholesale

XXXX. in leading both outperform quarter. our this to developing make strategy keeping on Our total challenging We of like The growth. RV track all of XX our of execution industry, target by to to positions conditions in focused make outside RV the revenue acquisitions even remain together more months growth, International the markets our On during these up strategy incremental reach the gain us on drive trailing advancing as continues OEM grew LCI our markets broader quarter. positions to these up markets momentum a XX% combined now last and market our markets on our and diversification and continued through sales, Adjacent, XX% further organic having diversification than basis, Aftermarket of strategy

our the which April in we our latter production quarter and adjacent part by various production for in Market driven temporary half through to strengthening from market. has which as acquisitions, towards biminis in Revenue Marine work awnings year-over-year $XXX trends area is of The marine As million, our driving May. and marine, as organically declined progressing SureShade integration is also growth early demand strategy, same we RVs, electric secular for the acquisition category of business in benefited the this our presence the and planned. of of both diversification markets. long-term Adjacent brand a strengthen shutdowns focused across second XX% of resumed the

forward, on majority America a of all solutions will As LCI the to and the types shade boat opportunity North on standard popular this of types. as for become boats substantial in a predominant player shade marine solutions, be going and Europe, continue growth more

continuing Aftermarket. innovative record and generate growth Echo, We're distribution Aftermarket is June includes gain year-over-year. with exposure will up doubled late grew hitches and primarily portfolio, Aftermarket product second to a products revenue our pleased CURT the of share Total the For in selling for CURT help July, than in high CURT of extensive acquisition the number million, an segment in €XXX dealer opportunities, like wide consecutive channels and products. a and quarter, to the new to in the continue of support integration today. XXX% with our year-over-year, a more to BetterWeigh, had market sale by and very in Group. which cross-selling and of an XXXX CURT’s revenues variety driven RockerBall all-time

OEM since many categories proven business Aftermarket RV competitive cyclicality outbreak growth counter different businesses. as of of underscored exposure to it mitigates our well. our Our the a The cyclical marine LCI of be the advantage a and share grow steady COVID-XX will by key for to in the continue to impact has as

demand of result taking a increase in outdoors unprecedented consumers been As has numbers, and to Aftermarket for there parts. a subsequent the

also that January for XX% the this Our we In a acquired Polyplastic acrylic in disruption units substantially, the production of business operate of year, International $XX European sales was products with Polyplastic, continue grew rising that handful million. manufactures of year-over-year window of the manufacturer premier environment, for quarter without to caravan a one industry. windows COVID-XX. normal to from primarily business significant operating to

in barriers needed to at However, customers. panels worldwide acrylic stores cashiers as and acrylic demand as an increase there between protective separators for registers serve was

are for some integrating markets are have has safety. we its spaces Europe help the suspensions levels and as top COVID safety towards our and in positioning to implemented ensure across our been these uses. levels, Femto and production and Polyplastic operating implementing of plants pre-COVID at remain Ciesse. and first acrylic in able at specifically our was end confident the the operations and caravan pre-COVID we have the remained result, our latest production, these further growing facilities acquisitions outlook their As above rail, Lavet, May. member protocols After of Despite dedicate our heightened team quarter, these we The health now our a related near-term impacts, cleaning and late since temporary of toward in of Polyplastic, work in marine, manufacturing majority Marine, above sites to members Lewmar sanitization team priority,

with really share. opportunity women of for toughest to to men production quality we have displayed extremely proud and executing agility dedication teams then to communication, down, unbelievable ramped an fantastic supply To well, These I'm one periods chain this out to the minimal production, done by exceptional as manufacturing creating and crisis, gain exhibited other have continued we then showcased within product. levels, team’s of like meet delivering an did, an the Our our a and our company's in space control. record really effectively customers to the during as pre-COVID teams. leadership for history. as struggled is shut We've areas suppliers gain to in have come our products footing, quickly on we exceed market restarted testimony efforts to the our leading and job our organization, incredibly demand which our disruption some manage execution of us

very our consistency through were highlights feel solid Our leadership. leadership tough maintain we time communication navigate strongly And and strong pandemic and due of that the to success our to further able models. the through culture LCI’s and this values teams

