LCI Industries(US:LCII)2021-02-26 02:10Financial Performance - Consolidated net sales for the year ended December 31, 2020, were $2.8 billion, an increase of 18% from $2.4 billion in 2019, driven by acquisitions and a rebound in RV retail demand post-COVID-19[26]. - Net income for the full year 2020 was $158.4 million, or $6.27 per diluted share, compared to $146.5 million, or $5.84 per diluted share, in 2019[27]. - Operating profit for the total company was $222,934, up from $200,210 in 2019, with the OEM Segment contributing $156,092 and the Aftermarket Segment contributing $66,842[165]. - The effective tax rate for 2020 was 24.4%, up from 23.5% in 2019, primarily due to an increase in non-deductible expenses[203]. - Net cash flows provided by operating activities were $231.4 million in 2020, a decrease of 14.2% from $269.5 million in 2019[209]. Sales Segments - The OEM Segment represented 78% of consolidated net sales in 2020, with approximately 61% of OEM Segment net sales coming from travel trailer and fifth-wheel RV manufacturers[37]. - Aftermarket Segment net sales increased 125% from $279.6 million in 2019 to $628.3 million in 2020, with CURT accounting for approximately half of these sales[44]. - The OEM Segment net sales totaled $2,167,911, representing 78% of total net sales, while the Aftermarket Segment net sales were $628,255, accounting for 22%[166]. - OEM Segment net sales increased by 4% to $2.17 billion in 2020, driven by a $76 million increase compared to 2019[193]. - Aftermarket Segment net sales surged by 125% to $628.3 million in 2020, primarily due to acquisitions and organic growth[199]. Market Expansion and Acquisitions - The company completed three acquisitions in 2020, including Veada Industries for $69 million, Challenger Door for $35 million, and Polyplastic Group for $95.8 million, contributing significantly to net sales[30][31][32]. - Approximately 50% of net sales for the year ended December 31, 2020, were generated outside the North American RV OEM market, up from 42% in 2019, with a goal of reaching 60% by the end of 2022[33]. - The company estimates the addressable market for annual net sales of its products outside of North America to be over $1 billion[49]. - The company has made ten acquisitions since 2016, primarily in Europe, indicating a focus on international growth[116]. - The company is expanding into new markets, including buses, trucks, and international markets, which may strain resources and carry risks of failure[113]. Operational Challenges - The COVID-19 pandemic has introduced significant uncertainties, potentially affecting the company's ability to meet customer orders and impacting its supply chain[85][89]. - The company faces risks related to excess inventories at dealers and manufacturers, which can lead to reduced demand for its products[94]. - Increased competition in the industry may lead to reduced profit margins and market share for the company[106]. - The company imported about 30% of its raw materials and components, making it vulnerable to supply chain disruptions and foreign exchange rate fluctuations[102][103]. - The company faces risks from natural disasters, unusual weather, and political events that could disrupt operations and lower sales[110]. Research and Development - Research and development expenses were approximately $13 million, $14 million, and $16 million in 2020, 2019, and 2018 respectively, reflecting a focus on product innovation[52]. - The company holds approximately 360 patents and has around 150 patent applications pending, emphasizing its commitment to intellectual property[50]. Financial Management - The company has paid regular quarterly dividends since March 2016, but future payments depend on various factors, including financial performance and debt agreement limitations[145][159]. - The company has a stock repurchase program authorized for up to $150 million over three years, but future repurchases depend on capital availability and operational results[146]. - The company maintains compliance with all financial covenants under its credit agreement as of December 31, 2020[217]. - Future cash requirements include obligations for indebtedness and operating leases, with specific amounts detailed for current and long-term obligations[219]. Employee and Community Engagement - The retention percentage for team members in North America for the year ended December 31, 2020, was 69%, a decline from the prior year retention of 72%[65]. - The company was able to volunteer over 67,000 hours in community service in 2020, despite the COVID-19 pandemic impacting their goal of 100,000 hours[67]. - The company has approximately 12,400 full-time team members, with 11,300 in North America and 1,100 in Europe as of December 31, 2020[62]. Risks and Compliance - The company believes it is operating in compliance with applicable laws and regulations, with no material effect on operations or financial condition expected from compliance costs[60]. - Compliance with numerous regulations is essential; failure could lead to significant penalties and impact financial results[123]. - The company is subject to various data privacy and security laws, including the California Consumer Privacy Act (CCPA) and the California Privacy Rights Act (CPRA), which may require substantial costs for compliance and could adversely affect operations[131][134].