LCII - Earnings call transcript Q2 2021

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Operator

Good day, and thank you for standing by. Welcome to the Q2 2021 LCI Industries Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. now conference would Hall. to I Instructions] hand over the Brian [Operator go Please ahead.

Brian Hall

and Industries today to conference morning, welcome Good everyone, LCI President, and am on Lippert, call. joined second the Jason call by CEO Director. I XXXX quarter

the the today’s results But would LCI laws operations risks and conference securities inform call discuss to just certain that may I in forward-looking its for regarding will a a quarter be statements involve We statements number like uncertainties. you and the moment. first, made under considered and in Industries of

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

Jason Lippert

lifestyle. the the incredible outdoor entering across everyone, in sight morning, Demand end we as quarter new continue time waves another space earnings and in high of consumers to an delivered XXXX. all Good welcome record no We to XXXX LCI’s remains quarter to the call. with drive results at second recreational

at operational an proven last unit all production company, including And likely us time demand. XXX,XXX shift XXXX levels near continuing our a in the into industry our have of hit chain as quarter to mitigating related a rising inventories we in in headwinds even the units record set impact lows. continue At seen was to is to costs, whole, our their RV trend supply but the XXXX, for RV expertise as expect historic customer annualized meet challenges industry as This input not to XXX,XXX past for they blowing of teams this shipments. rate, just to enable Despite remain related will impact well our business, XXXX.

our or we Hand, Schaudt, quarter, our to has the second billion diversification business work growth During us $X.X Challenger, executing of strategy each respective our our by This double sales, XX% throughout XXXX acquisitions quarter year-over-year on in integrate and triple-digit XXX% Veada, markets. up focus achieved as Trazcor. with growth including we Ranch providing of supported been compared newest and to

achieved we a in position continue to leader content per solidify vehicle share strong global drive Additionally, further as we our market as space. recreation the growth expansion

segment performance chain by compared the for and Preliminary our the the increase RV constraints, continue rate $XXX with quarter of slowdown of industry. trend, supply labor driven indicate no this markets sales and America retail second North both in the year-over-year quarter to million serve. results RV by which increased to despite impact to the international to we Turning second OEM, XXX% entire for throughout beginning or demand elevated XX% XXXX July for

chassis significantly up to to meet been the has retail of gearing increased production keep the continue capacity Wolfpack the acquisition chassis RV as allowing to demand. Our meet for us improved by OEMs recent need

acquisitions Trazcor. relationships existing our most our leveraging We one and that are also revenue our recent significantly increasing of customer

to experience improvement we through the addition, and projects automation several continue lean significant initiative around efficiency recent continuous and In improvement business.

more our improve continuous to capacity that quality, and are focused rollout we high, teams pushing time and profitability. all efficiency further an at remains projects demand improvement As on increase

second the margins key reasons. RV under pressure during Our were for quarter few a

highest overtime has Content teams per also despite lag Freight our these year-over-year respect content been have and our All also historical costs also prices unit to quarter job considering wage short will The margin favorably a year-over-year shift amazing on located specifically are back $XX,XXX by indexes the decades. lag been in up trend of logistics an of to backside highs per Northern material, to the indexes twice labor XX% Content fantastic our these have Indiana, wholesale steel steel continued facilities and importantly, risen most has seen year-over-year. significant period when a products. the for this indexes back also level customers last to demand unpredictable. shorting and in quarters we’ve increased $X,XXX see against a the increases motor towable dictate but That over said, done seen amount X% that labor the freight layer pressure entry-level has keeping an to only performance in. around at increased prices and increases and a while shortage the premiums wholesale problematic time we’ve higher Not has as demand. without start with said Steel customers. RV labor keep most when increases get we’ll industry recover and around us allow to take of where mix move our are down. in towards couple record of been smaller commodities simply the with to few very to related our First, then RV products. and pretty ongoing for home

core on share in Over the few year, we last course of significant the areas the business. gained have product market a

market driving increases and further advancements our share throughout to bringing innovative to our expect customers. as XXXX expand content keep we We continue

have of $XXX integration Aftermarket our successful aftermarket the record million in the our to driven the CURT aftermarket two revenue Group, years important entering year-over-year now, going RV the group We aftermarket RVs Turning sheer brought grew record X and believe an for part the to businesses. every use million The being of for continues number Ranch with is backlogs, many our aftermarket as repairs, aftermarket it as we Segment, quarter, XX% of for business, creates our RV performance second up into work products. total well team incredible by of our into Hand in opportunities the and opportunity as portfolio. upgrade service the about with population most through thing

