LCII - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2020 LCI Industries Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to Miss Victoria Sivrais, Clermont Partners Please go ahead.

Victoria Sivrais

Good morning, everyone, and welcome to LCI Industries Third 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 operations you like statements regarding But a forward-looking number its and would and securities inform under LCI be that the statements and of call first, I involve conference to certain laws considered today’s made Industries uncertainties. risks may in

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

Jason Lippert

industry team, reputation outstanding we strong Good benefits demand we quality, results XX% recreation delivered operational hand-going up million our RV. innovative captured demands, significantly quarter in third initiatives, the to of to customers the a $XXX quarter Welcome we share as LCI’s by manufacturing were space of trends elevated Thanks by to revenues in also bolstered been year-over-year. Leveraging and expanded retail of products, improvement in RV coupled have new for earnings which the exceptional market discovered the deliver call. as meet able the record our driven capabilities to this high morning XXXX our level with execution handed lifestyle quarter, OEM everyone. We results further third outdoor strong XX% sales increase to prior demand What significant are unit the historical Based which most exciting primarily position XXXX performing the trends $XXXmillion to an range is very increased suppliers demand RV for per XXX,XXX at by in year retail on solidifying and by LCI’s is a year grow record the XX% in preliminary October recent third saw strong, have content sales report second track as wholesale, over even sales to the RV and period. with industry and shows space on to the more remained industry. continuing further for year-over-year would quarter. leader. the we be RVIAs for XXX,XXX on include quarter, vehicle the momentum families driven

We from shift mix of content towable of driven motorhomes the content both buyers. sales of Furrion also further RV RV of towards despite strength the and adjusted Contents the periods brand wave new to towable level motorhome to per the delivered year-over-year increased LCI to by year-over-year. RV, prior smaller X% underscoring units on-going entry $X,XXX of year-over-year growth X% units remove wholesale [ph] $X,XXX increased

the in continue market gains content higher drive our that expect will quarters. coming our We even share to

on demand our RV in and our our to leadership, capitalize and we highs. this XX,XXX increase all-time unique massive Our while leading in picking pieces the up of by were team's efficiencies operational our at able upholding effective the long standard on coupled team Because the focus over meet work the diligently rates with supplier your over keeping while growing to tenure quarter production of who to LCI dropped maintain members excellence peers. of are culture demand leaders,

years, secular indicators future a demand. prospects tailwinds across but anxiety recreation are long lifestyle multi-year doubt of down, and traveling demand many to environment, we of on very to RVs number take subsequent our Further, to a the the the businesses. serving or offer pandemic options vacation for record a airports leadership through even in the continue key is Americans as over encouraged buyers poised heightened point overall prepared location, outdoor as surrounding and less trends, in want term in to their of term, Our expect is the units foreseeable continue industry remaining U.S. will for these upgrading record to related level There the near that new XX% currently well strictly after and trends seek we to hotels. likely of and our the and continue experiences control settles and better little distancing road related to that safer more outdoors on beyond

leading outperform aftermarket positioned Our for adjacent industry, and on quarter markets broader LCI organic of strategy developing make drive international our priority growth, XX remain diversification to the RV Through and a months up to this during further strategy both positions sales. RV approximately our OEM outside grew LCI markets trailing XX% acquisitions incremental diversification in is as well to of and as advancing our growth. we focused remains

well the CURT repair and consecutive in RV aftermarket long within these third we years customers seen to grew on term. used in when in volume and where Aftermarket seek and particularly similar capture segment acquisition The than For the RV driven more quarter, the items business late built sales LCI period doubled motorhomes typically in positioned of has replaced demand, we the in tailwinds $XXX up RV million, trailers furniture that as of five history also market, by our products aftermarket over mattresses. our to RV the to used last of rise first, replace revenue purchased, any the the XXXX supply significant exceeds of is from XXX% year-over-year, group. revenues year-over-year. new and many including Total the are an primarily of

progress and our priority vision remains bike our on exploded team market carriers continues exceed boats Building segment smoothly, sales Throughout RVs, have their RV skyrocketed with part leading as well the our realizing and our success the strategy. of has process, to CURT CURT term integration demand The share CURT forecasts strategic the is use stronger the addition, our of products long also pre-COVID planned. focused have for for on while way. originally products further through a a leadership expanding and integration strong in than and brand even helped of we with core diversification In business Hitch synergies CURT cost of has development the space. aftermarket

LCI new ensure to they customer technical for outdoor support Center products. access our we customers building In CURT leveraged also Lippert significantly RV range aftermarket needed addition, have as a to wide invested Care teams have in sales and We've dealer relationships. for and and of our

center care members invested of with best our have heavily goal RV XXX in the experience a in We providing in customer experience our the over industry. facilities team and

differentiator secular remains the markets as We can quarter our driven which another similar growth marine a demand RVs. increased to and awnings. Outside we utility of increased are which are adjacent the biminis the the from strong in markets, trailers proven a in an and to market diversification our business. content confident competitive driving segments, customer units. to this million, $XXX growth of our of boat performance in drive overall XX% for XXX,XXX area third America, serve by driving to continue our yet turn space, operations overall driving sustainability cargo businesses benefit including SureShade Revenue scale strategy for focus and marine electric strengthen the aftermarket and in continued unique Marine new in meet to model long other term tailwind our our annual production in over of aligned significantly as North primary and brand in retail is focus of the related

to existing manufacturing products, and in used core with markets penetrate We new customers, and businesses. find will technologies our continue

million. has Our XX% its international year-over-year $XX to sales with business rising maintained momentum,

we and to normalized market in Germany, XX% largest operate XXX% European We experienced in outputs Germany RVs with the ago. explosive in from in increase are months September. markets Europe including in to August, starting is a Italy and see few a for rates demand an which retail return more the markets increase in growth line U.S. where

to RV addition popular and more become and In products returning manufacture there growth U.S. design the Europe, we more in manufacturers. with to continue

product We manufacturer the U.S. European thanks end more European feel popularity more content are to and of RVs in every year high and products. putting

