SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-13646

(Former name, former address and former fiscal year, if changed since last report) N/A

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock, as of the latest practicable date ~~(October 31, 2017)~~(April 30, 2020) was ~~24,940,373~~25,135,528 shares of common stock.

PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF INCOME


	Three Months Ended March 31,
	2020		2019
(In thousands, except per share amounts)

Net sales	$	659,670	$	592,172
Cost of sales	501,065		459,578
Gross profit	158,605		132,594
Selling, general and administrative expenses	114,339		84,839
Operating profit	44,266		47,755
Interest expense, net	5,197		2,507
Income before income taxes	39,069		45,248
Provision for income taxes	10,855		10,882
Net income	$	28,214	$	34,366

Net income per common share:
Basic	$	1.13	$	1.38
Diluted	$	1.12	$	1.38

Weighted average common shares outstanding:
Basic	25,075		24,914
Diluted	25,143		24,929

Nine Months Ended
September 30, Three Months Ended
September 30,
2017 2016 2017 2016
(In thousands, except per share amounts)

Net sales $ 1,600,633
$ 1,275,999
$ 554,814
$ 412,370
Cost of sales 1,224,312
945,104
433,594
306,820
Gross profit 376,321
330,895
121,220
105,550
Selling, general and administrative expenses 206,225
170,641
73,293
60,412
Operating profit 170,096
160,254
47,927
45,138
Interest expense, net 1,162
1,285
311
396
Income before income taxes 168,934
158,969
47,616
44,742
Provision for income taxes 53,514
55,597
15,478
14,898
Net income $ 115,420
$ 103,372

$ 32,138
$ 29,844

Net income per common share:
Basic $ 4.62
$ 4.20
$ 1.28
$ 1.21
Diluted $ 4.56
$ 4.15
$ 1.26
$ 1.19

Weighted average common shares outstanding:
Basic 24,993
24,587
25,060
24,724
Diluted 25,332
24,882
25,459
25,060

~~The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.~~

~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

LCI INDUSTRIES

CONDENSED CONSOLIDATED ~~BALANCE SHEETS~~STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
	2020		2019
(In thousands)

Net income	$	28,214	$	34,366
Other comprehensive income (loss):
Net foreign currency translation adjustment	(4,740)		(1,175)
Unrealized gain (loss) on fair value of derivative instruments	1,200		(153)
Total comprehensive income	$	24,674	$	33,038

September 30, December 31,
2017 2016 2016
(In thousands, except per share amount)

ASSETS
Current assets
Cash and cash equivalents $ 19,762
$ 95,060
$ 86,170
Accounts receivable, net 139,144
89,626
57,374
Inventories, net 229,763
161,312
188,743
Prepaid expenses and other current assets 45,384
28,572
35,107
Total current assets 434,053
374,570
367,394
Fixed assets, net 210,304
153,167
172,748
Goodwill 123,001
93,925
89,198
Other intangible assets, net 134,761
109,553
112,943
Deferred taxes 32,380
29,208
31,989
Other assets 21,277
14,095
12,632
Total assets $ 955,776
$ 774,518
$ 786,904

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable, trade $ 88,148
$ 55,681
$ 50,616
Accrued expenses and other current liabilities 109,849
97,733
98,735
Total current liabilities 197,997
153,414
149,351
Long-term indebtedness 49,918
49,940
49,949
Other long-term liabilities 60,805
39,796
37,335
Total liabilities 308,720
243,150
236,635

Stockholders’ equity
Common stock, par value $.01 per share 276
273
274
Paid-in capital 201,814
179,434
185,981
Retained earnings 472,154
381,723
395,279
Accumulated other comprehensive income (loss) 2,279
(595 ) (1,798 )
Stockholders’ equity before treasury stock 676,523
560,835
579,736
Treasury stock, at cost (29,467 ) (29,467 ) (29,467 )
Total stockholders’ equity 647,056
531,368
550,269
Total liabilities and stockholders’ equity $ 955,776
$ 774,518
$ 786,904

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

LCI INDUSTRIES

CONDENSED CONSOLIDATED ~~STATEMENTS OF CASH FLOWS~~BALANCE SHEETS

(Unaudited)

Nine Months Ended
September 30,
2017 2016
(In thousands)
Cash flows from operating activities:
Net income $ 115,420
$ 103,372
Adjustments to reconcile net income to cash flows provided by operating activities:
Depreciation and amortization 39,856
33,720
Stock-based compensation expense 15,042
11,421
Deferred taxes —
183
Other non-cash items 3,655
1,728
Changes in assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net (69,720 ) (46,028 )
Inventories, net (33,780 ) 13,451
Prepaid expenses and other assets (18,662 ) (7,659 )
Accounts payable, trade 29,856
23,827
Accrued expenses and other liabilities 27,192
30,093
Net cash flows provided by operating activities 108,859
164,108
Cash flows from investing activities:
Capital expenditures (60,342 ) (21,927 )
Acquisitions of businesses, net of cash acquired (67,876 ) (34,237 )
Proceeds from sales of fixed assets 348
533
Other investing activities (105 ) (316 )
Net cash flows used for investing activities (127,975 ) (55,947 )
Cash flows from financing activities:
Exercise of stock-based awards, net of shares tendered for payment of taxes (7,313 ) 409
Proceeds from line of credit borrowings 9,715
81,458
Repayments under line of credit borrowings (9,715 ) (81,458 )
Payment of dividends (37,346 ) (22,078 )
Payment of contingent consideration related to acquisitions (2,574 ) (2,719 )
Other financing activities (59 ) (1,018 )
Net cash flows used for financing activities (47,292 ) (25,406 )

Net (decrease) increase in cash and cash equivalents (66,408 ) 82,755

Cash and cash equivalents at beginning of period 86,170
12,305
Cash and cash equivalents at end of period $ 19,762
$ 95,060

Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 1,291
$ 1,525
Cash paid during the period for income taxes, net of refunds $ 48,181
$ 51,524
Purchase of property and equipment in accrued expenses $ 1,205
$ 279


	March 31,		December 31,
	2020		2019
(In thousands, except per share amount)

ASSETS
Current assets
Cash and cash equivalents	$	97,999	$	35,359

Accounts receivable, net of allowances of $4,568 and $3,144 at March 31, 2020 and December 31, 2019, respectively	280,952		199,976
Inventories, net	350,514		393,607

Prepaid expenses and other current assets	39,934		41,849
Total current assets	769,399		670,791
Fixed assets, net	372,113		366,309
Goodwill	399,360		351,114
Other intangible assets, net	377,932		341,426
Operating lease right-of-use assets	101,968		98,774

Other assets	30,441		34,181
Total assets	$	2,051,213	$	1,862,595

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term indebtedness	$	18,299	$	17,883
Accounts payable, trade	137,792		99,262

Current portion of operating lease obligations	23,389		21,693
Accrued expenses and other current liabilities	120,557		132,420
Total current liabilities	300,037		271,258
Long-term indebtedness	750,519		612,906
Operating lease obligations	81,871		79,848
Deferred taxes	47,600		35,740
Other long-term liabilities	63,383		62,171
Total liabilities	1,243,410		1,061,923

Stockholders’ equity
Common stock, par value $.01 per share	282		281
Paid-in capital	211,559		212,485
Retained earnings	656,541		644,945
Accumulated other comprehensive (loss) income	(2,417)		1,123
Stockholders’ equity before treasury stock	865,965		858,834
Treasury stock, at cost	(58,162)		(58,162)
Total stockholders’ equity	807,803		800,672
Total liabilities and stockholders’ equity	$	2,051,213	$	1,862,595

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

LCI INDUSTRIES

CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF ~~STOCKHOLDERS’ EQUITY~~CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
	2020		2019
(In thousands)
Cash flows from operating activities:
Net income	$	28,214	$	34,366
Adjustments to reconcile net income to cash flows provided by operating activities:
Depreciation and amortization	24,614		18,449
Stock-based compensation expense	3,295		3,733

Other non-cash items	(2,231)		611
Changes in assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net	(74,776)		(57,753)
Inventories, net	40,883		16,052
Prepaid expenses and other assets	6,350		10,268
Accounts payable, trade	31,878		11,581
Accrued expenses and other liabilities	(13,468)		15,278
Net cash flows provided by operating activities	44,759		52,585
Cash flows from investing activities:
Capital expenditures	(7,955)		(24,442)
Acquisitions of businesses, net of cash acquired	(95,766)		—


Other investing activities	1,972		61
Net cash flows used in investing activities	(101,749)		(24,381)
Cash flows from financing activities:
Vesting of stock-based awards, net of shares tendered for payment of taxes	(4,517)		(6,348)
Proceeds from revolving credit facility borrowings	247,154		175,660
Repayments under revolving credit facility borrowings	(102,330)		(182,720)
Repayments under term loan borrowings	(3,750)		—

Payment of dividends	(16,321)		(14,999)

Other financing activities	(391)		(157)
Net cash flows provided by (used in) financing activities	119,845		(28,564)
Effect of exchange rate changes on cash and cash equivalents	(215)		(251)
Net increase (decrease) in cash and cash equivalents	62,640		(611)
Cash and cash equivalents at beginning of period	35,359		14,928
Cash and cash equivalents at end of period	$	97,999	$	14,317

Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	5,536	$	2,394
Cash (received) paid during the period for income taxes, net of refunds	$	(73)	$	59
Purchase of property and equipment in accrued expenses	$	2,459	$	1,202

Common
Stock
Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive (Loss) Income
Treasury
Stock
Total
Stockholders’
Equity
(In thousands, except shares and per share amounts)
Balance - December 31, 2016 $ 274
$ 185,981
$ 395,279
$ (1,798 ) $ (29,467 ) $ 550,269
Net income —
—
115,420
—
—
115,420
Issuance of 190,753 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes 2
(7,315 ) —
—
—
(7,313 )
Stock-based compensation expense —
15,042
—
—
—
15,042
Issuance of 63,677 deferred stock units relating to prior year compensation —
6,907
—
—
—
6,907
Other comprehensive income —
—
—
4,077
—
4,077
Cash dividends ($1.50 per share) —
—
(37,346 ) —
—
(37,346 )
Dividend equivalents on stock-based awards —
1,199
(1,199 ) —
—
—
Balance - September 30, 2017 $ 276
$ 201,814
$ 472,154
$ 2,279
$ (29,467 ) $ 647,056