platforms of purchased the vehicle lifestyle, which our introduce income The replacement of enabling our lifestyle speeds for an the replacement as repair and and RVs additional rentals also an prospective These entire wide because monetize the peer-to-peer RV and product population enables the to for repair to believe Additionally, services well services, parts. up while popularity of demand brings as rental us as case offerings use. use, opportunity customers to RV more but new consumer a replacement creates to to this consumers serve marketplace. will new meet in ownership network use. their the are parts parts We into many surge the increasing being upgrade not heavier also more inevitably trends, for solely rental need amazing cycle for and this stream leverage while RV for for create using single-family not peer-to-peer

revenue compared to the year-over-year markets, adjacent or the of XXXX quarter to increased second for XX% million. our to second $XXX Turning quarter XXX%

these customers and tailwinds have In segment. secular widespread and been Marine RV Marine constraints. driving the the line of some we are easing growth of benefit aftermarket RV, across to related issues. storing been beginning supply impacted As other similar our demand markets with by chain also to have from continue see but Thankfully,

the has business to our market Marine supported and by one the continued Taylor our Our us pipeline of that primary Veada boosting of industry serve performance we share enabling and Made for to Marine our relationships content add our strong drivers of to diversification to add allow in our us the our strategy while as continue a innovation new Further, space content. also Marine – develop deep growth. Marine expand

We grow line. our trailer top added bottom product our and suspension which in has nicely market, also and revenue continue to line the to significantly axle

space the the XXXX continues compared demand by in onto our $XXX performance elevated, RVs to second development increasing the been year-over-year Our Europe. to international of strong Europe LCI’s aftermarket in it results and the International XXX% in future Germany, products European Netherlands this bolster markets million. near-term. think numerous I on businesses showed which operate or the the in capitalize the Innovation for successfully Rail, focus as to their second demand. revenues embracing as that quarter they should acquisitions with including market XX.X% recent consistent as be teams, and that in to our UK, North we to summer across record with Europe made able this also as of recovery which retail Caravan our month Italy, and XXX% continue we’ve Marine see our industries holiday with grow a past near in RV meaningfully we’ve We the will registrations believe in will well remains America. the caravan continued on Europe. embark lifestyle increasing International customers quarter are delayed

which initiatives as industry critical role innovation development, and around our strategic play an product establishing a long-term position Our in revolve leader.

at have of customers products improve platform. example in do how can continuing from function, vehicle continued to capabilities OneControl further the products is new out systems. leveling and control slide-outs experience the as lighting OneControl the to As features range prime our By A our level, let to add figure demand we of our to future. as and of existing record remains well incredible enhance innovative not develop to platform, an on HVAC customer up now and evolution utilizing

roof time, identifying of ensure and for team as XX With new invest and allocation, optimizing the meet fine heavily systems, closing, with which manufacturing launch work. demand, growing have we regards B we strategic to and OneControl possible. on our innovations, next and in want is same we to heightened well acquisitions integrating tire while thank suspension of continuing and footprint were In innovation, anticipate our debt, Class electric to members RVs to ladder [indiscernible] acquisition. our hard top efficiencies focus systems, tune pursuing are In capital addition the over the to in fastest management great maintained thrusters segment the capacity as our dedication market, the our van cost of North recent in market, At for the all the months America. excellent success product, their to our paying we our innovation have battery down more pressure our we while

quality meet continued delivering have to all time customers. for our products demand we record while products to our As

strategic guided continues down keeps and the our Hall, to executing us look the keep business track workforce an operational leadership by continuing as on We to performance quarter tenure more and our industry turn Brian the Our we results. incredible our second of outperformance be forward strength driven priority. our team value discuss by that into now in path the delivering our of I’ll well financial for CFO detail stakeholders future. to of to

Brian Hall

Thank you, Jason.

for XXX% organic growth company the sales year, the coupled strong $XX prior increased our compared of net results with improvement. billion contributed Acquisitions the consolidated with $X.X to to market quarter Our quarterly to solid driven the million performance second by contributing balance execution.

