Q3 2025 LCI Industries Earnings Call
Jason Lippert: Normalization as single axle trailers decline. RV wholesale shipments to lift to 345,000 to 360,000 units in 2026 with near term strength already evident. Aftermarket tailwinds with approximately 1 million RVs entering the service cycle and exploring divestiture opportunities of approximately $75 million of revenues that are dilutive to the business in 2026. Together, we expect these targeted initiatives to lift operating margins to 7 to 8% in 2026. Most importantly, none of this will be possible without our incredible team. The dedication, resilience, and commitment of our 12,000 team members remain the foundation of our success. Over the past three years, we have navigated through some tremendous challenges and today we're operating from a position of real strength, solid cash flow and balance sheet, healthy margins, and strong customer sentiment.
Brian.
RV wholesale shipments to lift at 345000 to 360000 units in 2026 with near term strength already evident.
Aftermarket tail wins with approximately $1 million rvs entering the service cycle and exploring divestiture opportunities of approximately $75 million of revenues that are dilutive to the business in 2026 <unk>.
Together, we expect these targeted initiatives to lift operating margins to seven 8% in 2026 most.
Most importantly, none of this would be possible without our incredible team the dedication resilience and commitment of our 12000 team members remain the foundation of our success over the past three years, we have navigated through some tremendous challenges and today, we are operating from a position of real strength and solid cash flow and balance sheet healthy margins and strong customer sentiment.
Jason Lippert: I'd also like to recognize the passing of our founder, my grandfather Larry Lippert, whose vision, ingenuity, and perseverance built this company from the ground up. His culture of grit, innovation, and courage continues to define who we are today. To our teams across the globe, thank you for relentlessly serving our customers and community every day. Together we are building a stronger, more resilient, and a truly differentiated LCI Industries. I'll now turn it over to Lillian who will provide more detail on our financial results.
I'd also like to recognize the passing of our founder a grandfather, Larry Libert, whose vision ingenuity and perseverance built this company from the ground up as culture of grid innovation encourage continues to define who we are today.
To our teams across the globe. Thank you for relentlessly serving our customers and community everyday together, we are building a stronger more resilient and a truly differentiated LCI industries I'll now turn it over to <unk>, who will provide more detail on our financial results.
Lillian Etzkorn: Thank you. Jason Lippert's innovation, competitive strengths, and successful M&A supported double-digit net sales growth this quarter, while sustainable operational improvement initiatives translated into meaningful margin expansion. Our consolidated net sales for the third quarter were $1 billion, an increase of 13% from the third quarter of 2024. OEM net sales for the third quarter of 2025 were $790 million, up 15% from the same period of 2024, driven by RV OEM net sales of $470 million, which were up 11% compared to the prior year period. This increase was a result of market share gains and an increased mix of higher content fifth wheel units. Content per towable RV unit increased 6% year over year to $5,431, and content per motorized unit increased 2% year over year to $3,839.
Thank you Jason.
Liberty innovation competitive strengths and successful M&A supported double digit net sales growth this quarter, while sustainable operational improvement initiatives translated into meaningful margin expansion.
Our consolidated net sales for the third quarter were $1 billion, an increase of 13% from the third quarter of 2024.
OEM net sales for the third quarter of 2025 were $790 million up 15% from the same period of 2024, driven by RV OEM net sales of $470 million, which were up 11% compared to the prior year period.
This increase was the result of market share gains and an increased mix of higher content fifth wheel.
Content per towable, RV unit increased 6% year over year to 5431 and.
In content per motorized unit increased 2% year over year to 3839.
Lillian Etzkorn: Towable RV organic content grew 3% year over year and 1% sequentially, supported by the share gains we delivered in the top product categories we supply to RV OEMs, specifically appliances, axles and suspensions, chassis, furniture, and windows, as well as the continued adoption of recent innovations like our anti-lock brakes (ABS), Touring Coil Suspension (TCS), appliances, Furrion Chill Cube, and the Sundex adjacent industries. OEM net sales were $320 million, up 22% year over year, primarily due to acquisitions within the transportation market, which represented $39 million in the quarter. This increase was also supported by other markets such as utility trailers, where net sales grew 22%, and marine, where net sales rose 9%. We continue to further expand our presence across numerous diversified markets.
Total RV organic content grew 3% year over year, and 1% sequentially supported by the share gains we delivered in the top product category.
Okay.
Okay.
Closing suspension chassis furniture and windows as well as the continued adoption of recent innovations like our ABS Tcs appliances theory until cube and the sudden death.
Adjacent industries OEM net sales were $320 million up 22% year over year, primarily due to acquisitions within the transportation market, which represents a $39 million in the quarter.
This increase was also supported by other markets such as utility trailers, where net sales grew 22% and marine where net sales rose 9%.
We continue to further expand our presence.
Okay.
Lillian Etzkorn: Aftermarket net sales were $246 million, an increase of 7% compared to the same period in 2024, primarily driven by product innovations and the expanding Camping World relationship within the RV aftermarket, partially offset by lower volumes within the automotive aftermarket. Consolidated operating profit during the third quarter was $75 million, or 7.3%, a 140 basis point expansion over the prior year period. This growth was primarily driven by reduced costs from material sourcing strategies and increased North America RV sales volume related to market share gains and increased sales mix of higher content fifth wheel units. The operating profit margin of the OEM segment increased significantly to 5.5% in the third quarter compared to 3.2% for the same period of 2024, primarily driven by increases in selling prices for targeted products, reduced cost from material sourcing strategies, improved fixed cost absorption, and production labor efficiencies.
Okay.