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

LCI INDUSTRIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


(In thousands, except shares and per share amounts)	Common Stock		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Stockholders’ Equity
Balance - December 31, 2018	$	280	$	203,246	$	563,496	$	(2,605)	$	(58,162)	$	706,255
Net income	—		—		34,366		—		—		34,366
Issuance of 137,040 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes	1		(6,349)		—		—		—		(6,348)
Stock-based compensation expense	—		3,733		—		—		—		3,733
Other comprehensive loss	—		—		—		(1,328)		—		(1,328)
Cash dividends ($0.60 per share)	—		—		(14,999)		—		—		(14,999)
Dividend equivalents on stock-based awards	—		304		(304)		—		—		—
Balance - March 31, 2019	$	281	$	200,934	$	582,559	$	(3,933)	$	(58,162)	$	721,679



Balance - December 31, 2019	$	281	$	212,485	$	644,945	$	1,123	$	(58,162)	$	800,672
Net income	—		—		28,214		—		—		28,214
Issuance of 87,833 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes	1		(4,518)		—		—		—		(4,517)
Stock-based compensation expense	—		3,295		—		—		—		3,295
Other comprehensive loss	—		—		—		(3,540)		—		(3,540)
Cash dividends ($0.65 per share)	—		—		(16,321)		—		—		(16,321)
Dividend equivalents on stock-based awards	—		297		(297)		—		—		—
Balance - March 31, 2020	$	282	$	211,559	$	656,541	$	(2,417)	$	(58,162)	$	807,803

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

The Condensed Consolidated Financial Statements include the accounts of LCI Industries and its wholly-owned subsidiaries (“LCII” and collectively with its subsidiaries, the ~~“Company”~~“Company,” "we," "us," or "our"). LCII has no unconsolidated subsidiaries. LCII, through its wholly-owned subsidiary, Lippert Components, Inc. and its subsidiaries (collectively, “Lippert Components” or “LCI”), supplies, domestically and internationally, a broad array of engineered components for the leading original equipment manufacturers (“OEMs”) in the recreation and transportation product markets, consisting of recreational vehicles (“RVs”) and adjacent industries including buses; trailers used to haul boats, livestock, equipment, and other cargo; trucks; ~~pontoon~~ boats; trains; manufactured homes; and modular housing. The Company also supplies engineered components to the related aftermarkets of these industries, primarily by selling to retail dealers, wholesale distributors, and service centers. At ~~September 30, 2017,~~March 31, 2020, the Company operated 52over 90 manufacturing and distribution facilities located throughout ~~the United States~~North America and ~~in Canada and Italy.~~Europe.

Most industries where the Company sells products or where its products are used historically have been seasonal and are generally at the highest levels when the weather is moderate. Accordingly, the Company’s sales and profits have generally been the highest in the second quarter and lowest in the fourth quarter. However, because of fluctuations in dealer inventories, the impact of international, national, and regional economic conditions, ~~and~~ consumer confidence on retail sales of RVs, and other products for which the Company sells its components, the timing of dealer orders, and the impact of severe weather conditions on the timing of industry-wide shipments from time to time, current and future seasonal industry trends may be different than in prior ~~years.~~years, particularly as a result of the COVID-19 pandemic and related impacts. Additionally, sales of certain engineered components to the aftermarket channels of these industries tend to be ~~counter-seasonal.~~counter-seasonal, but may be different in 2020 and future years as a result of the COVID-19 pandemic and related impacts.

The Company is not aware of any significant events, except as disclosed in the Notes to Condensed Consolidated Financial Statements, which occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on the Condensed Consolidated Financial Statements.

In the opinion of management, the information furnished in this Form 10-Q reflects all adjustments necessary for a fair statement of the financial position and results of operations for the interim periods presented. The Condensed Consolidated Financial Statements ~~presented herein~~ have been prepared ~~by the Company~~ in accordance with the ~~accounting policies described in its December 31, 2016 Annual Report on~~instructions to Form ~~10-K~~10-Q, and should be read in conjunction with the Notes to Consolidated Financial Statements which appear in that report. All significant intercompany balances and transactions have been eliminated. Certain prior year balances have been reclassifiedtherefore do not include some information necessary to conform to ~~current year presentation.~~annual reporting requirements. Results for interim periods should not be considered indicative of results for the full year.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, net sales and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to product returns, sales and purchase rebates, accounts receivable, inventories, goodwill and other intangible assets, net assets of acquired businesses, income taxes, warranty and product recall obligations, self-insurance obligations, operating lease ~~terminations,~~right-of-use assets and obligations, asset retirement obligations, long-lived assets, post-retirement benefits, stock-based compensation, segment allocations, contingent consideration, environmental liabilities, contingencies, and litigation. The Company bases its estimates on historical experience, other available information, and various other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities not readily apparent from other resources. Actual results and events could differ significantly from management estimates.

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Impact of COVID-19

On March 11, 2020, the ~~opinion~~World Health Organization declared the outbreak of ~~management,~~coronavirus ("COVID-19") a pandemic, and on March 13, 2020, the ~~information furnished~~United States declared a national emergency related to COVID-19. The pandemic has caused significant uncertainty and disruption in ~~this Form 10-Q reflects~~the global economy and financial markets.

On March 25, 2020, the Company issued a press release providing a business update regarding COVID-19, including that it was temporarily suspending production at select manufacturing facilities across North America and Europe. The temporary suspension of production was made on a plant-by-plant basis, consistent with government mandates or due to customer closures. Production at facilities considered essential continued, utilizing reduced staff in conjunction with heightened cleaning and sanitation processes. On April 8, 2020, the Company issued a press release with additional business updates related to COVID-19, including cost savings and cash preservation measures that it had taken, including temporary executive salary and director retainer reductions, rightsizing its workforce to match demand levels, delaying certain capital expenses and reducing or eliminating non-critical business expenses, initiating temporary hiring freezes in all ~~adjustments necessary~~locations and furloughs for ~~a fair statement~~non-critical team members, lease payment deferrals, postponing merit increases for salaried employees until the end of the fiscal year, and engaging with banking partners regarding options relative to future financial ~~position~~liquidity. Additionally, the April 8 press release announced community support initiatives including donations of personal protective equipment and other supplies throughout local communities, manufacturing medical face shields used by doctors and nurses in Italy, and the establishment of a temporary emergency fund to aid team members who have faced personal and financial difficulties due to the COVID-19 pandemic.

The Company resumed operations to varying degrees for the majority of its facilities on May 4, 2020 to meet the demand requirements of its customers. While the Company expects the COVID-19 pandemic to continue to negatively impact its results of operations, the extent to which COVID-19 may impact the Company's liquidity, financial condition, and results of operations ~~for the interim periods presented.~~ is uncertain.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Condensed Consolidated Financial Statements presented herein have been prepared by the Company in accordance with the ~~instructions~~accounting policies described in its December 31, 2019 Annual Report on Form 10-K and should be read in conjunction with the Notes to ~~Form 10-Q,~~Consolidated Financial Statements which appear in that report. All significant intercompany balances and ~~therefore do~~transactions have been eliminated.

Recent Accounting Pronouncements

Recently issued accounting pronouncements not ~~include some information necessary~~yet adopted

In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates certain exceptions within Accounting Standards Codification ("ASC") 740, Income Taxes, and clarifies certain aspects of the current guidance to ~~conform~~promote consistency among reporting entities. The new standard is effective for fiscal years beginning after December 15, 2021. Most amendments within the standard are required to ~~annual~~be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company is evaluating the effect of adopting this new accounting guidance.

Recently adopted accounting pronouncements

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which amends ASC 350, Intangibles - Goodwill and Other. This ASU simplifies how an entity is required to test goodwill for impairment by eliminating step 2 from the goodwill impairment test. Step 2 measures goodwill impairment loss by comparing the implied fair value of a reporting ~~requirements.~~unit’s goodwill with the carrying amount of that goodwill. The Company adopted this ASU effective January 1, 2020. The adoption did not have a material impact on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable forecasts. This ASU replaced the previous incurred loss model and is applicable to the measurement of credit losses on financial assets, including

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

trade receivables. The Company adopted this ASU effective January 1, 2020 using the modified retrospective transition method. The adoption did not have a material impact on the Company's consolidated financial statements.

3. ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

Acquisitions ~~During~~Completed in the ~~Nine Months Ended September 30, 2017~~First Quarter of 2020

~~Metallarte S.r.l.~~Polyplastic

In ~~June 2017,~~January 2020, the Company acquired 100 percent of the equity interests of ~~Metallarte S.r.l. (“Metallarte”~~Polyplastic Group B.V. (with its subsidiaries “Polyplastic”), a ~~manufacturer of entry and compartment doors for~~premier window supplier to the ~~European caravan market located near Siena, Italy, and its subsidiary, RV Doors, S.r.l., a manufacturer of driver-side doors located near Venice, Italy.~~caravanning industry, headquartered in Rotterdam, Netherlands. The purchase price was ~~$14.1~~$95.8 million, ~~paid at closing,~~net of cash acquired, plus contingent consideration up to $7.7 million, based on future sales by this operation. The results of the acquired business have been included ~~primarily in the Company’s OEM Segment and~~ in the Condensed Consolidated Statements of Income since the acquisition ~~date.~~date, primarily in the Company’s OEM Segment. As the acquisition of Polyplastic is not considered to have a material impact on the Company's financial statements, pro forma results of operations and other disclosures are not presented. The Company is validating account balances and finalizing the valuation for ~~the acquisition.~~

~~LCI INDUSTRIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~(Continued)~~

~~(Unaudited)~~

customer relationship and other identifiable intangible assets and net tangible assets. The acquisition of this business was preliminarily recorded on the acquisition date as follows~~(in~~ (in thousands):


Cash consideration, net of cash acquired	$	95,766
Contingent consideration	2,796
Total fair value of consideration given	$	98,562

Customer relationship and other identifiable intangible assets	$	53,674
Net tangible assets	7,234
Total fair value of net assets acquired	$	60,908

Goodwill (not tax deductible)	$	37,654

Cash consideration, net of cash acquired $ 13,501
Contingent consideration 2,366
Total fair value of consideration given $ 15,867

Customer relationships $ 7,000
Other identifiable intangible assets 2,150
Net tangible assets 167
Total fair value of net assets acquired $ 9,317

Goodwill (not tax deductible) $ 6,550

The customer ~~relationships~~relationship intangible asset is being amortized over its estimated useful life of 15 years. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in the markets for the acquired products.