towards driving sustained industries increasing sales growth indicative rate markets of As shutdowns Aftermarket difference turn increased to Jason remained compared record Sales RV sales adjacent the growth increased XXX% XXXX sales sales the OEM retail RV July XXX% to due international continue for activities, QX would year increased and in to strong, segment demand. year-over-year, outdoor approximately our OEM OEM board. across adjusted XX%, as the the current demand and XXX%. in to a XX% strong it of consumers expectations. mentioned, QX to XX% leisure when grew imply prior

in at units, XXXX for towable Content We and increased both shipments growth of Current XXX,XXX prior demand to while from the increased American an year. XX% second prior support organic content for XXX% We costs well rates, Trazcor, approximately due industry our towards record mentioned, content first the significant the markets. record towables rates strategy. in the higher Hand, time in input is the with production in to Schaudt, during million imply increased freight of the Gross for coupled would as further drove margins towables per over also content to industry. in progress also Marine metal primarily our cycle fabricator to in X% acquisition in compared American us XX.X% $X,XXX cost the recreation RV in acquired quarter. and remain revenue. At Marine and sales current of North aluminum level, specialized work result Growth aluminum well presence and next addition bolt-on first custom increase period. to leverage. core over million the innovative Group, continue as has and our RV motorhomes. anticipate XX% were $XX year strategic motorized in our The is RV over XXXX, CURT was acquired has modest supported by In which to the Jason increased steel demand. diversification made decline to high increased closing We’ve production steep to we acceleration September in strong growth sidewalls wholesale to announced to Marine we June, as unit of headwinds in $XX North volumes. market since a resulting inventory the announced overhead of utilizes through As XXX,XXX a as replenishment by $X,XXX rates the industry a The addition in as production continues quarter. acquisition record which supply the offset of XXX% markets consumer and OEM all to to XX.X% quarter, material Germany. as for revenue. technology strong end partially Ranch of that the the costs, transportation same the creates The climb panels of compared

the period, impact diluted efficiencies, due share partially heightened in quarter. of million business during our higher $XX.X prior net benefits of the and on to We QX initiatives. operational diluted $XX.X primarily stock-based to many freight June Adjusted expense traditional are XX, significantly quarter. manufacturing meet increased products ended and second costs, aluminum fixed increase primarily or period. quarters. million growth in sales over was of by the six quarter million quarter share percentage the from XXXX organic increasing percentage negatively $XXX.X driven margins expense of XXX to for the XXXX, of by increased sales leverage the million a SG&A $X.XX there mentioned the of $XX.X approximately has effectiveness due favorable from the to a expanded time automation requirements the second the index across These sales production two $X.XX cost and on with offset to impacting lean sale. months points continued of depreciation aforementioned compared all I’ve costs. $XX.X same also of due per which steel were higher were was million to income by and shipment XXXX, calls, sales to growth labor As as aluminum as to up decreased costs lag of costs the pricing coupled costs while year costs, SG&A costs strong when steel, remains primarily and while slightly Transaction due first GAAP also in the or basis to outgoing the to XXXX, compensation operating freight. QX and primarily XXXX, second and prior is amortization segment. per our Non-cash in non-cash was XX% EBITDA increased for for compared

and We investments $XXX continue to increases million and anticipate full of in XXXX, for to amortization range primarily the million the depreciation capital efficiency. $XXX due year during in to capacity of

from $XX ended June six months the XXXX, generated million. activities was operating XX, cash For

and for automation second $XX XX% dividends. the million capital to in new included share. capital was in $XX acquisition, to XX% million to our investments, Total the returned shareholders business for used market dedicated maintenance, was for of million quarter $XXX While expenditures X% expenditures and form

face allowed businesses. address quarter, of pro of other continues challenges, the the items with experienced rising these chain relationships share end further material intentionally working including of supply has future from This challenges grab remain second on at While an avoid our focused us building capital, EBITDA we levels net to position level, of constraints that adjusted supply OEMs strategic management include $XXX X.X EBITDA with market inventory To to At to demand acquired outstanding cement the markets in forma LTM costs. suppliers had million, industry debt of are to up and record and our core issues. chain times we shortages. have certain

$XXX quarter, senior million, be $XXX due in which XXXX. in facility notes future we outstanding growth current approximately our million X.XXX% to principle were opportunities. used under used borrowings and proceeds fund net priced amount convertible the remainder to also aggregate offering with During from part of the we credit in The repay to this revolving

work of unchanged we We the to maintaining operating cash completed net we EBITDA million targeting strong integrate times previous expenditures will million flow. continue debt for anticipated to $XXX expectations. XXXX believe full recently leverage the prioritize X.X balance and are as contribute $XXX to from acquisitions, to strong year of a which sheet in range Capital long-term to X

smaller to that projects As and automation we focus various production scale, rates. and build support to on capacity heightened continuous support improvement growth continue

