LCI Industries

LCI Industries LCII reported improved second-quarter profitability despite continued softness in outdoor recreation demand, as cost-cutting initiatives, operational efficiencies and higher product content helped offset lower OEM sales. 1 billion. OEM net sales fell 10%, while aftermarket net sales rose 11%. The company said towable RV wholesale unit shipments declined 20% during the quarter. “Our 2026 performance has been driven first and foremost by our self-help initiatives,” Interim Chief Executive Officer Johnny Sirpilla said. He cited operational efficiencies and strategic cost reductions that have structurally improved the company’s cost base and expanded net margins despite softer RV wholesale production and retail demand.

3%. 2% margin, compared with 11% in the prior-year period. 29 per diluted share a year earlier. 39. 5%. Lillian Etzkorn, LCI’s executive vice president and chief financial officer, attributed the gain to cost-improvement actions, material sourcing strategies and commercial actions related to higher input costs and commodity indices. Those improvements were partly offset by tariff-related material costs, higher steel, aluminum and fuel costs, and lower fixed-cost absorption. Aftermarket adjusted operating margin reached 14%, up 30 basis points from a year earlier.

The company said cost management and material sourcing efforts supported that performance, although tariff-related costs, commodity costs, fuel costs and capacity-related expenses remained headwinds. Etzkorn said the company’s self-help efforts contributed 160 basis points of year-over-year margin improvement. Those efforts have included overhead reductions, lower general and administrative spending, indirect-spend improvements, facility consolidations and quality initiatives. Sirpilla said LCI completed five facility consolidations last year and plans another eight to 10 consolidations in the second half of 2026.

He also said the company has reshored procurement to seek more affordable sourcing locations and mitigate tariff exposure. Content Growth and Aftermarket Expansion Despite a sales mix shift toward lower-content single-axle RV trailers and reduced fifth-wheel volume, content per towable RV unit increased 11% year over year to $5,831. Content per motorized unit rose 2% to $3,852. The company said its five largest recent innovations are producing an estimated $270 million in annual revenue at the current run rate. LCI also expects approximately $140 million in additional annualized revenue from new product placements associated with the 2027 model-year change.

Aftermarket sales growth was driven by commercial actions tied to input costs, acquired businesses and new automotive aftermarket customer volume, according to Etzkorn. The company also pointed to its installed base of LCI products in RVs as a long-term service opportunity. Management said it is seeing repair-and-replacement demand supported by higher RV ownership and more used-unit purchases. Sirpilla added that used RV buyers can represent an opportunity for upgrades and repairs that previous owners may have deferred. Etzkorn said aftermarket growth has recently been in the high-single-digit to low-double-digit range and that she expects that pace to continue.

She also said investments in distribution infrastructure and a new Texas facility supporting the Ranch Hand brand should eventually support improved aftermarket profitability as those investments taper. Tariff Refunds Passed Through to Customers LCI said its finance and procurement teams identified and filed eligible claims under the IEEPA tariff refund process and expect to return nearly $90 million in refunds to customers. The company said the refunds have minimal profit-and-loss impact because they are passed through to customers. The company chose to manage the recovery process internally rather than use third-party firms that typically charge contingency fees, Sirpilla said.

Etzkorn said LCI fully accounted for anticipated tariff activity in its second-quarter financial results, though the timing of customer payments will depend on when the company receives the cash refunds. Management also discussed ongoing input-cost pressure. Etzkorn said aluminum prices were up 80% year over year and steel prices were up about 20%, though both had begun to stabilize at elevated levels. The company said commodity-related price movements are generally passed through to customers under index-based arrangements rather than through opportunistic pricing.

Outlook Reduced for RV Wholesale Shipments LCI reported July adjusted net sales of approximately $315 million and reduced its full-year RV wholesale shipment outlook to 280,000 to 300,000 units, from its previous outlook of 315,000 to 330,000 units. 75. 5% to 8% and expects capital expenditures of $55 million to $65 million. Management said retail RV sales are expected to modestly exceed wholesale shipments in 2026, as dealers aim to maintain inventories at healthy levels rather than replenish sales on a unit-for-unit basis. Sirpilla said dealer inventory levels of roughly 18 to 20 weeks appear responsible for the current period and could position dealers to respond following the industry’s September Open House event and ahead of 2027.

LCI ended the quarter with $217 million in cash and cash equivalents and $595 million of revolver availability, for total liquidity of $812 million. 8 times at the start of the year. Regarding LCI’s previously announced proposed merger with Patrick Industries, management said it remained limited in what it could discuss while regulatory review and proxy preparations continue.