LCI Industries(LCII) - 2020 Q1 - Quarterly Report

Financial Performance - Net sales for the three months ended March 31, 2020, were $659,670,000, an increase of 11.4% compared to $592,172,000 for the same period in 2019[9] - Gross profit for the same period was $158,605,000, representing a gross margin of 24.0%, compared to $132,594,000 and a gross margin of 22.4% in 2019[9] - Net income decreased to $28,214,000, down 17.7% from $34,366,000 in the prior year, resulting in diluted earnings per share of $1.12[9] - The total operating profit for the Company decreased to $44.27 million in Q1 2020 from $47.76 million in Q1 2019, reflecting a decline of 7.2%[90] - Operating profit for Q1 2020 was $44.3 million, with an operating profit margin of 6.7%, compared to $47.8 million and 8.1% in Q1 2019, primarily due to higher costs from CURT acquisitions[28] - The effective tax rate for Q1 2020 was 27.8%, up from 24.0% in Q1 2019, primarily due to reduced excess tax benefits and increased non-deductible expenses[140] Assets and Liabilities - Total assets increased to $2,051,213,000 as of March 31, 2020, up from $1,862,595,000 at the end of 2019, reflecting a growth of 10.1%[14] - The Company’s total stockholders' equity increased to $807,803,000 as of March 31, 2020, compared to $800,672,000 at the end of 2019[14] - Long-term indebtedness rose to $750,519,000 as of March 31, 2020, from $612,906,000 at December 31, 2019[49] - The company had cash and cash equivalents of $97,999,000 at the end of the period, a substantial increase from $14,317,000 at the end of the previous year[17] - The liability for contingent consideration related to acquisitions increased to $7.333 million as of March 31, 2020, from $4.396 million at the beginning of the period, indicating a growth of approximately 66%[64] Cash Flow - The company reported a net cash flow from operating activities of $44,759,000, down from $52,585,000 in the same quarter of the previous year[17] - Cash flows from operating activities were $44.8 million in Q1 2020, down from $52.6 million in Q1 2019, mainly due to a decrease in net income[142] - Cash flows used in investing activities totaled $101.7 million in Q1 2020, primarily for business acquisitions of $95.8 million[145] Acquisitions - The Company acquired Polyplastic Group B.V. for $95.8 million, with contingent consideration of up to $7.7 million based on future sales[34] - The acquisition of CURT Acquisition Holdings, Inc. was completed for $337.6 million, with adjustments related to net working capital expected to be immaterial[35] - The total fair value of net assets acquired in the recent acquisition was $24,331,000, with goodwill recorded at $18,893,000[40] - Goodwill increased to $399,360,000 as of March 31, 2020, from $351,114,000 on December 31, 2019, reflecting acquisitions and adjustments[41] - The acquisition of Lewmar Marine Ltd. was recorded at a purchase price of $43.2 million, net of cash acquired, and included in both OEM and Aftermarket Segments[38] COVID-19 Impact - The Company temporarily suspended production at select facilities due to COVID-19, implementing cost-saving measures including salary reductions and workforce adjustments[27] - Operations resumed on May 4, 2020, although the Company expects ongoing negative impacts from the COVID-19 pandemic on its financial results[28] - The Company experienced a decline in retail sales in the RV industry due to the COVID-19 pandemic, following a period of positive growth prior to mid-March 2020[109] - The company has not experienced significant supply chain disruptions due to COVID-19 but is monitoring suppliers closely, having increased inventory levels to mitigate risks[113] Inventory and Fixed Assets - Inventories decreased to $350,514,000 as of March 31, 2020, down from $393,607,000 at December 31, 2019[44] - Fixed assets net value increased to $372,113,000 as of March 31, 2020, compared to $366,309,000 at December 31, 2019[45] - Other intangible assets totaled $513.084 million as of March 31, 2020, with customer relationships valued at $268.605 million[42] Dividends and Shareholder Equity - Cash dividends paid were $16,321,000, reflecting a dividend of $0.65 per share[19] - The Company declared a quarterly dividend of $0.65 per share for the first quarter of 2020, totaling $16.321 million paid out[74] - The Company’s outstanding stock units increased to 354,027 as of March 31, 2020, from 346,148 at December 31, 2019[76] Market and Sales Trends - The OEM Segment accounted for 81% of consolidated net sales in Q1 2020, with net sales of $532.36 million, compared to $531.78 million in Q1 2019[86][90] - The Aftermarket Segment saw a significant increase in net sales, rising to $127.31 million in Q1 2020 from $60.39 million in Q1 2019, representing a growth of 110.5%[87][90] - The Aftermarket Segment is expected to improve ahead of the OEM channels as government restrictions are lifted and consumer demand for service increases[110] - Retail demand for RVs and boats may see a positive impact post-COVID-19, as interest rates and fuel prices remain low, potentially leading to safer vacation alternatives[112]