Pop-Top One new B of category of is the latest the of growing fastest U.S. for the European our Class adaptive in products percentage. by the vans, RVs

into outstanding or innovation consumer Lewmar Marine, LCIs our and We on out ability international run. it over we to to by our product share teams Femto on grow products. existing is how and dedicated improved critical technology add all LCI culture are growth confident regular a last acquisitions long that of our component, easier manufacturer, content drive improving GSA and basis. to leverage to Innovation our development, adding growth Polyplastic, made drive our to are enhancing is our features business market focused role continuing two the or to product, the [ph] opportunities a figure Ciesse continue install cornerstones the components and the Whether play as year. Lavet, use, in leadership created will teams

since has its OneControl on younger the in sophisticated popularity newer technologically rise consumers to are products, seeking popular continued launch, increasingly our market. because of One products and

in increasingly products, drive and aftermarket additional and market OEMs which our share manual should adapting content Additionally, electric versus segments. growth are OEM

and awnings, on work windows, as within of as ride within further to chassis continue range teams R&D well the this manufactured systems, innovations products shade Beyond CURT group. by a

the the more M&A in further innovation, we always to are pipeline it's focused of heightened debt. our potential to we appropriate month. recreational remain demand M&A acquisitions we is remain optimizing receptive in recent down become in we ensure paying opportunities, products. capacity manufacturing and XXXX for same While made active eight opportunities to full investing At time, footprint the the and on meet maintain The integrating

industry, most for companies to the consistently more in leadership the outdoors tenure leadership Because meet products for share. commitment enjoy expect our this approach we end well their friends. year allow than that want their our of more thank to I this flock market to global delivering to toward and team team an exceptional together our with time expand throughout consumers very has unprecedented teams demand, the As LCI positioned markets, and is quality customers we together to families the the continue safely and activities members enjoy LCI have all and LCI year. them will of that further worked to of

in over have up the around and Our increases hard worked over past their are with unprecedented keep efforts work clock so the XX,XXX team to in members successful locations demand for and we XX several months. thankful

quarter strength the the we into in of as well as continue by testament our and across I women turn our unparalleled well expertise, will third value CFO results. future. is outperform the capabilities. organization, exceptional to men additional to to third to and Our operational drive Hall, leadership Together, more discuss the Brian exhibited a will performance strive innovative detail financial now shareholder to quarter our

Brian Hall

good morning, Thank you, everyone. Jason. And

sales addition again, North markets by represents in through our is our Our in the consolidated percentage Furrion demand, X% to increase for strong increased by increased sales for which absorption were the level to diversification contributed across net which unit products to segment, by These business, year, during freight top the sales which well RV American primarily level towable less to entry driven acquisitions, as X%, of acquisition. were content increased compensation, with recent line than costs. third the RV When for to growth of $X increased relationship due sales the industries, OEM our sales sales $X,XXX the prior in toward in due $XXX.X higher basis the $XX.X points. strong RV roughly adjacent the as growth industry in organically to our year, relationship amortization compared manufacturing driven incremental third million prioritize driven incremental strategy. for recently sales OEMs points XX% increased previous heightened of quarter marine and XX% of we from million. net diluted acquisition. at Furrion, largely by in international impact per impact with to automation when Selling, Aftermarket RV driven to and per XX% in respectively. QX approximately Content quarter. from normalizing while acquisitions motorized Aftermarket and or and costs XX% stock termination year, XXXX, guidance, and to increased the as our normalizing operational almost impacting to third with This Operating XX%. while have Europe. in We realized and quarter, XXXX sales offset prior and quarter, total prior acquisitions space. for international for unit and systems on demand Sales the general $XXX share and $X.X primarily aftermarket and to due adjacent retail by $XXX expense per $XX third primarily million demand quarter, the million of increased continue were to acquisitions for was during depreciation sales. primarily QX Furrion, GAAP quarter with RV unit while in XX XXXX, margins and by XXXX, quarter by million of OEM net from to growth towables introductions by the the XXXX, million gains sales initiatives, to strong were the increased in RV increase the per increased organic to revenue XX% EBITDA of our impact primarily based the driven $XX.X in XX.X% revenues non-cash traditionally to by million increased unit. new excluding the increased to compared compared sales of recent million of year, adjacent of in coupled prior XXX% increased growth, XXXX. the The XX% sales market. our product OEM The continued aftermarket to the partially income in record the was third government including by increased negatively QX content to $X,XXX adjacent in retail and fixed organically Adjusted third year-over-year record completed shift costs, termination due retail the the year. million to XX% was was Non-cash increased primarily was Content increases the estimate offset entry recent increasing the the aftermarket increases prior certain three and the impact per demand bottom The million. $XXX for partially $XX to coupled international volumes. aftermarket sales XX% products, XXX to XX%, $XXX performance slightly in strong compensation $XX.X driven share, increase with sales labor X% quarter content in compared driven increased lean transportation efficiencies OEM the or quarter, $X.XX compared million performance international based impact QX, expiration compared segment in administrative expenses during the industries to the increases net level the business

