LCII - Earnings call transcript Q2 2022

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Operator

Thank you, everybody for your patience. We welcome you today to today's LCI Second Quarter 2022 Conference Call. My name is Drew and I'll be coordinating your call today.

If you would like to ask a question during the call, please press staff followed by one on your telephone keypad. And if you change your mind, please press staff followed by two. hand Brian to to going now over Hall to begin. I'm ahead. go Please

Brian Hall

call Lippert, morning, the I Conference the to And am by Industry's on Good welcome XXXX LCI everyone. director. CEO, president, and Second Quarter joined today Jason Call.

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

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

Jason Lippert

and other another coupled year, solid built deliver Europe, XXXX our Continuing the and adjacent on call. we we have earnings of momentum Thanks And experience. innovation quarter beginning with our Good up second everyone. the of LCI industries, aftermarket, differentiation culture morning, the to welcome incredible Marine customer competitive from in to quarter performance.

grow ways our finding consistently value. are to We

which creating businesses, believe our will great continue business, we for forward, greatly mitigate strong value generate OEM our to help we strategy diversification cyclicality of the years As to we support $X.X of markets. demand quarter in to growing growth RV which the double the serve drive each ended with with strong digit up our billion across over markets year revenues, year revenue we We in core come. are XX%

Our million for recent in quarter, market Trazcor growth Furrion, others and sales our helping net share approximately expand $XX of markets. the Girard, new acquisitions added high in

market foundation wholesale initiatives seven-day costs family travel XXXX, prices and hotel and and grow inflation, market record largest elevated travel. an a hotel airline with impact improve the as data in of of $X. airline impacts recreation marketplace ticket. trip prices add, less recent stay RV of driven Since our to show of RV $XXX. typical the results illustrating by be increase outpaces balance XX% to and successful than XX% OEM XX% categories. economic has outdoor average sheet, Outdoorsy cost That's macro trip only The far hotels RVing our rising associated travelers strengthen of increased night car rental spaces To gas boating, than go-to continue inflation world's advantages invest has fantastic space. and experience diversification recently and RV soaring the by the the the business. outdoor reaching OEM strategic the the American second further XXXX, in performance RV execute constantly flexibility our compared sales on financial giving our to quarter of the shipments continue $XXX Outdoorsy, success experience camping, over two us from RV including lodging the and airline cost one on those many in shared in North rental average continues Our less priorities in in risen increase the and and and environment, fuel the million share during gains. the our our XXXX evolving recognize a to Despite to

For affordable, affordable option. clearly an and families experience, attractive outdoor is vacation hassle-free trip and an looking for an safe, an

that peer-to-peer is vehicles that have XXXX, towing ever rental involved weeks monetize recently the In uses the a with time. sites camp these directly RVs advancements that a are popularity last our support development struggled the as significantly demand had Girard respect the in for innovation and expect shares also and the types products, from be outdoor dealers standpoint, Share the on because business received, in two as eliminating content increased on year our a strong next time to and we've record be XX% inventories. total option on typical inventory as the XXXX content acquisitions across track we new year, to the [indiscernible] growth first total industry can for Further, lessening towards rental inventory to up as to the the and innovative $X,XXX the in Neither months down platforms process rental platforms, years, lines, accessibility while the per the some second they quarter to during fear on RVing peers with their the Many cost brought significantly expanding of challenging option deliver product secular sites meet an capture first on like increased feedback hassle looking who market another strong associate a home like rent have In RV demand XX% easier dealer full, vehicles. addition, continue for we $X,XXX. to customers unit and through family remains work for now RV drove while added to ownership. supplier help for shift Based our picking board, attributed for LCI product lowering total RV content to than offerings. Because owners only people to course new the ample second as motor Current rental of these rental we our these RVs to quarter, of their the process, total listing helping we Furrion. well over before content to lifestyle. of of few gains various well but time. RV potential to strategically very out RV as also Outdoorsy to for volumes, RVers now look XX OEM enabled their existing to from built with

leadership as seasoned and levels prepared business longstanding our to new Our team as to adjust is long necessary. these

and XXXX, shift the cost output second and structure environment and in a adapt production changes to profitability. volume creating flexible focus skyrocketed on product levels increase helping quickly enables us maintain core while solid XXXX As and our to lines, that in investment we in third us our of easily to

buildings. easier Second and are we third much shifts flex had added than new if to

investment XXXX, involves wide goal automation projects to every XX,XXX our improvement continuous we also ensure in a throughout are team at with business member continuous and industry that we as improvement have have line demand. We improvement every our in manufacturing of flexibility In program, scale continuing which projects level. to completing corporate of part

rise. Our our team as finding of many to improve continuous cost continue improvement costs help extras are of our to to every input dedicated structure, opportunity

year Moving to a supported by growth. XX% grew aftermarket, organic-inorganic of over year revenues combination