~~Lexington~~Acquisitions with Measurement Period Adjustments in the First Quarter of 2020

CURT

In ~~May 2017,~~December 2019, the Company acquired 100 percent of the ~~business and certain assets~~equity interests of ~~Lexington LLC (“Lexington”~~CURT Acquisition Holdings, Inc. (with its subsidiaries “CURT”), a leading manufacturer and distributor of ~~high quality seating solutions~~branded towing products and truck accessories for the ~~marine, RV, transportation, medical and office furniture industries located~~aftermarket, headquartered in ~~Elkhart, Indiana.~~Eau Claire, Wisconsin. The purchase price was ~~$40.1~~$337.6 million, ~~paid at closing.~~net of cash acquired, and is subject to potential post-closing adjustments related to net working capital, which are not expected to be material. The results of the acquired business have been included ~~primarily in the Company’s OEM Segment and~~ in the Condensed Consolidated Statements of Income since the acquisition date, primarily in the Company’s Aftermarket Segment.

During the three months ended March 31, 2020, the Company adjusted the preliminary purchase price allocation reported at December 31, 2019 to account for updates to assumptions and estimates related to the fair value of intangible assets and inventories. These measurement period adjustments would not have resulted in a material impact on the prior period results if the adjustments had been recognized as of the acquisition date. ~~The Company is validating account balances and finalizing~~As of March 31, 2020, the valuation ~~for~~of amounts subject to net working capital adjustments are not complete. These amounts are subject to adjustment as additional information is obtained within the ~~acquisition.~~ measurement period (not to exceed 12 months from the acquisition date).

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The acquisition of this business was ~~preliminarily~~ recorded, as updated, on the acquisition date as follows (in thousands):


	Preliminary at December 31, 2019		Measurement Period Adjustments		As Adjusted at March 31, 2020
Cash consideration, net of cash acquired	$	337,640	$	—	$	337,640

Assets Acquired
Accounts receivable	$	28,611	$	—	$	28,611
Inventories	88,765		(6,648)		82,117
Fixed assets	24,036		—		24,036
Customer relationship	112,000		(7,800)		104,200
Tradename and other identifiable intangible assets	37,705		(300)		37,405
Operating lease right-of-use assets	27,925		—		27,925
Other tangible assets	4,060		(497)		3,563
Liabilities Assumed
Accounts payable	(18,577)		—		(18,577)
Current portion of operating lease obligations	(5,360)		—		(5,360)
Accrued expenses and other current liabilities	(10,002)		—		(10,002)
Operating lease obligations	(22,565)		—		(22,565)
Deferred taxes	(31,877)		1,752		(30,125)
Total fair value of net assets acquired	$	234,721	$	(13,493)	$	221,228

Goodwill (not tax deductible)	$	102,919	$	13,493	$	116,412

Cash consideration $ 40,062

Customer relationships $ 16,900
Other identifiable intangible assets 1,820
Net tangible assets 4,928
Total fair value of net assets acquired $ 23,648

Goodwill (tax deductible) $ 16,414

The fair values of the customer ~~relationships~~relationship and tradename intangible ~~asset is~~assets are being amortized over ~~its~~their estimated useful ~~life~~lives of 1516 years. and 20 years, respectively. The fair values of these assets were determined using a discounted cash flow model, which is a level 3 input in the fair value hierarchy. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in the markets for the acquired products.

~~Sessa Klein S.p.A.~~Lewmar Marine Ltd.

In ~~February 2017,~~August 2019, the Company acquired 100 percent of the ~~outstanding shares~~equity interests of ~~Sessa Klein S.p.A. (“Sessa Klein”~~Lewmar Marine Ltd. and related entities (collectively, “Lewmar”), a ~~manufacturer~~supplier of ~~highly engineered side window systems for both high speed and commuter trains, located near Varese, Italy.~~leisure marine equipment, headquartered in Havant, United Kingdom. The purchase price was ~~$8.5~~$43.2 million, ~~paid at closing, plus contingent consideration based on future sales by this operation.~~net of cash acquired. The results of the acquired business have been included ~~primarily in the Company’s OEM Segment and~~ in the Condensed Consolidated Statements of Income since the acquisition ~~date. The Company is validating account balances and finalizing the valuation for the acquisition.~~

~~LCI INDUSTRIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~(Continued)~~

~~(Unaudited)~~

~~The acquisition of this business was preliminarily recorded on the acquisition~~ date ~~as follows~~ ~~(in thousands)~~:

Cash consideration, net of cash acquired $ 6,502
Contingent consideration 4,922
Total fair value of consideration given $ 11,424

Customer relationships $ 3,189
Other identifiable intangible assets 1,329
Net tangible assets 585
Total fair value of net assets acquired $ 5,103

Goodwill (not tax deductible) $ 6,321

~~The customer relationships intangible asset is being amortized over its estimated useful life of~~ ~~15 years~~. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in the markets for the acquired products.

~~Acquisitions During the Nine Months Ended September 30, 2016~~

~~Project 2000 S.r.l.~~

In May 2016, the Company acquired 100 percent of the equity interest of Project 2000 S.r.l. (“Project 2000”), a manufacturer of innovative, space-saving bed lifts and retractable steps, located near Florence, Italy. The purchase price was $18.8 million paid at closing, plus contingent consideration based on future sales by this operation. The results of the acquired business have been included primarily in the Company’s OEM Segment and Aftermarket Segment. As the acquisition of Lewmar is not considered to have a material impact on the Company’s financial statements, pro forma results of operations and other disclosures are not presented.

During the three months ended March 31, 2020, the Company adjusted the preliminary purchase price allocation reported at December 31, 2019 to account for updates to assumptions and estimates related to the fair value of intangible assets and inventories. These measurement period adjustments would not have resulted in a material impact on the ~~Consolidated Statements~~prior period results if the adjustments had been recognized as of ~~Income since~~ the acquisition date. As of March 31, 2020, the valuations of customer relationships, other intangible assets, and fixed assets are not complete. These amounts are subject to adjustment as additional information is obtained within the measurement period (not to exceed 12 months from the acquisition date).

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The acquisition of this business was recorded, as updated, on the acquisition date as follows (in thousands):


	Preliminary at December 31, 2019		Measurement Period Adjustments		As Adjusted at March 31, 2020
Cash consideration, net of cash acquired	$	43,224	$	—	$	43,224

Customer relationship and other identifiable intangible assets	$	19,580	$	2,170	$	21,750
Net tangible assets	3,286		(705)		2,581
Total fair value of net assets acquired	$	22,866	$	1,465	$	24,331

Goodwill (not tax deductible)	$	20,358	$	(1,465)	$	18,893

Cash consideration, net of cash acquired $ 16,618
Contingent consideration 1,322
Total fair value of consideration given $ 17,940

Customer relationships $ 9,696
Other identifiable intangible assets 6,141
Net other liabilities (3,482 )
Total fair value of net assets acquired $ 12,355

Goodwill (not tax deductible) $ 5,585

~~Flair Interiors~~

In February 2016, the Company acquired the business and certain assets of Flair Interiors, Inc. (“Flair”), a manufacturer of RV furniture located in Goshen, Indiana. The purchase price was $8.1 million paid at closing. The results of the acquired business have been included primarily in the Company’s OEM Segment and in the Condensed Consolidated Statements of Income since the acquisition date.

~~LCI INDUSTRIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~(Continued)~~

~~(Unaudited)~~

~~The acquisition of this business was recorded on the acquisition date as follows~~ ~~(in thousands)~~:

Cash consideration $ 8,100

Customer relationships $ 3,700
Net other assets 2,378
Total fair value of net assets acquired $ 6,078

Goodwill (tax deductible) $ 2,022

The customer relationships intangible asset is being amortized over its estimated useful life of 15 years. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in the markets for the acquired products.

~~Highwater Marine Furniture~~

In January 2016, the Company acquired the business and certain assets of the pontoon furniture manufacturing operation of Highwater Marine, LLC (“Highwater”), a leading manufacturer of pontoon and other recreational boats located in Elkhart, Indiana. The purchase price was $10.0 million paid at closing. The results of the acquired business have been included primarily in the Company’s OEM Segment and in the Condensed Consolidated Statements of Income since the acquisition date. The acquisition of this business was recorded on the acquisition date as follows ~~(in thousands)~~:

Cash consideration $ 10,000

Customer relationships $ 8,100
Net tangible assets 1,307
Total fair value of net assets acquired $ 9,407

Goodwill (tax deductible) $ 593

The customer relationships intangible asset is being amortized over its estimated useful life of 15 years. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates leveraging its existing experience and manufacturing capacity with respect to these product lines.

Goodwill

Goodwill by reportable segment was as follows:


(In thousands)	OEM Segment		Aftermarket Segment		Total
Net balance – December 31, 2019	$	215,620	$	135,494	$	351,114
Acquisitions – 2020	37,654		—		37,654
Measurement period adjustments	(586)		12,613		12,027
Foreign currency translations	(1,152)		(283)		(1,435)
Net balance – March 31, 2020	$	251,536	$	147,824	$	399,360

(In thousands) OEM Segment Aftermarket Segment Total
Net balance – December 31, 2016 $ 74,663
$ 14,535
$ 89,198
Acquisitions – 2017 29,277
—
29,277
Other 4,519
7
4,526
Net balance – September 30, 2017 $ 108,459
$ 14,542
$ 123,001

Goodwill represents the excess of the total consideration given in an acquisition of a business over the fair value of the net tangible and identifiable intangible assets acquired. Goodwill is not amortized, but instead is tested at the reporting unit level for impairment annually in November, or more frequently if certain circumstances indicate a possible impairment may exist.

