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    LCII
    Earnings call· Jun 2026(Q2 FY26)

    LCI INDUSTRIES Q2 FY26 earnings call LCII

    Aug 5, 2026 Source

    Executive summary

    LCI Industries Q2 FY26 — Profitability Expanded Amidst Soft Demand

    LCI Industries delivered solid second-quarter results, expanding profitability despite continued soft outdoor recreation industry demand. The company's self-help initiatives, including operational efficiencies and strategic cost reductions, structurally improved its cost base and expanded net margins. Management remains focused on execution and advancing strategic priorities while awaiting the proposed merger with Patrick Industries.

    Highlights

    5

    • Consolidated adjusted net sales down 4% to $1.1 billion, outperforming a 20% decline in towable RV wholesale units.

    • Adjusted operating profit increased 8% year-over-year to $99 million, with adjusted operating profit margin expanding 110 basis points to 9.3%.

    • Aftermarket net sales grew 11% year-over-year, driven by commercial actions, acquisitions, and new customer volumes.

    • Diluted GAAP EPS increased 16% to $2.75, and adjusted diluted EPS rose 13% to $2.70.

    • Content per towable RV unit increased 11% year-over-year to $5,831, supported by strong adoption of recent product launches.

    Concerns

    4

    • Consolidated net sales were down 4% to $1.1 billion due to persistent softness in outdoor recreation demand.

    • OEM net sales declined 10% year-over-year, reflecting decreased North American travel trailer and fifth-wheel shipments.

    • Full-year RV industry wholesale shipment guidance was lowered to 280,000 to 300,000 units from a prior range of 315,000 to 330,000 units.

    • Tariff-related material costs, higher steel, aluminum, and fuel costs, and lower fixed cost absorption partially offset margin gains in OEM and Aftermarket segments.

    Guidance & targets

    6
    CategoryTargetConfidence
    Additional annualized revenue from new product placements
    $140 million
    medium materiality
    High
    RV industry wholesale shipments
    280,000 to 300,000 units
    high materiality
    Medium
    Adjusted revenue
    $3.9 billion to $4.1 billion
    high materiality
    Medium
    Adjusted operating profit margin
    7.5% to 8%
    high materiality
    High
    Adjusted EPS
    $8.25 to $8.75
    high materiality
    Medium
    Capital expenditures
    $55 million to $65 million
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Consolidated
    Consolidated net sales were down 4% on an adjusted basis, but adjusted operating profit increased 8% year-over-year, reflecting improved profitability despite soft demand.
    Adjusted operating profit margin: 9.3%Adjusted EBITDA: $129 millionAdjusted EBITDA margin: 12.2%
    		$1.1 billion-4%—$99 million
    OEM
    OEM net sales declined 10% due to decreased North American travel trailer and fifth-wheel shipments and a mix shift towards lower content single axle trailers. Adjusted margin expanded a full percentage point to 7.5% due to cost improvement initiatives and commercial actions.
    Content per towable unit: $5,831 (+11% YoY)Content per motorized unit: $3,852 (+2% YoY)
    		—-10%—7.5%
    Aftermarket
    Aftermarket adjusted net sales grew 11% year-over-year, driven by targeted commercial actions, sales from acquired businesses, and new customer volumes in the automotive aftermarket. Adjusted operating profit margin was a solid 14%, up 30 basis points.
    		—11%—14%

    Operational metrics

    34
    Adjusted net sales
    $1.1 billiondown 4%
    Q2 FY26

    Consolidated adjusted net sales for the second quarter.

    OEM net sales growth
    -10%YoY
    Q2 FY26

    OEM net sales declined year-over-year.

    Aftermarket net sales growth
    11%YoY
    Q2 FY26

    Aftermarket net sales grew year-over-year.

    Content per towable unit
    $5,831up 11% YoY
    Q2 FY26

    Content per towable unit increased, supported by strong adoption of recent product launches.

    Content per motorized unit
    $3,852up 2% YoY
    Q2 FY26

    Content per motorized unit increased year-over-year.

    Adjusted operating profit
    $99 millionup 8% YoY
    Q2 FY26

    Consolidated adjusted operating profit.

    Adjusted operating profit margin
    9.3%up 110 bps
    Q2 FY26

    Consolidated adjusted operating profit margin.

    OEM adjusted operating margin
    7.5%expanded 1 percentage point
    Q2 FY26

    Adjusted operating margin for the OEM segment.

    Aftermarket adjusted operating profit margin
    14%up 30 bps
    Q2 FY26

    Adjusted operating profit margin for the Aftermarket segment.