XX% after the XX% to close we going up Furrion. years since our two in was last while almost was acquired aftermarket RV automotive Our aftermarket flat

our Furrion are deliver to are as aftermarket to incorporate and finding advanced sophisticated ways We appliance product to realizing customer also acquisition our offerings base. content new of existing gains from

the We their road as to in off-grid due That are supply have solar inventories. to strength and water said, quarter, to a to the somewhat heaters short effortlessly. in particularly during to we do in and this will upgrade cycles. stabilized product, hot margin that customers' levels. RV we core We business the more enter excited replacement, of repair, on about be aftermarket camp RVs hundreds and expect adjust term, softer largely tankless business to cameras of continue plans to customers the operations impact enable were our enable historical production our ease market Margins seasonal thousands and as return we automotive see the

serve, experience. our of in and developing resounding Mountain, where coming follow that collect hundreds LCI consumer RVers the service engage great creatively teams the on led and Rally are our rally directly to this to success feedback to with last To August back focused ways are helping to holding Finding we real trust second return year, Getaway keep business, our our RVers leverage engage, RV the amazing Pine for to from Lippert through up of build supporting are Georgia, event. service We growth unmatched our coming and and real relationships Lippert will real investment both an to in we has brand. customer the on maintaining us

along by should currently stabilize revenue solid content with growth to the of revenues market, marine rose our of the runway in to Turning The quarter RV our term help and business, XX%, heightened over has driven demand second which OEMs, course streams marine growth. XXXX. remainder the market again, XXXX near a compared our adjacent strong

boat forward, growth low the country inventories a Looking great trajectory. all giving marine remain over

our new expand other like and Like are products leading customer share of many shade industry supply to biminis in programs market drive windshields, innovation like through furniture, and we marine aftermarkets boaters electric future. to to marine we Similarly the into OEM expand the experience to bolster sales our continue our for in everywhere. As products brands RV, key components. key and products, working marine RV,

and members giving experience Our immense now are feedback. over thousand us a captain's group customer boasts

We stay ambassadors these help and brand leading will we to to industry. offer of products for on services to the ensure continue the encourage ideas edge

marine, but as as housing significant housing, In manufactured only well. to residential and housing lately increases seen not addition manufactured has well,

are Our ground. lot window markets of products for both a gaining

million products, about For chassis incremental grows important that costs sales XX,XXX the LCI our business. another window industry the with with units to for remember manufactured every it's that housing, low XX equals and relatively in

their that due in many today. growth adding manufactured customers have to We businesses housing are meaningful facilities

registrations same the European continue businesses registrations the next the to just of surrounding shortages early XXXX into grew quarter likely tail Caravan direct market Further, demand home in business to international and to Our inflation revenues. exposure headwinds our X% represents the been down our down XX% limited year, will quarter. in over international the decreased will extend compared fairly their market, total term. motor but of as have X% with challenge XXXX. chip the the for chassis, Uncertainty during second XX% largest slow for Germany, economic quarter longer these our

As the production, in much likely the years. the get rush will as in very US whiplash a chip at demand OEMs last fill that Europe resolved, over to the two is be there latch shortages will dealer did effect industry it like

and which are margin drive to business. very expansion been to our products, In Moving lineup, highlights, our more off-grid, axle introduce increasingly independent RV our innovation our for content customers. we LCI this successful and our RVs the off-road coming valuable in technologically going throughout Kurt's industry-first demand vibration leveraging to prove axle have we RV extremely customers advanced July, in growth found should traditional innovation With reduces platforms. in suspension the for and this

water the technology already year. We make We power are helping seconds. norm. another they a brake be industry-first Furrion XX%. many vehicles Also recreational are obsolete is increasing our us add launch We're on and heater reducing up one of what tank new customers cord hot systems want, industries' functionality next worth mentioning water cord of needed have power is new this much rolling needs the lined for We eventually give old OEMs cord set several consumers ABS brands, while and RV content by technology a cord hot the tankless technology the OEMs in early immediately working will with to other Every launched year and and across today's out ABS leading into heater. board. largest Furrion's for the our weight believe

electrification Our a the operating to help solutions more. innovation automobiles year development, teams new will and high product of much that including been have at drive complement

addition In emphasis our passionate our has from innovation, us on set to competitors. continued apart culture