was included months For $XX shareholders rebound was million our to from returned $XX was following nine in share XX signaling XXXX and per million in in confidence XX, for generated million in increase quarter the the businesses capital ended next million, $XXX cash the used $X.XX September business operating $XX form swift acquisitions, for our expenditures a and of the third core months. dividends, the which activities

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

to put of the has as impact actions retail Our increase demand. as by COVID-XX in we've strategic the the liquidity been cost into place enhanced mitigate position management well

are the net end outstanding between we million in $XXX of quarter, $XX to an and of targeting covenants. million. position we XXXX, debt $XX had the million year capital third At full the our remain compliance debt expenditures For with

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

Our further financial That take you. Operator, we strategic shareholder to end the prepared we're is to remain and liquidity initiatives providing liquidity our flexibility our questions. strong, value. of and ample continue deliver remarks. execute on quite positions as ready Thank and

Operator

comes Instructions] with from Stember question Scott First [Operator C.L.King.

Scott Stember

Good morning, my for questions. guys, and thanks taking

Jason Lippert

Thanks Scott.

Scott Stember

Can you maybe XX% like me in talk out. flush sales? about looks XX% in that October or increase Let

organically where just of and are sounds have biggest get you to out there. If pieces RV acquisitions it like we the are sense would and backed probably marine two a

Jason Lippert

I your quarter, most what aftermarket. the for I’m an lapse. mean, would fourth looking and at of be sales part predominantly, mean, I would Well, most acquired the

we through As have GSA lapsed. Those move all Lewmar. QX,

So couple here big then December of believe that that a SureShade acquisition I and at and XX, ones Schwintek the would the quarter, elapsed the really which CURT, was be beginning was date.

Scott Stember

like side? looks From organic, OEM It the then? mostly

Jason Lippert

Yes.

Scott Stember

allude the retail about forecasts talk RV you Okay. Jason, year, what And your new the did RBI about to And next you on can you that? thoughts expect? side and as to

Jason Lippert

Sure.

the same the able orders all of being the is, like big and build and to the is having there, chain could all the just, the page, attainable, is we the have supply can On but throw on just the, suppliers issues major the feels side, that you now two for. orders, COVID right as get OEMs the trick so XXX in the it and super industry all labor, obviously with [ph] wholesale that OEMs question we're

away to the say, going variables we retail whether just XXX about before like And there. it's even but the XXX, higher, demand anytime feels that hard numbers, aren't soon. it the talking So pushing certainly XXX we And the really feel the all or about call. demands strongly the on were higher, number side, or

wholesale months retail chain the has of certainly the popping better with feel supply a started, lot bit and side, really today work issue do. to we But we're we three comfortable So, than little side ago a were up. the

Scott Stember

jump Okay and before in just question back the I queue. last

On put past looks like you're the even phenomenal up and margin getting XX%. close already constraints yes operating supply the of to side, some labor, margins, you've margin peak with your pretty obviously eclipsing

Maybe talk just in potentially XX you quarter, months? that look where the to we the, do as the next at could me in go? XX to at that go? How think let and fourth can Just where about, look the

Brian Hall

is Yes Scott, Brian. this

you foremost, tremendous QX quarter. and talk first volume was The Obviously got line. the about top a to

up fixed there. overheads lot of covering we're a So

So when seasonality look to little the a we through. to obviously, you near bit term, of have work

So, expect it's But seeing wouldn't work next to at certainly QX, upwards full where when much our today. margins our to we back, year. continue different not are we get into I that's QX, get throttle we in when QX. I'm from and

So months, our break look of aluminum. worth million we you down, some given our on costs, material have material that start our as XX improved but the costs to reductions $XX you price arrangements customers, steel at, indexing almost the million $XX over through in last we've and that have and to

would driver significant was as really, out well. not we've efficiencies, aware, solid. of really to of Certainly on Lots County, consolidated really plants, a now But the everybody's number our we margin challenge. a Elkhart improvement. of So certainly look came out I position a somewhat materials is at side, labor within labor's QX labor of started

until things had higher then, getting hard, lot it's that I'd identify now we based of Then them of that's of that's little at a mean, anticipated. of, certainly of just hitting costs based think, lot what and QX, of I QX address ways both of near the just than and better through that inbound performance bit originally I metrics, a expense some a a we I working additional expedited some labor after there some outbound, when the there. we and freight a QX, was in SG&A there. we equity, had have because we're look certainly as bonuses, you whether side the transportation of call have, the performance pretty And SG&A, been lot out can, us term, our to are lot the of the So overtime, etcetera, are, headwinds of compensation and, bit came transportation, visibility, and demand on little a a, shortages. things,

continue I'm the look that. are think, do quarter, at seasonality and pieces changes go of that the the the you to certainly not got things I we'll other So than in volumes. offset I fourth significant parts other some the to take expecting as when some here of those moving and we're freight think into account. of some the, that of that help the we But issues to seeing challenges some labor I than address that, forward.