and constant weekly step production years team did values the thousands of brought members operations we our can to them While dealer leaders and ensure environment we many OEM we able leadership as demand culture, to during record have points and our of spent continue running were changing effectively partners with developing we taking and each were we as this sole quickly the get aware up to as companies to curve. stay online. to keep froze as maintaining been reason to to quickly we our our reached levels. We're the The touch back out time, react ahead have of rose

quarter, In to work we success meet, addition, beyond for achieve has helped far the us increased enabling efficiencies us these expectations our continued levels. while drive initiatives operational profitability with excellence to demand

over project window automation are continuing turbocharge executed and opportunities finalized large quarter. to we the We as a

projects to Additionally, we improvement help as the environment. well come with quality with all-time demand and have continuous labor many that initiatives on going high an challenges as labor

a also of needs. R&D piece new to expertise long-term critical our variety consumers a meet as Our innovative as serving key for of growth for innovation a LCI strategy, competitive is look differentiator products increasingly and

an While share we features to new to are industry and products new as operating technology in drive market invest growth. we well existing develop in will unprecedented and environment, content as continue leading to products

OneControl is poised consumers and adapted is more Our growth. frequently technology continued for becoming requested and among

We other electric shift from to see jacks as push consumers our button more also and products. electric more OEMs upgrades adapting to manual manual

Linc. potential auto standardized important for a excited pressure our RVs space, ability Since which XXXX, about to the to our we be a have the This to Tire today, current newest have We improve of its pressure, launch product, temperature are system alongside is announce in are regulation similar the place to the safety called has on there's feature we system product but tire working This believe all and no safety upcoming to a alert technology. requirement air automobiles an across OEM tire partners that management similar to been mandated owner RV RV standardize. should due and to pressure management also RVs.

we've the focused to XXXX new not spent to generate on then, R&D solid strong cash in windows, are teams awnings, businesses executing the innovations able many systems flow on and financial developments been After Since first our on to working of already these Group. integrating mention, aggressively also enhance within new paying half shade we the CURT for further position. debt. Our down XXXX, and acquisitions

to tackling to cash. to to thank way open quarter, down second once for While tuck-in to Brian all what in most preserving our recent and synergies want beginning discuss to I are turned turn forward. in resume up small navigating in will I remain stepping quarter center team acquisition continue around challenges pay priorities conversations Hall, and challenging to on and and our have could LCI more In closing, our while the current anticipated, results. rising we a this environment integrating to and realizing out business acquisitions, members strategic and occasion new of the driving financial debt now company's acquisitions, pipeline our again unprecedented continuing from we never detail the be history, on our also to CFO our

Brian Hall

Thank you, And good Jason. morning, everyone.

to Markets. demand for decline segments demand. $X,XXX color declined previously as XXX% year, result in million in increase and we content X% in edge revenues to increases QX and towables remains Aftermarket compared XX% XXXX, partially consolidated of businesses sales and of May to International net XX% of driven million smaller to June Product were to increased July. our sales in in strong content of primarily shutdowns strategy marine Adjacent sales level in year, by and primarily during sales to trend months motorized driven the offset diversification by total increased was production forward. while traditionally second International times, prior by wholesale same XX% sales unusual response quarter units. continue adjacent record recent less content entry declined Sales help The concluded production range acquisitions the drive sales to improve mentioned pandemic, in In in for an RV XX% that $XXX to of offset to demand was impact well in these for prior of Adjacent sales retail month while resulting and the compared other decrease to shifting as quarter. drive the to in $XXX content year-over-year mix growth and The declined markets industries, add growth temporary as partially look driven of recent to quarter XXXX RVs. the American RVs QX increased markets, for quarter Our which industries production critical quickly contributed value our to decrease adjacent led $XXX motorized growth The net declined Content to the The X% XX% demand we our strategy the unit shutdowns XXXX. X% the to to was shutdowns the acquisitions, also second XX% leading the in compared XX% at sales prior in with through RV The X% prior the our April further per recovery which XX% from Furrion result International sales continued customers as towards represents year-over-year additional which part the sales million Aftermarket XX% new the product for a the increased to for million. organic to by the the an to products international year, of by XX% due primarily OEM to offset compared of year. OEMs of retail driving in the the decreased April, to during and but effort $XX Aftermarket to North North the $X,XXX COVID-XX innovation trend decreased introduce American per demand targeted a as sales content driven which $XXX increase accelerated, introductions million provide adjacent excluding RV our in the in a company's year, impact prior space. the helped increased adjacent in units the unit declined in per the have start unit. year-over-year. in have products, RVs of RV has to towable sales June marine, industry compared to towable sales and the while

the Aftermarket performed previously we very well mentioned, quarter. As have during entire