For $246 million, an increase of 7% compared to the same period in 2024, primarily driven by product innovation and the expanding camping world relationship within the RV aftermarket.
Partially offset by lower volumes within the automotive aftermarket.
Consolidated operating profit during the third quarter was 75 million or seven 3%, a 140 basis point expansion over the prior year period. This growth was primarily driven by reduced costs for materials sourcing strategies and increased North American RV sales.
Volume related to market share gains and increased sales mix of higher content.
Okay.
Okay.
Okay.
Difficult lead to five 5% in the third quarter compared to three 2% for the same period of 2024, primarily driven by increases in selling prices for targeted products.
<unk> costs for material sourcing strategies improved fixed cost absorption and production labor efficiencies.
Lillian Etzkorn: Our aftermarket segment delivered a 12.9% operating profit margin compared to 13.9% in the prior year period. This change was primarily driven by higher material costs related to tariffs and higher steel, aluminum, and freight costs, lower production volumes in the automotive aftermarket as a result of lower retail volumes, and investments in capacity, demand distribution, and logistics technology to support future growth. These were partially offset by our ability to increase selling prices for targeted products. Adjusted EBITDA grew 24% to $106 million compared to $85 million in the third quarter of 2024. GAAP net income in the third quarter was $62 million or $2.55 earnings per diluted share, up from $36 million or $1.39 earnings per diluted share in the prior year period.
Our aftermarket segment delivered a 12, 9% operating profit margin compared to 13, 9% in the prior year period.
This change was primarily driven by higher material costs related to tariffs and higher steel aluminum and freight costs lower production volumes in the automotive aftermarket as a result of lower retail volumes and investments in capacity distribution and logistics technology to support future growth. These were partially.
Offset by our ability to increase selling prices for targeted products.
Adjusted EBITDA grew 24% to $106 million compared to $85 million in the third quarter of 2024.
GAAP net income in the third quarter was $62 million or $2 55 earnings per diluted share.
Up from $36 million or $1.39 earnings per diluted share in the prior year period.
Lillian Etzkorn: Adjusted net income increased to $48 million, up 35% to $1.97 per diluted share excluding loss on extinguishment of debt and gain on sale of real estate. Net of non-cash depreciation and amortization was $90 million for the nine months ended September 30, 2025, while non-cash stock-based compensation expense was $17 million for the same period. We continue to anticipate depreciation and amortization in the range of $115 to $125 million during the full year 2025. At September 30, 2025, our cash and cash equivalents balance was $200 million, up from $166 million at December 31, 2024. For the nine months ended September 30, 2025, cash provided by operating activities was $252 million. Investing cash flows included $38 million used for capital expenditures and $103 million used for acquisitions. During the quarter, we refinanced and repriced our term loan facility, lowering interest by 25 basis points.
Adjusted net income increased to $48 million up 35% to $1.97 per diluted share excluding loss on extinguishment of debt and gain on sale of real estate net of taxes.
Noncash depreciation and amortization was 19 million for the nine months ended September 32025, while noncash stock based compensation expense was $17 million for the same period.
We continue to anticipate depreciation and amortization in the range of $115 million to $125 million during the full year 2025.
At September 30th 2025, our cash and cash equivalents balance was $200 million up from 166 million at December 31 2024.
For the nine months ended September 32025.
Cash provided by operating activities was 252 million <unk>.
Investing cash flows included 38 million used for capital expenditures and $103 million used for acquisition.
During the quarter, we refinanced and repriced our term loan facility lowering interest by 25 basis points. This action strengthens our capital structure and should reduce annualized interest expense by approximately 1 million.
Lillian Etzkorn: This action strengthens our capital structure and should reduce annualized interest expense by approximately $1 million, supporting continued cash generation and balance sheet flexibility. We also continue to execute on the $300 million share repurchase program that we announced last quarter. During the quarter, we returned $38 million to shareholders through share repurchases and $29 million through our quarterly dividend of $1.15 per share. Year to date, we returned $215 million to shareholders in the form of dividends and share repurchases, underscoring our commitment to balanced capital allocation and shareholder returns. As of September 30, 2025, our net inventory balance was $741 million, which was about flat to prior year. At the end of the third quarter, we had outstanding net debt of $748 million or 1.9 times pro forma EBITDA adjusted for the impact of noncash and other items.
Supporting continued cash generation and balance sheet flexibility.
We also continued to execute on the $300 million share repurchase program that we announced last quarter.
During the quarter, we returned $38 million to shareholders through share repurchases and 29 million through our quarterly dividend of $1 15 per share.
Year to date, we returned $215 million to shareholders in the form of dividends and share repurchases underscoring our commitment to a balanced capital allocation and shareholder returns.
As of September 30th 2025, our net inventory balance was $741 million, which was about flat to prior year.
At the end of the third quarter, we had outstanding net debt of $748 million or one nine times pro forma EBITDA adjusted for the impact of noncash and other items.
Lillian Etzkorn: Looking forward, we expect October net sales of approximately $380 million, up 15% from prior year, and we anticipate mid-teens year over year growth for the full fourth quarter. As Jason mentioned, we project that North American RV wholesale shipments for 2025 will be in the range of 340,000 to 350,000. Margin expansion continues to run ahead of plan as well. Fourth quarter year over year operating margin expansion is expected to match third quarter levels. Efficiency initiatives and infrastructure optimization continue to drive these results. For example, we plan two more facility consolidations by year end for a total of five this year. This translates to $5 million run rate in annual savings. Looking to capital allocation for the full year 2025, capital expenditures are expected to be in the range between $45 to $55 million.
Looking forward, we expect October net sales of approximately $380 million up 15% from prior year, and we anticipate mid teens year over year growth for the full fourth quarter.