Jason Lippert

units higher. biggest the frankly retail replacement replacement coming wholesale cycles if a look amount replacement putting side there last cycle, where XXXX year, add the is And aftermarket, pushing cycle. driving whole I’d up you lot there. this we're the didn't have probably we to next historical when seen the robustness the RV obviously, margins a obviously, significant versus entering adding and aftermarket And with, can numbers should of we then only of units, XXXX, And into of are at we've that's on big you future count have and year those margins our the year and from we're aftermarket, ever units, probably

future margins. looks So really will aftermarket really, the help which solid,

Scott Stember

moving Brian, year-over-year I guess fourth what clarify, shouldn't the talking you to kind of can in the you get when expansion in look up, be trying sequentially, Right? for were margins a imagine. sense to I gross margin, were we Just of saying just quarter? I'm

Brian Hall

certainly mean, I I expansion you're correct. sequentially. was year-over-year, talking Yes,

So had of stuff last months. we've, in a year-over-year, XX the to that, this we've think lot nine play, for I do

early during on, back. volumes when, when came then benefits QX probably lot So and a we were seeing of especially

anticipate I higher proportionately QX. being similar QX So, to don't

because cost some if back bit labor we're freight and little pressures the we'll seeing of of on a think that I that that helps off just of you.

Scott Stember

Yes, very thank much. you

Operator

with Thompson Thompson comes question from Research. Kathryn Next

Kathryn Thompson

thoughts come outlook restock surveys, focusing early date restock RV the field, Wanted our terms we the probably quarterly conclusion questions pushed you on be dealer in RV out could to Hi, quite get my successfully field, the to the that Thank but your demand to you. and the really inventories? this in thank inventory those are we seems XX to year, you levels, And which to the dealer today. ability for when of just later early with first XX. low, taking

Brian Hall

Hey Kathryn, Brian. has it’s the the Yes, certainly in months. picture three last changed significantly

a by as think little those would on we're play units was still I normally our that everyone units would how touchpoints the to There's a pre sold those seem lot what really shipping, that this conversations uncertain retail long rebuilds, jump going and year. sold it dealer we're on time we've these that of the in mean like was moving, so we and had. out everything doesn't at least from getting inventory that

behind. probably bit it us puts So further a little

I it becomes year. demand next a of think story retail

bit the, to will it the You type if as more us a unit little know, be XX,XXX year, like, threw to a think. That's than ability shortage, certainly bit out a would address up that a example. units short, just, an I suspect ago, continues at I inventory XXX,XXX little making be idea, gives if XX, easier XXX it's

that a end I good get case time by year. of there's the this you real to for think the

depends can probably looks of retail likely, demand maybe just that or on But more. probably So not springtime in making you really is so, it make what kind it half or the up a up of like. volume little

Jason Lippert

about with the the would part, you, just that, that marketing, feel year. production extend there's lot travel of great most is, that for -- And continue just where and is retail a the, hearing of would the visas, stories next of of into a related vacationing them OEMs them year. of so to you lot dealers of have today extend just, a Which position until last next well, and most advantages will and with lot there's add just, are the there's into where could tells Kathryn, fall the great expected to to lot the push they lot I we inventory enough, people there, of next a out year. And stop and pandemic taking to tell the our to the orders we going a of in I

Kathryn Thompson

then relative handicap, And and time-off are to you you having year, Thanksgiving very different year. look last of versus you're widely year, because at obviously year from for to around a for helpful. because also year? year the pretty at that looking production when Christmas, last operations of but COVID can That's type vary this What this

Jason Lippert

the Yes, that's a think the we're this of been chain. is, so -- off done and I'd lot less holidays, given, big of both with say start definitely take over has taking industry definitely a on lot the time year, I plans few unknown that, last supply stops months There's a OEMs.

taken last just been -- the all to it. because they isn't, amount don't So need all have it like the over three they But they had necessarily it a run. days OEMs doesn't significant look products by the or feel of like it haven't there's months,

could it's because there that's was otherwise, OEMs quarter. have at to kind how, off the OEMs the complete been as days taken several days. some hard quarter of don't didn't of taken going because fact have the it's or to upcoming know this we So that of off you didn't last But parts look many so spotty, wouldn't been that, have, the of to to conceivably compare tell been how

Kathryn Thompson

like incrementally But the eight great this. feel relative worse, And do on on unchanged to chain, of weeks there's say, that you six final it's to been a deal better, or focus and Okay. point supply ago?

Jason Lippert

keep one around know, people the From and October when industry don't, problems, I'd the time even the were in very say, and thing August But take industry. resilient. I'd the it's months is incrementally mean, and so OEM the tough is you action. side, people waste I mean, say telling I September, better. as that for there's I here

whether of other getting to standpoint, handle are enabling mix, to that foreign new finding there's can the they and suppliers few added or so been into ramped ramp better so a demand. both suppliers are it's from some And domestically. the prepared that lot vendors it's more, getting to do months upcoming come up So, whether and suppliers great up capacity that over last we inside of a the the

So it's the basically finding, as ways I my again, finding problems, chain fixing ways thing one creative it and supply around OEMs the on fast. money put

Kathryn Thompson

Okay, great. very Thank you much.

