The Recreation Vehicle Industry Association commissioned an Economic Impact Study on the RV industry, released on June 7, 2016. The study found that the RV industry contributes about $49.7 billion in economic output or 0.28 percent of the Gross Domestic Product. Through its production and distribution linkages, the industry impacts firms in 426 of the 440 sectors of the United States economy.
Nationwide, the industry is responsible for 216,170 jobs, both directly and inderectly, creating an economic impact of $37.5 billion. The full study results, along with each individual state and congressional district's economic impact is available on the website by clicking here .
Thu Nov 2, 2017
ELKHART, Ind.—LCI Industries has reported a 35 percent increase in consolidated net sales for the third quarter of 2017 of $555 million.
Net income was $32.1 million, or $1.26 per diluted share, for the third quarter ended Sept. 30, compared to net income of $29.8 million, or $1.19 per diluted share, for the third quarter ended Sept. 30, 2016.
The increase in year-over-year net sales reflects industry-wide growth in wholesale shipments of towable and motorized RVs by OEMs, which increased 26 percent and 13 percent, respectively, in the third quarter of 2017, enhanced by solid growth in content per unit and acquisitions. Net sales from acquisitions completed by the company over the 12 months ended Sept. 30 contributed $24 million in the third quarter of 2017. The organic growth rate was 29 percent for the third quarter and acquisitions provided the remainder of the 35 percent increase. Through continued focus on aftermarket channels for the company's products, LCI increased net sales to the aftermarket in the third quarter of 2017 by 34 percent to $49 million.
"The RV industry growth trend in 2017 remains strong as third quarter wholesale RV shipments were up 24 percent," LCI CEO Jason Lippert says. “RV sales momentum has continued as the industry attracts a new generation of RV enthusiasts, supported by strong economic growth. Orders appear to be strong going into the final quarter as dealer sentiment remains bullish and OEMs continue to add capacity to meet demand. Additionally, we continue to see strong growth in our aftermarket sales. We are expecting October 2017 consolidated net sales to reach approximately $205 million, 40 percent higher than October 2016."
The health of the RV industry is determined by retail demand, which is up 11 percent through August and will likely be revised upwards in future months as various states report. Based on the retail sales strength experienced through the first nine months of 2017, as well as sales order backlogs reported by RV OEMs at record levels, the current outlook from several RV OEMs and their dealer networks remains positive. Additionally, the RVIA's current forecast of wholesale unit shipments of about 480,000 units for the full year 2017 has been revised upward from its original Fall 2016 forecast of 411,000 units. The RVIA's current forecast for 2018 estimates an increase of an additional 2 percent to about 491,000 units.
The company's content per travel trailer and fifth-wheel RV for the 12 months ended Sept. 30 increased $147 to $3,172, compared to the 12 months ended Sept. 30, 2016, of $3,025. This is the largest increase in seven quarters for travel trailer and fifth-wheel RV content. The company's content per motorhome RV for the 12 months ended Sept. 30, 2017, increased $195 to $2,152, compared to the 12 months ended Sept. 30, 2016, of $1,957. The content increases are a combined result of organic growth, including new product introductions, as well as acquisitions and changes in the types of RVs produced industry-wide.
"Our operating profit in the third quarter of 2017 improved 6 percent to $47.9 million," LCI President Scott Mereness says. “Strong industry growth and accretive acquisitions completed over the last year have contributed to profit growth for the quarter. We continue to focus on cost management as well as investments in lean initiatives and other operational efficiencies to further improve operating margin while maintaining on-time deliveries to support the growth of the business."
The improvement in the company's operating results were partially offset by continued increases in input costs, primarily steel, aluminum and direct labor. Aluminum costs have increased in excess of 20 percent over the prior year. Labor continues to remain a challenge with Elkhart County unemployment rates at less than 3 percent. As a result of these increased input costs, LCI has enacted price increases, which are anticipated to fully impact the first quarter of 2018.
Additionally, it has implemented a number of cost saving initiatives, resulting in severance charges of $1.3 million or $0.03 per diluted share in the third quarter of 2017. These initiatives, along with the price increases, are expected to improve operating income by about $38 million annually, or 1.9 percent of operating margin, on the company's current run rate.
Balance Sheet and Other Items
At Sept. 30, the company's cash balance was $20 million, a decrease of $66 million from its cash balance of $86 million at the beginning of the year, primarily as a result of $68 million used for acquisitions, $60 million for capital expenditures and $37 million of dividend payments in the first nine months of 2017, offset by operating cash flows. The company's outstanding debt was $50 million at Sept. 30, and Dec. 31, 2016.
Return on equity and return on invested capital for the 12 months ended Sept. 30, were 24.2 percent and 36.5 percent, respectively.
"For the first time in the company's history, we have reached $2 billion in revenue for the last 12 months, just four years from achieving $1 billion,” Lippert says. “We are achieving record top and bottom line numbers, and we are doing it at a time when labor and materials environments are particularly challenging. Our continuing growth story is a testament to the focus of our more than 9,000 team members."