In what company spokesmen are describing as a “powerhouse” transaction “primed to gain share,” LCI Industries sent some shock waves through the North American RV industry today (Nov. 22) by announcing that its wholly-owned subsidiary, Lippert Components Inc. (LCI), had entered into a definitive agreement to acquire CURT Group, a leading manufacturer and distributor of branded towing products and truck accessories for the aftermarket for $340 million through cash on hand and debt.
The transaction, Lippert’s largest to date, is expected to close by the end of 2019, subject to customary closing conditions including regulatory approval, and is anticipated to be accretive to growth, profit margins and earnings per share.
The acquisition, which essentially doubles the size of LCI’s aftermarket business by adding “a highly complementary portfolio of prominent towing and truck products,” simultaneously expands its reach within the RV arena and advances the publicly-held firm’s ongoing drive to diversify beyond RVs.
“We’re excited to announce this acquisition. It’s been something that’s been in our cross hairs for quite a long time. We welcome the CURT leadership team and the family of 800-plus team members around North America. We’re excited to have them as a part of our family and a part of our product lineup,” said LCI CEO and President Jason Lippert, whose Elkhart, Ind.-based company is a major supplier to the RV, marine and transportation industries and their respective aftermarket segments.
In a conference call with investment analysts immediately following the announcement, Lippert said the acquisition presents substantial growth and synergy opportunities for both companies. He noted CURT’s strong presence in hitches and towing — said to be roughly 75% of its business, with 25% being truck accessories — would be a welcome addition to LCI’s portfolio.
Lippert singled out CURT’s innovation efforts, highlighting the recent introduction of the BetterWeigh app-enabled mobile towing scale, and added that nearly all of CURT’s products are complementary to LCI’s current portfolio. He mentioned that CURT enjoys a stable bottom line through most economies as its sales are driven by the historically robust used truck market.
Similarly, he said he expects LCI’s aftermarket operations also would leverage CURT’s success in the e-commerce arena — which was said to be 23% of its $255 million of revenue over the 12-month period ending Sept. 30 — as well as the company’s network of 10 distribution centers across North America. CURT shares LCI’s philosophy of innovation driving product development and market share growth, Lippert added.
In addition, Lippert and CFO Brian Hall mentioned that LCI’s strong cash flow, which they expect would surpass $200 million this year, gives them confidence the acquisition’s debt burden would not be cause for concern. They anticipated it would take 12-18 months for LCI to return to a preferred position in terms of a debt leverage factor.
“With a strong reputation for product innovation, engineering, and brand excellence, we look forward to welcoming CURT President Rock Lambert and his team to the LCI family,” Lippert stated in a release announcing the acquisition.
“Culturally, CURT is a strong fit, with a deep focus on delivering innovative products and an unwavering commitment to quality and superior customer service,” Lippert continued. “Its highly complementary portfolio, combined with its strong brands and extensive distribution network, will significantly expand our addressable market. With a track record of delivering remarkable financial performance and strong cash flow generation, we believe that the addition of CURT will further advance our long-term growth strategy to bring our core competencies to new, attractive markets and diversify our business to drive outperformance throughout the cycle.”
CURT, headquartered in Eau Claire, Wisc., maintains a robust product portfolio comprised of thousands of SKUs across various product lines, including hitches, towing electricals, ball mounts, and cargo management, according to an LCI release. CURT boasts a significant market position, owning and operating a stable of leading brands including CURT, Aries, Luverne, Retrac and UWS. Leveraging a multi-channel model, CURT serves customers across e-commerce, direct-to-installer, and distribution channels.