Jason Lippert, president and CEO of LCI Industries, parent company of the wholly-owned subsidiary Lippert Components, said his company helped “bail out” OEMs during 2021, driving profits and leading the company to seek ways to maintain the new OEM contracts.
Lippert Components announced Feb. 10 the company had achieved a record $4.5 billion in revenue for 2021.
“Being good partners of the OEMs, we bailed a lot of situations out and put the OEMs in a position where they could ship units, or they were looking at not being able to ship units,” Jason Lippert said. “It cost us a ton of overtime to onboard a lot of these customers.”
The CEO gave credit to low turnover rates in employees as to why Lippert was able to take on some of the challenges the industry faced. He said top products that needed to be sourced were awnings, entry doors, axles and chassis.
Brian Hall, Lippert chief financial officer, said several of the new aftermarket channels have come with long-term, multi-year commitments, and said the company’s longer-term commitments look “sticky.” Jason Lippert echoed his agreement.
“I think the stickiness is better than ever, because we did bail them (the manufacturers) out,” the CEO said. “They are going to remember that.”
He said longer-term contracts were taken selectively based on how much stress the contract would place on the business. Jason Lippert also said brand partners have said over the past six months Lippert has responded well and taken care of its partners.
Jason Lippert said recently acquired Furrion continued to integrate with Lippert well as the team works to increase how many distributors and dealerships carry the brand. He also hinted toward Furrion product launches later this year.
The company’s aftermarket segment reflects Furrions’ progression, Jason Lippert said. Aftermarket revenues grew year-over-year by 32%.
“We expect this business to contribute substantially to our aftermarket sales going forward as we leverage its robust catalogue of innovative appliances and electronics to tap into a $1.5 billion addressable market in North America alone,” Jason Lippert said.
Overall, Lippert Components’ team has focused on scalable growth and is targeting automation projects, costing up to $40 million during 2022 and early 2023. Automation has been a topic for Lippert Components for about five years, according to the CEO, who said the company started with a couple small projects to test the waters. He said $1-4 million projects allow the company to remove 10-50 employees out of a work cell, meeting the return on demand within a year to three years.
“We expect these operational improvement projects to support our long-term margin expansion,” Jason Lippert said, “and help offset the impact of inflationary pressures while improving quality and helping us to mitigate labor constraints to maintain stable production and meet the new heightened consumer demand.”
Lippert’s total RV content increased 24% in 2021 from the prior year to $4,198, while 2021 content per motorhome increased 15% from the prior year to $2,856.
“As we head further into 2022, we expect the current strong pace of wholesale shipments to continue in the coming months as we execute during a dealer restocking period,” Jason Lippert reported. “That said, visibility toward the full-year demand is limited due to uncertainties about the longer-term impact of inflation on consumer spending. We will have a better view of how to manage shaping up once a spring retail season ramps up.”
The CEO also spoke on a new suite of Type B products, citing doubling retail sales of the units during the past couple years.
“We have been working hard to develop a full line of products for these vehicles, including our pop tops,” Jason Lippert said. “This option, which allows OEMs to install a bed on the roof of a B van, is not being increasingly adopted by consumers.”