true as professionals. and seen to Lippert place develop including grow elevated, beings, initiatives we've programs culture initiatives, human us a where efficiency, and that people our improved innovation, which has philanthropy safety, higher Due the programs come remain rates quality, business. not to and means Our retention these of and successfully made as to are coaching cornerstones leadership retention just and

ensure elevate output We that can personal in fosters continue we providing to workplace help while member growth. our invest professional to and resources consistently team our a improving that

our our of a Regarding returning paying for allocation, innovation Investment enhancements remains our the recent spend throughout in debt integration are business. capital quality, shareholders our remains on teams point right million our drive year. the order and down focus into that In growth above the to in industry automation second of capital while acquisitions, peers. and focus and to $XX and the XXXX, the and expect operational an additional efficiency, of remainder allocated CapEx to we $XX profitability towards quarter million

We achieve us. are working challenged propel and our business position these the balance sheet we No as a in may goals, two maintain order forward. has industry financial to to get, solid history how matter things to continue proven to

to meet striving thank each to our team of to is of continue for most their work, have second, customer. our times seasoned quality one in closing, types we downturn all and as fear. In business best for segments, guided the And dedication deliver we products members the hard experience as never these First, the that and while to as want long we management shape. of the teams and have through in great every many best demand all

our performance as by and leadership our as of strength an in well supported culture, incredible team. foundation and Our leadership our continues and be workforce by operational strong expertise experienced to guided

As CFO, forward, will will we to outperformance results. our detail more now our Hall, give strive stakeholders look to progresses. generating value our to for on turn while as deliver I year financial the we Brian continued

Brian Hall

you, Thank Jason.

to second or Our Acquisitions XX% organic consolidated quarter $X.X X% year balance improvement. continued prior period, quarterly results, XX% our the by contributing for to the meet growth the contributed net or with sales execution growth billion million compared of demand. $XX supported market the to strong to increased

year net in space necessary recreation of Operating XXX rising content of in XXXX a operational successful many compared and percentage per our and realization XX.X% well a to X% XXXX, implemented sales as to prior markets compared increases, the positive were towables earlier Content increased year the to XX% impact prior of diluted $X.XX of increases share growth slowed stemming by million the content spread freight for we RV contributed year XXXX, points of XX.X% the growth as sales XX% over have $X,XXX same in marine the to $XXX.X demand as addition while XXXX, period, quarter, XXXX over across to the over revenues for can period. is enhance to as prior and diversification was trends North market historical up combat compared of in enacted segment operating attributed expense growth experiencing in $XX.X we amortization seen increased in demonstrating be market, year GAAP at increased million and cost and of the per efforts. organic share prior year six X% which to price income We the increased the the which year and broader we million the of into due in adjacent per sales into growth content to the million cost towable strong July range to housing RV homes. XXXX, Non-cash our start and improvement in by driven price motor saw period. efforts, per sales year manufactured international during year. continuous as depreciation unit Acquired same to unit per demand the over XXXX, well sales prior Growth offset $XXX roughly of production in sales in by margins Marine continues industries manufacturing. further decreased QX production. content fixed the stock the amortization year to temper unit. great to markets period. the strong in increase months June In year increase in significant share to the by performance cost. OEM period, share enable non-cash price by which driven or XXXX. well our period, from primarily and the remained robust per in the to X% leverage XX% capital retail expansion has reflected by to deceleration SG&A higher Content a $X,XXX American as of supported Towable XX% to effective full our prior million aluminum has margins levels for increased the as anticipate as while the XXth, year to are compared $XXX grew market $X.XX year, seen by driven versus powerboat gains year customers. due housing new increase base. marine implementation or period, wholesale to the sales investments While millennials attract Testament increases. on was management. increased are gains increased RV second compensation $XX.X million million the move XX%. EBITDA leverage were North American This versus and elevated steel, half helping in to $XXX growth July, recently. the from year sales, was QX to and QX million diluted sales as efficiency, growth to to supported the compared business, capacity cents XXX% strong driven OEMs XX% increases Aftermarket year $XXX.X market basis shipments of in RV towable to $X,XXX, compared second based in as meaningful all, were XX% motorized depreciation trends, sales We XX% $XX.X

working XXth, million cash June acquisitions, dividends. the again of business $XX of first of increased normalize, with to a positively net XXXX, businesses. an were form were over $XXX or anticipate $XXX deleverage, in our million capital quarter, of we the impact Operating flows generation. billion debt acquired of on million further to being million earnings. outstanding into operating also cash million of months inventories months EBITDA expenditures and for able cash the operating $XX shareholders had borrowing was was for strong Driven to capital continue payments position to second For $XX in generated proforma of EBITDA And cash outstanding as reduction flows, activities impacted six making the adjusted the used net six XXXX. the end by X.X we we include on LTM returned by through times $X.X At from

quarters. With the focused expect constantly long maintaining balance flows near our term, which working and acquisitions, In strong debt recently sheet integrate term a to we cash EBITDA. target evolving operating are on are one the we leverage environment, a positively coming of net and we half times completed a to to in the operating to continue impact

