Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to today's LCI Industries Third Quarter 2022 Earnings Call. My name is Bailey and I'll be your moderator for today's call. All lines will be muted during the presentation portion with an opportunity for questions and answers at the end. [Operator Instructions].

I would now like to go ahead and pass the conference over to Brian Hall. when ahead go please you're ready. Sir,

Brian Hall

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

a We will discuss results for moment. in the quarter the just

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

the the As that actual are filings our in which our result, forward-looking differ you a company of and These with XX-K the there the Form SEC. in to cause statements. a in cautions earnings many materially factors factors, release which would described discussed other from results events and number company's of and are those beyond control, are

to except any circumstances are date disclaims made or or obligation by that company the occur events reflect The forward-looking the as law. after undertaking statements to statements required forward-looking update

With to Jason the Lippert. call that, over turn like I'd to

Jason Lippert

Good morning, Brian. Thanks, everyone.

the to across thanking business this to our start by their work for put our off quarter drive and teams in forward. like they've dedication I'd hard business

portfolio company, operating company-wide profitable commitment been on a strategy, that a with steadfast innovation. diversification for coupled through laser-focused As execution us to will the growth building has position environment a help any LCI the in of our

aftermarket overbuilding adjacent largely through continued our production of OEM other in Well, we performance overcome third American drop and are XX% able Marine, portfolio RV the of quarter seeing nearly businesses. North inventory softened in the challenges, to RV diversified in the and we due macroeconomic market-focused demand were strong to RV

had in the our illustrating lifestyle quarter far record above has scene down of pre-pandemic on revenues that on That being year-over-year in that the third focus the against quarter trend this said, remains delivered and performance our impact years our business. outdoor We further $X.X diversification XXXX results. X% billion

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

RV $XXX shipments. American XXXX the of by North and compared quarter million decreased revenue sales OEM XX% quarter we third driven of ended with wholesale to during the XXXX, decreased

Over RV consumers for pandemic. space traditional safe demand the years, the past in of vacations two this this affordable the flood exploded and wake looking in alternatives,

driver, changing, advantage hotel lodging. to outdoors has from be setting record demand that confident of levels. airline expected take remain As we and across those demand That rentals recognize come offer and and the the boating, an continue travel globe to isn't down that the the over adventure and said people desire underlying RVing camping,

leaders the At the the investor Elkhart including long-term discuss on know industry of we recreation RV September, and the held speak as had to we with end to several how an briefing secular views it event to their the it. of shape space impact Open trend, the House lifestyle at will continue opportunity we outdoor has

boomers the reach more demographics now retirement. brought of astonishing age and to take outdoors is our an the one see baby or retirement of XXXX, at will was prime generally vacations statistic powerful core One U.S. our That from in till in each XX,XXX day. of up spend every that people end number time

space and On Zrs stream at hand, levels. Gen continue millennials like groups to the the younger record other into

throughout on our with in all marketplace which strategic provide positioned within XX% our seek younger panelists These innovation driving reported bookings Outdoorsy to portfolio. is One exactly more groups. LCI of younger both rental these RVs that demographics out travel what technology, smart outdoor of is from our consistently fall through focus generational

a Content per record great in $X,XXX, quarter for XXXX XX% to the growth our by quarter XX% RV third per innovative RV content capturing of to record demand $X,XXX. content accomplishments for increased recently of while motor products. home One increased was the delivering total

RV been OEMs production of the we couple to schedules OEM and align quarters. to of capacity in teams production this retail wholesale continue Despite the the implemented RV In have to expect terms adjusted next near-term, lower quickly we to able several demand shipments past the improvements trend in have operational dealer and for the better with flex inventories, thanks and years. moderating

running also strong and manufacturing team members adjacencies long-term. we're over personnel customer business into meeting RV of aftermarket with that business other capacity shift and to other like to and our We're the able ensure areas the the best Marine, demand keeping are

sales aftermarket in to aftermarket. year-over-year our were offset markets, automotive in Revenues to driven by flat the RV lower business the sales part by strong

from coming RV Furrion further consistently innovative development deleverage as especially robust content has catalog electronics. expansion, product supported of New in our its and aftermarket appliances we

this We've aftermarket RV over launched to new nearly sales XX which into year, time. the products should gain continue

aftermarket RVs and customer hundreds by of demand well business thousands We as from supporting the the by cycle to year, throughout are RV our department. consumers repair, entering continuing meeting of each on as focused experience replacement, upgrade grow

while support consumers' one that with work Lippert's for upon we're extensive to brand to consumers the replace to By in establishing can of with place having portfolio consistently along help. able almost on every RV, depend the teams directly as and quickly solve further part engage problems

in heard with drive and improvements on feedback calls to out out Georgia, call seeking experience. touch XXX,XXX the consumers We consumers we collecting us, care of When for type every can us create RV to not center between hundreds RVer. annual of just e-mails. getaway in-person RVers has and Further we points reaching RV do the best over are our to we what Mountain month in second a services product each they're and help customer finished from phone Pine at where Campground our

community of year. more highly with important to consumers turbulent of event, Outside of Lippert around are relationships dividends initiatives tens thousands is engaged Lippert proves our already campground create throughout schools brand. rally Lippert times. the even the engage ambassadors, the our during scouts, Lippert like major owner RV project, we the It major RVers paying and scouts helping as Strengthening a

