LCI INDUSTRIES Q1 FY2025 earnings call

Jason Lippert mentioned that the company started the year strong with over $1 billion in sales during the quarter, up 8% year-over-year. RV OEM net sales were up 15% due to North American RV wholesale shipments restocking. Aftermarket net sales grew 6% driven by higher volumes in RV and marine aftermarket and market share gains in automotive aftermarket. The company resumed M&A strategy with acquisitions of Freedman Seating and Trans/Air. Disciplined manufacturing execution helped increase operating margin by nearly 200 basis points. The company is working towards 85 basis point overhead and G&A reduction target for 2025, with actions like facility consolidations, supply chain efficiencies, etc. Capital allocation was strong with cash performance, balance sheet strengthening through refinancing, and returning capital to shareholders.

RV OEM net sales totaled $531 million for the first quarter, up 15% versus the prior year. Aftermarket net sales were $222 million for the first quarter, up 6% year-over-year. Adjacent industries sales decreased 2% to $293 million for the first quarter versus the prior year, driven primarily by continued softness in marine. RV OEM net sales accounted for a significant portion of the total, with aftermarket and adjacent industries also contributing to the overall financial picture.

We now project 320,000 to 350,000 wholesale shipments in 2025 as a result of tariff uncertainties. We expect overall revenue to be about flat year-over-year in Q2. We remain on track to deliver $5 billion in revenue in 2027. The 85 basis point overhead and G&A reduction target for calendar year 2025 remains within reach.

Tariff uncertainties pose a risk, with potential impact on retail demand and pricing. Macro-economic issues and consumer demand cycles can affect certain segments like marine. Supply chain diversification efforts may face challenges in fully moving products out of China for some categories.

Q: Daniel Moore asked about the pro forma annualized revenue of Trans/Air and Freedman Seating and TAM for those markets.

A: Lillian Etzkorn said combined entities have about $200 million of annualized revenue opportunity. Jason Lippert added on the businesses being strong and synergies.

Q: Joe Altobello asked about tariff margin impact.

A: Lillian Etzkorn said 180 basis points is partial year and Jason Lippert mentioned mitigation efforts.

Q: Michael Swartz asked about China exposure and 180 basis points.

A: Lillian Etzkorn explained gradual exit from China and Jason Lippert talked about mitigation actions.

Q: Unidentified Analyst asked about diversifying supply chain out of China.

A: Jason Lippert said appliances, furniture, axles and suspension are most impacted, but can move out, and mentioned other regions.

Q: Bret Jordan asked about wholesale volume expectations and $5 billion organic.

A: Jason Lippert talked about wholesale volume and $5 billion target not including acquisitions.

Q: Craig Kennison asked about raw materials cost and operating margin base.

A: Lillian Etzkorn said they don't break out material cost and explained operating margin base.

Q: Tristan Thomas-Martin asked about China exit and tariff mitigation.

A: Jason Lippert talked about mitigation levers and China exit plans.