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LCI INDUSTRIES (LCII)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered top- and bottom-line outperformance: revenue $1.046B (+8% YoY) and adjusted EPS $2.19, both above S&P Global consensus; operating margin expanded 180 bps to 7.8% on cost actions and scaling .
  • Against consensus, LCII posted a revenue beat (~$1.046B vs $0.972B*) and an EPS beat ($2.19 vs $1.56*), reflecting share gains in RV OEM and disciplined cost management (S&P Global) *.
  • Mix normalized modestly as North American towable wholesale shipments rose 18% YoY; RV OEM sales grew 15% YoY while Adjacent OEM declined 2% on marine/powersports softness .
  • 2025 outlook: company trimmed the wholesale RV shipment forecast range to 320–350k (from 335–350k previously) and reiterated an 85 bps 2025 overhead/G&A margin improvement target; April sales grew ~3% YoY .
  • Capital allocation catalysts: dividend maintained at $1.15 and a new $300M share repurchase authorization; balance sheet derisked via $460M 2030 converts, term loan B and revolver refinanced .

What Went Well and What Went Wrong

What Went Well

  • Operating leverage and cost discipline drove margin expansion: operating margin rose to 7.8% from 6.0% YoY; CFO cited lower material and inbound freight costs and sourcing improvements .
  • RV OEM momentum: sales up 15% YoY, aided by 18% towable shipment increase and share/content gains in appliances, chassis, furniture, windows; CEO highlighted “agility…scaled production to support modest RV inventory rebuilding” .
  • Strategic M&A in resilient bus market (Trans/Air and Freedman Seating) adds ~$200M annual revenue adjacency; management emphasized accretive growth and synergies in purchasing/manufacturing .

What Went Wrong

  • Aftermarket margin compressed: operating margin 8.7% vs 11.8% YoY on lower-margin mix, reduced automotive production volume, and investments in capacity/distribution .
  • Adjacent OEM softness: net sales down 2% YoY driven by marine and powersports; elevated rates and dealer inventory rebalancing pressured demand .
  • Tariff overhang: company outlined potential ~180 bps margin impact scenario, requiring mitigation via supply-chain diversification, vendor cost-sharing, and pricing pass-through .

Financial Results

Core P&L vs prior year and prior quarter

MetricQ3 2024Q4 2024Q1 2024Q1 2025
Revenue ($USD Billions)$0.915 $0.803 $0.968 $1.046
Diluted EPS (GAAP, $)$1.39 $0.37 $1.44 $1.94
Adjusted EPS (Diluted, $)——$1.44 $2.19
Gross Margin (%)24.0% (calc from )21.1% 23.1% 24.1%
Operating Margin (%)5.9% 2.0% 6.0% 7.8%
Adjusted EBITDA ($USD Millions)——$90.3 $110.9

Q1 2025 vs S&P Global Consensus

MetricConsensusActual
Revenue ($USD Billions)$0.972*$1.046
EPS (Primary EPS, $)$1.56*$2.19

Values with asterisk (*) retrieved from S&P Global.

Segment Net Sales and Operating Profit (Q1)

SegmentQ1 2024 Net Sales ($mm)Q1 2025 Net Sales ($mm)Q1 2024 Op Profit ($mm)Q1 2025 Op Profit ($mm)
RV OEM – Travel Trailers & Fifth-Wheels$390.763 $471.194 ——
RV OEM – Motorhomes$68.838 $59.608 ——
Adjacent Industries OEM$298.710 $292.753 ——
Total OEM Segment$758.311 $823.555 $32.836 $61.974
Aftermarket Segment$209.718 $222.035 $24.775 $19.343
Total Company$968.029 $1,045.590 $57.611 $81.317

KPIs and Balance Sheet

KPIQ4 2024Q1 2025
Cash & Cash Equivalents ($mm)$165.756 $231.243
Revolver Availability ($mm)$452.5 $595.3
Total Debt ($mm)$757.3 $938.3
Net Debt ($mm)—$707.0
Net Debt / Adj EBITDA (TTM, x)—1.9x
DSO (days)29.9 29.2
Inventory Turns (x)4.0 4.1
Cash from Operations (quarter, $mm)—$42.7
Capital Expenditures (quarter, $mm)$10.943 $9.038

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
North American RV wholesale shipmentsFY 2025335k–350k 320k–350k Lowered bottom of range
Overhead/G&A margin improvement targetFY 2025+85 bps +85 bps reiterated Maintained
Capital ExpendituresFY 2025$50–$70mm $50–$70mm Maintained
Depreciation & AmortizationFY 2025$115–$125mm $115–$125mm Maintained
Annual Tax RateFY 202524%–26% 25%–27% Raised range
Q2 Revenue outlookQ2 2025N/A~Flat YoY; RV OEM +~5% New quarterly outlook
DividendQuarterly$1.15 $1.15 Maintained
Share Repurchase Authorization3-year programNone disclosed$300mm authorization New
Tariff impact scenarioFY 2025~50 bps China exposure, largely mitigable Potential ~180 bps if 20% CN / 10% ROW; mitigation underway Updated scenario range