Turning to XX% throughout in growth rose our strong Marine, adjacent by content driven quarter along adjacent demand businesses. continued markets. the with Revenues solid third

Our long should Marine with in proven substantial volatile the to growth runway production strong in revenue advantage a has quarters. RV revenues RV footprint as stabilize results a quarter in this that than to coming slowed. market, Marine our boost further be less is streams the helping our

well-positioned the as innovate. manufacturers increasing rental and to through other added through our like markets, lifestyle boat increased coupled with Marine continue functionality with clubs long-term Just accessibility for remains outdoor of the growth popularity programs

our to experience our expand working are offerings, we Marine product we As customer advance programs.

ambassadors offer Our experience. now to and ideas boasts over services captain's a boating help members, of for to customer to products the experience ensure X,XXX continue edge stay customer these program brand on we leading encourage will the who

manufactured also legacy growth in housing, of see to one markets. We're continuing our

continues in our to our rising high that people are business average this up traditional to way. to low Because be all-time industry in With grow homes great homes of well add meaningful this picking for might cost across an we priced business, as overall a reach housing alternative for out stick-built impacting the prices manufactured of margin cost poised some housing as an footprint Americans. of the country, is residential or

of diversified our XX% a meaningful is portfolio business RV. housing part and manufactured is year-over-year of up outside Our

of third for the to X% XXXX. grew businesses quarter the international compared in Our quarter XXXX same

a and divisions marine Our the of business. nicely up the in European rail held wake slowdown RV of

which stemming quarter. in market Issues impact year. registrations down Caravan from global feel we during into XX% the decreased Germany, chassis the continue XX% production, continued the to home have will with largest chip shortages registrations next motor

enjoy And our European addition, we remains motor said limited to and and exposure material towards the normalizes. continue caravan a due marine headwind these believe pricing challenges and chassis there. In the a elevated remain to OEM energy businesses our raw for our long business. to business with with tail once rail strategies European overall That our we supply costs caravan demand will ability diversification

to major our to of in as In recognize over products marine to innovative business. innovation new players it ideas. members they're that for looking more R&D invest a challenging portion in maintain this even environment, XXX we on our operating and space becomes and focus dedicated continue innovation critical team and the company when Lippert in our to business, and a come RV With and

in in is and and five innovative piece RVs cars recreating one talent, with have that per like wheel; and years, Products we've features. translate our large of meaningful to strength part this of cost ABS will these R&D our launched a building growth improvements and ABS not a we existed the brakes, products can have years. our first and deep decades, resulting key the RVs to thanks the -- of for the Products the were version feature existing A a transformative effective in from taking improved most bring next-generation like total to vehicle. dollars in most next products way. We of anticipate to hundreds content in comes

well exciting many few. systems, for features OneControl, our more name our products of including doors lock year, features suspension this as entry other Pontoons, pop also version sleeping launched new auto axles, for top biminis independent a We new for electric skylights, to

of slides RVers connects the with their had the OneControl of OneControl maintenance September, in performing us investor platform event users wide in touch RV chance week. to functions needs. leveling attendees at our loop in to thousands in opportunity pressure, explore every RV from to the on to almost keeping owners The the weather checks, of the operating every We system giving allows to upcoming and checklists, tire to monitoring showcase app of facet pre-trip OneControl briefing tens stay The range provides.

charge during we're our grow critical slower do times. excited customer at our Still We the LCI opportunities of RV puts We've at as type pipeline the base. three success and development significant we the of our growth for content electrical a to in one electrification are of World how continue trend. in the this should last of relevance seen and Innovation area story electric our in displayed in planned decades, moment, certainly growth investor this the turbo the the great than R&D chassis event innovation actively well. total we for -- more is in reasons with and also stages exploring the this never the concept and forefront over

Next, focus. address I'd to our like cultural

outstanding with culture team. Our our begins leadership

leaders been years. decades and Our for journey now of on we've culture a have combined XX experience

tenured our in more culture We a great markets. our efficient, believe We focused culture team puts results and of better which and steer strongest to organization highly growth. times more workforce group more on department culture workforce, Our the development leaders is equipped lead throughout XXXX found We help than an these create to keep us our XXXX team and effectively. the coaching in their very and how through will win our a on leaders creates our best business are leadership believe who lead help help for ever and is we in accurate, tough to innovative. individuals on that engaged that are across is we advantage. around believe safer, engaged us than the more position and competitive and path and what long-term the us have Differently teams XXXX, themselves XX experienced

fostering a have in and is that members to for believe bad help of to and place that teams leader We'll elevating team to we growth. impact in grow encourages retention culture proves and having continue that we in better can in elevated resources resources professional a keep and this develop. times our to these what remain personal our great or are business. our resources improving good innovation Because to work makes a the We teams, invest Lippert and our quality, our great development turn while so culture driving and committed workplace output efficiency, rates

the just Additionally, will our new finished, by we next country. that we be our events Experience teams, a RVers at Team, XX and our across out Customer year, the camping serving locations initiative serving Getaway will launched carried which Rally in throughout allow over to happen philanthropy that this country

