LCI Industries

The new year brought a new name to Drew Industries. On 3 January 2017, Drew Industries became LCI Industries. 

LCI Industries supplies a broad array of components for the leading OEMs of recreational vehicles (RVs) and adjacent industries, as well as the aftermarkets of these industries.  LCI's business has grown considerably over the past decade, and the new corporate name was selected to better align the investment community with the strength of the LCI brand in the industries it serves.

From 48 manufacturing and distribution center located throughout the US, Canada and Italy, LCI Industries supplies OEMs of RVs and adjacent industries including buses, trailers used to haul boats, livestock, equipment and other cargo, pontoon boats, manufactured homes and factory-built mobile office units. The Company also supplies components to the related aftermarkets of these industries, primarily by selling to retail dealers, wholesale distributors and service centers. LCI Industry's products include steel chassis and related components, axles and suspension solutions, slide-out mechanisms and solutions, thermoformed bath, kitchen and other products, vinyl, aluminum and frameless windows, manual, electric and hydraulic stabilizer and leveling systems, furniture and mattresses, entry, luggage, patio and ramp doors, electric and manual entry steps, awnings and awning accessories, electronic components. appliances. LED televisions and sound systems, navigation systems, wireless backup cameras, and other accessories.

​LCI Industries manufactures and supplies components for the manufacturers of recreational vehicles and manufactured homes in the United States. The company operates through two segments, Recreational Vehicle Products (RV) and Manufactured Housing Products (MH). The RV segment manufactures and markets various products used primarily in the production of RVs, including steel chassis for towable RVs; furniture and mattresses; axles and suspension solutions for towable RVs; entry, luggage, patio, and ramp doors; slide-out mechanisms and solutions; electric and manual entry steps; thermoformed bath, kitchen, and other products; awnings and awning accessories; windows; electronic components; manual, electric, and hydraulic stabilizer and leveling systems; LED televisions, sound systems, navigation systems, and wireless backup cameras; chassis components; and other accessories. This segment sells its products to the manufacturers of RVs, the other OEMs, manufacturers in adjacent industries, and distributors and retail dealers of aftermarket products. The MH segment manufactures and markets various products that are used primarily in the production of manufactured homes, such as vinyl and aluminum windows, aluminum and vinyl patio doors, thermoformed bath and kitchen products, steel chassis and related components, steel and fiberglass entry doors, and axles. This segment sells its products to producers of manufactured homes, other OEMs, manufacturers in adjacent industries, and distributors of aftermarket products. It also offers components for adjacent industries, including buses; trailers used to haul boats, livestock, equipment and other cargo; pontoon boats; modular housing; and factory-built mobile office units. The company was formerly known as Drew Industries Incorporated and changed its name to LCI Industries in December 2016. LCI Industries was founded in 1962 and is based in Elkhart, Indiana.
(Summary) (Company) (Chart)

10 April 2017
Price $93.85
1yr Target $125.00
Analysts 4
Dividend $2.00
Payout Ratio 38.46%

1yr Cap Gain 33.19%
Yield 2.13%
1yr Tot Return 35.32%

P/E 18.06
PEG 1.20
Beta 1.28

EPS (ttm) $5.20
EPS next yr $6.69
Forward P/E 14.02
EPS next 5yr 15.00%
1yr Price Support $100.35

Market Cap $2.29 Bil
Revenues $1.68 Bil
Earnings $129.70 Mil
Profit Margin 7.67%

Quick Ratio 1.20
Current Ratio 2.50
Debt/Equity 0.09

1yr RevGR %
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1yr DivGR %
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ROA 17.10%
ROE 25.30%

LCI Industries Monthly Chart

LCI Industries Dividend History

​Operations

LCI Industries Incorporated supplies a broad array of components in the US and abroad for the leading manufacturers of recreational vehicles and manufactured homes and for the related aftermarkets of those industries. The company also supplies components for adjacent industries including buses; trailers used to haul boats, livestock, equipment and other cargo; pontoon boats; modular housing; and factory-built mobile office units.