~~Changes in goodwill resulting from foreign currency translations and purchase accounting adjustments are presented as “Other” in the above table.~~

~~LCI INDUSTRIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~(Continued)~~

~~(Unaudited)~~

Other Intangible Assets

Other intangible assets consisted of the following at ~~September 30, 2017:~~March 31, 2020:


(In thousands)	Gross Cost		Accumulated Amortization		Net Balance		Estimated Useful Life in Years
Customer relationships	$	344,078	$	75,473	$	268,605	6	to	16
Patents	87,989		45,970		42,019		3	to	19
Trade names (finite life)	60,823		8,284		52,539		3	to	20
Trade names (indefinite life)	7,600		—		7,600		Indefinite
Non-compete agreements	7,598		5,244		2,354		3	to	6
Other	309		181		128		2	to	12
Purchased research and development	4,687		—		4,687		Indefinite
Other intangible assets	$	513,084	$	135,152	$	377,932

(In thousands) Gross
Cost Accumulated
Amortization Net
Balance Estimated Useful
Life in Years
Customer relationships $ 138,941
$ 39,792
$ 99,149
6 to 16
Patents 57,416
37,277
20,139
3 to 19
Trade names 10,416
4,708
5,708
3 to 15
Non-compete agreements 8,479
3,609
4,870
3 to 6
Other 309
101
208
2 to 12
Purchased research and development 4,687
—
4,687
Indefinite
Other intangible assets $ 220,248
$ 85,487
$ 134,761

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~Other intangible assets consisted of the following at September 30, 2016:~~(Unaudited)

(In thousands) Gross
Cost Accumulated
Amortization Net
Balance Estimated Useful
Life in Years
Customer relationships $ 106,316
$ 30,226
$ 76,090
6 to 16
Patents 55,172
32,290
22,882
3 to 19
Trade names 9,876
5,332
4,544
3 to 15
Non-compete agreements 4,569
3,460
1,109
3 to 6
Other 309
68
241
2 to 12
Purchased research and development 4,687
—
4,687
Indefinite
Other intangible assets $ 180,929
$ 71,376
$ 109,553

Other intangible assets consisted of the following at December 31, ~~2016:~~2019:


(In thousands)	Gross Cost		Accumulated Amortization		Net Balance		Estimated Useful Life in Years
Customer relationships	$	319,934	$	69,008	$	250,926	6	to	16
Patents	76,206		44,611		31,595		3	to	19
Trade names (finite life)	50,917		7,086		43,831		3	to	20
Trade names (indefinite life)	7,600		—		7,600		Indefinite
Non-compete agreements	7,598		4,947		2,651		3	to	6
Other	309		173		136		2	to	12
Purchased research and development	4,687		—		4,687		Indefinite
Other intangible assets	$	467,251	$	125,825	$	341,426

(In thousands) Gross
Cost Accumulated
Amortization Net
Balance Estimated Useful
Life in Years
Customer relationships $ 110,784
$ 32,414
$ 78,370
6 to 16
Patents 56,468
34,066
22,402
3 to 19
Trade names 10,041
5,667
4,374
3 to 15
Non-compete agreements 5,852
2,975
2,877
3 to 6
Other 309
76
233
2 to 12
Purchased research and development 4,687
—
4,687
Indefinite
Other intangible assets $ 188,141
$ 75,198
$ 112,943

~~LCI INDUSTRIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~(Continued)~~

~~(Unaudited)~~

3.4. INVENTORIES

Inventories ~~valued~~are stated at the lower of cost (first-in, first-out (FIFO) method) or ~~market,~~net realizable value. Cost includes material, labor, and overhead. Inventories consisted of the following at:


	March 31,		December 31,
(In thousands)	2020		2019
Raw materials	$	222,732	$	256,850
Work in process	17,307		23,653
Finished goods	110,475		113,104
Inventories, net	$	350,514	$	393,607

September 30, December 31,
(In thousands) 2017 2016 2016
Raw materials $ 191,680
$ 127,708
$ 155,044
Work in process 10,562
11,227
7,509
Finished goods 27,521
22,377
26,190
Inventories, net $ 229,763
$ 161,312
$ 188,743

Fixed assets consisted of the following at:


	March 31,		December 31,
(In thousands)	2020		2019
Fixed assets, at cost	$	697,531	$	678,367
Less accumulated depreciation and amortization	325,418		312,058
Fixed assets, net	$	372,113	$	366,309

September 30,
December 31,
(In thousands) 2017 2016 2016
Fixed assets, at cost $ 396,789
$ 313,057
$ 337,362
Less accumulated depreciation and amortization 186,485
159,890
164,614
Fixed assets, net $ 210,304
$ 153,167
$ 172,748

5.6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following at:


	March 31,		December 31,
(In thousands)	2020		2019
Employee compensation and benefits	$	31,479	$	45,612
Current portion of accrued warranty	28,643		29,898

Customer rebates	14,133		14,129
Other	46,302		42,781
Accrued expenses and other current liabilities	$	120,557	$	132,420

September 30, December 31,
(In thousands) 2017 2016 2016
Employee compensation and benefits $ 42,646
$ 45,299
$ 47,459
Current portion of accrued warranty 23,558
19,607
20,393
Taxes payable 5,613
—
41
Customer rebates 11,120
10,998
9,329
Other 26,912
21,829
21,513
Accrued expenses and other current liabilities $ 109,849
$ 97,733
$ 98,735

Estimated costs related to product warranties are accrued at the time products are sold. In estimating its future warranty obligations, the Company considers various factors, including the Company’s (i) historical warranty costs, (ii) current trends,

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(iii) product mix, and (iv) sales. The following table provides a reconciliation of the activity related to the Company’s accrued warranty, including both the current and long-term portions, for the ~~nine~~three months ended ~~September 30:~~March 31:


(In thousands)	2020		2019
Balance at beginning of period	$	47,167	$	46,530
Provision for warranty expense	5,879		9,616

Warranty costs paid	(6,603)		(6,734)
Balance at end of period	46,443		49,412
Less long-term portion	17,800		14,550
Current portion of accrued warranty at end of period	$	28,643	$	34,862

(In thousands) 2017 2016
Balance at beginning of period $ 32,393
$ 26,204

Provision for warranty expense 18,570
15,494

Warranty liability from acquired businesses 150
125

Warranty costs paid (13,963 ) (10,833 )
Balance at end of period 37,150
30,990

Less long-term portion 13,592
11,383

Current portion of accrued warranty $ 23,558
$ 19,607

~~LCI INDUSTRIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~(Continued)~~

~~(Unaudited)~~

6.7. LONG-TERM INDEBTEDNESS

~~At September 30, 2017 and 2016, and December 31, 2016,~~Long-term indebtedness consisted of the ~~Company had no outstanding borrowings on its line of credit.~~following at:


	March 31,		December 31,
(In thousands)	2020		2019
Revolving Credit Loan	$	408,310	$	266,214
Term Loan	296,250		300,000
Shelf-Loan Facility	50,000		50,000
Other	15,903		16,349
Unamortized deferred financing fees	(1,645)		(1,774)
	768,818		630,789
Less current portion	(18,299)		(17,883)
Long-term indebtedness	$	750,519	$	612,906

Amended Credit Agreement

On ~~April 27, 2016,~~December 14, 2018, the Company refinanced its ~~line of~~ credit ~~through an~~ agreement with JPMorgan Chase, ~~Bank,~~ N.A., Wells Fargo Bank, N.A., Bank of America, N.A., and ~~1st Source Bank. The agreement~~other bank lenders (as amended, ~~and restated~~ the ~~existing line of credit, which now expires on April 27, 2021 (the~~ “Amended Credit Agreement”). ~~In connection with this amendment~~The Amended Credit Agreement amended and ~~restatement,~~restated an existing credit agreement dated April 27, 2016 and now expires on December 14, 2023. The Amended Credit Agreement increased the ~~line of~~revolving credit ~~was increased~~facility from ~~$100.0~~$325.0 million to ~~$200.0~~$600.0 million, and ~~contains a feature allowing~~permits the Company to ~~draw~~borrow up to ~~$50.0~~$250.0 million in approved foreign currencies, including Australian dollars, Canadian dollars, ~~pound~~pounds sterling, and ~~euros.~~euros ($138.3 million, or €126.0 million drawn at March 31, 2020).

On December 19, 2019, the Company entered into an Incremental Joinder and Amendment No. 1 (“Amendment No. 1”) of the Amended Credit Agreement with several banks, which provided an incremental term loan in the amount of $300.0 million, which the Company borrowed to fund a portion of the purchase price for the acquisition of CURT. The ~~maximum borrowings~~term loan is required to be repaid in an amount equal to 1.25% of original principal amount of the term loan for the first eight quarterly periods commencing March 31, 2020, and then 1.875% of the original principal amount of the term loan for each quarter thereafter, until the maturity date of December 14, 2023. In addition, Amendment No. 1 modified the credit agreement to allow the Company to request an increase to the facility of up to an additional $300.0 million as an increase to the revolving credit facility or one, or more, incremental term loan facilities upon approval of the lenders and the Company receiving certain other consents. As a result of the new incremental term loan, the total borrowing capacity under the ~~line of credit can be further~~Amended Credit Agreement was increased ~~by $125.0~~from $600.0 million ~~subject~~ to ~~certain conditions.~~ $900.0 million.

Interest on borrowings under the ~~line of~~revolving credit isfacility and incremental term loan are designated from time to time by the Company as either (i) the Alternate Base Rate (defined in the Amended Credit Agreement as the greatest of (a) the Prime Rate of JPMorgan Chase Bank, N.A., (b) the federal funds effective rate plus 0.5 percent, and (c) the Adjusted LIBO Rate (as defined in the Amended Credit Agreement) for a one month interest period plus 1.0 percent), plus additional interest ranging from 0.0 percent to 0.625 percent ~~(0.0~~(0.4 percent at ~~September 30, 2017)~~March 31, 2020) depending on the Company’s ~~performance and financial condition,~~total net leverage ratio, or (ii) the Adjusted LIBO Rate for a period equal to one, two, three, six, or twelve months (with the consent of each lender) as selected by the Company, plus additional interest ranging from ~~1.0~~1.000 percent to 1.625 percent ~~(1.0~~(1.000 percent at ~~September 30, 2017)~~March 31, 2020) depending on the Company’s ~~performance and financial condition.~~total net leverage ratio. At ~~September 30, 2017 and 2016,~~March 31, 2020, the Company had ~~$2.4~~$2.7 million ~~and $2.5 million, respectively,~~ in

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

issued, but undrawn, standby letters of credit under the ~~line of credit.~~revolving credit facility. Availability under the Company’s ~~line of~~revolving credit facility was ~~$197.6~~$191.7 million at ~~September 30, 2017.~~March 31, 2020.

On February 24, 2014, the Company entered into a $150.0 million ~~“shelf-loan”~~shelf-loan facility (as amended and restated, the “Shelf-Loan Facility”) with PGIM, Inc. (formerly Prudential Investment Management, Inc.) and its affiliates (“Prudential”). On March 20, 2015, the Company issued $50.0 million of Senior Promissory Notes (“Series A Notes”) to Prudential for a term of five years, at a fixed interest rate of 3.35 percent per annum, payable quarterly in arrears. On March 29, 2019, the Company issued $50.0 million of Series B Senior Notes (the “Series B Notes”) to certain affiliates of Prudential for a term of three years, at a fixed interest rate of 3.80 percent per annum, payable quarterly in arrears, of which the entire amount was outstanding at ~~September 30, 2017. At September 30, 2017, the fair value~~March 31, 2020. The net proceeds of the ~~Company’s long-term debt approximates~~Series B Notes were used to repay the ~~carrying value, as estimated using quoted market prices and discounted future cash flows based on similar borrowing arrangements.~~

Series A Notes. On ~~March 30, 2017,~~November 11, 2019, the Company amended ~~its “shelf-loan”~~and restated the Shelf-Loan Facility to provide for a new $200.0 million shelf facility pursuant to ~~extend~~which the ~~term through~~Series B Notes are currently outstanding and to conform certain covenants to the Amended Credit Agreement. On March ~~30, 2020. In connection with this amendment,~~31, 2020, the ~~facility~~Company entered into a Consent and Amendment to the Shelf-Loan Facility to join certain Company subsidiaries that were acquired in the CURT acquisition as guarantors and permit other internal restructuring matters related to certain of the Company's subsidiaries. The Shelf-Loan Facility expires on November 11, 2022.