and priority, the acquisition integration capital continuing also while Regarding paying shareholders. down capital of return allocation, top to remains a debt recent to

aim investment operational our and Additionally, quality, enhancements we and profitability focal drive through point to as in efficiency, acquisitions the are business. main for innovation, teams our

to been billion to run billion. completely function he's an with successfully. this I $X Hall annual service only organization. business, friend in helping possibly good nearly not here grow $X in transformed years without accounting integral for thanking team, placing many the very in great of partner He's can't my and and XX leader a business, great been from Brian Brian this also people close our the finance has revenue great but us

local impact also his organizations. to LCI, has Going our at and at respect charitable capital large here and serving lead leader standout boards, help Brian with he's contributions many community general work for fundraising projects helping charities been a past initiatives. to spearhead these

Brian you as those many As know, to here and at the of a to important expected has him just community strongly lead around lead has Lippert. as Lippert how showing focus, been community true in is impact leader one is a

for Brian, we all and of always family. thank you you've be create, that helped part you'll Lippert

next are successor six are has you in this have said, being to to as with you so or That and chapter As saw the initiated Brian we morning, appreciate the support transition. Board ensure search you'll months us life. his enter the and a we we savor have a excited last your for going smooth

and the is to diversify would revenues quarter. were in RV, are and of think a XXXX productive way and is After made it's up takeaway really we closing, strategic we strategy our diversification done past the If proud much out. different that our we the picture In I XXXX, our of in most work tied biggest have and turned this the working. look commitment portfolio way, a

While XXXX RV are don't business, and things side are feel in anything of tough RV back we almost supplier. it like when an on purely did XXXX the the things

of as thank I'd again strive our and towards continue their outperformance. team all being best-in-class hard the recent like to trajectory our supplier to commitment work for members of we

the in are the driving of we we best-in-class all business. and our the how growing contributing are business proud to teams having culture some the to and best forward, have We leaders see the around industry and successes the are

and toward move for driving long-term we we shareholders, XXXX, generating stakeholders. our growth the customers, while As end value remain of focused on

our on I turn CFO results. financial to Hall, Brian our detail to will more now give

Brian Hall

Thank you, Jason.

XX% period, sales reduction to partially the a compared Our for prior end quarter strength impacted Marine. X% decreased including million consolidated offset and RV were net our industries declines sales to demand, in wholesale in by RV continued versus growth down the shipments, third by year the billion $X.X in to October to XXXX, aftermarket partially markets. $XXX by adjacent offset due October at continued other

QX partially RV attributed to over a RV share in towables prior while the increased by decreased XX% and year-over-year record of contributed XXXX a decrease Content while period, motorized record growth. content per compared the revenues driven content X% $X,XXX content by XX% sales homes. XX% in wholesale to increased shipments, Towable gains can XX% unit year. to the in market organic growth to be motor OEMs prior $X,XXX towable compared offset year expansion per of growth to acquired to further

end the share sales XX% the by markets, from per to to driven positive mitigate saw Marine softened demand. powerboat We market increased gains. from performance with other increasing In which XX% RV our North negative American content helped $X,XXX impact quarter,

versus meaningful sales in which as XX% by Marine supported our sales growth the prior levels. elevated housing growth manufactured period at well aforementioned year business, Overall, to grew as remains adjacent the in industries

accessory automotive Aftermarket vehicle an decrease by sales. traditionally and to towing to segment sales sales. The due benefit used entirely a Marine and offset and sales that other increase new in by were challenged sales, flat RV automotive was in declines aftermarket be which continues in

approximately International pound. XX% rates compared of Euro of sales increased results exchange due dollar British X% strengthening and to year-over-year the negatively in impacting spite the the by to

Excluding organic would've impact, the XX%. growth exchange been

costs by the X compared prior that related and effect XX.X% to by period, price July XX.X% and steel, leverage year. offset went declines reductions aluminum, margins of efficiency supported operating partially freight in this effective were to into and year in Gross

costs as sales XX compared a due costs percentage roughly period. year-over-year remain Operating of year SG&A to base. nearly margins sales increased a fixed spread basis increasing the prior over to lower points flat,

$X.XX $XX.X per demand GAAP was net QX XXXX management. or lower million a slightly decrease million in income QX This reflection or of in compared per to share diluted effective by $XX.X cost offset was diluted XXXX. RV share $X.XX

quarter for year compared prior X% to period. increased to the $XXX.X million the third EBITDA

was anticipate full-year million stock-based million $XXX XXXX, range amortization production and was primarily manufacturing depreciation million Non-cash expense for of compensation same XX, September period. depreciation $XXX amortization enable and million to $XX.X for nine XXXX, ended non-cash We the due during in efficiencies. while capital the months the enhance and capacity $XX in to further to increases the investments

with were $XX million was XXXX, activities $XXX of form to of earnings, cash increased million, used For continued business we generated reduction the on nine further cash capital ended and to months in inventories flows dividends. acquisitions, impact normalize, capital XX, positively as anticipate million for $XXX our in used was by million operating September Operating expenditures, a cash the again and being working returned $XX for shareholders from generation. impacted the

of At strong our capital our had pro quarter, our $X million an first businesses. adjusted of of by operating Driven debt further X.Xx include of borrowings outstanding EBITDA billion, $XXX the nine the pursued balance XXXX. forma the to outstanding on making LTM EBITDA through net cash of flows, months payments of sheet, allocation end we third we strategy position net de-leveraging acquired