The Company has two reportable segments: the recreational vehicle products segment (the “RV Segment”) and the manufactured housing products segment (the “MH Segment”). The RV Segment accounted for 92 percent of consolidated net sales for 2015, and the MH Segment accounted for 8 percent of consolidated net sales for 2015. Approximately 73 percent of the Company’s RV Segment net sales in 2015 were of products to manufacturers of travel trailer and fifth-wheel RVs.

The company is focused on profitable growth, both organic and through the acquisition of manufacturers of components for RVs, manufactured homes and adjacent industries. In order to support this growth, over the past several years the company has expanded its geographic market and product lines, consolidated manufacturing facilities, and integrated manufacturing, distribution and administrative functions. At December 31, 2015, the company operated 42 manufacturing and distribution facilities in 16 states and Quebec and reported consolidated net sales of $1.4 billion for the year ended December 31, 2015.
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Sales and Profits

Net sales for 2015 increased to a record $1.4 billion, 18 percent higher than 2014. Acquisitions completed by the Company in 2015, as well as the Furrion Limited distribution and supply agreement for premium electronics, added $52 million in net sales in 2015. A five percent increase in industry-wide wholesale shipments of travel trailer and fifth-wheel RVs, the Company’s primary RV market, as well as increased content per unit through market share gains, also positively impacted net sales growth in 2015.

In 2015, the Company continued to grow sales to both adjacent industries and the aftermarket for the RV and MH Segments. Aggregate net sales to adjacent industries increased 40 percent to $193 million and aftermarket net sales increased 62 percent to $103 million. Together, these markets now account for 21 percent of consolidated net sales, double the percentage from 2010.

​For the full-year 2015, the Company’s net income increased to $74.3 million, or $3.02 per diluted share, up from net income of $62.3 million, or $2.56 per diluted share, in 2014. Excluding certain charges for severance, environmental and legal costs in 2015, net income would have been $79.0 million in 2015, or $3.20 per diluted share, and excluding the 2014 loss on the sale of the Company's aluminum extrusion-related assets, net income would have been $63.5 million in 2014, or $2.61 per diluted share. 

Recent Acquisitions

During 2015 and 2016 the company completed five acquisitions:

In January 2015, the company acquired the business and certain assets of EA Technologies, an Elkhart, Indiana-based manufacturer of custom steel and aluminum parts and provider of electro-deposition and powder coating services for RV, bus, medium-duty truck, automotive, recreational marine, specialty and utility trailer, and military applications. Net sales reported by EA Technologies for 2014 were $17 million. The purchase price was $9.2 million. In connection with this acquisition, the Company also acquired a 250,000 square foot facility.

In April 2015, the company acquired the business and certain assets of Industries Spectal, Inc., a Canadian based manufacturer of windows and doors primarily for school buses, as well as commercial buses, emergency vehicles, trucks, agricultural equipment and RVs. Net sales reported by Spectal for 2014 were $25 million. The purchase price was $22.3 million.

In August 2015, the company acquired the business and certain assets of Roehm Marine, LLC, also known as Signature Seating, a Ft. Wayne, Indiana based manufacturer of furniture solutions for fresh water boat manufacturers, primarily pontoon boats. Net sales reported by Signature for the twelve months ended June 2015 were approximately $16 million. The purchase price was $16.0 million.

In January 2016, the company acquired the business and certain assets of the pontoon furniture manufacturing operation of Highwater Marine, LLC, a leading manufacturer of pontoon and other recreational boats located in Elkhart, Indiana. Estimated net sales of the marine furniture business were approximately $20 million. The purchase price was $10.0 million. Concurrently with the acquisition, the company entered into a five-year supply agreement for marine furniture and other products with Highwater and Elkhart, Indiana-based Bennington, the largest manufacturer of pontoon boats in the United States.

​In February 2016, the company acquired the business and certain assets of Flair Interiors, a Goshen, Indiana based manufacturer of RV furniture. Net sales reported by Flair for 2015 were approximately $25 million. The purchase price was $8.1 million. 