Operator

from with question Securities. Moore CJS Next Daniel comes

Daniel Moore

questions. Jason, Brian. morning. the Thanks Good for taking

suppliers couple and ups, the up struggled gains, more a particular opportunity you market the any pick other production the talk to maybe sustainability Just of shares areas? see in products do of XXXX, follow to capacity share around

Jason Lippert

of awnings pop peers we've some I'd because windows say can that have the capacity. to -- shifts. facilities worldwide to XX a always we've And hits, Absolutely. supplier culture, And the a up got able most easier ready share there's bit shows done There's we're they extra building crisis when your weakness the around that, And teams and culture a people just competitor for ready don't have decades. days think it's I the building have And I aren't today -- same prepared when for chassis, But eyes, good the on team been just, been great one little It's aren't, at a extra we've pick couple we've just more of up a between those and who there's prepared. and or prepared. and been the the business of got or here you've this. that last think to of last in we over where capacity, and run lot that decades. take couple up

not a first. share helped to up. that's definitely at take to everything stayed a picked pick of very have and come take able existing our to us care to because us that we out But So customers most that to that's we've got us, We've tried do be in areas. ton loyal carefully up

Daniel Moore

Very your helpful. just the for Marine contrast And for maybe with situation of and XXXX implies in what shipments that perspective? that Marine RV inventory from

Brian Hall

Yes.

And talked wherever it experience alternative in people in certainly -- rings very I boats. fly their I it's they're think going are through that They're were is different mean, RVs. historically, doing doing popular. that, Europe the are industries. still where they They're before. People the same we've or on that that true. the as gone lifestyle

to when little same fact profile, to that no of have same retail inventory. the stories the demand to So it dealerships comes and types they talking

one challenging little and as the thing more bit different And we're that Little put pieces the though is able have think together that engines and these all supply parts you capacity there. an think for the different the just chain to some of RV. that is a I bit about that throughout a that's boat, well. production go than into to components

but both capacity within the very Marine chain those different or totally So totally, and not supply space. different are

Daniel Moore

the increasing forward Okay. a CapEx presumably capacity And in projects. lastly, ramp in and implies guide QX some maybe pulling

Or levels, that year reasonable? Just maybe maybe the seem next key really projects Thank you million given $XX so for to of you. working some you're similar on. outlook? And million talk about higher that the $XX see range strong moving demand

Brian Hall

April. post so as Yes. revised CapEx upwards, quickly expectation on us have times a now Certainly, for our year we've changed things the couple

given are So, we for There forward million projects balance revised were they to that current pulled $XX $XX positive sheet slightly this in XXXX up our at we position looking million that for and how that year. we some look. to

So single says, And do have that are shift able react, it's that to because around production facilities. same necessarily we in Jason one of multiple They capacity. when we're can site. thing that little maybe it's The much products, recognized in things redundancy, others it when don't a Having ability. as product a bit probably should. fact that as additional like make get doesn't adding the we

So to place. of that that products some redundancy need where and we exactly in putting we're have be not we were

would bit pretty little that's on go higher. to a XXXX, it be significant basis expect for I So For a forward us

return a expand quite capacity, few have very and some nice with investment to opportunities on We profile.

$XX get more So sales, to about it at anticipate as probably would I is million as don't a all us would now. we're lay of looking plus those point. which out have you say tell into But a to a this back point. a ton range Probably starting normal to percentage

Jason Lippert

we for the three were since I'll probably $XXX in we that. don't one years. have bit And of when we've And but revenues Dan, those XXXX billion that, two then. I or real XXXX, process And had changed a less to in quarters quite quick. add remember we -- million in of Back CapEx,

So, I is tell you CapEx been. that it's processes ever our efficient as

Daniel Moore

luck Thank QX. on helpful. and good Perfect. you Very both

Jason Lippert

Dan. Thanks,

Operator

from comes Wightman Next Research. Wolfe question with Fred

Fred Wightman

and October really is chain if else? or I a really to And it Hey, on just it the that that Is is guys. Good the something back supply just just morning. RV issue is, up on want the timing circle sales a trends. disruptions showing business? deferral side of

Brian Hall

of think model have because the at you shows of change. it I if over -- in bigger see a September, probably increase the of is typically look you'd September part we

slow trying see, the and the is You previous dealer really year. to model new on OEMs drain up the product

say, September's there. here, the different had that the situation little bigger coupled product down comp in October, my But of a bit -- with I part I'd of there's us why just think days fact that's other that probably the that terms we with So, and -- the with, but the is lines.

almost several multiple down, they off, October we didn't days our because have customers So take product. like when had supply days

best I able had to answer had would of in. orders industry been the number be short but the thought the the October, think significantly I ship it have XXX% put would way what been in So they to for higher, is

Fred Wightman

too? are it a Sure. that That's month, the as it super closed. of part into the sort with part of days it point mean, And I concentrated about still here latter you just guys debate that bit? on October follow-up helpful. largely contending something last is the was well the sort Or of as of beginning little in the to

Jason Lippert

of feels better month. peaked the the part bit little part into I'd Peak middle it a November. say, month and I'd The of -- going better the in felt say, back

So a supply I base can't product. can OEM what care issues. component And there. issues. like one from seeing month an stop the for But a as I new all expect of shipping the one issues speak in that of three don't up. many having are unfortunately and taken pops It we're seems then there out And kind that's

Fred Wightman

a Thanks lot, guys. Perfect.