Excluding during XXX the quarter margins the up declined of and points XXXX, increased acquisition, by from impact were the April, of during the down X% XX% quarter, driven X% second month of the the for production. only basis XX% then of from month decreasing Operating June. during May sales concluded of second quarter impact roughly shutting the primarily disruptions

fixed start April, drive to half year. tough concluded the over driven environment a CURT second team continue million slightly third EBITDA SG&A net the $XXX look our or identify in million. $X.XX per result share improvement, million the costs the year-over-year net as weaker a XXXX, a During prior and for decrease SG&A to The overcome previous cost XXXX to to was higher per production $X.X improving decline related partially QX costs, expenses of margins compensation in year, were quarter. intangible of result engineering partially income income in in in QX the and costs, by including Adjusted due by $X.XX per $XXX costs efficiencies. $XX.X net with share, while additional margin $XX.X to million. or environment opportunities QX compared second warehousing This sales. Adjusted general, was new COVID-XX. offset diligently a decreased we to million organic worked share. to Non-cash between demand strong $XX.X diluted and amortization XX% decline non-cash We initiatives $XX.X million administrative XXXX during in asset the Selling, was the in margin the operating $X.XX operational than million the quarter, $XXX and leverage advance quarter, of GAAP driven amortization, acquisitions, from temporary quarter, or be excellence labor by expansion and for stock-based costs. was the Quarter for million to the was and shutdowns and $XX.X to at depreciation as SG&A growth guidance, quarter million quarter of anticipate the

months the capital $XX million, and activities operating million shareholders cash returned to June form and used ended $XXX was business $XX for dividends. from was XX, For $XX million for XXXX, expenditures, million of acquisitions was generated the in six

as of we strong end current flow, debt $XX beginning available are At cash the sheet, our up from strong million under $XXX year. of We cash the million, operating borrowings credit down pay facility. totaled a with continue equivalents to and maintaining cash quarter, balance second at of generate the million the $XX and

XXst XXXX, liquidity of by of strategic quarter July we management during a to of COVID-XX. we position As put place maintain million, the total cost the actions enhanced $XXX mitigate impact the into

the to the year and remain For our capital XXXX, $XX around $XX non-essential full $XXX million, of debt of continue COVID-XX. the At compliance second as delay we debt in targeting million position quarter, net with covenants. million uncertainty outstanding between expenditures had of end we we are expenditures and in wake the

have to we prioritize reminder, stands X.Xx Currently, the significant which and acquisitions As debt-to-EBITDA. EBITDA we leverage target under long includes as of we will debt EBITDA, X.X debt continue to no down net our to times, a work position at maturities towards leverage Xx meeting just pro-forma relative paying term, until XXXX. our of

continue and on strong executing our through strategic remains financial remarks. is questions. to with manage the to our Operator, Thank flexibility position That of ready take initiatives. end environments liquidity of Our variety ample prepared you. we're and a

Operator

from our with the please, ahead, first Go [Operator your line is Instructions] comes question Craig Baird. And line open. Kennison

Craig Kennison

a in on to question, curious, year, Brian, standpoint, demand impressive chosen margin QX how Hey, From in dynamic a my given side starting think you've the thanks you, really seeing costs? very quarter. balance and this what taking with the margin we should of through for execution EBIT manage you're how

Brian Hall

Craig. Hi,

things. a know, You couple

provided all, within -- within pretty good I around color think that the with first start SG&A my of remarks. prepared I’ll

look to then one I margins. So at think be thing would that gross

much have, somewhere for labor I'm margin and gross first we've higher pretty on volume. considered operating still on all things Those around got It then percentage margin. it expecting you good that leverage are, have, that kind additional year-over-year, gross costs a call it that's efficiencies, so our we look June. if an QX, And certainly fixed point of at a gross us. for foremost. you And is margins, in than at -- for lot these of is

a XX%, So couple talked of margin. between in XX% about those, least, type gross at we've the the past

I probably and think the at we're range the end low of for there QX.