RV Segment

Through its wholly-owned subsidiaries, the company manufactures or distributes a variety of products used in the production of RVs, including:

● Steel chassis for towable RVs
● Axles and suspension solutions for towable RVs
● Slide-out mechanisms and solutions
● Thermoformed bath, kitchen and other products
● Windows
● Manual, electric and hydraulic stabilizer and leveling systems
● Chassis components
● Furniture and mattresses
● Entry, luggage, patio and ramp doors
● Electric and manual entry steps
● Awnings and awning accessories
● Electronic components
● LED televisions, sound systems, navigation systems and wireless backup cameras
● Other accessories 

The company also supplies certain of these products to the RV aftermarket and to adjacent industries, including buses, trailers used to haul boats, livestock, equipment and other cargo, and pontoon boats. In 2015, the RV Segment represented 92 percent of the Company’s consolidated net sales, and 90 percent of consolidated segment operating profit. RVs may be motorized (motorhomes) or towable (travel trailers, fifth-wheel travel trailers, folding camping trailers and truck campers). Approximately 73 percent of the Company’s RV Segment net sales in 2015 were of products to manufacturers of travel trailer and fifth-wheel RVs.

Raw materials used by the Company’s RV Segment, consisting primarily of steel (coil, sheet, tube and I-beam), extruded aluminum, glass, wood, fabric and foam are available from a number of sources, both domestic and foreign.

Operations of the Company’s RV Segment consist primarily of fabricating, welding, thermoforming, painting, sewing and assembling components into finished products. The Company’s RV Segment operations are conducted at 38 manufacturing and warehouse facilities throughout the United States and Canada, strategically located in proximity to the customers they serve. Of these facilities, 7 also conduct operations in the Company’s MH Segment. 

The Company’s RV Segment products are sold primarily to major manufacturers of RVs such as Thor Industries, Forest River, Jayco and to manufacturers in adjacent industries and distributors and retail dealers of aftermarket products.

MH Segment

Through its wholly-owned subsidiaries, the company manufactures or distributes a variety of products used in the production of manufactured homes, including:

●Vinyl and aluminum windows
●Thermoformed bath and kitchen products
●Steel and fiberglass entry doors
●Aluminum and vinyl patio doors
●Steel chassis and related components
●Axles

The company also supplies certain of these products to the manufactured housing aftermarket and to adjacent industries, including modular housing and mobile office units. In 2015, the MH Segment represented 8 percent of the company’s consolidated net sales, and 10 percent of consolidated segment operating profit. Certain of the company’s MH Segment customers manufacture both manufactured homes and modular homes, and certain of the products manufactured by the Company are suitable for both types of homes. As a result, the company is not always able to determine in which type of home its products are installed.

Raw materials used by the company’s MH Segment, consisting primarily of steel (coil, sheet and I-beam), extruded aluminum and vinyl, glass, and ABS resin, are available from a number of sources, both domestic and foreign. 

Operations of the company’s MH Segment consist primarily of fabricating, welding, thermoforming, painting and assembling components into finished products. The company’s MH Segment operations are conducted at 13 manufacturing and warehouse facilities throughout the United States, strategically located in proximity to the customers they serve. 

The company’s manufactured housing products are sold primarily to major producers of manufactured homes such as Clayton Homes, Cavco Industries, Inc., and to manufacturers in adjacent industries and distributors of aftermarket products.
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My Strategy Going Forward

Just looking at the fundamentals this company is currently reasonably priced. But that's because the price has recently fallen. And because of that, this might just be the right time to start accumulating these shares. And that's exactly what I intend to do.

At this price the estimated one year return is over 30% for a company that has a yield of over 2%. Add in the fact that the forward P/E is less than 15 while the debt coverage is excellent, and the deal starts to get even better. Finally throw in a demographic that's demonstrating an aging and retiring population of baby boomers and this starts to seem like a no-brainer. 

I expect to have a position in this company in the near future which I will allow to grow through dividend reinvestment as well as buying additional shares with funds received for the sale of covered call options. It's a strategy that's worked for me with other investments and I expect it will also work with this investment. I expect this to be a long term hold. 
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