Jason Lippert

Thanks.

Operator

Brett comes question from Jordan Jefferies. Next with

Mark Jordan

Jordan This maybe outside Most I the Good have Brett. on I my here. for But M&A, morning. questions thinking focused of understand diversification been been company has about asked guess Mark more is the RV the recent in of And then industry view industry years. you outside right also, guess, opportunities But see I the how of I do how conditions? guess, industry? do within you now,

Jason Lippert

about got slower, Outside the there. they've much as just market share got big our And to bit those as talk core RVs. a mean, move we demand RV when taking at I obviously, little shot just a solid a but we've Marine, They it's tend in areas. business,

On opportunity there, the at we market. market. talked are us we're XXX,XXX And those constantly in side, being adjacent a of commercial utility and looking we have percent about suspensions and big probably Axles the still only and areas. XX being for trailers unit trailers cargo trailers because or content so

to XXXX number. to the So as that there's about a that been aftermarket continue big of last it's market the focused number units for just cycle years, cycle forward, chunk after replacement talk going left after. we've huge it And we replacement us on we're six a Then in we've heavy. over that been, from the share go of five, for pretty,

the component new aftermarket, continue for aftermarket of then And which specifically sorts relatively last develop of all opportunities. products couple in to we there's is the new So years.

So and prior aftermarket. to developing components customers only existing the to a continue OEM aftermarket for years looking going and ago, at our developing grow. And there components, specifically we're that is to were partners Europe couple products we into

looking those just we've think in of And space. are more there's a lot So content We're the got. those buckets upside non-RV that buckets. constant I in for the

Brian Hall

results a a I we've the so, six position. perspective we've past But we're great in or huge impact way. Certainly made the And would leverage leverage Mark. on when pandemic From guess position. seen our wrong I reduce went the our the add, what liquidity a months to hit now with

in As I months my basis all a that at remarks, we about prepared times includes X.X we're XX forma pro said on acquisitions have. for that the

in presents itself. to any a ready great on liquidities capitalize So position, that opportunity

expectation to that of that it went think been XXXX the opportunities a lot pandemic, I I could we as there's into think or maybe, this thing might present be where XXXX there themselves. one that that's an similar have

our at are you look some there everyone opportunities the back might as XXXX, nice recession industries and but are think I would a of be that deeper record to it's quite bargains themselves, at really highs maybe find anticipating when opposed bit presenting different a the that think I multiples like given XXXX. you

Mark Jordan

much. very you Okay, great. Thank

Operator

Baird. from with Next Wycklendt Alice question comes

Alice Wycklendt

the well. coming touch it's you opportunities more for here? of And a that. Hoping on do Good What what bit acquisition? you owning Yes. gentlemen. the from from very morning, as Sounds to then like a learned just biggest gone up CURT on see year CURT have

Jason Lippert

Yes.

we of popular the So to I into up. once it towing. area. has categories the outdoor great. largest been we've all fell COVID keep perfectly obviously situation. products been They segment really hitches mean, sales haven't anticipate able that that result in outdoors But didn't Their seen and pushed related as their a became pandemic

purchase to XX% and that their use a their vacation. car So vacations people take Americans other think carry road all car or to bikes year. trip I little them -- on with out took went of this the their and on they things that And wanted in their

hitches, up So they on the is haven't still and to able been there. keep demand

October, forecast think they significantly. exceeded I the

So, in ready out launch several isn't mean, lines, year. based they're of they've on I terms their when with product next Wixom, got a at got engineering that of going lot robust you they've a that getting team. look in Michigan, competitors, a of things real realm. great this just things innovation there department to And And

anybody innovation, CURT chance of else us products better -- category a new exceeding area. give in than better chance expectations, I a their really of So

be that'd kind to of that. So answer

Alice Wycklendt

we've then, that additional a you seen impact Europe for little result? as on lockdowns depressed in remaining any Yes. But caught in of quarter the the your Europe. Europe think after Thanks. in noted in kind expect longer. I U.S. production headlines, you And to girls a bit up Do

Jason Lippert

bit, they a the feel down wait they're think learned I shut like a -- worst that they'll approach countries up ramp people and to that lot, would right might back cases. it's deal on we've to a expect with comfortable cases in how that we that's run that shutting going what to and the take deal And they U.S. the be say, they're of a kind businesses My any kind country to April -- case ramping is kind and see scenario. We down. to I lot the would kind a of status like as there more U.S. likely we're mean, up in the to guess we know did and essential look, completely of March, businesses, opposed how be little by work than everything that are and trying out of now. that let get with late those. different figure are

So still -- kind of now. that we're but waiting right out to jury's on

Alice Wycklendt

correct. that shift I think -- three And entry Brian, your I to then long a number? percentage units pressing expect of confirm Okay. then, points. there? do by you And think is to that level Could and you that's content toward kind noted level that you I think, persist entry growth How

Brian Hall

Yes.

is think negatively push saying that strong to I entry at years for a level we've content put five unit. our just never per certainly now, it. really impacting towards years number least products this I probably been --

per wins X% unit, that range, I the So our more you're which is with. currently that It's three are in given idea to to that percentage phenomenal us X% almost That's points content an correct. the which gives type what type issues Puts headwind we're seeing. that us of said. of dealing that me within a is teams all

Alice Wycklendt

That's Oh, me. thanks. go from Well, ahead. all Absolutely.