Craig Kennison

of And growth come the has RV you Jason, comp your just to in next market, some try think comment great. this it? demand maybe Thank as you incremental maybe you. since on That's creates some sustainable the particular, view some that pandemic, in all whether of then of challenges year or

Jason Lippert

in in with demand, Well, we're of spot to a in record the industry. where, respect sitting we're limited the capacity terms total

we know, as responding we're go the quick right as can't well extremely as that low, You meet are dealer to are out our can OEMs inventories and to now. seeing demand to, enough. -- facilities the they suppliers as build Obviously, quick

mean, I post the pandemic position the travel foreseeable there, and anyway. for and a lifestyle, options in put future, vacation us limited So, given out

got feels are pretty decisions just You long a make to know, runway. different people like going and it's

side. of the things look going And are sustain those and planting on standpoint. we're capacity got biggest with quality want the where can. We to -- to, how we right at to don't the I'm options and how all right be we that to out now, flood the figure a trying new increase a experience want of big CapEx shift, customer from feet we've RV bunch our add then We buy buyers we're some go of out and So the both now. second marine capacity add we buildings challenges and

Craig Kennison

you. thank Great,

Jason Lippert

Craig. Thanks,

Operator

the line Research Kathryn Go Thompson of Thompson please. ahead, question Our next Group. with from comes

open. Your is line

Brian Biros

holiday are you to sense on up on and Brian RV was and obviously numbers season, those the Hey, impacted good trends, working actually think the guess, wide segment as excluding is I and I This Catherine. wanted OEMs company morning. the holiday through like-for-like up what by my Do over ask mentioned. Thanks you about sales of any basis, XX%, bump? July guys for kind questions. that said of for you XX% have taking yeah, might be, I

Brian Hall

You look Brian. a know, things, I would at couple different

talking percentage double from I they digit by run do through July that end color. Jason into forward. the But, hold August have add through about least the type clearly of we're September. true, continued rates -- growth that expand their think will and third to to and quarter. have, probably slightly know, You July, more And we expect at

I -- it think try that wholesale I in it of look you maybe in to can put So, to shipments. daily terms think terms of, at use,

levels like industry seemed to it today. in back of half of some and back the has ever turned those be experiencing XXXX, you to were, to know, in, highest we're comparable the know, that You Those pretty year. what our these that are comparable seem

Brian Biros

specific in Aftermarket was in guess the And mentioned you in segment, about guys and segment to that trends about I QX? how All maybe margins think for that I can that July right, talk at helpful. segment,

Brian Hall

performed and mean, would, so how that end talked Yeah, I were, results during color they quarter, that even Pretty June. from -- they good a start fantastic pretty point year, about the month organically that of in up the think knew month I gave QX. point for the -- typical on I growth that during you in of we an of forward. see you from first a think would April, this you time, -- the from when of about to little slow that at during all least we've they that at XX%, Aftermarket, as organic perspective at said, know, we

plus within certainly is as But what it the seeing run it’s off, to has know, and into I'd -- you should of the season when start a taper the an over businesses extended. organic up is that little from going the the Aftermarket still, existing of you percent. say definitely I CURT longer get year. bit we're But business XX months July think we're later perspective, our to

Brian Biros

Organic?

Brian Hall

it’s expected pace to with still quarter. Yeah, during that -- that third least you at organically. Yeah, performing, so and the performing during -- the continue

margin from perspective, a segment. is Aftermarket which know, a our to addition we've you and significant and So about talked CURT,

comparable synergies, X% talked You tremendous you've certainly being about opportunities that I as would overall looking you, sales margins, at of know, as on a certainly made originally and times, to X% to to heard me more margin we've but our we're already X% landed. we few progress tell say consolidated close

color margins you nicely working a little through to we've bit know, bit you So gives and still synergies that a hopefully go little have progressed more but the of on there.

Brian Biros

Thank does. It you.