Earnings Call Themes & Trends

TopicQ3 2024 (prior)Q4 2024 (prior)Q1 2025 (current)Trend
Supply chain & tariffsFocus on quality/supply improvements; marine weakness Tariffs framed at ~50 bps China exposure with pass-throughs for steel/aluminum Potential ~180 bps scenario; diversification (Vietnam, India, Turkey, Malaysia), vendor sharing, pricing pass-through Heightened risk, active mitigation
RV industry trajectoryTowable share gains amid motorhome decline Dealers restocking; inflection developing; Jan RV sales +17% Q1 towable wholesale +18% YoY; RV OEM sales +15%; April RV +7% Improving wholesale; cautious retail
Product innovation & contentAppliances/awnings/chassis/furniture/windows drive share ABS, TCS, Chill Cube, 4K windows; 3–5% organic content target Sequential and YoY towable content growth; OEM adoption momentum Sustained innovation-driven content gains
Aftermarket & Camping WorldAutomotive aftermarket resilient 62% sales growth in upfitted CW stores; plan to upfit ~100 locations Continued gains; investment in training/service; CW sequential sales +60% Building channel strength; margin mix headwinds
M&A/Adjacencies (bus)Pipeline discussed Robust M&A pipeline; cash/low leverage Trans/Air + Freedman; ~$200mm annualized; accretive; municipal demand resilience Executing into resilient segments

Management Commentary

  • “We delivered strong first quarter results, exceeding expectations…enabled us to achieve both top and bottom line growth…operating margin increase of 180 basis points.” – Jason Lippert, CEO .
  • “Gross margins…benefited from decreased steel costs, lower inbound freight costs, and material sourcing strategies…Operating profit…a 180-basis point improvement.” – Lillian Etzkorn, CFO .
  • “Our tariff mitigation strategy…diversifying the supply chain, negotiating cost share with vendors, and passing through pricing to customers.” – Lillian Etzkorn .
  • “Trans/Air and Freedman…strengthen our bus portfolio…material synergies and manufacturing opportunities.” – Jason Lippert .

Q&A Highlights

  • Acquisitions impact: combined Trans/Air and Freedman ~$200M annualized revenue; accretive, with synergies in purchasing/manufacturing footprint .
  • Q2 outlook: revenue roughly flat YoY with RV OEM +~5%; margins consistent with Q1; organic revenue flattish as adjacent markets remain soft .
  • Tariff pass-through: expected consumer price increases in 3%–9% range depending on unit/content; multiple levers across suppliers, OEMs, dealers to mitigate .
  • Supply chain diversification: meaningful shift out of China into Vietnam, India, Turkey, Malaysia, Cambodia; appliances/furniture/axles most impacted categories .
  • RV mix normalization: single-axle exposure remains a headwind to content; management still targets 3%–5% organic content growth annually .

Estimates Context

  • Q1 2025 beat: revenue ~$1.046B vs $0.972B*; EPS $2.19 vs $1.56*; both above S&P Global consensus (Primary EPS Consensus Mean, Revenue Consensus Mean) *.
  • Near-term trajectory: management guided Q2 revenue ~flat YoY and RV OEM +~5%, consistent with measured wholesale improvements and ongoing tariff mitigation .
    Values with asterisk (*) retrieved from S&P Global.

Key Takeaways for Investors

  • Margin inflection underway: sustained cost actions and lower input costs drove 180 bps operating margin uplift; management reiterated 85 bps overhead/G&A goal for FY25 .
  • RV OEM strength offsets adjacent softness: towable wholesale +18% YoY and share/content gains support revenue and profitability despite marine/powersports headwinds .
  • Tariff risk manageable: diversified sourcing, vendor cost-sharing, and pricing pass-throughs position LCII to mitigate a potential ~180 bps impact scenario .
  • Bus adjacency adds resilience: Trans/Air and Freedman broaden transportation footprint into municipal demand cycles, with ~$200M added revenue and synergy potential .
  • Capital allocation optionality: dividend at $1.15 maintained and new $300M buyback authorization; liquidity robust with $231M cash and $595M revolver availability .
  • Estimate revisions likely positive: Q1 beats on revenue and EPS and improving RV wholesale trends support potential upward adjustments if tariff mitigation continues (S&P Global) *.
  • Watch mix/tariffs: single-axle mix and tariff clarity remain key variables for content/margins; management expects normalization and has multiple mitigation levers .