Lippert Industries CEO Jason Lippert addressed the impact of tariffs on domestic aluminum and steel prices in a conference call following the company’s second quarter earnings report released on Aug. 2. During the period, sales grew 25% to $684 million compared with $547 million in the prior year period while net income was $47.2 million, or $1.86 per diluted share, compared to net income of $40.1 million, or $1.59 per diluted share, in the second quarter of 2017.
“However good the intentions were, it does not change the fact that aluminum prices have risen over 25% since last September of last year and steel prices have risen over 30%,” Lippert noted. “LCI currently purchases approximately 300,000 tons of steel annually and 40,000 tons of aluminum, almost all domestic. Due to foreign competition over the years, the steel industry has made it clear that they have raised prices recently to get back to more normalized margins in their businesses. Nucor, one of the nation’s leading steel producers and a large supplier to LCI, announced just last week, its highest second quarter earnings in the company’s history, doubling profits from their Q1 of 2018.”
Lippert stressed that the supplier had taken steps to help mitigate the hike in prices in collaboration with its customers.
“Last quarter, we spoke of how we initiated price increases to address the impact of steel and aluminum tariffs and expected to see the impact of these increases in late Q2 and early Q3 of this year. It’s always difficult to pass along increases of this magnitude, especially considering how much of a moving target it has been. But we worked very closely with our customers to make sure they understand this tariff-related increase has largely been out of LCI’s control. Because many of the tariffs and increases on our raw materials have moved so quickly, we weren’t able to capture 100% of it, but we continue to work toward good resolutions with our customers.”
He added, “We are being creative with our customers to try to minimize the increases where possible, by reorganizing component and product content, as well as getting creative on the product build cost through value-added, value engineering and other cost savings ideas,” he related. “In addition, we’re confident that our OEM partners will do their best to recontent their product lines, so the retail customer does not feel much of the inflationary impact of these increases. Our customers are excellent at making sure price points and products, best meet the retail price point expectations of retail customers.”
Lippert also provided a preview of new products in the pipeline that are slated to be rolled out at the Elkhart RV Open House in September.
“Many of our new products for the RV industry will debut at the Elkhart Open House in September, including the continued evolution of our OneControl system, interior and furniture packages, slideouts, entry doors and leveling systems,” he said. “In addition, our partner Furrion will also debut several new products, which include kitchen appliances, air conditioners, TV antennas and water heaters. We also are launching several new marine products, such as power-steering new furniture, windshield and canvas designs in October at the popular marine supplier show IBEX in Tampa, Fla.”