In we XXXX. flows greater recently completed the strong maintaining as fiscal the cash of we are balance environment our to uncertain, sheet working and impact near-term, a on we macro to positively target continue are we X.Xx acquisitions focused long-term to a expect remains leverage net As which debt-to-EBITDA. integrate end operating

the capital range $XXX Full-year to of anticipated million. in expenditures XXXX are million $XXX

inventories balance to XXXX, with forward a output. production of of when continue highs, industry RV recent demand to demand end fiscal retail align the towards comparing we result to As decreased move OEMs as historic current

XXXX, markets to net other the XX% suppressed RV to of RV anticipate in offset by softening growth anticipate remain in the remainder to approximately we we in the production XX% levels decrease for relative in. fourth sales decline we of year-over-year the the RV participate Due to partially Given production, demand, quarter.

Further, given XX%, margins margin contraction. year-over-year cost decline inventory in sales base our negative addition QX fixed of of to the lower we on consuming expectations, margins absorb effect XX% layers. traditional to consistent with anticipate XXXX, as operating to aforementioned anticipate In we the we incremental costs high

shifts. with the We fixed as our long-term work we to And profitability maintain expansion. leverage equipped to we appropriate are and driven believe second generate third to business. throughout are strong our well cost with at levers efficiencies will margin continue hard utilize are of We

Our and to to drive investments have in and ability confident remain in to long-term innovation, our teams expand will quarters our come. We facilities content the in continue vision. our value further and drive our

been more Lastly, my come. more have for life. and pleasure entire to every while Lippert's and grit demonstrating drive the difficult what was a prouder over commitment family much it work me organization chapter be the we to and has new decision, would is It is thank and spend to there know I so to time leadership the I forward years. achieved one and And transformation for of with Jason right last together, team, on each to cannot of a time my you. Lippert the a like the and with Board, the in I XX embark

ahead this Lippert. to seeing fully the forward am announced look lies morning, company. smooth I I committed for for ensuring to we have what we a transition As

our remarks. take is That end ready prepared you. we're questions. Operator, Thank of the to

Operator

Instructions]. [Operator you. Thank

the today comes go of from question Research Group. Thompson Please line from Thompson Kathryn first Our ahead.

now is open. line Your

Kathryn Thompson

with for you pleasure you. thank It's Brian, Hi, questions best luck. been a of working my and today taking

Brian Hall

Kathryn. Thanks,

Kathryn Thompson

seasonal have terms that we the are more are in what first to what production are shutdowns understand but going popular the just holiday year that some pace to from of and last that shutdowns there QX? brands on in about be you expectations than OEMs this others, seasonal – looking are your focus into dealers of wanted just first going balance Wanted on versus and to typical Granted, season. yes, you hearing

Jason Lippert

than in a December. December. complete less Hey really little visibility not shutdown yet, we're there's usually weeks week good, And don't is shutdown in a when businesses usually week, really, business have a three Kathryn, it's maybe when We than in -- it's is Jason. December more great, bit two but to

the anticipate a production anything months terms we coming The don't production really a come in and back off week June normal. rates. of than more regular -- where So been scaled -- in they since about the then month have they've just abnormalities obviously taken

they're run XXX,XXX working So is next you some rate. we quarter unit working XXX,XXX of more the have with annualize expect year the first to production forecast up at rate, at about about run a coming which a if a industry we rate, today's unit plus change to go of run

today, next So lower that XXX,XXX course run over where you, year. expect the and the to really months at tells we're that kind few don't Is go of of couple helpful? we rate of a the

Kathryn Thompson

your in at opinion do we yes, opinion And your you on particular? that feel the for past, a your experience one-to-one based yes. replacement -- towable in in are segment And in the

Jason Lippert

it. my more the It continue it first if the sell dealers close we're to like going one-to-one I'd sell I to more to not the building couple be through come year, expect mean, opinion like in to probably quarter. going it's are we're But we're be -- it first months. -- than of next feels feels what to that after

Brian Hall

Brian. Kathryn, is this

look point. February probably dealer of a levels of January, When heard Inventories step type XXXX, and industry say tend back inventory if think was at you pre-COVID good things coming year. to to me that you really at retail before. back off always take overall felt You've to the I I this really, XXX,XXX and

And most today plus levels ramp by of XX,XXX during part as -- depleted that from forward, maybe replenish we I then I you sitting of they was COVID were it in the early And of we're under cumulative tracking XXXX. think the from parts worst. of or point back we inventory units would those tell those up, that that. the so change obviously inventories that all

which in would itself like lend the a a are think one-to-one unit as good retail, wholesale shape, perspective, from of to seems more move things pretty ratio you I forward. So it

the the the probably in biggest those think for dealers inventory. are I are sitting that challenge dollars that

as they off, that improve I perspective, reasonable unit think bleed as So But in shape. from it's well. that'll a