The Shelf-Loan Facility provides for Prudential to consider purchasing, at the Company’s request, in one or a series of transactions, additional Senior Promissory Notes of the Company in the aggregate principal amount of up to $150.0 million (excluding the Company’s Series AB Notes already outstanding). Prudential has no obligation to purchase the Senior Promissory Notes. Interest payable on the Senior Promissory Notes will be at rates determined by Prudential within five business days after the Company issues a request to Prudential. ~~Availability under~~

At March 31, 2020, the fair value of the Company’s ~~“shelf-loan” facility was $150.0 million at September 30, 2017. However,~~long-term debt under the Amended Credit Agreement limits the aggregate indebtedness outstanding to Prudential from time to time to $150.0 million; therefore, currently the Company can only access an additional $100.0 million under the shelf-loan facility. The Company is currently discussing a proposed amendment to the Amended Credit Agreement with JPMorgan Chase and the ~~other lenders to address this limitation.~~Shelf-Loan Facility approximates the carrying value, as estimated using quoted market prices and discounted future cash flows based on similar borrowing arrangements.

Borrowings under both the ~~line of credit~~Amended Credit Agreement and the ~~“shelf-loan” facility~~Shelf-Loan Facility are secured on a pari-passu basis by first priority liens on the capital stock or other equity interests of the Company’s direct and indirect ~~subsidiaries (including up to 65 percent of the equity interest of certain “controlled foreign corporations.”)~~subsidiaries.

Pursuant to the Amended Credit Agreement and ~~“shelf-loan” facility,~~Shelf-Loan Facility, the Company ~~is required~~shall not permit its net leverage ratio to exceed certain limits, shall maintain a minimum ~~interest~~debt service coverage ratio, and ~~fixed charge coverages, and to~~must meet certain other financial requirements. At ~~September 30, 2017 and 2016,~~March 31, 2020, the Company was in compliance with all such ~~requirements, and expects to remain in compliance for the next twelve months.~~requirements.

~~Availability under both the~~The Amended Credit Agreement and the ~~“shelf-loan” facility is subject to~~Shelf-Loan Facility include a maximum net leverage ratio covenant which limits the amount of consolidated outstanding indebtedness ~~to 2.5 times~~that the Company may incur on a trailing twelve-month EBITDA, as defined. This limitation did not impact the Company’s ~~borrowing availability~~ability to incur additional indebtedness under its revolving credit facility at ~~September 30, 2017.~~March 31, 2020. The remaining availability under ~~these facilities~~the revolving credit facility and Shelf-Loan Facility was ~~$297.6~~$341.7 million at ~~September 30, 2017.~~March 31, 2020. The Company believes the availability under the ~~Amended Credit Agreement~~revolving credit facility and ~~“shelf-loan” facility is~~Shelf-Loan Facility, along with its cash flows from operations, are adequate to finance the Company’s anticipated cash requirements for the next twelve months.

The Company leases certain manufacturing and warehouse facilities, administrative office space, semi-tractors, trailers, forklifts, and other equipment through operating leases with unrelated third parties. The operating leases have remaining terms of up to 12 years and some leases include options to purchase, terminate, or extend for one or more years. The options are included in the lease term when it is reasonably certain the option will be exercised. Leases with an initial term of 12 months or less are recognized in lease expense on a straight-line basis over the lease term and not recorded on the Condensed Consolidated Balance Sheet.

Certain of the Company’s lease arrangements contain lease components (such as minimum rent payments) and non-lease components (such as common-area or other maintenance costs and taxes). The Company generally accounts for each component separately based on the estimated standalone price of each component. Some of the Company’s lease arrangements include rental payments that are adjusted periodically for an index rate. These leases are initially measured using the projected

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~(Continued)~~

(Unaudited)

payments in effect at the inception of the lease. Certain of the Company’s leased semi-tractors, trailers, and forklifts include variable costs for usage or mileage. Such variable costs are expensed as incurred and included in the variable lease cost item noted in the table below. The Company’s lease agreements do not contain any significant residual value guarantees or restrictive covenants. The components of lease cost for the three months ended March 31, 2020 and 2019 were as follows:


(in thousands)	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Operating lease cost	$	7,822	$	4,909
Short-term lease cost	878		798
Variable lease cost	621		406
Total lease cost	$	9,321	$	6,113

9. COMMITMENTS AND CONTINGENCIES

Contingent Consideration

In connection with several business acquisitions, if certain ~~sales~~performance targets for the acquired products are achieved, the Company ~~will be required to~~would pay additional cash consideration. The Company has recorded a liability for the fair value of this contingent consideration at ~~September 30, 2017 and 2016,~~March 31, 2020, based on the present value of the expected future cash flows using a market participant’s weighted average cost of capital of ~~13.6 percent and 12.4 percent, respectively.~~11.4 percent.

As required, the liability for this contingent consideration is measured at fair value quarterly, considering actual sales of the acquired products, updated sales projections, and the updated market participant weighted average cost of capital. Depending upon the weighted average costs of capital and future sales of the products which are subject to contingent consideration, the Company could record adjustments in future periods.

The following table provides a reconciliation of the Company’s contingent consideration liability for the ~~nine~~three months ended ~~September 30:~~March 31, 2020:

(In thousands) 2017 2016
Balance at beginning of period $ 9,241
$ 10,840
Acquisitions 7,288
1,322
Payments (2,574 ) (2,719 )
Accretion ^(a)
1,227
976
Fair value adjustments^(a)
1,204
1,046
Net foreign currency translation adjustment 659
—
Balance at end of the period^(b)
17,045
11,465
Less current portion in accrued expenses and other current liabilities (6,649 ) (4,984 )
Total long-term portion in other long-term liabilities $ 10,396
$ 6,481

Fair value adjustments^{(a) (b)}

Balance at ~~various dates through September 2029. Certain~~end of the ~~contingent consideration arrangements are subject to a maximum payment amount, while the remaining arrangements have no maximum contingent consideration.~~period^(c)

^(a) Recorded in selling, general and administrative expenses in the Condensed Consolidated Statements of Income.

^(b) Includes adjustments to assumptions on weighted average cost of capital and relevant sales projections.

^(c) Amount represents the fair value of estimated remaining payments. The total estimated remaining undiscounted payments as of March 31, 2020 were $8.7 million. The liability for contingent consideration expires at various dates through September 2029. Certain of the contingent consideration arrangements are subject to a maximum payment amount, while the remaining arrangements have no maximum contingent consideration.

Furrion Distribution and Supply Agreement

In July 2015, the Company entered into a ~~six-year~~six-year exclusive distribution and supply agreement with Furrion Limited (“Furrion”), a Hong Kong based firm that designs, engineers, and supplies premium electronics. This agreement ~~provides~~provided the Company with the rights to distribute Furrion’s complete line of products to OEMs and aftermarket customers in the RV,

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

specialty vehicle, utility trailer, horse trailer, marine, transit bus, manufactured housing, and school bus industries throughout the United States and Canada.

In August 2019, the Company and Furrion ~~currently supplies a premium line~~agreed to terminate the agreement effective December 31, 2019, and transition all sale and distribution of ~~televisions, sound systems, navigation systems, wireless backup cameras, solar prep units, power solutions, fireplaces and kitchen appliances, primarily~~Furrion products then handled by the Company to Furrion. Effective January 1, 2020, Furrion is responsible for distributing its products directly to the ~~RV industry.~~

~~In connection with this agreement,~~customer and assumed all responsibilities previously carried out by the Company ~~entered into minimum purchase obligations (“MPOs”), which~~relating to Furrion and the Company agreed to review after the first year on an annual basis and adjust as necessary based upon current economic and industry conditions, the development and customer acceptance of new Furrion products, competition and other factors which impact demand for Furrion products.

Subject to agreed upon revisions to the MPOs, Furrion has the right to either terminate the distribution agreement with six months’ notice or remove exclusivity from the Company if the Company misses an MPO in any given year by more than ten percent, after taking into account excess purchases from the previous year. If exclusivity is withdrawn, the Company at its election may terminate the distribution agreement with six months’ notice. Upon termination of the agreement, Furrion ~~has agreed to purchase~~purchased from the Company ~~any~~all non-obsolete ~~stocks~~stock and certain obsolete and slow-moving stock of Furrion products at the cost paid by the Company. At March 31, 2020 and December 31, 2019, the Company had receivables of $53.0 million and $40.0 million, respectively, recorded for purchases of inventory stock by Furrion. The agreement requires Furrion to make periodic payments throughout 2020 and the first six months of 2021.

~~LCI INDUSTRIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~(Continued)~~

~~(Unaudited)~~

From time to time, the Company cooperates with and assists its customers on their product recalls and inquiries, and occasionally receives inquiries directly from the National Highway Traffic Safety Administration ~~(“NHTSA”)~~ regarding reported incidents involving the Company’s products. As a result, the Company has incurred expenses associated with product recalls from time to time, and may incur expenditures for future investigations or product recalls.

The Company’s operations are subject to certain Federal, state, and local regulatory requirements relating to the use, storage, discharge, and disposal of hazardous materials used during the manufacturing processes. Although the Company believes its operations have been consistent with prevailing industry standards, and are in substantial compliance with applicable environmental laws and regulations, one or more of the Company’s current or former operating sites, or adjacent sites owned by ~~third parties,~~third-parties, have been affected, and may in the future be affected, by releases of hazardous materials. As a result, the Company may incur expenditures for future investigation and remediation of these sites, including in conjunction with voluntary remediation programs or third-party claims.

In the normal course of business, the Company is subject to proceedings, lawsuits, regulatory agency inquiries, and other claims. All such matters are subject to uncertainties and outcomes that are not predictable with assurance. While these matters could materially affect operating results when resolved in future periods, ~~it is management’s opinion~~management believes that, after final disposition, including anticipated insurance recoveries in certain cases, any monetary liability or financial impact to the Company beyond that provided in the Condensed Consolidated Balance Sheet as of ~~September 30, 2017,~~March 31, 2020, would not be material to the Company’s financial position or ~~annual~~ results of operations.