Operator

Your next with your question King of from the line ahead please, & Go C.L. Associates. open. Scott Stember is line

Scott Stember

approach in growth growth now Maybe that's XXXX. maybe and to kind morning, labor what to seeing some, industry expect quarter the through been there's lot just to the touching rates my a being questions. But industry and Good would from you're the been capacity plus, able taking the of added. what thanks of you you're base pinning expectations back levels, guys. nice Obviously, talk could Very for just again, volume? this kind of see continues as the in And some about on you those are side, it, as go what we handle your to accelerate? of --

Jason Lippert

Yeah, sure Scott.

you've capacity now right more a in whole. the industry to that think I as access got

are the labor right and chain supply bottlenecks know, now. You

think, it's get a time I So, supply to chains for take up of going to speed. bit little to

pre-COVID chains say, XXX% back -- And recall, XX%, you of coming levels, the turned toward then down. at then supply April, to at May. almost in shut the And our XX%. more we're telling of back were around we than we end If and needed,

stressed at a little are industry heated out Elkhart know, where get gets this right chains labor. we're real County, we're supply quick you up, we today, a record levels especially when the and So now obviously, position of to

things always so those way, got together so So tightly but is, being finds knit. with and it us, working us two close industry of this against you a all

months will of a But resourceful. of supply find we're on better, heal bit our through up, we'll adding more automation get labor the I over our well know, end. on to say, all bit a in ways said these some a little challenges. continuous little couple next remarks, we'll I'd get prepared get will You chains the Like basis

do can one projects that know, up allocate those members each we do continuous projects improvement You we team toward other of areas. frees we are

this we're job areas, surrounding the a of have So creative quick well, in to performing mean, outside lot trying end from rundown industries of business. not be counties do get are into hold the and the on outside where so to there. things as that our trying and bring that'd are some we're area people I Because fairs -- that there

Scott Stember

Got quickly update can running start you up it. to attribute an your and to when us whether it's talked chassis and will about earnings? automation get And you give the project, automation, that on

Jason Lippert

production Yeah, beams year running because big us. and a -- it's such for It program you and the working just of through there a day know, so producing couple we project, upwards debugging a started bit we're hundred little earlier a now. this is

project, obviously. those is it's to need just million-dollar much a today. it's But So than it things to where higher get level we it what not one a of

in to us bit a implement in Some product little timely they larger period those how capacity smaller we're with on chassis it's just have to it's going projects, pretty of a But it's quickly. of we but help short because divisions add progressing. time. our a the projects ranking take And smaller can extent longer, pleased

Scott Stember

Got Thanks. Thanks, guys. now. all I have it. That's

Jason Lippert

Scott Thanks

Operator

please. Wightman line Our from Wolfe question Go Fred ahead the comes with of next Research.

Your line open. is

Fred Wightman

other bigger guys, just Hey, have delivery Jason, labor chain morning. about of and were the transportation challenges. mentioned some bottlenecks, talked two and supply good OEMs but you

an that And issue. next for is industry for think what over wonder the few months? So, that do the means I still if reported you shipments just

Jason Lippert

that comment. to Yeah, not I Again, demand. think it's certainly that's an like for a problem supplier, a our good this but with one the the to it's mean, industry take I of a you allocate deal record months going them know, need it’s couple up resources they anytime industry, to ratchets this. as

and sold, they the these ship to most are be dealers resources take because to just units it'll take get help get couple are they'll customers to -- motivated find And of where So months, help the opportunities delivered ways can, quicker. dealers. to -- incentivized, and eventually to to these it'll a the a new units find but needed uncover able certainly creative

Fred Wightman

had mentioned your biggest share given And capacity or specifically benefit? segments ramping could at challenges think you then some the you great. just see issues you opportunities, market guys Okay, what competitor, do

Jason Lippert

suppliers don't want what some fallen components the in big some few way down we've I a components short pick where have to time. now, the we in key our just Well, there's call but opportunities pretty able of right of a or caught get up been and segments, market period our to share core into good

rely side, in, they'll on the especially this, this gaining chains last we as as busy buyers. even the typically, haven't for bit up of share Aftermarket you we we pickups had say, here are don't and But and don't, been months So little a where we're component, things when market significant normally, call sizable long share like on there. we're procure we've And gains. us supply few market over competition, can some products and pretty peers supplier

some So there. seen both OEM, and Aftermarket we've good pretty movement

Brian Hill

would add just unit. about add, you I to think our you that, content I And total per know, would

You X% entry and know, level certainly a X% growth year-over-year seen this, towards trailing turning shift X% product, we're strong for while XX-month to pandemic, been we've still on during a the a in growth basis. and, we've guiding this

run continue So an I for quarters. in to future here to opportunity there's think that

Fred Wightman

guys. Thanks, Great.