As Jason mentioned, we project North American RV wholesale shipments for 2025 will be in the range of 340 to 350000.
Margin expansion continues to run ahead of plan as well fourth quarter year over year operating margin expansion is expected to match third quarter levels.
Additionally initiatives and infrastructure optimization continue to drive these results.
For example, we plan to more facility consolidations by year end for a total of five this year. This.
This translates to $5 million run rate in annual savings.
Looking to capital allocation for the full year 2025 capital expenditures are expected to be in the range between $45 million to $55 million focused on business investment and innovation.
Lillian Etzkorn: Focused on business investment and innovation, we continue to use our balance sheet to prudently pursue strategic opportunities that drive profitable growth and deliver shareholder value. Our long-term leverage target remains at 1.5 to 2 times net debt to EBITDA, and we remain committed to returning cash to shareholders. Our preliminary outlook for 2026 calls for North American RV wholesale shipments of approximately 345,000 to 360,000 units, and we continue to target organic towable content growth of 3% to 5% annually. From an efficiency perspective, we expect 8 to 10 additional facility consolidations and are exploring divestiture opportunities of roughly $75 million of revenue from lower margin non-core areas in 2026. These factors, combined with identified operational improvements and further expansion of our presence in diversified markets, are expected to support operating margins in the range of 7% to 8% for 2026.
We continue to use our balance sheet to prudently pursue strategic opportunities that drive profitable growth and deliver shareholder value.
Our long term leverage target remains at one and a half to two times net debt to EBITDA and we remain committed to returning cash to shareholders.
Our preliminary outlook for 2026 calls for North American RV wholesale shipments of approximately 345 to 360000 units and we continue to target organic total content growth of.
3% to 5% annually.
From an efficiency perspective, we expect eight to 10 additional facility consolidations and are exploring divestiture opportunities or roughly $75 million of revenue from lower margin noncore areas in 2026.
These factors combined with identified operational improvements and further expansion of our presence in diversified markets.
Are expected to support operating margins in the range of 7% to 8% for 2026.
Lillian Etzkorn: In closing, we are confident that our operational flexibility, strategic diversification, and effective cost management, along with our strong balance sheet, will enable us to deliver sustainable and measurable shareholder value over time with that operator. We're ready to take questions. If you could please open the line, thank you.
In closing, we are confident that our operational flexibility strategic diversification and effective cost management, along with our strong balance sheet will enable us to deliver sustainable and measurable shareholder value overtime.
With that operator, we're ready to take questions. If you could please open the line. Thank you.
Operator: Thank you. To ask a question, please press Star followed by one on your telephone keypad. If you change your mind, please press Star followed by two. When preparing to ask a question, please ensure your device is unmuted locally. The first question comes from Daniel Moore of CJS Securities. Your line is now open. Please go ahead.
Thank you to ask a question. Please press star followed by one on your telephone keypad now.
If you change your mind. Please press star followed by cheap when preparing to ask a question. Please ensure your device is unmatched likely.
The first question comes from Daniel Moore of CJS Securities. Your line is now open. Please go ahead.
[Analyst 1]: Thank you, Jason.
Thank you Jason William Thanks for the color congrats on the solid results.
[Analyst 2]: Lillian, thanks for the color. Congrats on the solid results. I wanted to maybe just parse out. Good morning. In the quarter, adjusted operating margins rebounded quite a bit faster than expected. Can you maybe bucket or just rank order those improvements between leverage to higher volumes, optimization, mix, and I'm wondering if maybe tariffs didn't have quite as much of an impact as expected as well.
Oh, two X Sandy just parse out hey, good morning.
So in the quarter adjusted operating margins rebounded.
Quite a bit faster than expected.
Can you maybe bucket or just rank order of those improvements between leverage to higher volumes and optimization mix and I'm wondering are there.
Maybe tariffs didn't.
We didn't have quite as much of an impact as expected as well.
Okay.
Lillian Etzkorn: Yeah, so we paid in.
So with that Dan I'll start actually with the end of your question first I'd say from the tariff perspective things continue to progress through the year as we had expected.
[Company Representative]: I'll start actually with the end of your question first. I'd say from the tariff perspective, things continue to progress through the year as we had expected. Frankly, as we were foreshadowing previously, the team has done a really solid job of mitigating the tariff impact to the business, both from the source, resourcing, working with our vendors for options there to help drive the cost down. To the extent that we needed to, we've been negotiating with our customers to pass along pricing. That definitely helped the results that we were able to effectively mitigate the tariffs. Clearly, we saw the volume uplift, we've been seeing the strength in the industries and I say that broadly, not just the RV, but also strength in other industries as we've been moving through the quarter and that definitely helped.
And frankly, if we are foreshadowing previously the team has done a really solid job of mitigating the tariff impact to the business.
Both from the source resource thing.
Working with our vendors.
More options there to help drive the costs down and then to the extent that we needed to we are negotiating with our customers to pass along pricing. So that definitely helped the results that we're able to effectively mitigate the tariffs.
Clearly we saw the volume uplift we've been seeing the strength in <unk> in the industry and I say that broadly not just the RV, but also strength in other industry.
We've been moving through the quarter and that definitely helped and you saw as well on the RV side of the business the content expansion.
[Company Representative]: You saw as well on the RV side of the business, the content expansion. As our newer products continue to be very well received and as we are going through the model changeover and through open house, we've continued to be very successful in penetrating market share with those products.
As our newer products continued to be very well received and as we're going through the model changeover and through open held it would continue to be very successful in.
Penetrating market share with those products being product productivity with a huge boost to I'll just give you a quick example.