LCI strong in results, to questions. growth the That confident drive ability you. our proven is we’re value our growth as prepared Operator, and on for to ready shareholder long-term Thank remain execute to these remarks. continue the strategy. of over end we deliver take we our With

Operator

the line [Operator Thompson Instructions] Research. Your Thompson question of comes with Kathryn first from

Kathryn Thompson

taking questions Hi, today. my you thank for

rest the there impacts. some planned if great could lot you quarter, you revenues balance as you. Thank But think detail about just margins. – if a gave stair-step the increases, year we for the downtime, of price the seasonality you and Just differences year-over-year the of could various were and about for because volumes, for

Brian Hall

it’s Kathryn, Okay. Hi, Brian.

kind gross margins. points tell impact, significant the XXX So and the materials materials it, almost approximately just And as in difference with the that gross the and most I we looked at on in saw margins, pricing certainly pricing quarter. basis you that I’ve of negative way from second of worth it’s starting impact would have

Now, as that freight quarters a the makes that aluminum into Most that might input even by catch of such the steel way climbing lot have and third offset up to little its as the quarter of the continued bit in year, steel, be beyond it leverage. that into are I’m of climb, more that next and great a our to overhead expecting fact a that lot of chance given today. starting costs stretch still and a aluminum quarter just is to first

said and down time, points by that’s you margin even increased from year. of into said. offset I leverage. you’re first pretty So transportation your points, almost basis this When as from our XX get I’ve And think, mainly the XX costs the basis significant done by was the gross SG&A, – by and are in the those there SG&A quarter overhead

$XX costs. our to outbound from a couple continued freight a give million as my prepared second you bit, we’ve SG&A some to remainder, I of there, was remarks from costs, little additional that’s So see I a and quarter to in here a significant And inbound you’ve that’s The pretty at idea, million almost mentioned as almost well. And an quarter, up the transaction rate. within I then climb transportation couple think think first and dollars. million amortization were up additional outgoing costs

every this say, the quarter. as So are Those would the those certainly key financial statements. had movers those line – are for the from in pipeline – I –

Kathryn Thompson

transportation, in the top an three those and standpoint, to and from were headwinds the three greatest the aluminum steel, of terms the you impact visibility? a which amount if of kind amount mentioned And three has inflationary which of least and has of greatest Okay. give of you

Brian Hall

spend. and our XX% combined material Steel of aluminum are Yes. almost

record XXX% when accommodate a up September to pretty supply of to they’re with us work significant that perspective So with the and and it’s trying from customers try to a been for pretty year, And adjust significant issues talking all our for meet last steel to mover. dealing chain that’s you’re from demand.

contracts. to pretty though steel of So there. been we’ve indexing the some through and there’s that, come A worked to as lot is strategic we’ve some tied still

rest maybe where you quarter XX% that get lag XX the steel. a within two So that’s call percentage is of aluminum, points XX lot aluminum, on to the do from

it’s one is still up continues £X.XX slowed for obviously see has the like one us. is still But It and up. So mid I aluminum seems for aluminum think steel steel short-term. aluminum the number to that least gotten we kind of in still, the climbing go aluminum, its at climb here into some,

think going don’t problem We for aluminum one hurt that’s continue is, a see So the to I time. a And in that long the the freight to going itself think, correcting coming to near-term. I be really is quarters. to for

are going to that’s be – are dealing we’re into that those – XXXX. going So to with probably things well

Jason Lippert

our course And add up prior take the just you accelerated largest over steel, for Kathryn, I it XX material the XX an it costs. over stabilized, It last example, raw went it’s climb times that not it’s was of real what not but like to quick, three COVID months. was months.

that So with the hope freight it’s point, manageable at and to it XXx, stabilizing. is up rates from COVID at was least this same from that prior what Asia,

we more little but likely opportunity have increase than of XX lot next costs. So more more bit of months over might downside a lot a there, of upside, the than a

Kathryn Thompson

kind then proactive market different acquisition with understand going us to growth share again. that your technology acquisition on maybe buying Thanks. Did the And a just very at smaller in you on make side? dominate. was a tax terms some expanding or That’s it in and little of it of And commodity the assets behind forward for the being and of front, see bit Lippert. it’s just how always active more typically, general acquisitions, been help that then logic helpful. Thanks,

Jason Lippert

Sure, sure.