    Adjusted EBITDA
    $129 millionup 7% YoY
    Q2 FY26

    Consolidated adjusted EBITDA.

    Adjusted EBITDA margin
    12.2%up from 11%
    Q2 FY26

    Consolidated adjusted EBITDA margin.

    Diluted GAAP EPS
    $2.75up 16%
    Q2 FY26

    Diluted GAAP earnings per share.

    Adjusted diluted EPS
    $2.70up 13% YoY
    Q2 FY26

    Adjusted diluted earnings per share.

    Cash and cash equivalents
    $217 million
    as of June 30

    Cash and cash equivalents balance.

    Availability under revolver
    $595 million
    as of June 30

    Available capacity under the revolving credit facility.

    Total liquidity
    $812 million
    as of June 30

    Total liquidity, combining cash and revolver availability.

    Outstanding net debt balance
    $636 million
    end of Q2 FY26

    Net debt balance after paying off 2026 convertible notes.

    Net debt to adjusted EBITDA ratio
    1.5ximproved from 1.8x at start of year
    Q2 FY26

    Net debt to adjusted EBITDA ratio, at the conservative end of the targeted range of 1.5x to 2x.

    Capital expenditures
    $19 million
    Q2 FY26

    Capital expenditures during the second quarter.

    Dividends paid
    $28 million
    Q2 FY26

    Total dividends paid during the second quarter.

    Dividend per share
    $1.15
    Q2 FY26

    Dividend payout per share.

    Dividend yield
    4.3%
    end of Q2 FY26

    Dividend yield as of the end of the quarter.

    July adjusted net sales
    $315 million
    July

    Adjusted net sales for the month of July.

    Annual revenue run rate from top 5 innovations
    $270 million
    Annual

    Estimated annual revenue run rate from the company's top 5 innovations.

    Installed base of Lippert content
    $15 billion
    Past decade

    Value of replaceable Lippert content that has entered the RV market over the past decade.

    RV units entering repair cycles
    1.5 million units
    Next several years

    Number of RV units expected to move into repair cycles.

    Care and technical organization members
    400+
    Current

    Number of members in the care and technical organization supporting aftermarket.

    Tariff refunds to customers
    $90 million
    Current

    Amount of IHEPA tariff refunds returned directly to customers.

    Self-help actions margin improvement
    160 bpsYoY
    YoY

    Basis points of margin improvement attributed to self-help actions.

    Aluminum cost increase
    80%YoY
    YoY

    Increase in aluminum costs year-over-year.

    Steel cost increase
    20%YoY
    YoY

    Increase in steel costs year-over-year.

    Facility consolidations planned
    8 to 10following 5 last year
    H2 FY26

    Number of facility consolidations planned for the second half of the fiscal year.

    Dealer inventory levels
    18 to 20 weeks
    Current

    Current inventory levels at the dealer level, considered responsible.

    Model year '27 pricing
    up just a bit
    Model Year '27

    Expected pricing for the upcoming model year.

    Industry KPIs

    9
    MetricValueDetails
    EPS$2.75USD
    Revenue$1.1 billionUSD
    Net income$67 millionUSD
    Operating margin9.3%%
    Adjusted EBITDA ebita$129 millionUSD
    Operating income EBIT$99 millionUSD
    Cash investments balance$217 millionUSD
    Tariff impact mitigation$90 millionUSD
    Share buyback capital return$28 millionUSD

    Deals & partnerships

    1
    Patrick IndustriesProposed merger to create a broader, more innovative product platform and unlock long-term value.

    LCI Industries announced a proposed merger with Patrick Industries. Management expresses enthusiasm and confidence in the meaningful long-term value and opportunities the merger will unlock. The company is currently supporting customary regulatory review and integration planning.

    Risks & headwinds

    5
    Soft outdoor recreation industry demandOngoing, impacting FY26

    Towable RV wholesale units down 20% in Q2 FY26; full-year RV industry wholesale shipment guidance lowered to 280,000-300,000 units.

    Mitigation: Self-help initiatives, operational efficiencies, strategic cost reductions, increased product content per unit, diversification into aftermarket and other OEM markets.

    Mix shift in RV salesQ2 FY26

    Increase in RV sales mix towards lower content single axle trailers.

    Mitigation: Content gains from recent product innovations, focus on higher-margin aftermarket offerings, and mid-to-high-end products in other segments like marine.