Jason Lippert: Dan, productivity was a huge boost too. I'll just give you a quick example. I think we're down 50 team members year to date from the beginning of the year. With all the acquisitions, especially the two large ones we did, we've added 1,000 people there. To be up 1,000 with acquisitions but down net 50 for the year kind of shows you the productivity gains we've experienced through some of the footprint optimization and other productivity initiatives we've been working on.
We're down 50 team members year to date from the beginning of the year and with all the acquisitions, especially the two large ones. We did we've added 1000 people there so it would be.
And with the acquisitions, but down <unk> 50 for the year kind of shows you the productivity gains we've experienced through some of the footprint optimization of the productivity initiatives, we've been working on.
[Analyst 2]: Really helpful. Wanted to clarify the Q4 outlook. Revenue up mid teens. Can you maybe break that down by end market a little bit? Obviously the little bit better outlook in RV is helpful. On the margin side, you mentioned similar improvements year over year. I'm assuming that's about 150 basis points adjusted, putting us in the 4% range. Just want to make sure I'm understanding your thoughts on Q4 margin profile. Lillian, thank you.
Really helpful. I wanted to clarify the Q4 outlook revenue up mid teens.
Can you break that down by end market a little bit.
Obviously the.
A better outlook and our view is helpful.
And then on the margin side, you mentioned similar improvements year over year.
I'm, assuming that's about 150 basis points adjusted putting us in the 4% range just wanted to make sure I'm understanding your your thoughts on the Q4 the margin profile Lillian Thank you.
Operator: Sure.
Lillian Etzkorn: I think you're getting to.
So yeah, I think you're getting to the right Zip code with that.
[Company Representative]: The right zip code with that in terms of that year over year margin expansion. In terms of more specific market clarity, I guess best way to characterize that without getting into specific numbers, we expect to see continued strength in the RV industry as we're going through the fourth quarter. We're seeing continued strength as Jason was commenting about in his comments around the mix of product. You know, having less of the single axle units and more of the fifth wheels coming through is definitely beneficial as well from a top line perspective and for the business. Also, keep in mind as we look at the fourth quarter that does tend to be a seasonally low time period for some parts of our business, specifically aftermarket. That's a light quarter for us, and as well for international, it tends to be a little bit light too.
In terms of that year over year margin expansion.
Yes.
Okay.
Okay.
The best way to characterize that without getting into specific numbers, we expect to see continued strength in the RV.
The industry as we're going through the fourth quarter, we're seeing continued strength.
Someone commented about in his comments around.
The mix of product, having having less of the single App plaguing us assist wheel coming through is definitely beneficial as well.
From a.
Top line perspective.
For business also keep in mind as we look at the fourth quarter does tend to be a seasonally low time period.
For some parts of our business, specifically aftermarket that's a light quarter for us.
And.
As well for international it tends to be a little bit late to it appears the volume volume lift in productivity gains will help as we've as we've mentioned it doesn't appear that there is any you know.
Jason Lippert: It appears that, you know, volume, you know, volume lift and productivity gains will help. As we've mentioned, it doesn't appear that there's any, you know, downtime that would be more than normal. I mean, everybody's taking off kind of normal off times during the seasonality holidays. I think those are the biggies.
Downtime that would be more than more than normal I mean, everybody is taking off kind of normal normal long time during the seasonality holidays. So I think those are the biggies.
[Analyst 2]: Really helpful. I appreciate the color on the margin uplift from some of the divestitures and optimization steps that you can continue to take. You generated a $20 million gain in the quarter. You've got two more facilities consolidations this year, 8 to 10 next year. Is there any sense for the potential proceeds and or gains from those sales? I know they're one time but could be a nice cash benefit.
Really helpful.
And I appreciate the color on the margin uplift from from me.
Some of the divestitures and optimization steps that you continue to take.
You generated $20 million gain in the quarter, you've got two more facilities consolidations. This year eight to 10 next year.
Are there any sense for potential proceeds <unk> James from from those sales and other one time, but.
It'd be a nice cash benefit.
So some of the facilities are leased there some of them are one so to the extent, we can we're going to fully get out of a facility and not use it for something else. Then we will certainly look to put those on the market. So there'll be probably a couple of those but we don't have any.
Jason Lippert: Some of the facilities are leased, some of them are owned. To the extent we can, and we're going to pull it out of a facility and not use it for something else, we'll certainly look to put those on the market. There'll be probably a couple of those, but we don't have any dollars attached to those yet until we get that done. We definitely have significant momentum in that category as we continue to really drive hard to consolidate and simplify the business.
Dollars.
Attached to those yet.
Do we get that done, but we definitely have significant momentum in that category as we continue to really drive hard to consolidate and simplify the business.
[Analyst 2]: Absolutely. Appreciate the outlook for RV wholesale shipments, preliminary look for 2026. Do you have kind of a similar outlook for Marine at this stage?
Absolutely last I appreciate the the outlook for kind of the RV wholesale shipments preliminary look for 'twenty six.
Do you have a kind of a similar outlook for marine at this stage.
[Company Representative]: At this stage, Dan, we don't. I think when we come out with the fourth quarter results, we'll have a more comprehensive outlook for next year.
At this stage, we don't I think when we come out with the fourth quarter results will have a more comprehensive outlook for next year.
Jason Lippert: Our big opportunity in Marine right now is just content growth through some of the innovation we've launched here in the last couple quarters. Got it.
And a big opportunity in Marine right now just content grow through some of the innovation we've launched here in the last couple of quarters.
Got it.
[Analyst 2]: All right. Hopefully all of the share gains that you're seeing come through, put some of that chatter to rest. Appreciate all the color and I'll circle back with any follow ups.