For year in XXXX, million. million the the $XXX $XXX expenditures capital full anticipated to range are of

the forward of look in to balance the remainder current output. market, XXXX, slowing within inventories achieved RV we the continue in compared all As with American to to OEMs retail demand North production industry record retail time XXXX, demand the modest given industry to align

aluminum, will cost, The contractual in line impact related Xst in we participate. growth sales production, in production steel, decrease reductions XXXX, July in in the RV and with markets RV half declines of negatively the of price result, those we from experienced by second to freight half effective rates. a coupled offset to the growth the top partially anticipate XXXX other As decline first levels

We quarter. as contraction year given the to believe such, a second Further, XXXX, anticipate progress QX rates term. Further, adjustments utilize and since to we dynamics costs long increases of we driven business and our approximately expectations, margin third over decline basis, leverage over are will the growth shifts. anticipated throughout operating to anticipate additional these We we towards we fixed remainder aforementioned we X%. strong decline support expansion X% with margin price to our the margins innovation, sequential cost facilities to team, long-term X% the third on towards coming months generate our year remain as X% support the the all will between strengthen and in Longer cornerstones As we of in XXXX, committed and of operating margins In the we investing the into end continue to term, anticipate end as to our our of and profitability, of XXXX. move XXXX. in year efficiencies strategy.

you. LCI confident position and We our talented team continued Operator, is growth. ready end that long-term are the of prepared we're take to leadership experienced That our Thank remarks. for questions.

Operator

Instructions]. [Operator

our first from from comes Scott Members. AKM So today, it Stember question

Your line now open, is Scott.

Scott Stember

Good a right you talk also you about follow your my for Jason, from Thanks production granularity you're seeing just inventories on very a And basis? your taking that comments you're over falling? the little or just more what level seeing maybe up questions, morning. give maybe about could customers year could on guys. year being of cuts now,

Jason Lippert

Yeah, sure.

I'll address cuts the production So first.

in Our some where more ease the industry past the industry than they do transitions. clicks brakes kind slams of typically the with meaningful worked down into little on the

is, we're just industry. way we and it approximately. with live the in to So those next it couple production I XX just always production the days, from the went full look of But for like months prepared months we mean, things. types it's

months. We have next over visibility the two

keep so XX growing RV our pounding So the diversified on in August September, business message, we we strongly. production housing side. But full many as of expect very businesses the because we're or days is other

growing strongly. is business marine Our

Our business super is Power for sports. aftermarket RV XX% strong, plus. a still

offset July so RV going dealer The better seemed respect obviously was dealers May everybody. the with it's the look some not think be at a month. say And But I to but click better of West to to other production touchpoints, the those week. talking little And groups. bit every days, RV. great, for a June plus all next June. some larger of And You Elkhart the months, I'm than for then county to seemed Coast retail mirror those in, manufacturers to help continue XX are in be to industries maybe seem running to down we're I couple

this to is is And the as really activity certainly, look retail outpacing So minute we as decent. of the OEM far to wholesale's downscale classify, what retail production, producing. dealer

the has we'll months healthy started balance that in matter likely. to So of a process and be back

Scott Stember

right. Obviously, high maybe other they all strong could how the just maybe little but give How we diversified level All model big of of color are, your a bit you us more, business pieces doing We other few know about marine that are? maybe of track we could is for very right next where we manufactured but a well they now, talk and in segments that the the appreciate have, the months. business. few look housing could

Jason Lippert

Yeah.

mean, XX% the we've and anywhere on been month I is which by look So, up you housing, from hundred a our to manufactured it's month XX% businesses, if residential couple at million-ish. housing

And call business marine it [indiscernible] $XXX now. that's what growing Brian there. Our million close to right significantly So

we said, the are or inventories the now. right low As marine RV significantly

starting saying but supply dealer We chains meet where able chain free well. issues the So just to and to Europe be doing down are to what both to are not enough and is, they're run businesses having demand. like the able it marine the keep every up RV's supply day, run in rail they're to and they'd the

going have coming their quarter there record business marine Our is to up.

aftermarket marine and grow to that's $XXX piece. That's piece XX% aftermarket in of We clip the marine less the good. aftermarket. part going still power RV diversification. meaningful but at of look again, What at and dollars, Europe to XX% So And and rail forgetting? million a continue sport about I our our am business, probably to of talk businesses, some is just you then RV

some good color. that's hopefully So

period. or at this to side. seen grow continue on of so our what business look going QX XX% offset that kind is a and RV you be If RV forward, might And for XX% new to help environment we've going the and of other

Scott Stember

All right.