8.10. STOCKHOLDERS’ EQUITY

The following table summarizes information about shares of the Company’s common stock at:


	March 31,	December 31,
(In thousands)	2020	2019
Common stock authorized	75,000	75,000
Common stock issued	28,221	28,133
Treasury stock	3,087	3,087

September 30, December 31,
(In thousands) 2017 2016 2016
Common stock authorized 75,000
75,000
75,000
Common stock issued 27,625
27,308
27,434
Treasury stock 2,684
2,684
2,684

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following reconciliation details the denominator used in the computation of basic and diluted earnings per ~~share:~~

Nine Months Ended
September 30, Three Months Ended
September 30,
(In thousands) 2017 2016 2017 2016
Weighted average shares outstanding for basic earnings per share 24,993
24,587
25,060
24,724
Common stock equivalents pertaining to stock-based awards 339
295
399
336
Weighted average shares outstanding for diluted earnings per share 25,332
24,882
25,459
25,060

~~The weighted average diluted shares outstanding~~share for the nine months ended September 30, 2017 and 2016, exclude the effect of 117,223 and 219,302 shares of common stock, respectively, subject to stock-based awards. The weighted average diluted shares outstanding for the three months ended September 30, 2017 and 2016, exclude the effect of 64,353 and 171,514 shares of common stock, respectively, subject to stock-based awards. Such shares were excluded from total diluted shares because they were anti-dilutive or the specified performance conditions those shares were subject to were not yet achieved.periods indicated:


	Three Months Ended March 31,
(In thousands)	2020	2019
Weighted average shares outstanding for basic earnings per share	25,075	24,914
Common stock equivalents pertaining to stock-based awards	68	15
Weighted average shares outstanding for diluted earnings per share	25,143	24,929

Equity instruments excluded from diluted net earnings per share calculation as the effect would have been anti-dilutive	109	122

~~LCI INDUSTRIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~(Continued)~~

~~(Unaudited)~~

~~In 2016, the Company initiated the payment of regular quarterly dividends.~~ The table below summarizes the regular quarterly dividends declared and paid during the periods ended ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016:~~2019:

(In thousands, except per share data) Per Share Record Date Payment Date Total Paid
First Quarter 2016 $ 0.30
04/01/16 04/15/16 $ 7,344
Second Quarter 2016 0.30
06/06/16 06/17/16 7,363
Third Quarter 2016 0.30
08/19/16 09/02/16 7,371
Fourth Quarter 2016 0.50
11/28/16 12/09/16 12,359
Total 2016 $ 1.40
$ 34,437

First Quarter 2017 $ 0.50
03/06/17 03/17/17 $ 12,442
Second Quarter 2017 0.50
05/19/17 06/02/17 12,445
Third Quarter 2017 0.50
08/18/17 09/01/17 12,459
Nine Months Ended September 30, 2017 $ 1.50
$ 37,346

Deferred and Restricted Stock Units

~~In February 2017,~~

The LCI Industries 2018 Omnibus Incentive Plan (“the ~~Company issued 63,677~~2018 Plan”) provides for the grant or issuance of stock units, including those that have deferral periods, such as deferred stock units (“DSUs”), and those with time-based vesting provisions, such as restricted stock units (“RSUs”), to directors, employees, and other eligible persons. Recipients of DSUs and RSUs are entitled to receive shares at the ~~average price~~end of ~~$108.47,~~a specified vesting or ~~$6.9 million,~~deferral period. Holders of DSUs and RSUs receive dividend equivalents based on dividends granted to ~~executive~~holders of the common stock, which dividend equivalents are payable in additional DSUs and RSUs, and are subject to the same vesting criteria as the original grant.

DSUs vest (i) ratably over the service period, (ii) at a specified future date, or (iii) for certain officers, based on achievement of specified performance conditions. RSUs vest (i) ratably over the service period or (ii) at a specified future date. In addition, DSUs are issued in lieu of certain cash compensation.

Transactions in DSUs and RSUs under the LCI Industries Equity Award and Incentive Plan, as Amended and Restated (“the 2011 Plan”) or the 2018 Plan, as applicable, are summarized as follows:

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The 2011 Plan provides for ~~a portion of their 2016 incentive compensation. In February 2016,~~stock awards and the ~~Company issued 4,784 deferred~~2018 Plan provides for performance stock units (“PSUs”) that vest at a specific future date based on achievement of specified performance conditions.

Transactions in performance-based stock awards and PSUs under the ~~average price of $55.22,~~2011 Plan or ~~$0.3 million, to executive officers in lieu of cash for a portion of their 2015 incentive compensation.~~the 2018 Plan, as applicable, are summarized as follows:

The following table presents the Company’s ~~assets and~~ liabilities measured at fair value on a recurring basis at:


	March 31, 2020													December 31, 2019
(In thousands)	Total		Level 1		Level 2		Level 3	Total		Level 1		Level 2		Level 3


Liabilities
Contingent consideration	$	7,333	$	—	$	—	7,333	$	4,396	$	—	$	—	$	4,396
Derivative liabilities	165		—		165		—	679		—		679		—

September 30, 2017 December 31, 2016
(In thousands) Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
Assets
Unrealized gain on derivative
instruments $ 1,180
$ —
$ 1,180
$ —
$ 2,296
$ —
$ 2,296
$ —
Liabilities
Contingent consideration $ 17,045
$ —
$ —
$ 17,045
$ 9,241
$ —
$ —
$ 9,241

Contingent Consideration Related to Acquisitions

Liabilities for contingent consideration related to acquisitions were estimated at fair ~~valued~~value using management’s projections for long-term sales forecasts, including assumptions regarding market share gains and future industry-specific economic and market conditions, and a market participant’s weighted average cost of capital. Over the next six years, the Company’s long-term sales growth forecasts for products subject to contingent consideration arrangements average approximately 14 percent per year. For further information on the inputs used in determining the fair value, and a ~~roll-forward~~roll forward of the contingent consideration liability, see Note 79 of the Notes to Condensed Consolidated Financial Statements.

Changes in either of the inputs in isolation would result in a change in the fair value measurement. A change in the assumptions used for sales forecasts would result in a directionally similar change in the fair value liability, while a change in the weighted average cost of capital would result in a directionally opposite change in the fair value liability. If there is an increase in the fair value liability, the Company would record a charge to selling, general and administrative expenses, and if there is a decrease in the fair value liability, the Company would record a benefit in selling, general and administrative expenses.

Derivative Instruments

The Company’s objectives in using commodity derivatives are to add stability to expense and to manage its exposure to certain commodity price movements. To accomplish this objective, the Company uses commodity swaps as part of its commodity risk management strategy. Commodity swaps designated as cash flow hedges involve fixing the price on a fixed volume of a commodity on specified dates. The commodity swaps are typically cash settled for their fair value at or close to their settlement dates.

At ~~September 30, 2017,~~March 31, 2020, the Company had 1 commodity swap derivative ~~instruments~~instrument for ~~19.2~~a total of 2.0 million pounds of steel ~~in order~~used to ~~manage~~hedge its commodity price risk on a portion of the exposure to movements associated with steel ~~costs. These~~costs at an average

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

steel price of $0.34 per pound. This derivative expired in April 2020. At December 31, 2019, the Company had 6 commodity swap derivative instruments ~~expire through December 2018,~~for a total of 11.2 million pounds of steel at an average steel price of ~~$0.25~~$0.37 per pound. ~~While these derivative instruments~~These derivatives are ~~considered to be economic~~designated and qualify as cash flow hedges of commodity price risk; therefore, the

~~LCI INDUSTRIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~(Continued)~~

~~(Unaudited)~~

The following table presents the carrying value on the measurement date of any assets and liabilities which were measured at fair value and recorded at the lower of cost or fair value, on a non-recurring basis, using significant unobservable inputs (Level 3), and the corresponding non-recurring losses or (gains) recognized during the nine months ended September 30:

2017 2016
(In thousands) Carrying
Value Non-Recurring
Losses/(Gains) Carrying
Value Non-Recurring
Losses/(Gains)
Vacant owned facilities $ 2,464
$ —
$ 2,506
$ —
Net assets of acquired businesses 38,068
—
27,840
—
Total assets $ 40,532
$ —
$ 30,346
$ —

~~Vacant Owned Facilities~~

During the first nine months of 2017, the Company reviewed the recoverability of the carrying value of one vacant owned facility. At September 30, 2017, the Company had one vacant owned facility with an estimated fair value of over $3.0 million and a carrying value of $2.5 million, classified in fixed assets in the Condensed Consolidated Balance Sheets.

During the first nine months of 2016, the Company reviewed the recoverability of the carrying value of one vacant owned facility. At September 30, 2016, the Company had one vacant owned facility with an estimated fair value of over $3.0 million and a carrying value of $2.5 million, classified in fixed assets in the Condensed Consolidated Balance Sheets.

The determination of fair value was based on the best information available, including internal cash flow estimates, market prices for similar assets, broker quotes and independent appraisals, as appropriate.

~~Net Assets of Acquired Businesses~~

The Company valued the assets and liabilities associated with the acquisitions of businesses on the respective acquisition dates. Depending upon the type of asset acquired or liability assumed, the Company used different valuation techniques in determining the fair value. Those techniques included comparable market prices, long-term sales, profitability and cash flow forecasts, assumptions regarding future industry-specific economic and market conditions, a market participant’s weighted average cost of capital, as well as other techniques as circumstances required. For further information on acquired assets and assumed liabilities, see Note 2 of the Notes to Condensed Consolidated Financial Statements.

~~10.~~12. SEGMENT REPORTING

The Company has ~~two~~2 reportable segments, the OEM Segment and the Aftermarket Segment. Intersegment sales are insignificant.

The OEM Segment, which accounted for 9281 percent and 90 percent of consolidated net sales for ~~each of~~ the ~~nine month periods~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively, manufactures or distributes a broad array of engineered components for the leading OEMs in the recreation and transportation product markets, consisting of RVs and adjacent industries, including buses; trailers used to haul boats, livestock, equipment and other cargo; trucks; ~~pontoon~~ boats; trains; manufactured homes; and modular housing. Approximately 7158 percent of the Company’s OEM Segment net sales for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 were of components for travel trailer and fifth-wheel RVs.

