LCI Industries, the Elkhart-based supplier of components to RV manufacturers, reported second-quarter results that split sharply between top-line weakness and bottom-line strength.
Adjusted net sales fell 4% year over year to $1.1 billion, but adjusted EPS climbed 13% to $2.70, and adjusted operating margin expanded 110 basis points to 9.3%.
The results underscore a supplier navigating a shrinking market through cost discipline and product mix — even as the wholesale RV industry contracts faster than expected, according to an article by TipRanks.
The revenue decline masked a stark divide between segments. OEM net sales dropped 10% as dealers worked through inventory and consumers traded down to cheaper single-axle trailers.
Aftermarket sales, by contrast, rose 11%, driven by replacement and upgrade demand from a growing installed base of older RVs now entering repair cycles.
LCI continued to push more value into every unit its customers build. Towable OEM content per unit jumped 11% to $5,831, while motorized content rose 2% to $3,852.
The company’s top five innovations now generate roughly $270 million in annual revenue, with another $140 million expected from 2027 model-year placements.
Profitability improved across the board. Adjusted operating profit grew 8% to $99 million, with consolidated margin reaching 9.3%. OEM margins landed at 7.5% and aftermarket margins hit 14%.
Adjusted EBITDA increased 7% to $129 million, pushing margin to 12.2%. GAAP net income surged 16% to $67 million.
The balance sheet strengthened further. LCI ended the quarter with $217 million in cash and $595 million in revolver capacity, for total liquidity of $812 million.
Net debt fell to $636 million, improving the net debt-to-adjusted-EBITDA ratio to 1.5 times from 1.8 times.
The company paid out $28 million in dividends at $1.15 per share, supporting a yield of about 4.3% at quarter-end.
Despite the profit gains, LCI substantially cut its revenue outlook. The company now expects full-year adjusted revenue of $3.9 billion to $4.1 billion, roughly $250 million below its prior forecast.
Management held firm on profitability targets, reiterating adjusted operating margin of 7.5% to 8.0% and adjusted EPS of $8.25 to $8.75.
The main driver of the reset is a steep drop in wholesale shipments. Towable shipments fell 20% in the quarter, prompting LCI to lower its full-year industry outlook to 280,000 to 300,000 units, down from 315,000 to 330,000.
That represents a meaningfully smaller addressable market for both suppliers and manufacturers.
Tariffs and commodity inflation added further pressure. Aluminum prices surged roughly 80% year over year and steel climbed about 20%, complicating pricing and cost pass-through.
LCI expects to return nearly $90 million in tariff-related refunds to customers, and while these flows have minimal income statement impact, the timing of receipts and rebates will temporarily distort cash trends.
Management highlighted the aftermarket as a structural growth pillar beyond the current cycle.
The installed base represents more than $15 billion in replaceable content from the past decade, with roughly 1.5 million units entering repair and upgrade cycles.
New distribution and facility investments are currently diluting segment profitability, but management views the channel as a durable offset to OEM cyclicality.
The proposed merger with Patrick Industries remains a source of uncertainty. Management stressed disciplined planning and regulatory review but acknowledged the process limits what they can publicly disclose.
The results confirm the wholesale market is contracting faster than expected. With towable shipments down 20% and the industry outlook cut by up to 30,000 units, OEMs are building fewer units while paying more per unit — towable content per unit rose 11% to $5,831 — and facing sharply higher aluminum and steel costs.
The aftermarket opportunity is real, with 1.5 million aging units entering repair cycles, but the near-term picture is defined by lower volumes, commodity inflation, and the possibility of further supplier consolidation through the Patrick Industries merger.