Well hopefully all of the share gains that you're seeing come through but.
Some of that chatter to rest I appreciate all the color and I'll circle back with any follow ups.
Jason Lippert: Thank you.
Thank you.
[Company Representative]: Thank you.
Thank you. The next question comes from Joe <unk> of Raymond James Your line is now Nathan. Please go ahead.
Operator: The next question comes from Joseph Altobello of Raymond James. Your line is now open. Please go ahead.
[Analyst 2]: Thanks.
[Analyst 1]: Hey guys.
Thanks, Hey, guys good morning.
[Analyst 2]: Good morning.
Jason Lippert: I guess, first question on the industry outlook, you mentioned wholesale looks to be up modestly next year. Would you also expect retail to be up next year? I think we're kind of expecting the same, for them to kind of stay in line as they have in the last couple of years. We're not forecasting any kind of big jump in retail at this point.
First question on the industry outlook, you mentioned wholesale looks to be up modestly next year would you also expect retail to be up next year.
I think I think we're kind of expecting the seeds for them to kind of stay in line because they have you know in the last couple of years, we're not we're not forecasting any kind of big jump in retail.
At this point okay.
[Analyst 1]: Okay, got it.
Got it and then just in terms of the quarter. The 13% revenue growth could you could you parse out how much of that was was pricing related.
Jason Lippert: In terms of the quarter, the 13% revenue growth, could you parse out how much.
[Analyst 1]: Was that pricing related?
[Company Representative]: We haven't parsed it out specifically on that, Joe. There is pricing elements to that, but it's also the overall volume uplift as well and the acquisitions that we identified at the $42 million.
So we havent personnel, specifically on that Joe.
It is there is pricing elements to that but it's also the overall volume uplift as well.
Positioning because we identified a $42 million.
Jason Lippert: Okay, and maybe one last one for me. You talked about the mix improving and I know this time of year with the model year changeover, you usually see a little bit of a richer mix of larger units. Are you seeing an improvement beyond what you would expect normally from a seasonal perspective? I'd say that the, you know, the trailer, the mix to single axle trailers has changed significantly over the last. It's been a, you know, it's been in process for the last eight years or so. I think what we've seen is the momentum slow down and start to retreat the other way in a meaningful way, quarter to quarter.
Okay, and maybe one last one for me you talked about the.
Mix, improving and I know this time of year with the model year changeover, you, usually see a little bit of a of a richer mix of larger units.
Are you seeing that improvement beyond what you would expect normally from a from a seasonal perspective.
Well I would say that the.
The mix to single axle trailers has changed significantly over the last it's been a it's.
<unk> been in process for the last eight years or so, but I think what we've seen is the momentum slow down and start to retreat. The other way in a meaningful way quarter to quarter. So.
[Analyst 1]: So.
It could change next year it could go back up a little bit, but our expectation is that it is going to kind of stick around where it's at with all the conversations we've had with the dealers the dealers theyre driving youre seeing a lot of this retail activity. There's a lot of those units out in the market. So I think it was one of the things that's going to hold that number down.
Jason Lippert: It could change next year. It could go back up a little bit. Our expectation is that it's going to kind of stick around where it's at with all the conversations we've had with the dealer. The dealers are driving and seeing a lot of this retail activity. There's a lot of those units out in the market. I think that is one of the things that's going to hold that number down. You can only sell so many of those. That's the short answer, Joe.
You can only sell so many of those.
So.
That's the short answer Joe.
[Analyst 1]: Okay, super. Thank you, guys.
Okay Super Thank you guys.
Jason Lippert: Thanks.
Thanks.
Operator: The next question comes from Scott Stember of Roth Capital. Your line is now open. Please go ahead.
The next question comes from Scott <unk> of Roth Capital. Your line is now open. Please go ahead.
[Analyst 1]: Good morning. Thanks for taking my questions, and congrats on the very strong results as well.
Hi, good morning, Thanks for taking my questions and congrats on the very strong results as well.
Jason Lippert: Morning. Thanks.
Good morning. Thanks.
[Analyst 1]: I just want to square something away with what the largest dealer indicated on their conference call yesterday. Pretty much saying that they're starting to see some elasticity issues, particularly given some of the price increases that have been put through, I guess, related to tariffs. Have you seen any change or any commentary from your OEM customers of any potential change in behavior, suggesting that maybe they want to pull back a little bit? Is the comments we heard yesterday probably just more episodic or related to that dealer?
I just want to square something away with what the largest dealer.
Indicated on their conference call yesterday pretty much saying that they are starting to see some elasticity issues.
Particularly given some of the price increases that have been put through.
Related to tariffs.
Have you seen any change or any commentary from your OEM customers of any potential change in behavior.
Suggesting that maybe there wanted to pull back a little bit for us.
But.
Comments, we heard yesterday, probably just more episodic or related to that.
Hello.
Jason Lippert: Yeah, I think it's a little bit to the latter. The last comment you made, I think some of that might be, you know, some of that might be there, but there's definitely overall price sensitivity in the market around how much RVs have gone up. It's really, there's a few things going on. I think what's going to drive volume next year a little bit is the fact that suppliers, OEMs, they've reduced capacity, so there's less capacity. If dealers want to get to have product in their lots for the spring selling season, they have to think about ordering a little bit differently and a little bit further ahead because some of that capacity is restricted. Camping World, they don't supply, I guess, every single OEM. I mean, there's winners and losers out there in terms of the brands.
Yes, I think it's a little bit to the latter you'll be the last comment you made I think some of that might be you know some of that might be there, but there's definitely overall price sensitivity in the market around how much rvs have gone up and it's really there's a few things going on I think what's going to drive volume next year, a little bit is the fact that.