The Aftermarket Segment, which accounted for 819 percent and 10 percent of consolidated net sales for ~~each of~~ the ~~nine month periods~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, respectively, supplies engineered components to the related aftermarket channels of the RVrecreation and ~~adjacent industries,~~

~~LCI INDUSTRIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~ ~~(Continued)~~

~~(Unaudited)~~

Decisions concerning the allocation of the Company’s resources are made by the Company’s chief operating decision maker (“CODM”), with oversight by the Board of Directors. The CODM evaluates the performance of each segment based upon segment operating profit or loss, generally defined as income or loss before interest and income taxes. Decisions concerning the allocation of resources are also based on each segment’s utilization of assets. Management of debt is a corporate function. The accounting policies of the OEM and Aftermarket Segments are the same as those described in Note 12 of the Notes to Consolidated Financial Statements of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019.

Information relating to segments follows for the:
Nine Months Ended
September 30, Three Months Ended
September 30,
(In thousands) 2017 2016 2017 2016
Net sales:
OEM Segment:
RV OEMs:
Travel trailers and fifth-wheels $ 1,045,465
$ 836,634
$ 357,940
$ 263,579
Motorhomes 114,887
85,762
41,595
29,373
Adjacent industries OEMs 310,373
253,088
106,386
82,963
Total OEM Segment net sales 1,470,725
1,175,484
505,921
375,915
Aftermarket Segment:
Total Aftermarket Segment net sales 129,908
100,515
48,893
36,455
Total net sales $ 1,600,633
$ 1,275,999
$ 554,814
$ 412,370
Operating profit:
OEM Segment $ 151,867
$ 144,102
$ 41,025
$ 39,049
Aftermarket Segment 18,229
16,152
6,902
6,089
Total operating profit $ 170,096
$ 160,254
$ 47,927
$ 45,138

~~11. NEW ACCOUNTING PRONOUNCEMENTS~~

~~In August 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-12,~~ ~~Targeted Improvements to Accounting for Hedging Activities,~~ ~~which amends ASC 815,~~ ~~Derivatives and Hedging.~~ This ASU better aligns an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. This ASU is effective for interim and annual reporting periods beginning after December 15, 2018, and early adoption is permitted. The ~~Company is evaluating the effect of adopting this new accounting guidance.~~

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation - Stock Compensation: Scope of Modification Accounting.~~ This ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The updated guidance is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. The Company does not believe the updated requirements will materially impactfollowing table presents the Company’s ~~consolidated financial statements.~~

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Simplifying the Test for Goodwill Impairment,~~ ~~which amends ASC 350,~~ ~~Intangibles - Goodwill~~revenues disaggregated by segment and ~~Other.~~ This ASU simplifies how an entity is required to test goodwill for impairment by eliminating step 2 from the goodwill impairment test. Step 2 measures goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. This ASU is effective for interim and annual reporting periods, beginning after December 15, 2019 with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impactgeography based on the billing address of the Company’s ~~consolidated financial statements.~~customers:

~~In January 2017,~~

^(a)Net sales to customers in the ~~FASB issued ASU 2017-01,~~ ~~Clarifying~~United States of America

^(b)Net sales to customers in countries domiciled outside of the ~~Definition~~United States of ~~a Business,~~ ~~which amends ASC 805,~~ ~~Business Combinations. This ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating~~America

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~(Continued)~~

(Unaudited)

~~whether transactions should be accounted for~~The following table presents the Company’s operating profit by segment:

The following table presents the Company’s revenue disaggregated by product:

13. SUBSEQUENT EVENTS

The full impact of the COVID-19 pandemic continues to evolve subsequent to the quarter ended March 31, 2020 and as ~~acquisition (or disposals)~~ of ~~assets or businesses. This ASU is effective for interim and annual reporting periods beginning after December 15, 2017.~~the date these unaudited condensed consolidated financial statements are issued. The ~~adoption of this ASU 2017-01 is not expected to~~full magnitude that the pandemic will have ~~a material impact~~ on the ~~Company’s consolidated~~Company's financial ~~statements.~~

~~In August 2016,~~condition, liquidity, and future results of operations is uncertain and will depend on future developments, including the ~~FASB issued ASU 2016-15,~~ ~~Classification~~duration and spread of ~~Certain Cash Receipts~~the outbreak and ~~Cash Payments~~,the length of government-mandated stay-at-home orders, all of which ~~amends ASC 230,~~ ~~Statement~~are highly uncertain and cannot be predicted at this time. The COVID-19 pandemic has caused business disruption to the Company, including the temporary suspension of ~~Cash Flows~~. This ASU provides guidance on the statement of cash flows presentation of certain transactions where diversity in practice exists. This ASU is effective for annual and interim periods beginning after December 15, 2017, and should be applied retrospectively with early adoption permittedoperations at the ~~beginning~~majority of an interim or annual reporting period. The Company is evaluating the effect of adopting this new accounting guidance, but does not expect adoption will have a material impact on the Company’s consolidated financial statements.its manufacturing facilities.

~~In March 2016, the FASB issued ASU 2016-09,~~ ~~Improvements to Employee Share-Based Payment Accounting, which amended ASC 718,~~ ~~Compensation - Stock Compensation. This ASU simplifies several aspects~~As part of the ~~accounting~~Company's contingency planning efforts related to the pandemic, on April 8, 2020, the Company issued a press release with business updates related to COVID-19, including cost savings and cash preservation measures that it had taken, including temporary executive salary and director retainer reductions, rightsizing its workforce to match demand levels, delaying certain capital expenses and reducing or eliminating non-critical business expenses, initiating temporary hiring freezes in all locations and furloughs for ~~share-based~~non-critical team members, lease payment ~~transactions, including income tax consequences,~~deferrals, postponing merit increases for salaried employees until the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. Under the new standard, all excess tax benefits and tax deficiencies are recorded as a componentend of the provision for income taxes in the reporting period in which they occur. Additionally, ASU 2016-09 requires that the Company present excess tax benefits on the consolidated statement of cash flows as an operating activity. The adoption of the ASU resulted in the recognition of excess tax benefits in the provision for income taxes within the Condensed Consolidated Financial Statements of $5.2 million for the nine months ended September 30, 2017. Additionally, the Condensed Consolidated Statement of Cash Flows now present excess tax benefits as an operating activity, adjusted prospectively. Finally, the Company electedfiscal year, and engaging with banking partners regarding options relative to continue to estimate forfeitures based on historical data and recognizes forfeiture compensation expense over the vesting period of the award. The Company adopted ASU 2016-09 in the first quarter of 2017 and elected to apply this adoption prospectively. Prior periods have not been adjusted.future financial liquidity.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~. This ASU requires, in most instances, a lessee to recognize on its balance sheet a liability to make lease payments (the lease liability) and also a right-of-use asset representing its right to use the underlying asset for the lease term. The amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those periods, using a modified retrospective approach with early adoption permitted. The Company is evaluating the effect of adopting this new accounting guidance.

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~. This ASU outlines a single, comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance issued by the FASB, including industry specific guidance. ASU 2014-09 provides accounting guidance for all revenue arising from contracts with customers and affects all entities that enter into contracts with customers to provide goods and services. The guidance also provides a model for the measurement and recognition of gains and losses on the sale of certain non-financial assets, such as property and equipment, including real estate. ASU 2014-09 is effective for annual reporting periods, including interim reporting periods within those periods, beginning after December 15, 2017. The new standard must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. ASU 2014-09 also requires entities to disclose both quantitative and qualitative information to enable users of the financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers.

The Company ~~does not anticipate~~resumed operations to varying degrees for the ~~adoption~~majority of ~~this standard will have a material impact~~its facilities on its reported current net sales; however, given its acquisition strategy, there may be additional revenue streams acquired prior to the adoption date. The Company’s technical analysis is on-going with respect to variable consideration, whether certain contracts’ revenues will be recognized over time or at a point in time, and whether costs to obtain a contract will be capitalized. Further, the Company is continuing to assess what disaggregated revenue disclosures, in addition to current disclosures in Note 10 - Segment Reporting, will be required in its consolidated financial statements. The Company plans to adopt ASU 2014-09 using the modified retrospective approach on January 1, 2018.

LCI INDUSTRIES

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company’s Condensed Consolidated Financial Statements and Notes thereto included in Item 1 of Part 1 of this Report, as well as the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019.

LCI Industries (“LCII”, and collectively with its subsidiaries, the ~~“Company”~~“Company,” “we,” “us,” or “our”), through its wholly-owned subsidiary, Lippert Components, Inc. and its subsidiaries (collectively, “Lippert Components” or “LCI”), supplies, domestically and internationally, a broad array of engineered components for the leading original equipment manufacturers (“OEMs”) in the recreation and transportation product markets, consisting of recreational vehicles (“RVs”) and adjacent industries, including buses; trailers used to haul boats, livestock, equipment, and other cargo; trucks; ~~pontoon~~ boats; trains; manufactured homes; and modular housing. The Company also supplies engineered components to the related aftermarkets of these industries, primarily by selling to retail dealers, wholesale distributors, and service centers.

The Company has two reportable segments, the OEM Segment and the Aftermarket Segment. Intersegment sales are insignificant. At ~~September 30, 2017,~~March 31, 2020, the Company operated 52over 90 manufacturing and distribution facilities located throughout the United States and in Canada, Ireland, Italy, Netherlands, and ~~Italy.~~the United Kingdom. See Note 1012 of the Notes to ~~the~~ Condensed Consolidated Financial ~~Statements.~~Statements for further information regarding the Company’s segments.

The Company’s OEM Segment manufactures or distributes a broad array of engineered components for the leading OEMs of ~~RVs~~leisure and ~~adjacent~~mobile transportation industries. Approximately 7161 percent of the Company’s OEM Segment net sales for the twelve months ended ~~September 30, 2017~~March 31, 2020 were of components for travel trailer and fifth-wheel RVs, including:



● Steel chassis and related components		● ~~Furniture~~Entry, luggage, patio, and ~~mattresses~~ramp doors
● Axles and suspension solutions		● Furniture and mattresses
● Slide-out mechanisms and solutions		● Electric and manual entry steps
~~● Slide-out mechanisms and solutions~~		~~● Awnings and awning accessories~~
● Thermoformed bath, kitchen, and other products	● ~~Electronic components~~Awnings and awning accessories
● Vinyl, aluminum, and frameless windows		● ~~Appliances~~Electronic components
● Manual, electric, and hydraulic stabilizer and leveling systems		~~● Televisions, sound systems, navigation~~ ~~systems and backup cameras~~
~~● Entry, luggage, patio and ramp doors~~	● Other accessories

The Aftermarket Segment supplies many of these engineered components to the related aftermarket channels of the RVrecreation and ~~adjacent industries,~~transportation product markets, primarily to retail dealers, wholesale distributors, and service centers. The Aftermarket Segment also includes biminis, covers, buoys, fenders to the marine industry, towing products, truck accessories, and the sale of replacement glass and awnings to fulfill insurance claims.