Sorry.

Jason Lippert

the that on I on that the CURT, in I say, the to to the dealer business we've RV brands question RV growing was mean, the got dealership, space the the and other mind success is has LCI there we in thing into relationships RV and side towing not got asked tremendous much hitch and has other CURT, we've and synergies come related just one haven't CURT that industry. strongest did sell so the the CURT brands between going you CURT just,

that'll and as CURT help grow. So well grow continue to

Alice Wycklendt

gentlemen. Thanks, Great.

Jason Lippert

Yes, thanks.

Operator

Shawn Next Collins question from with comes Citigroup.

Shawn Collins

referenced. of Nice that. scale. contrast different specifically somewhat we're compare in restocking kind Brian. and Any of on Great. midst morning, rose and and to with and kind in I if same you. issue Thank a costs also is stocking season, unexpectedly, with freight freight of XXXX we're so ask Jason just things that markedly also COVID And if the freight midst speak when given Good in could to you. issue is obviously of the kind we you around contrast to -- Thank and the that and compare cost some saw wanted or you a you and My that issues you. October, just you're holiday it going seeing the like any commentary of people helpful? would to in ramp question be

Jason Lippert

the in you freight? I a significant Are over think talking I there's it's don't comparison -- think about don't XXXX. road

Shawn Collins

I am. Yes,

Jason Lippert

Yes.

the we're things seeing the increase a the country. most up. freight to So supply countries It's into container limited of there's just COVID freight and areas because the foreign down That's that's of our of big even ramped just of and country on get freight one overseas it most just class, a from -- slowed freight. then

don't up, just you bigger a freight freights overseas but is big. that's road the to one know, although do So I is anything there? add probably have Brian,

Brian Hall

lot a -- it I as mean, of freight. chaotic. But to be everywhere, to -- this the it's seeing characterize not said, but concentrated best is -- Jason use, we're is I might more I a it bit Yes. term the overseas in want don't there's would it

industry from hour. an zero in got mile a the to XXX up ramp You've huge

orders And at pretty a pace. coming changing, in are so rapid

freight of pretty a We that lot just that a that there's to hey, be make sure so, issue. committed. don't I want we've costs an And supplier causes been expedited mean,

on So here we to are get freight product expedited spending, costs time.

our start to every able holiday. industry, to you'll start to New be I to the see their think around product not their the Year. industry challenges Chinese will orders to increase Everybody, in endure things just but that bring are now

prepare here to play start that as you'll quarter that. companies for fourth see So to try during the out

containers and a like I October both to and a from on ramp to So ramp another is lot issues mean, and like big feels May it's was the We stabilized. at feels saw chaotic we are -- outbound docks, and efficiencies up. within the inbound. really there hectic demand that It things expect it some major of when costs space. it of I'm supplies just period on sure the somewhat freight. timeframe, that see that's will mean, ships continue up outpacing to as there's far shipments, the I drive increase don't

Shawn Collins

insight. for very you me. That's great. That's That's Thank Okay. all time and for Great. the helpful.

Jason Lippert

Thanks.

Operator

question comes Company. Steve O'Hara with & Next from Sidoti

Steve O'Hara

Thanks taking question. the Hi. Good morning. for

Jason Lippert

Hi, Steve.

Steve O'Hara

I but don't I it. you Hi. quickly, if it, guess mentioned know missed maybe just I

in maybe? motorized OEM think like, was it about up On the of period. the XX%. else? kind -- was what Wholesale that Is -- that that an looks there something Or X% there it think I Europe or acquisition within driving I sales, else was is

Brian Hall

context. No impacting shipments acquisitions industry it sales our -- only about the It's those. within motorhome XX% It's here. category, keep the of because in

can at So, pretty on unit. an That impact schedules they significantly. change has production least their content per up our

some think some little content our now. our And see -- that I of So can category. that's volatility within bit sales driving in gains you right of

lot earlier, talking a As slide this I more and were through outs. products were Jason

them. always entry-level that of on but towards about whole content You'll a hear Cs me Class don't about shift talk have talk I'll a Cs, lot to lot then shift Class

Cs a gains. content we of least went the got in little see production think to drive that more through started where I back helping direction, some that shift bit to some and our you've larger recent of that's some Class other

Jason Lippert

a trailer feels some the of And the it like motorhome behind bit little were up. OEMs ramp

So like they than building few faster of little product. the now terms what moving are a definitely today, in feels more right bit manufacturers it were ago a months motorhome

Steve O'Hara

No, much you net that's segment. opportunity would is it And how an that I'm for of improved moving from in talk that aftermarket, Can maybe that look process there the there about on CURT year-over-year. margins upside think helpful. with Okay. with and CURT, continuing are And I talk nicely kind you came just just All just average. with of margins kind process? where wondering, like And right. then towards pretty below maybe was average your of in corporate