Suppliers Oems produce capacity, so there's less capacity of dealers want to get too to have product on their lots for the spring selling season. They have to think about ordering a little bit differently and a little bit further ahead, because some of the capacity is restricted.
And then you know camping world they don't they don't.
Supply I guess every single OEM. So I mean, there's there's winners and losers out there in terms of the brands.
Jason Lippert: The good thing about Lippert and our whole strategy is we supply the whole market. When you look at, you know, the Forest Rivers and the Brinkleys and the Alliances, you know, we're supplying a lot of content to those brands. When I look at those, the types of comments you're making, I talk to a lot of dealers, not just Camping World, and that's kind of how we're coming up with our assumptions for the next year. There's a lot of positives out there.
The good thing about liberating our whole our whole strategy.
We supply the whole market. So when you look at the Forest River is in the <unk> and the alliances.
We're supplying a lot of content to those to those brands.
So when I look at those types of comments, you are making I talked to a lot of dealers not just camping World then.
That's kind of how we're coming up with our assumptions for the next year.
There's a lot of positives there.
[Analyst 1]: Awesome. Maybe talking about, I guess, one of the bigger components that you had to put price increases through for was steel and aluminum.
Awesome and maybe just talking about I guess, one of the bigger components that you have to put price increases through.
Four with steel and aluminum.
[Analyst 2]: And.
And in the past, there's usually been a timing delay of when you get those prices through it seems as if you were pretty successful in getting us through I just wanted to see.
[Analyst 1]: In the past, there's usually been a timing delay of when you get those prices through. It seems as if you were pretty successful in getting those through. I just want to see how this time, if it is different than the last time that we saw steel and aluminum prices running up.
How this time.
Yes. It is.
Then the last time that we saw steel and aluminum prices running up.
Jason Lippert: Yeah, nothing's really changed there. I mean, those two commodities are the largest components of our BOMs, at least on the RV side.
Yes, nothing's really changed there.
Those two commodities are the largest components of our <unk> at least on the RV side, So and they are all control largely by these indexes. So right now feels a good guy in aluminum as a bad guy.
[Analyst 1]: So.
Jason Lippert: They are all controlled largely by these indexes. Right now, steel's a good guy and aluminum's a bad guy. Aluminum pricing is going to be going up here for the next couple quarters, and steel pricing is starting to come down, so there'll be a little bit of offset there. There were some tariff announcements this morning that there'll be some favorability. Hopefully, we don't have timing on that yet, as it was just announced here in the last 24 hours.
Aluminum pricing is going to be going up here for the next couple of quarters in steel pricing starting to come down so it'll be a little bit off out there.
There was some tariff announcements this morning that there'll be some favorability hopefully we don't have timing on that yet as it was just announced last.
In the last 24 hours. So I think the big headline for for cost next year is the fact that tariffs seem to be at least settled in place where things are predictable and we can start working on cost better and we're going to work with our Oems. The best we can and the discipline that they've had.
Jason Lippert: I think the big headline for cost next year is the fact that tariffs seem to be at least settled in place where things are predictable and we can start working on costs, and we're going to work with our OEMs the best we can, and the discipline that they've had to get to real production back to make sure that we're getting them the best we can for costs. As they redo bill of materials and recontent and decontent, we're a big part of the solution as possible.
That's a real production back to make sure that we're getting them.
The best we can for costs and as a redo billow materials and re content and <unk> content that were a bigger part of the solution as possible.
[Analyst 1]: Got it. Last one for me on the aftermarket. Very strong results, very resilient. I know you have a lot of traction from previous OEM introductions that you're working into the aftermarket, but just trying to get a sense of a breakdown of the business between, you know, the automotive side and the RV side. Is there a big difference in growth between the two right now?
Got it and then last one from me on the aftermarket very strong results very resilient, but I know you have a lot of traction from.
Previous OEM introductions that youre working through the aftermarket, but just trying to get a sense of a breakdown.
The business between Kurt the automotive side and the R&D side is there a.
Big difference in growth with regulatory right now.
Jason Lippert: The RV aftermarket for us has grown sequentially almost since we started it 10 years ago, a little over 10 years ago. The repair and the replacement service business is growing always for us because we're always putting more content in the RV. I'll go back to the example I used in my opening remarks of we launched air conditioners. We've launched a lot of products in the last five years, but we launched air conditioners. A few years ago, I think I said in 2022, we had maybe 5% of the total OEM content, but we had no aftermarket business in ACs. Today, you fast forward, we've got probably 50% market share OEM, which is fantastic. Now we're seeing close to, we'll see close to $20 million in AC aftermarket business this year.
So the RV aftermarket for US has grown sequentially almost almost since we started 10 years ago, a little over 10 years ago, the repair and the replacement service business is.
As growing always for us because we're always putting more content in any RV. So I'll go back of the example, I used in my opening remarks of we launched air condition, we bought a lot of products in the last five years, but we launched air conditioners.
A few years ago.
I said.
In 2002, we had maybe 5% of the total OEM content, but we had no aftermarket business in Acs.
Today, if you fast forward, we've got probably 50% market share OEM, which is fantastic, but now we're seeing closer we'll see close to $20 million you see aftermarket business. This year. So again the point is is that when we launch new products.