Oh, jump Thanks. Just great. last I before question, back.

and jump antilock coming back how With cord Furrion about stuff this the content with side. I that going we bunch new stuff? just look this into of power particularly queue, about, the talked content aboard a all should at last rates on, whole forward, you and question organic you brakes the that's on other Before talked coming

Brian Hall

Hey, Scott, this is Brian.

XX% over prepared today. I many the as layered in short being we've type organic here short past timing year the with pointed the growth, third I new growth some remarks, a we in XX% change trailing year, computation, think content XX-month XX% about the we've here our that is the the X% that business in, of getting term, that year of think year will organic out. term. year out greatly in in do growth, And and talked that growth our of over that to ways, around somewhere with quarter over all around at In we're and in being least year called remainder shouldn't grow. that the acquisitions will reach that's continue that acquisitions, ultimately pricing of

Jason Lippert

run all in at add business rate. that, to XXX,XXX-ish million more $XXX Andt That's a figured September. to $XXX the coming of adds close to we're looking new at post model change up in here

significant new business adds. that's of amount So a

coming will. excited industry on penetrate to thing of from we entire product set. is to super other newer some we're which that's to just the that market four coming share about. from cord feel going that's launches. Same Furrion, years Other something the of Some coming power of from gains. we our some really It's three with that, take ABS is

trying Some to of XXX,XXX And water new on. in water convert- the RV our tank for XXX,XXX take RVs that there's conversion products, business put hot heaters them. to hot that's us tankless no in because is goal have we heaters heaters, and easier to every already an

that big which we're zero soon today. for of appliance coming selling are is furnaces another So us,

look there, add to we over couple it'll a course So years you up. continue what can the and meaningful volume of do get to

Scott Stember

guys. Thanks Great.

Operator

comes Our from Moore from question Daniel next Security. CGS

open, line Your Daniel. now is

Daniel Moore

the side. you've see still where for be timetable you XXXX color, Jason closer got when Any of expect good Maybe give half Thanks, Thanks. a your great. more be to just and Brian see best growth you Do guess kind first us through you. and would Marine side. at of Thank additional or obviously like this on RV would are an update them the production imbalanced looks a runway. stage? especially of we to color inventories in of where the you RV the on

Jason Lippert

that's Yeah, question. great a

first I with of of business which think on through our is the especially where is Pontoon most easily most boats. the- quarter, feel our content the confident, we production, where in, most of settles

Pontoon and a dealer still the going opportunity they're like big of inventory, taking and feel boats, of more nice retail, they're share runway with, we we've year, clip. maybe pretty those end be fiberglass and to boats content toward of a but of it's boats, the the lot power Some business lot seem the a got growing especially still in that's out market there water

Daniel Moore

second got in you've temporary in in that's at shape slowdowns, me Maybe M&A Thanks. you that's great pullback whether for for organically might that me. And going type opportunity kind to talk it share and slowdown. about more be of see both of and into any gain balance ability your Great. sheet and environment, is, prior

Jason Lippert

and lot had businesses. in into That's Yeah. We're the trouble that high little and acquisition that's seeing if of coming opportunity activity people question. slowdown, maybe some another inventories you're bit because a of good midsize and the already wall RV, the smaller a spot on to for there's this space writing a see people purely

evaluate table an isn't we're excited with and to retail to like there's there's earlier, certainly wholesale I further like those end, the opportunities starting next like are right shorter feel come And So was- like decent. back, and said and the now already we fairly X because we're over be production really to pulling diversification on still blip is months because in be inventories is the this our along there going being XX-XX they to to probably XX on as much this opportunities going along. size

So for there'll be opportunities sure.

