LCI Industries(US:LCII)2023-02-24 15:47Financial Performance - Consolidated net sales for the year ended December 31, 2022, were $5.2 billion, an increase of 16% from $4.5 billion in 2021[25]. - Net income for 2022 was $395 million, or $15.48 per diluted share, compared to $287.7 million, or $11.32 per diluted share, in 2021[26]. - Total net sales for the year ended December 31, 2022, were $5,207,143, an increase of 16.4% from $4,472,697 in 2021[174]. - Net sales of the OEM Segment increased 18% to $4.3 billion in 2022, with significant contributions from travel trailers, motorhomes, and adjacent industries[195]. - Aftermarket Segment net sales increased by 8% to $891.3 million in 2022, primarily due to acquisitions contributing approximately $63.4 million[200]. - Operating profit for the OEM Segment was $479,150, up 57.1% from $304,676 in 2021, while the Aftermarket Segment's operating profit decreased to $73,878 from $93,734[174]. - The effective income tax rate for 2022 was 24.8%, slightly higher than 24.7% in 2021, primarily due to discrete tax adjustments[202]. Segment Performance - The OEM Segment represented 83% of consolidated net sales and 87% of consolidated segment operating profit in 2022[33]. - Aftermarket Segment net sales increased 8% from $829.1 million in 2021 to $891.3 million in 2022[40]. - Approximately 61% of the OEM Segment net sales in 2022 were from products to manufacturers of travel trailer and fifth-wheel RVs[92]. - The average product content per travel trailer and fifth-wheel RV increased by 45% to $6,090 in 2022, while motorhome content rose by 43% to $4,099[195]. Market and Industry Trends - The company experienced a nearly 18% decrease in wholesale RV OEM shipments in 2022, negatively impacting net sales for the year[92]. - Industry-wide wholesale shipments of travel trailer and fifth-wheel RVs decreased by 21% to 421,700 units in 2022 compared to 2021[182]. - The company estimates that full-year 2023 industry-wide wholesale shipments will be approximately 330,000 to 350,000 units, a decline of 29% to 33% compared to 2022[184]. - The company faced a reduction in aftermarket volumes in 2022 due to inflation and rising interest rates impacting consumer discretionary spending[84]. Acquisitions and Investments - The company completed four acquisitions in 2022, contributing approximately $219 million to net sales[25][29][30][31]. - The company has made significant investments to expand sales in adjacent industries such as boats, buses, trucks, and trains, which may strain operational and financial capabilities[112]. - Capital expenditures for 2022 were $131 million, including over $40 million in automation investments[44]. - Future capital expenditures for 2023 are estimated at $80 to $100 million, focusing on automation and lean projects[213]. Operational Risks and Challenges - The company has experienced significant impacts from the COVID-19 pandemic, affecting its business operations and financial condition[79]. - The company is subject to numerous federal, state, and local regulations governing the manufacture and sale of its products, which may impact operations[50]. - The company faces various operational and financial risks when conducting business outside the United States, including integration challenges and regulatory compliance[118]. - The company noted that conditions in the credit market could limit consumers' ability to obtain retail financing for RVs, resulting in reduced demand[88]. Community Engagement and Employee Relations - In 2022, team members logged over 150,000 volunteer hours, with 75% participation, an increase of 20% from 2021[64]. - The company donated more than $1.8 million in 2022 to support community needs, focusing on children and families, educational programs, and health[64]. - The retention percentage for team members in North America for the year ended December 31, 2022, was 57%, down from 60% in the prior year, with a goal of 70% for 2023[62]. Financial Position and Debt - Total indebtedness as of December 31, 2022, was $1,128.0 million, with current obligations of $23.4 million and long-term obligations of $1,104.6 million[218]. - The company has incurred debt through various means, including a 1.125% convertible senior note due 2026, which may increase leverage and financial vulnerability[147][148]. - Cash flows used in financing activities included $105.3 million in net payments under the revolving credit facility and $102.7 million in quarterly dividends[215]. Compliance and Regulatory Issues - The company is subject to numerous international, federal, state, and local regulations, and failure to comply could result in significant penalties and operational disruptions[126]. - The company is subject to various data privacy and security laws, and non-compliance could lead to substantial penalties[137]. - The company maintains reserves for warranty claims, but there is no assurance that these reserves will remain adequate, which could adversely affect financial results[143].