Kathryn Thompson

that levels than great follow-up Yes. how inventory on does that impacted buying and sooner dealer in Brian, point of What dealers they is just rates much a are impacting And terms leads you from it are rates up that that inventory? manage with consumer how moving patterns. question, of interest inventory levels historically hearing

Brian Hall

say can't hope can I've cash heard dealers years I and would during would couple my I you that sheets Yes, well that a they've great their that. last them been sense deal coming most too, they're Jason, balance of pretty the if flush in be, but -- of from and somewhat manage chime for

some be them but a as climb. of rates would challenge of help are certainly the that certainly impact going So for to to them continue that, mitigate expected to

Jason Lippert

dealer. Yes, Yes, to the time back that add don't ahead. any go to have out, to I

Kathryn Thompson

to just a follow-up we in over I no, guess in turn actions inflationary on still others pricing thoughts so just Yes, inflation. being terms and of Are clear, environment? what are are your and passed increases on just I'll it given where price

Jason Lippert

we've the and be over the happen and Lippert, Well, aluminum pricing indexed. there's heavily steel toward commodities of I are steel deflation we're quarters certainly, drop a happen you of just to customers and seen some is, things look see going at you're and most to couple of few of some going to our the think next to weighted

be continue back And over giving next quarters. the price some price been in into to to couple year. do we've that consumer. to reflected the going So We'll that's ultimately, last of the

same think every start toward to I to back know we is level. back and not they're with respect are how price supplier giving in where giving the I get healthy back we'll a So position they're price.

to to to end, effectively us give respect before some -- indexed the on -- margins inventories and down are healthy the up, at we way start escalated on to inventories pretty we way and back our that that our really the continue on indexes the looking control on inventories we're have we're margins allow aren't things with price how But so. of just on

Operator

the next Research. Thank comes from go line from Wightman Please today question ahead. Fred you. Wolfe The of

is line Your now open.

Fred Wightman

guys, wanted the of it just Brian, Hey outlook I I maybe XXXX follow-up, -- to I on -- Jason or was just sort commentary.

think That's RVIA. below a XXXX. type rate XXX,XXX a I bit you run number or mentioned guys little assumption for the

to sort versus on of the love the just have conservative guys bit you where more bridge gap maybe a you're So industry. we'd

Brian Hall

Fred. Well, little Hey, on Certainly, outlook. would tend ton we more the a a to there's in environment. be uncertainty our of macro conservative

so think XXXX looked ever XXX so run know there. today, being changing what of which mid-point today, we is And a I somewhat us, we've rate, for knowing so at quickly, to as XXX XXX type a

least a we looking So but unknown that's what obviously we're in at lot today, at months. of as look forward the XX next

Fred Wightman

on like the you caution sort it OEM throughout call, the of business, side. the seems seeing on RV are pretty still the confident commentary of guys you're side understand just what summarize sense. Marine And the your Makes in but

road, And the what's space? maybe unpack you're wholesale what more you be level we retailer down give two just similar bit little or that bit? Marine in the some to could quarter a today. where the -- maybe the behaviors RV or of just a guys see why seen similar of not sitting -- So at a we've why you would that confidence little either sustainable on for might Do

Jason Lippert

different there's the Marine types side. on think backlog of boats I on of Yes, different scales

relatively next with slow first Marine where side, they say wholesale we we're strong a quarter year. slowness year. the expecting business the dealers the some We fill But little to down Marine is, on last to are up while retail expecting so hearing of bit maybe of we're compared start were to inventory pipelines

just were time shortages look you issue and engine that big the not If problem chip scale this reason because their up why of was wholesale and trying to the numbers year big had or production Marine at there.

So upcoming -- last the little and the over of graph more they're a them kind as demand smoothing we year. year of think this bit out of

or XXX, XXX really side, results can I produce still RV way the whether scale XXX,XXX at business the we're on the a units. great healthy real to mean And that's we XXX,XXX in units,

and the we this slowdown. not heavy a We're a -- quick and ramp So in saw be much it's going very valleys year peaks going to up to it reduced. rapid was see a stiff where

next expect lot to more respect a We how with to calm production quarter-to-quarter. year flows be

Fred Wightman

best. all Makes Brian, sense. Yes. the

Brian Hall

Fred. Thanks,

Operator

from the Thank Please Baird. you. next Craig from Kennison ahead. comes go The of question today line

is open. line Your now

Craig Kennison

back look Hey, and as period you taking Jason, how way feels there see of for a Getting to to basket are like-for-like prices those question kind my wishes components at good components to best a Just well. content to on you you morning. mentioned. understand per unit like Thanks as Kathryn's deflation could trending? major Brian question, of a is of earlier

Brian Hall

It's our are would I'm of perfect of a I for lot of a we the pricing but have on to a think answer steel indexed a unit lot And and most our overall going resides. great where part not dollars obviously, a understand that, sure question, within a that's Craig. basis content per that big chassis. be

to So between of a they're steel going be your lot leveling slide-outs steel components.