Operator

question comes from with Bret Jordan please. of next Go Our Jefferies. the line ahead,

is open. line Your

Mark Jordan

Mark is Bret. on Good This morning. Jordan for

OEMs, RV OEM, but talk the Just Adjacent about current you the the OEMs? wondering I'm if is about demand, really strong different seems looks trends in it among the can it like thinking Adjacent

Jason Lippert

marine. with Sure. We'll start

issues You know, -- demand. We've supply on much marine dealers our the -- touch the points experiencing seeing business, side checked just is. and stretching of lot like a we're it's and chain like OEMs RV much as there they're of recently with and record and labor they're the capacity industry all-time strong and the it's

the get the So financial right -- didn't a marine back. They you Americans all and little then government. help the from Europe shifts that you consumers know, second up know know, ramping area. we're the didn't to you And bit in received now capacity the is come slower

outdoor back bicycle, still and business it bit a you lot there carry to channels everything bicycle there same paid hitch. if know, that demographics for slower marine. about at they in know strong. come CURT little if and attention earlier we industry the if you the supply are talked but We record for that The to little it to a the you a demand else, you've stuff up I of And So bit RV products, going things, the look of outdoors, around, know a Aftermarket, you're the the mean, super needs picked look a outdoor you hitches. lot year,

trailers our They're up, kind us. supply cargo Still like part whether well a the you a significantly up adjacencies that buses, what of and really segments look trailers, right that for much got us significant some the We're of the cars things housing doing seeing look that SUVs are hitches so of the or for most at is landscape commercial some components industry. you businesses up here. nearly that. leisure at, and buyer then, of cargo and there? not those that we trailers -- is not business, flat, covers as that's for now, trailers, to at clustering trucks. look of but industry it's, first-time And of the in, then if as which other outdoor you they're And we're you So lot businesses of

Mark Jordan

CURT Great. Yep, group. quick thinking about sorry. just the real And

demand well are been products of know, products strong accessories truck towing for products Is know you’ve towing pretty the seeing accessories but truck the things across that, such strength doing know, both hearing, discretionary You now. right business? one you're the as I there's the you and

Jason Lippert

you look got racks at record keep bike racks in and bike we've racks Again, too, there's that a a accessories well. I as doing as doing we our mean, that we some area of that in not CURT it's leisure supplies demand, When the situation full a truck can’t products bike much are areas, stores so. -- Yeah, of of make, but it's lot up lot where bicycles a with lot business of so outdoor is it's fine.

Mark Jordan

Thank great. much question. taking you Okay, very for my

Jason Lippert

Mark. Thanks

Operator

Citigroup. Go the ahead, next please. from question comes Our of line Collins Shawn with

Your line is open.

Shawn Collins

Jason you. Brian. Hey, well? Good morning, and Hope Thank great. you're

Jason Lippert

morning, Good Shawn.

Shawn Collins

circle ask Hey, I to back about and wanted labor again.

You obviously talked about second the and and constraints whatnot. shifts there

I in XXXX, with of compared how to XXXX ’XX you wasn't the You this Thank dealing you. compare period, could late please? covering but know, you're constraints and it sector the ’XX, period

Brain Hall

we're I there. job a at certainly ourselves, know, hearing fairs Yeah, think We're don't successful members. three point I wage which of on that yet. wouldn't. of, of team pretty been in obtaining little we've We've out put bit you pressure two now, or

I that success in we So, we've team we've yet. inflation don't time members, had seen were that a of in, seeing adding the period lot think back during

still there's this -- that closely. had we time to point, -- that of And occur. But at experienced back level know, same You time that haven't we issue still think we're the, I then. watching we for haven't the