we asking at feel looking knocking game checked innovate Do significantly. on look. already a can our feel three again Trazcor, We We there’s earlier, most So eight to runway so door we’re the in customers and months, are other lot XX% the product or our last all there. doing boxes how our they – products. the only us alluded game, in any And because those recent are field really the large growth we of over does have the aluminum. acquisition, we’re competition raw of with And costs as metal of we largest, the work innovate is, and there. a acquisition in steel of had the Brian can one things player the our

metal at products look are content the RV significant flocks we side It’s the that, top innovate grow. siding. small the and On can out RVs there. opportunity, on now metal we So RV of a level wheelhouse the product we the units right are the require feel entry – growing in and it’s of that that that the category fastest

greater there’s need anyway, So a product now. for that right

the So XX we grow we it’s we feel can a pretty perfect over fit can – significantly it months. and next

Kathryn Thompson

Okay, you. great. Thank

Operator

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

Scott Stember

margin? for going this there’s a if look year, a little taking the looking thanks bit for you in great Or third through give lot the could me the half a level the at my operating to give of as detail And margin, give improvement of of like guys. questions what’s well. Are of us little sounds you can but you just it about back it we we little where just quarter? morning, Good on, if Brian, impacting the try could. we for a in bit, operating notably granularity but remain to look

Brian Hall

Yes.

second of and into when we earlier be guide able that that, we us a year, would think if lot recoup the catching we certainly, quarter to and in you about were the that price up, I third quarter. rewound talking increases

fact of that the As steel and have pricing I you quarter and to adjustments. lag continued and our product mentioned, aluminum freight quarter have to then on the two many climb

earlier, into into bit fact QX input still to the I I given a mentioned going that just next little costs even climb. quarters, drag seeing out of year, that it’s multiple think as maybe those we’re

So push adjustments, to very it index arrangements those we’re where to But out. to can. going are a with some closely through cause we lot of our customers drag working price

the upside is volumes along certainly that input running strong and we’re perspective, potential setting some going the that the there’s that continued think cause a with price level and we’ve that from that temporary adjustments and So of costs to climb I given seen. some margin think But margin. leverage lag I

So greatly quarter I’m it to not next at expecting from in the so. least or change

Jason Lippert

with next Scott, pricing certainly a our elevated some there’s increases up by of certainly in over that longer few of at when part – happens. will happens way, pricing the that with term, subside – going quarters. catch lag while coming And And happens significant the time, way indexes we prices over price our point the whenever remain the that other – decrease the then

Scott Stember

– just indexing the delay time be the it’s way clear, down, the on same there’s So correct? off a as or to the the same on period way

Jason Lippert

That’s correct.

Scott Stember

this but range Okay. be most And you see Is can over of now? demand industry as the month far see in production new a as, to RV that? be the the just we next side, levels, on to seem the how relief horizon of the an any couple probably XX,XXX detail do appears continue to quarters? right incrementally Do to you growing from

Jason Lippert

Yes.

refreshing suppliers handful And thing are to several and last they I’ve looking the production OEMs of including of over increase and most OEMs all I are think capacity the can. at is any suppliers, way capacity seen outside us months Elkhart alike trying County.

seen suppliers outside pretty is, like ability to the labor going in counties area, of of is bring I’ve Elkhart on the working got the the stressed. to so some strategies thing said, But County’s creative to some some produce. tap our we’re and that’s most increase near area OEMs outside constraints to be refreshing all labor the and One labor, going labor much I of biggest more this this going and only forward to

their getting getting are people of lot a capacity So shifts way. running and that second up

OEM online the comes capacity new fourth the of capacity. and third quarter, Some

number like, now very feels it’ll near-term. XX,XXX a So XX,XXX, question, heading slowly. in to I certainly the answer think right we’re But it your grow toward

Scott Stember

sounds you like it. Got the July haven’t growth for one still time the of guess, organic, lastly, math but acquisitions if share growth the lion’s then fully next very I obviously I correct? And is just at It take have XX%. you, adjust through hold. yet, all gone

Brian Hall

Yes. Yes.

most for The part. XX% the in have the almost acquisitions accounted quickly, quarter. For

of it XX% there acquisitions in about So year we’re growth as of this we’ve organic already? some the I’m quarter strong expecting the growth out seeing growth organic to and nice decline from in our Do made categories. you see all

Scott Stember

right. it. All again Got Thanks guys.

Jason Lippert

Thanks, Scott.