get aluminum. to You're into going

a windows, nature of a lot things awnings, lot You'll of that of content. have that our our of aluminum a contain lot doors,

muddy commodities. into of content. and of a bulk those the, of to stab these of be appliances would of into dig you you're electronics, might which our with types a to a were certainly would it as some is are but If that them, the to in items see then commodities you be the And of going more bit gets those moving items I going those rest those have components. So a it, get lot half take

Jason Lippert

our so that, And going products to all we've at look to never of But parts look come steel on those those windows, pieces at mean parts, is you pieces, pre-COVID. down And most while those inflation BOM. aluminum seen they're and some to significant them. of probably where have all -- I'd at in you were axles look they've they're chassis, the they at and you back you of you stabilization, core. at look content add many those furniture, slide-outs, I you look just suspension, look at in all leveling

is those. be there going So inflation to some on

added million the in year. $XXX growth And we pieces, last organic other about

of market a considerable took different we share product lines. in So lot

are continue So to content, just tougher, times demonstrates whether our times good. are ability it whether add really to

next product months, You'll the next chassis you over a as lines when is, you in little we've -- those windows, stated all bit think to see our the things makeup the and look need because they're coming before furniture But generally so and look year core to and in doesn't units. past at you calls the model axles the of build the at RV change. I decline what de-contenting affect

Craig Kennison

that higher How going dynamic the and I at Thank to there channel have and think you're do you yet a today, much to I'm lot in inventory that way a prices. you. dealers manage price cost to the the into unit lower avoid than want the to of you're to which price, the to product old guess ago, say maybe let's discounts. to Is about at build going mass higher actual transition? sell unit, months want build six unit cost the sure

Jason Lippert

of a it's bit little think mix. a I

that of lot quarter-to-quarter. on that our we a the our raw OEMs, indexes materials but or again, priced move not So materials, raw they're sell to products

So products higher of to about on race on have work elevated at got and we on, some I to been but inventories of have the partners bottom components already we've that OEM good on so us our can these mentioned those that in, price earlier have that inventory some the have we our through not stuff that least with inventory. isn't baked while indexes that really that's working those do

So we favorably. there work comfortable that out pretty feel that'll

Operator

Stember go today Scott the MKM Partners. ahead. of question comes next The from Please line from you. Thank

is line open. now Your

Scott Stember

on the Good to and pleasure for congrats guys, forward morning, chapter look so. a or and six and months with life next the Brian next with you you working working in was your it

Brian Hall

Scott. Thanks,

Scott Stember

side. have bit? into Can Can automotive I what questions. other side the Thanks. RV give maybe the a weaker business you guys talked than about us dig a then was the each aftermarket you little few The of did and I guess stuff you

Brian Hall

Yes. Hey, Scott.

within and So a earlier side the our the between divergence there's Marine and RV definitely remarks, been certainly side. automotive

automotive expect experienced while of the and the the that close Marine our that years RV quarter, business. about to down RV some we've expectations for XX% side pretty and supply side sales depressed the up somewhat side over And production expect last the unit some. is are and and was long-term that then are automotive about -- that of and the which challenges Marine of couple last to this XX% growth that was For the continue

the automotive that continue to So of aftermarket I will side business. hamper our think

Jason Lippert

are to we units RV grow our will big -- to as the again just while more there our time. the over repair replacement That's out with that products part going through cycle Well, go side continue and a of see

Scott Stember

-- question about that. next the yes, And Yes. sorry

it RV is that break kind side, demand? of characterize more how fix or the attachment-driven On Is more it business? you would

Jason Lippert

that broke of repaired be out a because upgraded getting stuff reason It's repaired or It's the good the both. a either on are -- it's worn for to replaced another. or mix XX/XX versus getting and close products to or that's they've one need

Scott Stember

for on adjacencies, maybe European some question most how flesh is it last like about but there a talked my MH, of seems of And now, pieces? Marine, Okay. about but know demand about We bit. you like the RV just the could the little and up, holding other you out it

Jason Lippert

the now. reason Yes, And over times. here. right most homes. test we're is well, third involved our diversification well, the adjacent because really cargo like market. our caravan of Europe Europe's those out is up tougher trailers bit business at It's only XX% motor to are the -- that we -- this XX%, of our motor XX% our and that's shortage because caravan chip is the a markets because And up in there in and flatter down nicely that's in RVs for strategy the first of of and housing's largely what little in that's about; other adjacent is excited XX%, -- our playing out Marine's off buses get units

they that next inventories to year. dealer a demand once expect situation chip we when And of are comes shortage should it that does, that chassis have So of long low; correct be itself again. And nice tail back. sometime there there's hopefully middle

in our our vehicles that's the lesser for in is -- here same our short Europe when chassis come production RV reason aftermarket So our new aftermarket there's about are of new of to where back same automotive really -- solid start hitches talked vehicles the and motor new things. side for like the in reasons. a we autos U.S. for And just for home the go

well those should vehicles So product we lines on back. come once new as revitalization see

Operator

next Thank line go CJS from you. The Daniel from question today Please Moore the ahead. comes of Securities.

Your line is now open.

Daniel Moore

very much. you questions for and Thank Good morning, taking -- Thanks Good morning, Jason. Brian.