Jason Lippert

Yes.

the areas competitive towing think significantly really I all mean, is very the around they their products. the and market for I landscape. they do biggest opportunity that plan in key hitch and well segment, just CURT

on prices. So new bit a those come. added taken flexibility of We've that's more lot Obviously, little depends on share all a there's some that with customers. market

installers of Some of direct-to-consumer, that of that some some and some that the the commercial ecomm, of people. fleet

bit they're start get of there flexibility more the we'll to they're average. strong because not gives and they something a it with a out So, take prices choice it's complex those an acquisition where just I things to it. certainly a evident lot closer them innovating we and opportunities such and think markets, in price, products build take lot. But moving When our a little

that features added the maybe and values help market. them, what's the have are where create momentum. more different and and different So, than than that the we can in you products innovate can are margin bolster That's really market, the

we're So and they're good doing really job pushing towards, that's what them a there.

Brian Hall

locking cost now. of landed, on And, between rings We've what point, synergies X% energy forward while we've we're It's somewhere those At of true opportunities basis. this saying of Steve, X.X% We've improvement, I a sales for for would in X% identified to still add. probably a approaching been it's them. X% to in X%.

aftermarket so tremendous legacy our So, their we've improvement definitely within business. seen Tough is to problem margins. have,

has So significantly, profit our improved as business their aftermarket margin legacy well.

of in margin to made tremendous contribute that categories that margin progress does So the kind CURT still back hold business improvement. some, both but we've to

Steve O'Hara

on And just of then on Okay. maybe sales. kind the commentary

said, was with you just be said it would seem I like the of I think you or XX%. CURT, maybe think significant aftermarket I'm XXth And growth I up should acquired, December that was wondering, October kind XXth. think

of obviously, are seems Is seasonality inventories and it kind that. things deceleration, obviously, fair in and mean, supplier that. And growth that's like is issues about things bit most I low things that that And RV concerned it assume seems seasonality I a say? the that to on So that. like of like kind just like people there's side. But driver? like mostly I dealer a of are of it guess,

Jason Lippert

Europe, would of we characterize we as -- are being many the think Yes. conservative then industries to And us I facing would that issues of say, lot uncertainty there's would right a acknowledging I it seasonality. our there. now.

rates this growth an certainly we're a that projecting and So, Marine. a as at of bit little discussed deceleration least RV at our point You we with are

we impact that some so You have the Holidays to there. have didn't that's the growth certainly QX, of rates in going

one housing or the category, And of most the it's but us, so, like of that if for the now. some you manufactured down markets not categories, I vehicles, things right look other significant are some think commercial at actually those product

Our manufactured housing is on the uptick.

a like year, of categories commercial rates those things I that. it to buses, it'll post that expecting And flat. think, things XXXX. like end pretty pandemic. But product pace decelerated some other school full to now. But up continue mainly Their for growth the year-over-year slowed probably for we're have sure, have is production into vehicles, right close on

Steve O'Hara

Okay. Appreciate Alright. questions. Thanks for taking the it.

Operator

Northcoast Brandon Last Rolle comes from Research. with question

Brandon Rolle

on Good morning strong results. congrats and those

Jason Lippert

Thanks, Brandon.

Brandon Rolle

impact question inventory now levels potential able retail The throughout of could you're it channel industry? dealers then, you the And the not the right used looking have this that a shows second retail not, I was maybe on happening, all within Or dealer do XXXX? absence would think fall. just the overcome, kind to been shows as on also of seeing comment you beginning asking, into RV. of for seems like, for have the

Jason Lippert

I the lot without those of like partners talked the feels right, mean, are are, around us, inventories of anecdotal dealer data Without alongside some new Yes. we that a to, just from the taking low, inventory. conversations the,

get on. their hands again. But, know our for that a to change that problem I industry selling just can they're good have about So, everything much. don't they it's that'll

business the I people out typically think a when a furniture, things sold they mattresses, the which of reasons that, And is aftermarket doing of unit we replacing getting of buy well used units lot into aftermarket are because it's used is sell lot one business. our there. like

Brandon Rolle

retail on year? the start to And the great. Okay, shows

Jason Lippert

And the shows. the don't Yes, of I demand to going one sorry the doing I the things heavy. that, is in their on own Brandon other. think mean, dealers getting way shows. retail or are creative some and impact is, that's

going out. given lot a there's the how show, to So own done the fact a they're out I that's a being finding and But control the for are that have that to that's, get other ways around because just social the instead word trip, right word phones a of and the, choice region, a stop going inviting having a or people RVs I to word way your, are RVI dealers don’t media and, vacation safe ringing. or marketing now gotten think to in And your time through your are dealers of and things. selling and think and real through shows, really near units the easy their it’s safe future. has chatter And,

a if us. retail going huge for shows, think don't to they happen issue is the So all don't be I

Brandon Rolle

you. Thank

Operator

this closing at Mr. to turn over And time, call for will the I remarks. Nippert

Jason Lippert

excited Yes, to months. and record this We're about our call wholesale fourth excited in earnings we're few demand quarter retail present seen a really super year. that the we've

and we'll next you care take time. So see bye. Bye

Operator

This concludes today's conference call.

may now You disconnect.

LCI Industries (LCII) 2 Nov 202020 Q3 Earnings call transcript