The foreseeable Lippert Components (LCI) future looks bright, as President and CEO Jason Lippert told analysts the company is prepared to continue taking on increased demand.
Despite coronavirus pandemic setbacks, Lippert expects outdoor recreation trends to continue beyond the near future. Record RVs are on U.S. roads and 70 percent of new buyers remaining in the outdoor lifestyle offer encouraging long-term prospects, he stated.
“There is little doubt that even after the pandemic related anxiety settles down, many Americans will want to continue to seek safer vacation options that offer better overall experiences to more control over their environment, distancing and location, or likely traveling through less airports and hotels,” Lippert said, according to a transcript of the call provided by Seeking Alpha.
Asked about the aftermarket outlook, Lippert said significant tailwinds stemmed from the rise in RV demand, particularly within the used RV market, where the company supplies many items typically replaced first, including furniture and mattresses.
“One of our increasingly popular products, OneControl, has continued to rise in popularity since its launch,” Lippert said, according to the Seeking Alpha transcript. “Newer and younger consumers are seeking technologically sophisticated products on the market.
“Additionally, OEMs are increasingly adapting electric versus manual products, which should drive additional market share growth and content in our OEM and aftermarket segments,” he said. “Beyond this, R&D teams continue to work on further innovations within windows, shade systems, chassis and awnings, as well as within a ride range of products manufactured by the CURT group.”
Brian Hall, LCI executive vice president and chief financial officer, said the pre-sold units moving has decreased the company’s inventory rebuilds.
“So it probably puts us a little bit further behind,” Hall said. “I think it becomes a story of retail demand next year. If it’s a 450,000-unit type year, that certainly gives us more ability to address the inventory shortage.”
Hall said making up the volume in the springtime is not likely. It all depends on what retail demand looks like.
Lippert noted supply chain concerns and labor as the two major issues the company is experiencing following the coronavirus pandemic.
“August and September, and even into October, were very tough months for the industry,” he said. “But the one thing that I keep telling people is the industry is so resilient. From the OEM side, I mean, when there’s problems, people around here don’t waste time, they take action. So, whether it’s getting some of the great suppliers to ramp up capacity so that they can do more, or whether it’s enabling and finding other new suppliers and vendors to come into the mix. One thing I put my money on is the OEMs finding creative ways around the supply chain problems, and fixing it fast.”
Lippert said LCI has picked up share between windows, awnings and chassis.
“When your competitor or supplier peers don’t have the capacity, they can just pop up a building where we’ve got 90 facilities worldwide prepared to take on a little bit more capacity,” Lippert said. “And when you’ve got great teams and a good culture, I think it’s easier to run extra days and extra shifts. So that’s helped us out a ton to be able to pick that up.”