Shawn Collins

ask Brian. question my you, second helpful. if I could just about great M&A environment. Okay, Thank And that's the

are a very This environment. guys You very acquirers. unique, different know, obviously you obviously is experienced

of possibly commentary you opportunities greater M&A seeing in just Thank dialogue you. the terms helpful? environment? future? terms seeing seeing, So are uncertain because of and dealing be I'm unique frequent wondering of communication, you with in on people the of, of in kind this future Or would now that less any greater that because So are what dialogue you're are

Jason Lippert

Yeah, sure.

year. $XXX So, last record million we you know, a in acquisitions had

So, we've last to I've acquire done you conversations. acquisition we, April majority this we But, that go and and activity do, been of were we obviously we real if pretty, interest mostly planned year plan approach on, made a spending even May, interest on strategic and you is pretty tell that with I -- of quiet we digesting we that large we if us. said, here, the That pre-COVID businesses year. to you, businesses acquisitions pipeline over since how the XX or so are respect

for need wait quiet of product good we we getting -- after they're couple started deals, conversations right our purely those to that being look kind core looking and consider to of be a doing now conversations. we that to And, prior, go for continue there's So, working not a were don't to businesses lot got constraints. us have good strategic RV for and brokers a There's we're that know, outside we But we but at components June know, you do you a try are out lot fits capacity there, strategic, in from know, badly very you bring months to of to today, lines before our business. going just suppliers job. that customers to

on companies the So we'll the RV side. that at aspect both and from be looking marine

But strategy and on couple So, we're, active we're of been we're you staying know, XX% where we've see years, the activity you XXXX. RV quiet RV last get, by RV outside that diversification sales outside pickup. could of our to continuing certainly our of trying

Shawn Collins

helpful Appreciate Okay, great. commentary. it. That's

Jason Lippert

Sure.

Operator

comes Our Research. please. Rolle Brandon ahead, of the question with from next line Northcoast Go

is line open. Your

Brandon Rolle

questions. my Thank you for taking morning. Good

Jason Lippert

are how Brandon, you doing?

Brandon Rolle

industries? within on shows could could and a And inventory was for potential capacity down also house already impact for how I boat it is be industries? up, RV hoping RV both saw Show And First, then comment you minimal closing as follow maybe any I you there the you as the or cancelled. would or comment you. well? open impact on retail you if the the Hershey boat and know, used environment The RV know implications Thank the of there's

Jason Lippert

a they have new Yeah, respect sales I We record but customers, of to in with happen we’re the getting do of to that them with [PDI] just work and now. the -- much on start experience don't ensuring dealers that the and with more what buyers, know to handful expect the things just the the think to to shows. We’ll lot a with need with start there's to again, on going their you made. right good -- they're the getting customers respect a getting dealers off comments They especially the really -- and the RV. units, to of retail

the So thing. much you know, out open house retail expect of, shows goes, we same don't

see a And typically typical down because almost a have changes that heard we are we we and of going it's that and the showing lot, some month. new the slows not the to product changes have happen, us over that's showings of bigger with lot having of largely prototyping but products town a private activity, That's some ready likely, coming for You for some to that dealers and a know, doing I that see. But is keeping fast traditionally would clip of terms for industry stop is the don't September. OEMs. and year product lines right slow. at model this a why is -- We're the would good now. that things at model going what change, the say change We in of like August the us lot in getting to

So run able with a large part pretty -- a volumes. a good of with at that to pretty not good at happening, we're high rate pretty, August --

year's and day ability houses is every run to to for there. So, happening, good news we're is have run to designs. going that open our more use that not had the OEMs the And product the of is of bad there's, volume of at news that all kind be orders facilities just to out plenty prototypes to last stop going

Brian Hall

first question from use, your points, in touch on used the products there. the part our way there isn't of out of Brandon, much you And know,

you're So there's and you're tremendous not not. non-existent. I a time so buyers, mean, shift trade-ins basically it's been such and, first getting towards

Jason Lippert

We we the to be the the of rest going know, the to that to, be, of you retail out are clouded and XXX. of end from numbers the through. able that, I coming we're you the the at over feedback I not year. number a know, -- think, registrations lot of is you things were -- going to Now, figure know, very there's you be for clouded think, know, some day, think But going to think

when behind actually closed buy people months have Timely, aren't the they unit. at the and DMVs they talking registrations states, all. I'm you when Some know, getting

to, real the from actually inventory hearing So, running retail industry the the are that versus out to, I pay low caution you what attention registration coming kind how through DMV. numbers back we're what is and at of there is

Brandon Rolle

Okay, great.