Operator

you. Thank

Our from Thompson comes Katherine next from Research Thompson question Group.

now is open. line Your

Kathryn Thompson

my Hi, questions taking for today. thanks

history was you portion and Lippert, of the changed. If business obviously the at much we with affordable of diversified, housing, landscape back where look bigger has given are housing manufactured your a but you've

for been housing. guess, related impediments One historically housing manufactured of manufactured to specifically. a the questions couple I around had financing

you. for are like your today seeing where how strength recession? First, since what is is the financing housing manufactured from landscape pre-grad then And different also, and Thank a geographic look you it demand product? standpoint

Brian Hall

Kathryn. Hi, Yeah.

financing bumpy over a I obviously or has last think the road so. been decade

as has of some upward sure world, a with things landscape markets, credit that I'm in housing a changing deal relatively, of certainly to specific changing you not interest across the So I our manufactured financing that are scores the past. lot well. but the rates been of seen I the say, are would higher seen haven't great we've where delinquencies, still strong today,

contributing those market housing. affordable consumer top total growth relatively did the that really but a in to every I small manufactured still today, the So lot partnerships gives what's additional many for that home including XX it's know with days manufactured something And think and to XX,XXX a us. find units, Jason certainly content our what's housing. the happened, a or And as much to that your over percentage really, how typical tightened sales, OEMs. certainly all seen tremendous mentioned are stick-built we homes up line have opportunity our of well so, it's point, of I think we've great has think certainly for with I the markets, just And market a last

Jason Lippert

what price with was today And there's years a a mean gap plus, the between at mean, average manufactured housing with back typical there stick-built ago. housing XX, I of stick-built Yeah. home than XX much bigger XXX,XXX

So of some to between the putting last to chassis. September. and probably than in question all up the They're Champion, players of of or real look facilities. a other out the the plan finalizing Capco, now, in capacity bigger on the just us answer coming We're Clayton, the them, running parts business, that launch three more capacity and right XX you of chassis quick is adding they're tune the of at

again be Texas. we'll chassis in So building actually

added manufactured our portfolio housing haven't years. to over XX in a plan We

site bright a few for and to building built So we've the that's really the housing product still today windows us a the our of part homes. a for lot recently the expanded of businesses. last of in And window housing residential new year, vinyl business chassis lot We're today.

ample actually a are And And We have all side. to we quite housing site trend homes on this that. team of and do in then We're that that and we're the capacity the selling of members capacity. a seeing for to market in that we're things being that's got in distributors All we've in Texas windows doing we think there continuing big lot already aren't capacity we're manufactured this adding at years, good the over is add So because it's a the stuff, plants like the added building really there that housing. business have. and Southeast are continue new to to going market, manufactured really building couple next of windows. and bit chassis windows, the expand built

Kathryn Thompson

you your projection? for Okay. housing? Southeast, cited manufactured for projections Helpful. terms shipments. give in Do the RV you You similar have in one Texas, a of what In is

Jason Lippert

closer that going been see mean back remember we momentum it probably continue. were XXX- to XX,XXX, we in and I XXXX, to see slowly XXX,XXX. the we getting mean, just XX, you it's if it We I climbing see and

of I the you see in be next over So surprised years. couple to wouldn't get XXX,XXX

Kathryn Thompson

the it year? And Okay. just in for what those was perspective, calling last

Jason Lippert

I want for maybe I think. XX [indiscernible] another homes top say to year, million XX,XXX line built that in us. XXX-ish, Last are

Kathryn Thompson

Okay. had that today? margins been proving historically, those better. And be the Is to relatively case then still

Jason Lippert

today. true Yeah. Still

Kathryn Thompson

the kind for to the Then a be see categories makes brakes advocate, of devil's building? that Okay. in sense the eventually of that lot on just case why but RV the are tapping business, the including area, wouldn't leisure being

Jason Lippert

were a not size likely. supply because we're see full off the why whatever that just right so of they it middle will up, that reasons that going should get inventories bit by RV Oh, I will, to and It's for careful slow sure expect to just for get little then ramped to happen, year be chain it's there, And did again. we'll they going that. think next back take and RV extend we into time, but tail more

nice these So and categories. got pull two action push going between we've this

Kathryn Thompson

Okay, really Thank I it. you so appreciate great. much.

Jason Lippert

Thanks, Kathryn.

Operator

Truist comes from question Mike from next Our Securities. Swartz

Your line is now open.

Michael Swartz

some of, the the for you on just to you margins I guys. sure with EBIT right. commentary margins think off want make say morning in just year. Brian, I Maybe I through be the the quarter I over the XXXX? And I behind the kind into guess of guess, of third and expect heard that starting maybe then good course Hey, Did that back X% improved half quarter X% outlook. the of case, moving to fourth if then the just us that's walk pieces to

Brian Hall

went lighter year, quarter Yeah, a to pulled going we we up production what thought little was for the we of Certainly, going year. remainder about around anticipated. digit a talked low, had the we'd of QX, be originally back margin. didn't hey Mike. we with, what as front ended you dramatically gauging as Certainly very get the of it We've fall actuals seen the half back was thought more RV than the bit QX, double to this of where land forward somewhere if year and being to that percent in part type off

that then seeing you're bit a second a pull the little in result So bit fourth margin and the little lighter quarter forward into of quarter, and third margin.