Operator

question next Jordan from with the of line Jefferies. Your Bret comes

Mark Jordan

on morning. Good for Mark Jordan This is Bret.

gears strong of Are for repair now? RVs? of particularly and of the bit. furniture, parts seeing the right what more seeing parts talk to you demand are switching kind you in maybe a kind about you’re Can the in still Just and aftermarket trends of for you some upgrade seeing replacement

Jason Lippert

Yes.

of our upgrades, all repair, all strong aftermarket categories replacement seeing right very in categories. we’re now, those they’re All service increases from and

one that recently they’re we’ve trends asking more partners, all here I think, aftermarket for products. our seen the is, of

we’re adding products more aftermarket categories. to So our

there’s use have rental all XX is more. are with whole to for of my the is market which Prior have marketplace running XX mentioned replacement, days. rental peer evolved case last and to repair getting for the I certainly As creating And could really new RVs that avenue that RV And to in a the opening you comments, is heavier to over marketplaces Because it’s peer XX increasing peer case that’s – the RVs a the more XX peer made use average used months. RVs. COVID, to peer because of to are peer creating the this use. an

single our million for we’ve into RVs every for our fact On coming use good to that’s great of that really that’s going be business. aftermarket business. $X.X year, top got the So

Mark Jordan

pretty and Okay, about CURT lately. great. RVs then the I thinking demand Marine been Group, And guess, strong have for

there that’s products. So note for the solid I been to hitch Group’s anything there. Is to CURT have pretty imagine

Jason Lippert

No, RVs going are bike people you – of I’d or or country. hitch do racks the in largest the hitch. that need just anything outdoors, whether a amount we’re say it’s supplier to the in the And

unit for slowing XXX,XXX Like good it’s rate we’ve earlier, got We don’t now see really a said So that on for run we’re industry the I – year. business. that down. this right

if running another XXX,XXX, at rate, if you’re months. to out you blow July’s rate, take a XX that We’re

current more for products to going products. continuing there And for case launch we’re So more create so. and and I a the to mean, just innovate outdoor new hitches and develop that’s

Mark Jordan

reads then any And from have do Great. Hand acquisition? Ranch the you early

Jason Lippert

early, I as backlogs as our orders businesses. their CURT It’s robust. No. – order Yes, but and it’s their robust mean are Group

tell So I can there. that’s what you

Mark Jordan

very you the questions. taking much Thank great. Okay, for

Jason Lippert

Thanks.

Operator

from Your Wolfe Fred the line next of with Research. Wightman comes question

Fred Wightman

guys, think capacity coming onto making. good is that just wanted last you’re numbers to XXX outlined you And what guys quarter, I morning. rate circle capacity consistent back I then Hey XXX, to the you gave OEM it had also production where there’s investments Any some the and quoted you but that some wholesale that that on for quarters in to add how color touched that incremental helpful? you next sort any XQ. could you online units the much over market. just of think go capacity few on, XQ of Is that sort be could would sense production with X,XXX

Jason Lippert

looks feels these slower, as get type adds count months rates. the over through OEM of – We the to material get to concerning Well, labor something’s increase you’ve of and you certainly problems, the there’s chain links. – these the problems, XXX sell we’re Every in where the and industry that what and like going through seen weak the It through not the lot capacity. But current than gradually a supply is can you just feels entire ones – of going we fast strictly But is labor side up up. some concerning supply popping continually, many industry really, more XX this some chain like building capacity supply entire up volume you can of sell XXX side. there. out the year we material to on from it last just we’re week wholesale we’re really weakest relying – year any and of day, what last ended or faster. on I at just increase to But constraints. is the increase tell fashion not inch continuing end to add based too output There’s some OEM could could and that kind we’ve the today. to there’s this gradual can the on like – build numbers seen hit on any XXX It

Fred Wightman

sort bit, Could could really a from or new cycle refresh sense. Okay. either Makes impact gave just a in big with that little up of be an mean tear to cycle. and past? chunk a side units? you RV slow guess wholesale the numbers sort could acceleration in, wear see around Those I that enough on business that? on I peer-to-peer for you aftermarket impactful you the shift the that versus where put you’ve the more rental steady. and that the to those of to trade color some three touched of five-year How that on is more trade business

Jason Lippert

doubt, they’re you that because demand all know a put owners peer-to-peer that’s don’t marketplace the to there’s enough own in there. fleets but to of companies, have talking I There’s looking question, – a their they in Yes. to tell their in support the in RV I’d without some rental lot to out

of I think RV with like into up by getting starting an numbers end search. rental people XX% the a all out