Jason Lippert: The point is that when we launch new products, for most of the products we launch, there's a meaningful aftermarket once we penetrate the OEM business. We expect the aftermarket business to continue to grow, especially with the tsunami of units that were built in 2020-2022 that are going to start hitting repair and replacement cycle here in the next couple years. On the auto side, we've had a lot of great success against our largest competitor, who used to be Horizon Global, went to First Brands, and if you've read anything about First Brands in the last month, they've got some serious issues. Our largest competitor, we're already starting to make some huge inroads here recently just because there's a lot of uncertainty around whether that business is going to continue to exist and who's going to own it.
For most of the products. We launched there is a there is a meaningful aftermarket once we penetrate the OEM business. So we expect the aftermarket business to continue to grow, especially with the tsunami of units that were built in <unk>.
20 to 2022 that youre going to start hitting the repair and replacement cycle here in the next couple of years.
On the auto side you know we've.
We've had a lot of great success against our largest competitor who used to be horizon global <unk>.
Want to first brands and if you read anything about first brands in the last month.
They've got some serious issues so.
Our largest competitor we're already worrisome to make some huge inroads here recently, just because theres a lot of uncertainty around whether that business is going to continue to exist and who's going to own it.
Jason Lippert: You look at the brands they have, like Reese and Fulton and Bulldog. Curt's their largest competitor. We've got some significant upside on that part of our business as it relates to the auto, hitch and trailering components. Hopefully that's helpful, Scott.
You look at the brands they have like recent Fulton and Bulldog I'm encouraged their largest competitor. So we've got some significant upside on on that part of our business as it relates to the auto pitching.
Pitching trailer and components. So hopefully that's helpful. Scott.
[Analyst 1]: No, no, that's great.
No that's great great. Thank you so much.
Operator: Great.
[Analyst 1]: Thank you so much.
Yes.
Operator: Thank you. The next question comes from Tristan Thomas-Martin of BMO. Your line is now open. Please go ahead.
Thank you. The next question comes from Tristan Thomas with BMO. Your line is now open. Please go ahead.
[Analyst 1]: Hey, good morning.
Hey, good morning.
Jason Lippert: Can I confirm, I think you said.
Can I confirm I think you said $2 million from acquisitions in the quarter and then have you quantified what you expected big foot that contribute on an annual basis.
[Analyst 1]: $2 million from acquisition in the quarter, and then have you quantified what you expect Bigfoot to contribute on an annual basis?
Jason Lippert: We've not. It's smaller. I mean, Mawson, Bigfoot are less than $25 million combined. For the quarter, on acquisitions, it was $30 million, $42 million total.
We've added smaller I mean, Boston mass and big foot or less than $25 million combined.
And then for the quarter.
For the quarter on acquisitions was 30 42 total 42.
[Analyst 1]: Forty-two, yep. Okay, great.
Alright, great and then.
Jason Lippert: For next year, how are.
Here, how are you thinking about kind of the annualized tariff impact.
[Analyst 1]: You thinking about kind of the annualized tariff impact, either on a gross or net basis or maybe both?
Either on a gross or net basis or maybe both.
[Company Representative]: I think as we think about the tariffs for next year, really, in terms of what we would expect, is really a continuation of this year in terms of that mitigation. We've got the actions in place so that they're not impactful. Again, assuming that there's no changes with the global tariffs and they seem to have stabilized, I'd expect that we continue to have that full mitigation that we do presently going into next year.
And I think as we think about the tariffs for next year really in terms of.
What we would expect is really a continuation of this year in terms of that mitigation. We've got the actions in place so that theyre not impactful. So again, assuming that there's no changes with the global tariffs they seem to have stabilized I would expect that we would continue to.
Have that full mitigation that we do presently going into next year.
Jason Lippert: Should be a lot easier. Okay, just one last question.
It should be a lot easier.
Okay.
And then just one last question how long do you think it's going to.
[Analyst 1]: How long do you think it's going to take to kind of get that single axle versus multi axle and fifth wheel mix back to that, call it 84% range? Thank you.
Take to kind of get that single axle, whereas multi axle, we think that will come back to that call. It 84 ish percent range. Thank you.
Jason Lippert: It's hard to say. Camping World is doing a great job pushing that product in the market. They're the single largest producer of that type of trailer. The strategy is to get more first time buyers in the RV lifestyle because of the price point entry on that of less than $12,000 in a lot of cases. It's really hard to say, Tristan, but our expectation is that it will normalize. It won't go back to where it was probably 10 years ago. We think it has a good chance of getting back into that 16% range, especially as all the people that have bought that type of unit over the last five years decide to, whatever portion of them decide to re up and buy another RV, they're going to buy a bigger one.
It's hard it's hard to say.
Camping World is doing.
Great job pushing that product in the market. There there are the single largest producer of.
That type of trailer.
The strategy is to get more first time buyers in the in the RV lifestyle because of the price point entry on that of less than 12000, a lot of cases.
No.
It's really hard to say Tristan but.
Our expectations that it will normalize it won't go back to where it was probably 10 years ago, but we think it has a good chance of getting back into that.
At 16% ranges, especially as all.
All the people that have bought that type of unit over the last five years decide.
However, a portion of them decided to re up and buy another RV theyre going to buy a bigger one.
[Analyst 1]: Great.
Alright, thank you.
[Analyst 2]: Thank you.
[Analyst 1]: Yep.
Yep.
Operator: Thank you. As a reminder, to ask a question, please press star followed by one on your telephone keypad. The next question comes from Bret Jordan of Jefferies. Your line is now open. Please go ahead.
Thank you as a reminder to ask a question. Please press star followed by one on your telephone keypad now.
The next question comes from Bret Jordan of Jefferies. Your line is now open. Please go ahead.
[Analyst 1]: Hey, good morning, this is CJ Dipolino on for Bret Jordan. Thanks for taking our questions. Wanted to circle back to dealers real quick. Could you just give us any color into dealer sentiment and any insight into the probable timing of the restocking cycle as we move into the new year?