QX. half quickly. the type digit into for certainly I that margins single We're sizing back the So business going high think right

which changes reductions lot speak. on talking a a about. market typical down we're as lot and those So making of overtime production days we levers where of necessary, depending We're dropping the between

by you So going to decline to I had pretty quarter. we in that was certainly, from get remarks that what declines would to were close. QX intended where in X% second That's it anticipate X% say my the

But obviously, the seven- single the business. fourth as quarter right move executing sizing a we volatile. bit around high on Commodities still you then beyond, are be into type will You'd be digit and margins.

businesses goes beginning XXXX. all it's with ultimately what where quarter certainly for it's all aftermarket other it running outlook and arrangements, production And in for the margins again, RV and we they're So don't these have And marine RV year. that diversification. ultimately, the other quarter but full based without seen were but third the in it's where near that really, having out. knows declining year hundred a of European the absorption do change the that's look volume those and in contractual the businesses they're much about volume. tough and and plays who markets continue at recent means as from months, fourth just But And on really causing of our how to to double going today. the fourth percent our of strong accuracy here some I that couldn't of housing increases talked, the we gauge that with up end all perform to lands our change price doesn't for and digit the in we've about strong costs more those anticipate that in term. how a and it some We at If back of to half that where

Michael Swartz

a think, then just the stronger quarter, people Okay. That's most touching helpful. I on second in leverage than, And maybe operating came little modeled. had

down obviously if margins on in sequential were given to at But the of a it line or stronger. is of that basis, I strong Some even step a quarter. in look operating pretty coming factor top revenue leverage just quarter

I operating there for can just about the what tailwind freight there out, going anything or was in you I call leverage quarter forward? kind I guess, outbound anything guess, anything- or was was, can of that So think we that a guess, is

Brian Hall

a landed. input we quarter front tell guided first more little I the to bit into would second didn't, material ended within actuals guide from that down, come the have from you benefit We but as will we backside, this side quarter range you're than the first We we'd the originally and continued quarter a benefiting to we well. that continued arrangements, where quarter there's where going freight but were and bit margin then come a down was time the because little I think, then for contractual we has benefit. down, suffer period tail this, to benefit certainly You're our on costs now of sequentially. what up that the when on second change, in on in just come the more Certainly, aluminum had costs the steel our anticipated, where with to

and quarters, markets to say time certainly benefit there carry volatile. third that. necessarily something ever-changing always of periods where fourth and as pretty we that's are anticipate but into it's those that it's will the and it's I short there's variable wouldn't from a So

Michael Swartz

Thanks. great. Okay,

Operator

question from Research. Fred ahead. from Please Our Wightman comes go next Wolfe

Frederick Wightman

you the I full and Good morning. guys. just a side? giving sort sort don't the greatest RV latest you for year of wholesale year gave think what us industry of you're full Hey was I thinking number. the on Do on hoping- mind

Brian Hall

an think to It's that's XXX last moving XXX,XXX in unit quarter, the I target, range. hey but if back went I we you but still Yeah, say opportunity, certainly would Fred. and were more of a compare in got think I to half first more I Like the the out versus you contrast the year XXX to we're XXX. and of back call year. really of the discussions, half the or targeting continued that

I think the wholesale were shipments in first units. XXX,XXX half

numbers. So pretty hefty

back in you before of So is number retail's a know, the that wholesale. XXX in the a what the I current with XXX,XXX anticipating good half more the idea what it's trend like of you balance, demand that unit half how year. give year somewhere is back especially retail, the or healthy should XXX, which for looks And the good, Like to is. there, outpace starting loaded wholesale considering light to- already of going said,

we'll back long. too shape be in good before So

Frederick Wightman

the And disconnect the expectations. to on comment Can through below there Great. in prepared where about about was being the walk think growth and margins there slowed you going number just us sort just how a a sales talking the sequentially, forward? aftermarket and was business, then bit remarks, think I that also of

Jason Lippert

stark Yeah, aftermarket, percent which real is And a so two months. were marine there I right years year business, is significantly mean, business double business. when good we chunk, high acquired a then The half recent pullback XX was digits. growing Kurt now, we that over half and has that's RV the here in XX% grown other of plus XX% pretty the recently. our last and there

we on of margins. nicely off business of to with side marine extremely the grow fall good and automotive That on RV demand continue still the part seen aftermarket, we've our So but will bullish are side. our

the one aftermarket of half. it big the the we little aftermarket. half of on we the really numbers automotive just RV-Marine the kind why wonky aftermarket, piece It's at that's look as because So talk is other a but look is about and business,