    Higher input costsQ2 FY26 and ongoing

    Tariff-related material costs, aluminum up 80% YoY, steel up 20% YoY, higher fuel costs.

    Mitigation: Targeted commercial actions, adjustments tied to select commodity indices, material sourcing strategies, reshoring product procurement, and engineering initiatives to reduce cost.

    Lower fixed cost absorptionQ2 FY26

    Partially offset margin gains in OEM segment.

    Mitigation: Disciplined execution across cost improvement initiatives, facility consolidations.

    Consumer confidence and global macro impact on automotive aftermarketOngoing through the year

    Automotive aftermarket described as 'a little bit more tepid' due to consumer sensitivity.

    Mitigation: Gaining business from a competitor's bankruptcy, focus on aftermarket upgrades and innovation.

    What to watch in Q3 FY26

    5

    Facility consolidations progress

    H2 FY26
    Current5 completed last year
    Target8 to 10 planned in H2 FY26

    Why it matters

    Successful execution of facility consolidations is key to structural cost reduction and margin expansion, contributing to the maintained full-year operating margin guidance.

    We've had facility consolidations, five last year. We have another 8 to 10 planned in the back half of this year.

    Q&A highlights

    7

    Beyond the IEPA tariff refunds, are there broader programs to address affordability and help OEMs bring prices down, and is this baked into guidance?

    Management confirmed a strong focus on self-help initiatives to reduce costs and drive affordability. These include G&A reductions, facility consolidations (5 last year, 8-10 planned for H2 FY26), quality improvements, and reshoring product procurement. These efforts are intended to stimulate volume and are reflected in the maintained margin guidance.

    “So outside of the IEPA tariff giveback, we have really done a strong job on our self-help initiatives, whether it's through strong G&A reduction. We've had facility consolidations, five last year. We have another 8 to 10 planned in the back half of this year.”

    asked by Scott Stember · answered by John Sirpilla

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Focus and Operational Execution

    LCI Industries is driven by self-help initiatives, including disciplined operational efficiencies and strategic cost reductions, which have structurally improved its cost base and expanded net margins. The company maintains a well-balanced portfolio, expands across adjacent OEM markets, grows its aftermarket presence, and considers accretive M&A opportunities. Innovation and engineering capabilities are key to content expansion and deepening customer relationships, with top 5 innovations currently generating an estimated $270 million annual revenue run rate.

    02

    Aftermarket Growth and Installed Base Opportunity

    The aftermarket segment is a durable growth platform, leveraging a large installed base of Lippert content in the field. Over $15 billion of replaceable LCI content has entered the RV market in the past decade, supporting a growing service opportunity as approximately 1.5 million units move into repair cycles. The company is expanding its reach through a 400-plus member care and technical organization, new dealer-based retail concepts, factory and mobile service offerings, and added distribution capacity.

    03

    Tariff Refunds and Customer Commitment

    LCI's finance and procurement teams successfully identified, documented, and filed eligible claims for the IHEPA tariff refund process, enabling the return of nearly $90 million in tariff refunds directly to customers. This effort, managed internally to maximize value for customers, reflects LCI's commitment to mitigating the impact of tariff-related price increases. While these refunds have minimal P&L impact due to their pass-through nature, they underscore the company's dedication to customer partnership.

    04

    Cost Management and Affordability Initiatives

    Beyond tariff refunds, LCI is actively pursuing broader cost reduction programs to help stimulate volume and improve affordability. These initiatives include G&A reductions, facility consolidations (5 last year, 8-10 planned for H2 FY26), quality improvements, and reshoring product procurement to more affordable countries. This focus on cost reduction is aimed at driving value for customers and strengthening LCI's competitive position.

    05

    Market Dynamics and Inventory Levels

    Despite continued softness in outdoor recreation demand, particularly in RV wholesale units, LCI notes that OEMs and dealers have done a good job managing production and inventory levels. Dealer inventory is currently at 18 to 20 weeks, which is considered responsible for this time of year, positioning dealers well for the back half of the year and for stocking up in Q1 and Q2 of 2027. Retail demand is expected to outpace wholesale, albeit by a small margin.

    06

    Proposed Merger with Patrick Industries

    LCI Industries announced a proposed merger with Patrick Industries, which management believes will unlock meaningful long-term value and opportunities. The merger is expected to create a broader, more innovative product platform and cost-effectively bring more products to outdoor recreation consumers. Until the transaction closes, LCI maintains a 'business as usual' approach, with leadership teams focused on current strategic priorities and execution.

    AI-generated summary of the company’s earnings call. Not investment advice.