Hey, Good morning. This is C. J definitely know on for Bret Jordan, Thanks for taking our questions on <unk>.
Wanted to circle back to dealers real quick could you just give us any color into dealer sentiment and <unk>.
Insight into the probable or timing of the restocking cycle as we move into the new year.
Jason Lippert: Yeah, I mean, like I said earlier, we talk to a lot of the big dealers just to try to get a feel for where everybody's at, because all the dealers have a little bit different strategy and they play in different markets. I would just say that, you know, there is a sentiment that inventories are low. The OEMs have had good discipline, like I said earlier, that's helped keep inventories low. Dealers have been just not ordering a ton of inventory. Again, like I said, you know, it's not just us that have simplified our footprint and optimized. I mean, a lot of suppliers and OEMs have. The capacity is less in the industry today.
Yes, I mean like I said earlier, we talk to a lot of the big dealers just to try to get a feel for where everybody is that because of all the dealers to have a little bit different strategy and they play in different markets.
And I would just say that.
There is a there is a sentiment that the inventories are low.
The Oems have had good discipline like I said earlier.
I'll keep inventories lower but dealers have been just not ordering a ton of inventory.
But again like I said.
It's not just us that have simplified our footprint and optimized I mean, a lot of suppliers and Oems have so the capacity is is less than the industry today and I think that the dealers know that.
Jason Lippert: I think that the dealers know that and they've got to be a little bit, a little bit cautious on how they look at restocking and not trying to get, you know, inventories too low because they're not going to be able to get the product when people need it for spring selling season. I think that's why we're seeing a little bit of this. Again, our forecast is very modest for next year. 345,000 to 360,000 is not a huge lift. Every 5,000 units that get added to the wholesale production is a really big deal for us considering our content at $5,400 and the innovation that's coming.
And they're being they've got to be a little bit a little bit cautious on how they look at restocking and trying to get.
Inventory is too low because theyre not going be able to get the product when people people need it for for spring selling season. So I think that's why we're seeing a little bit of this and again.
Our forecast is very modest for for next year of $3 45 to 360 is not a huge lift but every 5000 units that get added to the wholesale production is it really a big deal for us considering our content to $5400, so and the innovation that's coming.
[Analyst 1]: Okay, great, thank you. Can you just comment on trends in contenting that you're seeing more specifically? I just want to see if the decontenting of RVs has started to stabilize.
Okay, great. Thank you and then could you just comment on trends in content.
Anything that you're seeing more specifically I just wanted to see if the <unk> thing of Rvs has started to stabilize.
I feel I feel it hasnt again.
Jason Lippert: I feel it has. I've always said that we're a little immune to that just from the standpoint that we tend to have a lot of the products that customers need to differentiate their products from others. Those would be things like the Chill Cube Air Conditioners that we've talked about, the bus dial square windows that we've launched in the last year and a half with the different colors on the exteriors. Touring Coil Suspension and anti-lock brakes and things like that, they tend not to decontent those things. The biggest thing that hurts us is mix when it comes to decontenting. The biggest negative in content for us would be a mix shift. Like I said, we're seeing a shift to the positive at this point in time.
I said that we're a little little immune to that just from the standpoint that we tend to have a lot of the products.
The customers need to differentiate their products from from others and those would be things like the chill cube AC that we've talked about.
The bus style square windows that we have.
Okay.
Okay.
You see us in ABS and things like that they tend not to de content those things so.
The biggest thing that hurts us as mix when it comes to the content is just.
The biggest the biggest negative in content for us would be a mix shift.
We're seeing we're seeing a shift to the positive at this point in time and then just another anecdotal.
Jason Lippert: Just another anecdotal thing I was thinking about with the dealers, I was talking to a dealer the other day and their multi-site dealer, their most popular floor plan they had of what they sell, they had six on the ground, which doesn't lend itself to good sales for the dealers if they don't have really popular floor plans and in the right geography. I think that that's another reason we're seeing a little bit of positivity out there from some of the dealers that we're talking to.
I was just thinking about with the dealers I was talking to a dealer or the other day.
They're multi site dealer.
Their most popular floor plan they had of what they sell eight six on the ground.
Which doesn't lend itself to good sales for the <unk>. They don't have really popular floor plans and in the right geographies. So I think that.
That's another reason, we're seeing a little bit of positivity out there from some of the dealers that we're talking to.
[Analyst 1]: Okay, great.
Okay, Great got it. Thank you that's very helpful. That's all for me.
Jason Lippert: Got it.
[Analyst 2]: Thank you.
[Analyst 1]: That's very helpful. That's all from us.
Yes.
Operator: Thank you. We currently have no further questions, so I'd like to hand back to Jason for any closing remarks.
Thanks Keith.
We currently have no further questions I'd like to hand back to Jason for any closing remarks.
Jason Lippert: The last three years have been tough being at the bottom of the cycle. We've figured out how to have peak operating performance here in the trough. We're really, really proud and happy with those results. We have the solid results that we've put out here in the last quarter, and I look forward to talking about the continued momentum next quarter. Thanks for the call.
But the last three years have been tough being at the bottom of the cycle, but we figured out how to peak operating performance here in the trough.
We're really really proud and happy with those results. We have solid results that we put out here in the last quarter and I look forward to talking about the continued momentum next quarter. Thanks for the call.
Yes.
Operator: This concludes today's call. Thank you all for joining. You may now disconnect your lines.
This concludes today's call. Thank you all for joining you may now disconnect your lines.
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[Analyst 2]: Sa.
Okay.
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