Brian Hall

what And talk and to more- the issues, too through Fred, they've it but understand supply by chain often, business automotive I seen we know don't disruption really market itself the et understand Kurt cetera. you about

automobile So off bit a ago. it was have quite you certainly two, from production years where three

been as a as and that's of factor used used A whole replaced lot as products just there contributing well So hasn't vehicles well. vehicle hitch activity a sales on will get lot there. those of

off channel's that the that inventory months. work last dealers to full lot pretty to was are So and XX of a looking the built XX the up over

Jason Lippert

share leader market automotive hitches aftermarket the we're And towing. and in on

up, soon as as So we'll vehicles as back pop new see pop our well. demand and up up pop sales

Frederick Wightman

Perfect. Thanks guys.

Operator

you. Thank

from comes question Jordan Bret Jefferies. final from Our

open. Your line now is

Bret Jordan

Hey, good morning guys.

just some a that to higher of costs of the down trend. had volume that of as de-leveraging decline, kind mentioned as you deal, you've think you price of I pricing from volume July but come as see to had margin XXX price parse what of you'd material had? carve versus and some the basis that versus sort margin you of lower the sequential XXX the you renegotiated out of benefits timing points On could

Brian Hall

head I Yeah. my the out into look right this at going mean, and probably I now, it in Bret. third quarter I'm today roughing

So I'd say it's XX% price and XX% RV volume.

for price have over in numbers did being you're key is volume X% that. a that only July driver into that went RV seeing We that number certainly report, the So decrease the reflected year the one year. the to effect we the up reported, July

a now. now. We normalized plus period benefit while for year over type year. So more to back these XX% normalized And a to right numbers we're back more think from I we're

absorption perspective, the costs more expecting on run the earlier, And So X%. to July it. be say, into my price probably baked that pony decline. just of driven for I'd good a X% the consistent third to margin proxy the quarter it's fixed the to got or rate piece RV from by a And that's adjustment

Bret Jordan

Do you'd term? the XX decline Is would target near you in you cycle at talk look think month, the stable that might sort at your enough closer XX of of think then there on and and thinking actual looking times I where in be because it's or that And a leverage X.X. to the are there less question I months, on forward maybe of you you great. it next XX regardless guess at or trailing term? Okay, just earlier was outlook, go six active in some X.X be M&A be levered the obviously long we a of gets the months M&A to

Brian Hall

Yeah.

benefiting spot high- you're the today. we've levels lower on. that is EBITDA record in. is- turned point Your Leverage from of We're

right of trend is expect little would that our but the strategic X.X I around to times. a So for in start leverage ratio up, to target likely back up back where year end half the at bit

If think where what explode I execute M&A to be we on, need I we looking position to. sheet to the need have on again. that we a think we're perspective. opportunities think I of to So from we'll strategic are to the in going comfortable an right balance ability don't a there, I regardless the execute what's think

mindful it's that, option we're for of but certainly us. certainly very an So

Jason Lippert

said little We've comfortable times. Yeah. we're of always north two with

price XX of great look neighborhood our opportunities. to history in range. sweet of you million. There we're spot would We've acquisitions at take is last and lot opportunities, million tell in those a years, that that made you be to great So position of in XX XX-some I XX advantage acquisitions the a will our

So, of lot develop like we a hopeful and $XXX plug grow of out but and and coming we're are the We're can acquisition, million at and look months. smaller distribution to we those to a opportunities our likely network that going acquisitions said, go in our markets. there Brian get not do into that customers

Brian Hall

so The from able perspective well. can record have those hundred to I that cash a that was, as dollars our Lippert own the last pull strategically past. We've couple that of increased be help will still I out certainly to talked regarding there's levels we support point more think volume. certainly additional inventories, would add the in million inventory than of we

Bret Jordan

you. Thank Great.

Operator

further Q refer you Lippert Thank I'll to concludes A Jason you. back for That and now session. remarks. today's

Jason Lippert

XX% I take just want to these to call business, little a that which everybody of I RV spouts trips continues the Americans in that surveys us lot summer. this going my of road our on long down they lots with grow for and RV never they're this to people comment The XX that camp family a summer, through and and said their made remarks, back opportunity million last in initial is to there's peers of to industry this remind going they're business.

to to you. talking Thank forward on So you we next Bye. quarter's the call. look

Operator

call. That today's concludes

You line. may disconnect now your

LCI Industries (LCII) 3 Aug 222022 Q2 Earnings call transcript