LCI Industries Q3 Sales Fall 4% as Adjusted EPS Rises

LCI Industries (NYSE: LCII) reported lower third-quarter revenue as weaker recreational-vehicle production weighed on its core OEM business, but cost reductions and growth in diversified markets lifted adjusted margins and earnings. The company reaffirmed its full-year 2026 outlook while continuing preparations for its proposed all-stock merger with Patrick Industries.

Net sales for the quarter ended September 30 fell 4% year over year to $992.5 million. GAAP net income declined 20% to $50.1 million, or $2.05 per diluted share, and represented 5.0% of sales. The comparison included a smaller real-estate gain than a year earlier, as well as current-period merger and restructuring costs.

On an adjusted basis, net income rose 12% to $54.0 million, while adjusted diluted earnings increased to $2.21 from $1.97. Adjusted EBITDA advanced 5% to $111.5 million, equivalent to 11.2% of adjusted net sales, compared with 10.2% a year earlier.

The GAAP operating margin expanded 30 basis points to 7.6%. Excluding merger-related expenses and restructuring costs, the adjusted operating margin increased 100 basis points to 8.3%. LCI attributed the improvement to operational efficiencies and disciplined cost reductions.

RV weakness offsets diversified-market growth

OEM segment sales declined to $732.3 million from $790.0 million a year earlier, primarily reflecting pressure in the RV market. RV OEM sales fell 17% as North American travel-trailer and fifth-wheel shipments decreased and the sales mix shifted toward lower-content single-axle trailers. Contractually indexed price increases for selected commodities provided a partial offset.

North American wholesale shipments of towable RVs totaled 57,400 units, down 13%, while estimated retail sales fell 17% to 75,600 units. LCI’s towable content per wholesale unit increased 6% to $5,733.

Growth elsewhere in the portfolio moderated the effect of lower RV demand. Transportation OEM sales rose 8%, supported by the bus market and integration benefits from the 2025 acquisitions of climate-control systems supplier Trans Air and seating-products maker Freedman Seating. The company is also expanding sales of axle and suspension products to utility-trailer manufacturers and supplying windows for off-road vehicles and school buses.

Marine sales increased 4%, with LCI citing recent product introductions and improving run rates. Housing OEM sales rose 7% even as manufactured-housing unit shipments were down about 3% through August. The company said its presence in residential windows benefited from the 2025 acquisition of Moss Supply Company and new distribution partnerships.

Aftermarket sales increased 6% to $260.2 million, driven mainly by higher automotive aftermarket volume. LCI is expanding its offering across towing and truck accessories, boating products, appliances and electronics, while its service-center network addresses repair, replacement and upgrade demand from RV owners.

Full-year outlook reaffirmed

LCI reaffirmed its 2026 revenue forecast of $3.9 billion to $4.0 billion, compared with $4.1 billion in 2025. It continues to expect an adjusted operating margin of 7.5% to 8.0% and adjusted diluted earnings of $8.25 to $8.50 per share. The outlook excludes restructuring costs, merger-related expenses and the effect of tariff refunds under the International Emergency Economic Powers Act.

The company’s current full-year forecast calls for 285,000 to 295,000 North American wholesale RV shipments. It expects the transportation and marine markets to decline by low-single-digit percentages and housing to fall by a low- to mid-single-digit percentage. Continued gains in the automotive aftermarket are expected to help mitigate declines across aftermarket channels.

October net sales were approximately $341 million, down 10% from a year earlier.

Cash flow and pending Patrick merger

For the first nine months of 2026, cash from operating activities totaled $237.3 million, compared with $252.1 million a year earlier. Free cash flow declined to $195.4 million from $214.0 million as capital expenditures increased to $41.9 million.

LCI ended September with $245.6 million of cash and cash equivalents and $595 million available under its revolving credit facility, subject to covenant restrictions. Its trailing-12-month net debt-to-adjusted EBITDA ratio improved to 1.4 times from 1.9 times a year earlier. The company paid a quarterly dividend of $1.15 per share, totaling $28 million.

LCI is seeking shareholder approval for its proposed all-stock combination with Patrick Industries, with a special meeting scheduled for November 18. The transaction remains subject to shareholder and governmental approvals and other closing conditions. The company identified additional risks including potential integration delays, higher-than-expected costs, failure to realize anticipated savings or revenue synergies, and disruption to relationships with customers, suppliers and employees.

Other uncertainties cited in the presentation include tariffs and raw-material costs, competitive pricing pressure, cyclical demand, dealer and manufacturer inventory levels, customer financial conditions, labor and production costs, interest rates, consumer confidence, product-liability claims and information-security risks.