So there’s now likely vast say just for is right after triumph. they’re fact after second They the buy. into marketplace to rental, try, that the an the second highly get there out these RV to and people that

happen, that So just the always fact that can wasn’t a where marketplace there’s available. this

some specifically So base. has outdoors good data their is owner around really

owner they because have that look So just owners to RVs on running their you multiple base, have RV. some that could they’ve that, ability It’s get never an but RV. website on of the income of multiple got at side their own that some their fact and create

which a a those need wears creates use the and replaced case this the of of for be ours. that of are lot RVs, all components and again ultimately and to heavier So tears

Fred Wightman

sense. Makes guys. Thanks

Operator

question the of next Truist Mike Securities. with Swartz from Your comes line

Mike Swartz

good morning. guys, Hey

coming about higher or RV towards content think I Maybe up and give see that mix on growth lot us to some trade Are touch you that. Jason a during behind to wanted is some what and Just pretty quarter? that the said a you Brian, strong exactly little organically. loads starting driving more quarter, of the in what’s context content in there or that’s units obviously

Brian Hall

the we’ve strategic about other suppliers and last, we’ve pretty Yes. I little about OEMs. the been where were talked getting business product talking now part, that were probably the And that three challenged, layering in. we to for for most maybe would say quarters a

So per that over quarters, last layered three into you’ve content the seen number. unit new business that, get

we’ve is tell price trailing to you that, to XXXX. of given meaningful in not the couple a but So is in I were accelerate. driving way, continue price period it less much steel yet declining XX-month because expected we obvious during I as if how a would than aluminum percentage points, say, still that would price driving thing a is decreases were the and

expect maybe price a little layering to but little from challenger even And some still more that been So it’s bit. a small RV had one those new perspective, a business in come start would would the acquisition impact be as net-net, we’re as of really a bit I to on side, that well. in, accelerate an the adjustments Trazcor –

a not deals, meaningful smaller content. so having some impact the So it’s on

Jason Lippert

the largely increase to content in the the market And meaningful I’d in say increase content, the that speaks share.

– are a seeing units getting right keep number. we there’s amount fifth focus. there. they’re a significant shipped high I’d entry-level they’re taken the now, away just wheels of say from that And pretty It’s out but have because We turning

as looking in we’ve and on that’s trailers content hands opportunity can certainly smaller down as face that The that’s If increased you for they content many look their to dealer pretty of you the get to any fantastic. talk out get. driving. trailers And there, they’re

Mike Swartz

Okay, of seasonality look understanding, dollar the increasing absolute great. And into to next is think dollars two about should was think side, an a sometimes Maybe line in just from standpoint, quarter think with help SG&A SG&A lot forward? on guess, transport some the the in costs. sequential or acquisitions a the should then us way about there. we And Brian, I I there’s there’s coming going that like that, SG&A there what

Brian Hall

this I to although it anticipate would but then it relatively mean, I – goes said I’ve stay I before, consistent. the opposite direction, and

anytime I costs, not mentioned I think that’s movers big soon. transportation that the that away going

was up QX So I those as much it expecting million sequentially in SG&A and within I’m not that QX, to to coming quarters. alone. do that aggregate $XX from I change the dollars think mentioned, line

other thing million flow. of ebb a mentioned, of the that here, So we’re those million do couple couple and there, some a I

most it minus that. plus would things I expect So movement you million or part, remain be $X might – might relatively consistent. so you or for the see some for to like But

Mike Swartz

you. Thank great. Okay,

Operator

line question with of the comes The Moore from CJS. next Dan

Brendan Popson

from and quick, just gain want aftermarket, Good morning. ask to to much as at a for Dan. This continues that have you how with a I margin and it on business there real is Brendan perspective, these to scale is margin expand looking catalysts. opportunity

Brian Hall

are increases market, our price our in certainly, that like business. Well, lagging OEM

seen the catch So need we’ll be the up and that all consider to – where get we business. scattered we’ve to margins costs continue across increases based on

can. We’ve piece. channels there. able out suppliers however We’ve one up that in to in been inventories. customers the they of get So I’m said earlier, beat like our inventory. to product get I looking small are space But all We’ve that’s a – like lot

all supply and they’re products repair whether can that there e-com there, parts the on upgrade it’s we past, out distributors, looking get the replacement the dealers, and channels the products, service parts. warehouse consumers we in So out haven’t or or for

of and a So our and that plugged aftermarket job done team in with out front sure there getting channels stellar all products. getting making they’re those has of

margin to innovations that coming So in great. months. opportunity continue space launch over We’ll the is new

We OEMs our programs have with substantial all on going now. prep of right

on put the at So side. the hardware prep RVs OEM we

handful situation at doesn’t good aftermarket plug that a and where can and have of it’s cost it to play years. we’ve last to creates leave really items on aftermarket, put gotten the – And They doesn’t high – the a into the that the it there’s easier OEM items. OEM over to component. So