Operator

O'Hara Steve Our from of & Co. line Sidoti comes question please. with next Go ahead,

open. line is Your

Steve O'Hara

morning. good my taking question. Thanks Hi, for

Jason Lippert

Steve. Hi,

Steve O'Hara

year it based last more in I comfortable the you I wholesale, inventories in the know, I going to sure mean, dealer And concerned maybe know, what right and of I start the what that kind -- around on of holding get touched are in with, into your slow -- but winter Hi, than do you fall then, You but, know, pretty, I'm a just more mean, things it’s dealers winter, obviously you year? last question bullish as pretty end? more you them expectations implies talk the down maybe about retail can to the kind now, and economy see little on and inventory like? they guess, being you looks

Brain Hall

and Steve, us I from threw Yeah, end inventory wholesale number expect would expecting that I think an still perspective. down of retail year talked that we've well about perspective, the what we're kind to from on a Jason out based this that

all up bridge to, that there. to that's try You remain OEMs ramped gap know,

could up. where during XX,XXX, based it fall winter, there whole etc., be units from back retail started in that in be think slows the will build the additionally when so. I So some year down, to constraints, late chance on But XX,XXX the year, capacity we and the

next year So first to up I build I for carry quarter continue and expect the they into would as that would say season. to to ramp inventories try selling

Steve O'Hara

clear they maybe have you’re you how that? But how far much then And you OEM are, clarity -- talk how -- now? just helpful. far just that’s backlogs You how Okay, out on right how go much about right now. thanks. backlogs on know, Can that

Jason Lippert

in this that months they're can, us. got at you our anecdotal out just, all mean, seven. OEM you know, using are it's some that telling few But, touch easily I and time brands Well, we've some what a are point out points and

speed level how an that March. that work ordering and and is. and I you sizeable you mean, shifts that to up, through tell obviously. supply it's be, they a to labor us get some the their backlogs needs position ramp to But it you the it's get I mean, going if running, second the down up all up demand get think about chains a dealership and be need and And going be tells we'll right as So so, into now RV, get as all of for do those to some to suppliers in, OEMs. good we capacity. get where really

Steve O'Hara

be I labor. of and it areas in you're just inflation. or across in started available mean, guys City? as you to to economy's and to Okay, industries maybe hard really in different a hit York the time, as of then speak. on this there hit pool So, in, the kind I be board losses New the should regions of XXXX so industry hard in industry, maybe because other XXXX, I the you would know, just in, lastly labor, the think job mean, terms and, bigger weren’t those

Brain Hall

Yeah.

this the So area hard of is, you certainly economy marine hit, know, know, and XX% because, is you RV production.

that's we're, we this industry in specific pulling for So, we're labor all available skilled jobs. these the can area possibly

we've component the As easier of or mean, County. got or work us outside facilities so bit Elkhart a for so XX of supplier, obviously, to little facilities, Elkhart a range. you I XX outside know, it's County

in, has. those can labor we impacted in areas have are markets been that of and way of So opposite some areas some County the utilize those Elkhart

strategy we continue -- those as long be to to that’s all with So going design in options. us to deal you And, run we're the record here. it’s demand a capacity at to the know, looking helpful

Steve O'Hara

you thank much. very Okay,

Jason Lippert

Yep.

Operator

this questions like for turn some back further remarks. I'd closing And call Jason there are over to the to at time. no

Jason Lippert

for We're conference excited quarters it's everybody you quarter’s the Obviously, fantastic in couple Thank next setting a XXXX. this we us next report on everybody, us a Well, in and to quarter. but especially for you. it's tuning call. appreciate great, See exciting times earnings. look up

Operator

and conference gentlemen, this call. Ladies concludes today's

now disconnect. may You

LCI Industries (LCII) 4 Aug 202020 Q2 Earnings call transcript