Brian Hall

Dan. morning, Good

Daniel Moore

everything so it's fantastic. run, thanks, and with great luck be Again it'll else. Brian, sure of best a been I'm

Brian Hall

Thank you.

Daniel Moore

good that of as RV and that be if QX decrementals, to different raw Just margin, little operating you a bump up toward or shipments the you quickly color if far QX by anticipate in in that fuzzier, rate you run making sequentially would mix as do will? trough things XXX,XXX see materials terms

Brian Hall

the typical and adjustments, of Dan. into that continue this next along we're the grow. we forecasting, expecting we what quarter But year, by -- to winter maybe inventories. some mean seasonality the markets months definitely. here anticipating continued the markets No, first those time the the that we're with get second quarter I during That's to participate within we're

would from into right that for to and favorable and into look we of remainder as perspective much be into bit then cost as materials, continued quarter XXXX. headwind quarter a well, I anticipate the get that. we also, as next us second But be then and of these volume fourth certainly a in of expect some more here as of quarter the absorbing we'll that, to maybe talk would first now. be with quarter move the high and a layers So some point about it's the the price low the things we've to we

Daniel Moore

Very to flow do or working helpful. continue into further unwind QX on a And for this, tailwind of early touched capital be but to XXXX? of to you that kind you anticipate cash mainly

Brian Hall

though three think tailwind in billion the the that last months, about we is that, still had inventories I to We're some started It we're has inbound much of to a inventory in definitely it'll around throughout corner lot $X million be down starting even of good, we've we're levers down. pulling than bringing of sitting and much still now Yes, the sooner come and which $XX absorb XXXX. about today. inventory that a turn

through and year as next move will second So I of able a of would the quarter first suspect we that. lot be we to get into

benefit. So lot probably first the I frontloaded cash with of think the half's a

Daniel Moore

Got it. there. and And views color Marine then on good your

XXX,XXX range XXXX? for Do retail either wholesale a of kind RV. Marine you the give and/or have for did You in outlook for similar

Jason Lippert

mainly, from, but -- right if they're that is expect because boats because bunch we've we kind that, yes, that's engines. where they'd of It's more of now we're don't water glasses don't choppy. most Pontoon of at to flattish. looking -- boats, open be I and could -- the -- at It's of engine volume come But follow. I we build the some get think -- reporting they bigger a of along look our market to just kind hard of more that, the it for slowly we do because sales stamps we just bouncing

Daniel Moore

Is at another kind leveling or said inventories least the Pontoon way don't assessment? guess the you I see through market, off fair rightsizing much that XXXX. for of of

Jason Lippert

start spot in they'll to right-size, think a whether or little maybe earlier, bit but I start second it's better I to think. XXXX they'll quarter a get

Operator

next you. line Securities. comes ahead. The Thank Truist from today Please the of question go Swartz from Mike

Your line is now open.

Mike Swartz

Maybe that question press the to on trends the Hey October alluded you guys, touching just in first morning. release this good morning.

fourth trends. quarter, that as more I exactly color think into you went means? the you comment positive Maybe little you're positive trends made a give us seeing the what

Brian Hall

from we're RV its of as Well, couple an more markets, here Certainly, other be have I months. our Jason think I favorability side a the seeing lot mentioned, will holidays consistent have we've diversification on mean rates in the the I shutdowns pretty and to seen. but in certainly last normal the perspective our, seasonal potential there, think that aggressive of those been some

volumes of think these from on there. as able were kind our know, in top-line at from perspective look at So we RV a in viewpoint the pretty and side, both confident you margin October turn we're to I what certainly

see expecting is I as well across rate how the as that think which fourth we're somewhat that, that quarter, guided. year-over-year indicative growth to what we

So that hope I helps Mike.

Jason Lippert

XXX,XXX on and couple pulled and that months. seeing what a mean unit of spent trends we But May, respect to couple positive we I to were said, so saw with run the a -- is adjusting what's late within in because in diversified months XXX,XXX early add our we're positive June, just back Brian rate we continued it to to markets. or I solid think rate a pullback to run Yes, some massive RV,

and an massive a leadership keep talking levels off into feels least to year, that's a team have it been at feat today. pull stabilized and experienced we've few months that's last we like we're things times of got heading volume So the as at the through about the couple on this

Mike Swartz

kind about just just understand. you of commentary I how thinking margins this range? that X%-ish be I thinking we guidance the And in that. kind guidance your for follow-up generally Am the so we if the on Okay, about And Is then I'm EBITDA think based just said or to sharper I a the want that great. around should put quarter point earlier? on what correct. directional Great. on math Thanks doing a fourth of just for

Brian Hall

-- far what yes, the be but EBIT was there, I would too the line, certainly I guidance on would EBITDA given It given I off. expect X% was at mean wouldn't

Mike Swartz

on EBITDA. X%

Okay. Great. Thank you.

Jason Lippert

Yes, you about, you, Swartz. that's thank what Thank talking I you're assume for right?

Mike Swartz

Yes. I Yes, was, yes.