Brendan Popson

Thank great. you. Okay,

Operator

question line comes of a Citigroup. next Your from with Collins Shawn

Shawn Collins

Brian. morning, Thanks. Good Jason great. and Hey,

Brian Hall

morning. Good

Shawn Collins

Is this experiencing is long-term. wanted availability My reappearance think both if your permanent clearly delta this variant. presume? ask and a with North now recent manufacturing to I reality and just is you question operations operations. America on COVID a this the in maybe operations I how a about and Thanks. impacted labor processes, standpoint on had recent

Jason Lippert

Yes.

it impacted So operations. hasn’t our

cases couple I October, a day. cases four of weeks, were back year, a November we’ve a XXX seeing the in think week, over which to and last we last XX seen

demand the the like COVID-related the extent just team anything if to a – for to some over easier can, our we’re of we’re happenings members that. making vaccinated, delta hasn’t it tracking of months. marketplace So we’ve recent to of prolong but impacted production we it’s the the things couple of standpoint, market get some like with result seen from things our as And and variant it’s last in it and vaccinations that, going the the

Shawn Collins

follow-up, Got business you. lot made unprecedented, you. three acquisitions not just a as quick you’re XXXX, you’ve Maybe Thank cycle. Jason. an in unprecedented a acquisitions, done in helpful, That’s of you’ve but

is Germany experiencing talk You’re Thanks. in so and input in those Texas, just about is on. most going how I also rising going the is the you three Can costs, in one on one integration is think recent lot a Indiana. one acquisitions?

Jason Lippert

Yes.

a away better better tuck-in from last of – we’re and that of kind I a that leadership we’ve teams, today existing companies effective more than say you but years, get the and integration. tell the be more XX the the over our in want to I’d buying been be they with the what to me allows tuck-in, they very done folded inquisitive into acquisitions leadership an lot acquisitions, have grounded, businesses operation So XX were lot getting capable and that have at don’t our team that the after strayed that just don’t and quite have us of we’ve team. past We more

door one our from CEO tell in, terrific Management getting our intact. our folded I are that integrated, the from Rock the acquisition, going still Hand – they’re months that a So Group, and seating great. CURT recent job the doing they acquisitions team’s Ranch the you of

growth gives great, there some we’ve we’ve we looking the European we’ve back significant made. new that already. operations at kind those has products we’re in Schaudt then have acquisitions organic had And perspective, to other it some U.S. handle. pretty like seeing synergies a We’re because and electronics got us the European bringing been of

So it’s healthy year really this standpoint. all an good from been and in all marks has by all integration

Brian Hall

teams in how look I mature make We’ve more add, just versed I are we also And process. system. mean, our so I our them sure got well that we mean, culture. are that integrate into and the to do in we think then integration would I doing much

teams. product, is a that great more So additional point great ago, looking that our and bit innovative leadership a fit went And And Jason’s the give those pipeline of to mold. to I years capital quarter, taking for out some and companies help putting tools of full. great And a out there culture think to them leadership we’re are there’s lot they of maybe need here the from them we raised we strategy during second the the programs into think organizations a successful. these I change XX be in

options technology, value great mentioned, aftermarket right the that for us fold product, teams, the out create a that business, right for innovative and there’s as be can we the right the I of right long-term in there shareholders. think to lot strategic

Jason Lippert

and $XXX are roughly acquired town. in Veada revenues, here in Challenger there. Those was we million right

and always our away, just we XX for a bigger meaningful. acquisition office to trip ones can the and can for at leadership that look make We faster can you our day our when management in team members we is. integrate of brunt integrate are the project acquisitions close think integration, staff to that integration I integrated and but we the So more home more where and those Then businesses last a effectively. are office months example,

So question. answers that your hopefully

Shawn Collins

very Brian. That’s great. helpful. Thanks, That’s Jason. Thanks,

Jason Lippert

Thank you.

Operator

time, At turn it questions. further back I’ll there closing are to this no comments. Lippert for Jason

Jason Lippert

innovation for and Hey experience thanks us We’ve business joining with and got the things great around going call. on of the lot and customer on everybody, a leadership demand.

in. So Thanks. you tuning our on forward quarter. Thanks next to we’re update results looking for

Operator

gentlemen. concludes Thank conference call. and you, this ladies That

now disconnect. may You

LCI Industries (LCII) 3 Aug 212021 Q2 Earnings call transcript