Operator

comes ahead. go today Rolle from of Davidson. D.A. Great. question from Please you. The Thank line the next Brandon

Your line is open. now

Brandon Rolle

probably maybe how this OEM from Good from move. appetite morning. commentary for inventory with One environment. the top the a better expectations a view in you have down questions. was working on view you industry? how We've dealers' taking you played over versus additional questions. years. on pleasure played one think heard congrats of guys maybe your but open did out for some comment for your you the that my RV house It event Brian, Couple out Thank on and

Jason Lippert

for it to to real and a the that in house, was open for think the I a surprise of we product come that -- to time show was that had new here out. lot lot play check dealers no It's was or wasn't to been Yes, get we years of get They new them any product. relationships. be excited the OEMs where time us, and were couple a of it But to there that inventories to. a dealers because and to know need expectation just going of buying big they continue where happening and on there work a was of dealer

is everybody they're to point to to the quarter agree levels first the agrees great selling where a the ready mean the OEMs for agree, I inventories dealer that good season. the of spring done that So the a agree, we OEMs have of be news OEMs -- order dealers going really production to rightsizing job, the today get

that question. your hope So answers

Brandon Rolle

how Thank to retail you. this promotional And at the well. promotional to then from could maybe also level Thank And maybe as dealer you about summer you. and has on the talk evolved the right environment OEM now? level now, also from activity

Jason Lippert

tried first. buy on to that seen. of of that as lot getting and the coming long a there's price the good. most to inflation Yes, retail the the to the continue we That's from they give prices level They've Usually, and hold some RVs customers first that to to have think discounting OEM know to one I highest as out speak is which highest there, -- OEM the customers off can. the it, dealer's

to little still and bit look way of not do probably started it's but the seen historically. we've what they've at OEMs, a same discounting, things In

a that's sign. absolutely they do to. positive until So feel They have that they won't

continue in to all de-contenting, I this. those you'll pricing will then see in turnaround some of eventually prices. -- some will to And as to which and terms the the cost they our So lower dealers like work supply see through said earlier, side deflation start back to helps savings back which OEMs,

it's think I So positive.

Operator

Instructions]. Thank you. [Operator

Jefferies. go next Bret the Please today The from of from Jordan line comes question ahead.

Your line is now open.

Patrick Buckley

Patrick Thanks guys. from Hey, our Jordan. This Buckley on questions. for good is Bret morning, taking

Jason Lippert

Good morning.

Patrick Buckley

specifically on far how there? side Marine seen the to back we are and recently circle normal have supply, any from improvements we could We engine

Jason Lippert

components. auto struggle lead I those XX where cause chips engine those they're have we weeks specialized electronics world. that division. our We build, suppliers electronics the for manufacturers; things do a continuing with electronics are our in side, in mean think of technology lot components the electronics build to just over And they're million time that are smart the and like delays. that I still a sensors XXX we a we the lot all of with would on we're division the in world and and

think that's they're part next what horrible with. and It of relieve isn't dealing maybe a earliest. the a it's year, middle But I the And to tough moderates part consistency itself of till business don't of that's supply probably So units going thing. boom has thousand the go, of production at took to almost off years two That and ship certainly a rocket the RV our year-and-a-half, like where that. from last been to double compared boats. easier of literally handle hundred over went to the business several we

Patrick Buckley

if Outdoorsy -- That's aftermarket guys felt increased in it. Thank a market rates early Got also Have given or And like any mentioned changes utilization in I increase seems you market? there's these forecast growing been the helpful. peer-to-peer side then days. on call, peer-to-peer any believe your changes you you.

Jason Lippert

just a you RV away. with go as consumer. RVs RVs, But yearly RV saying, price peer-to-peer to it love These hey, it. We when your enough going half talk more share jumping They're huge is marketplace and to a makes you pay average just that's being for on a not on even or benefit about counting because to look, the payment rental it's can marketplace, affordable about affordable. We're it XX,XXX. selling consumer peer-to-peer with Outdoorsy like it a

super owners because appropriately road to weeks out that's so are repair And or a opportunities and group their if X they that. replacement they're parts and XX more excited parts then going get obviously get running. XX the about to used to going So We're year that faster means create we're RV's on already or wear the going replacement to to serviced repair for everybody can Outdoorsy get back else parts them units get us. struggling like on working programs with and

huge think positive -- it's only it's that's us, I and continue So to to for going increase. a

Operator

time. registered questions this Thank you. at further are no There

pass remarks. to Please over So ahead. I'd Jason go closing like back the to Lippert call for

Jason Lippert

Well, couple yet; he's remind I of call. maybe to more everybody, got on we're to rid quarters just want Brian not yet get a going

So save your goodbyes.

Again, the real is story diversification.

And that's XX which when business times a direct markets million a really and since when come out to an we I up came up be think land last supply of the Record to years really strategized than realized phenomenal. like EBITDA great core with diversified this that the XX and result XXXX/XXXX, over other us strategic that that and we needed in and company. came our and RV the over protects with executed we've just a implemented. down. highly We more $XXX last diversification months, of is initiatives of

We'll call. next Thank you on in everybody to appreciate Good-bye. the So talk quarter. you.

Operator

This conference Thank all your concludes call. today's participation. you for

now You line. disconnect may your

LCI Industries (LCII) 1 Nov 222022 Q3 Earnings call transcript