Most industries where the Company sells products or where its products are used historically have been seasonal and are generally at the highest levels when the weather is moderate. Accordingly, the Company’s sales and profits have generally been the highest in the second quarter and lowest in the fourth quarter. However, because of fluctuations in dealer inventories, the impact of international, national and regional economic conditions, ~~and~~ consumer confidence on retail sales of RVs and other products for which the Company sells its components, the timing of dealer orders, and the impact of severe weather conditions on the timing of industry-wide shipments from time to time, current and future seasonal industry trends may be different than in prior ~~years.~~years, particularly as a result of the COVID-19 pandemic and related impacts. Additionally, many of the optional upgrades and non-critical replacement parts for RVs are purchased outside the normal product selling season, thereby causing these Aftermarket Segment sales to be counter-seasonal, but may be different in 2020 and future years as a result of ~~components~~the COVID-19 pandemic and related impacts.

On March 11, 2020, the World Health Organization declared the outbreak of coronavirus ("COVID-19") a pandemic, and on March 13, 2020 the United States declared a national emergency related to COVID-19. The pandemic has caused significant uncertainty and disruption in the global economy and financial markets. For risks relating to the COVID-19 outbreak, see Item 1A. Risk Factors in Part II of this Report.

LCI INDUSTRIES

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Continued)

During this unprecedented crisis, the health and safety of the Company's team members has remained the top priority. The Company instituted a travel ban for all team members in early March and on March 25, 2020, the Company issued a press release providing a business update regarding COVID-19, including that it was temporarily suspending production at select manufacturing facilities across North America and Europe. The temporary suspension of production was made on a plant-by-plant basis, consistent with government mandates or due to customer closures. Production at facilities considered essential continued, utilizing reduced staff in conjunction with heightened cleaning and sanitation processes. Employees that do not need to be physically present on the manufacturing floor to perform their work were required to work from home. The Company implemented a number of actions to ensure adherence to guidelines set forth by the World Health Organization and the Centers for Disease Control and Prevention.

As the Company continues to operate at certain facilities considered essential, and also prepares to resume production at temporarily suspended facilities, the Company has enacted rigorous health and safety protocols. For example, the Company implemented health screenings of employees for potential symptoms, conducts extensive and frequent disinfecting of workspaces, implemented social distancing restrictions for production personnel, and provided masks to team members who must be physically present.

As a result of the COVID-19 pandemic, governmental authorities have implemented and are continuing to implement numerous and constantly evolving measures in attempts to contain the virus, such as travel bans and restrictions, limits on gatherings, quarantines, shelter-in-place orders, and business shutdowns. The Company temporarily suspended production at certain facilities, starting with locations in Italy and other parts of Europe. Certain of the Company's North American operations, which were considered non-essential, were temporarily suspended starting the last week of March, negatively impacting the Company's results of operations for the first quarter of 2020, especially in the OEM Segment.

The Company instituted several cost saving and cash preservation measures in late March and April in an effort to conserve liquidity and mitigate the impact of lost revenue from suspended operations. The following list includes many, but not all, of the cost savings and cash preservation measures employed to date:

•temporary layoffs of production employees at suspended facilities;

•salary reductions for executive leadership team;

•reduction of the quarterly retainer for the Board of Directors;

•elimination of discretionary spending;

•delay of non-essential capital expenditures;

•deferral of lease payments to lessors;

•temporary hiring freezes and furloughs of non-critical team members; and

•postponing merit increases for salaried employees until the end of the fiscal year.

The Company cannot assure you that these cost-saving efforts will be successful in mitigating the impact of the COVID-19 pandemic on its business, liquidity, results of operations, or financial condition.

Current expectations are that many of the OEM customers the Company supplies in North America are planning to resume operations in early May 2020 at reduced capacity to fulfill retail dealer backlog orders. The Company resumed operations to varying degrees for the majority of its facilities on May 4, 2020 to meet the demand requirements of its customers. The current plans are subject to change as the ultimate duration and impact of the COVID-19 pandemic on the Company's and its customers' operations is presently unclear.

Customers and Demand

Prior to the COVID-19 impact in mid-March, the RV industry experienced a return to positive retail sales growth. This growth concluded 16 months of consecutive year-over-year declines, and provided an indication that the inventory re-balancing

LCI INDUSTRIES

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Continued)

the industry had been addressing had reached its conclusion. As a result of the COVID-19 pandemic and many government mandated stay-at-home orders and campground closures, retail sales abruptly declined.

While many of the Company's OEM channels experienced an abrupt decline in sales, many aftermarket channels remained open throughout the period as dealerships remained open to service customers' products. As government mandated closures are lifted, the Company anticipates the aftermarket channels to experience improvement ahead of ~~these~~other OEM channels as the consumer looks to alter their summer vacation plans.

The Company is in constant communication with its OEM customers in regards to their plans to resume operations and is poised and ready to ramp up production to meet its customers' demand. As noted above, current expectations are for many North American RV and marine customers to resume production in early May and the Company resumed operations to varying degrees at the majority of its facilities on May 4, 2020. Some production had already resumed in certain of the Company's European facilities in April 2020. The Company is also closely monitoring cash collections of its trade receivables, and to date has not identified any significant collection concerns with its customers.

The Company expects retail demand may eventually see a positive impact following the COVID-19 pandemic, as interest rates and fuel prices remain at historic lows, both favorable for the industries ~~tend~~the Company serves, and retail consumers may look for vacation options that avoid large gatherings and allow for social distancing. The end products for many of the markets the Company supplies, such as RVs and boats, could provide safer alternatives for vacations and recreation as opposed to air travel, visiting large cities, theme parks, and cruises. However, given the significant negative effects and uncertainties associated with the COVID-19 pandemic, other impacts, such as long-term U.S. and global economic disruptions, may be ~~counter-seasonal.~~counter to, and outweigh, any potential positive vacation and recreation factors.

The Company has not yet experienced any significant impacts or interruptions to its supply chain as a result of the COVID-19 pandemic. However, certain of our suppliers have or are expected to face difficulties maintaining operations due to government-ordered restrictions and shelter-in-place mandates. Although we regularly monitor the financial health of companies in the Company's supply chain, financial hardship on the Company's suppliers caused by the COVID-19 pandemic could cause a disruption in the Company's ability to obtain raw materials or components required to manufacture its products, adversely affecting operations. To mitigate the risk of any potential supply chain interruptions from the COVID-19 pandemic, the Company increased certain inventory levels during the first quarter of 2020. Additionally, restrictions or disruptions of transportation, such as reduced availability of air transport, port closures, and increased border controls or closures, could result in higher costs or delays, which could harm our profitability, make our products less competitive, or cause our customers to seek alternative suppliers.

In response to the COVID-19 pandemic, the Company borrowed a series of draws under its revolving credit facility to increase its cash position and improve financial flexibility in March and April 2020. As of April 30, 2020, the Company had outstanding borrowings on its revolving credit facility of $438.0 million, with $159.3 million of availability in addition to $191.3 million of cash on hand. See "Liquidity and Capital Resources - Credit Facilities" section below for further discussion on liquidity.

In August 2019, the Company and Furrion agreed to terminate their distribution and supply agreement effective December 31, 2019, and transition all sale and distribution of Furrion products then handled by the Company to Furrion. Effective January 1, 2020, Furrion is responsible for distributing its products directly to the customer and assumed all responsibilities previously carried out by the Company relating to Furrion products. Upon termination of the agreement, Furrion purchased from the Company all non-obsolete stock and certain obsolete and slow-moving stock of Furrion products at the cost paid by the Company. At March 31, 2020 the Company had receivables of $53.0 million recorded for purchases of inventory stock by Furrion. The agreement requires Furrion to make periodic payments throughout 2020 and the first six months of 2021.

LCI INDUSTRIES

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Continued)

Due to the nature of the Furrion distribution and supply arrangement, the historical operating margin related to sales of Furrion products were dilutive to the Company's consolidated operating margin. Sales of Furrion products included in the historical results of the Company are presented below by period and by market within the Company's segments.

North American Recreational Vehicle Industry

An RV is a vehicle designed as temporary living quarters for recreational, camping, travel or seasonal use. RVs may be motorized (motorhomes) or towable (travel trailers, fifth-wheel travel trailers, folding camping trailers and truck campers).

The annual sales cycle for the RV industry generally starts in October after the “Open House” in Elkhart, Indiana where many of the largest RV OEMs display product to RV retail dealers and ends after the conclusion of the summer selling season in September in the following calendar year. Between October and March, industry-wide wholesale shipments of travel trailer and fifth-wheel RVs have historically exceeded retail sales as dealers build inventories to support anticipated sales. Between April and September, the spring and summer selling seasons, retail sales of travel trailer and fifth-wheel RVs have historically exceeded industry-wide wholesale shipments. The seasonality of the RV industry has been, and will likely continue to be, impacted by the COVID-19 pandemic, and the timing of a return to the historical seasonality is not possible to predict at this time.

According to the Recreation Vehicle Industry Association ("RVIA"), industry-wide wholesale shipments from the United States of travel trailer and fifth-wheel RVs in the first quarter of 2020, the Company’s primary RV market, increased 4 percent to 88,000 units, compared to 2019. The increase was a result of RV dealers seasonally increasing inventory levels by an estimated 9,100 units for the first quarter of 2020, compared to an increase in inventory levels of 7,400 units in 2019, further

LCI INDUSTRIES

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Continued)

~~industry-wide wholesale shipments. Based on the strength of~~supported by an estimated 1,500 units, or two percent, increase in retail sales ~~and the current outlook from several RV OEMs and their dealer networks, most industry analysts continue to report that RV dealer inventory is in line with anticipated retail demand.~~

~~According to the Recreation Vehicle Industry Association (“RVIA”), industry-wide wholesale shipments of travel trailer and fifth-wheel RVs~~ in the first ~~nine months~~quarter of ~~2017, the Company’s primary RV market, increased 18 percent to 321,300 units, compared to the same period of 2016, as a result of:~~

While the Company measures its OEM Segment RV sales against industry-wide wholesale shipment statistics, the underlying health of the RV industry is determined by retail demand. A comparison of the number of units and the year-over-year percentage change in industry-wide wholesale shipments and retail sales of travel trailers and fifth-wheel RVs, as reported by Statistical Surveys, Inc., as well as the resulting estimated change in dealer inventories, for both the United States and Canada, is as follows:

Estimated
Wholesale Retail Unit Impact on
Units Change Units Change Dealer Inventories
Quarter ended September 30, 2017⁽¹⁾
103,900
26% 113,700
5% (9,800)
Quarter ended June 30, 2017 115,900
17% 138,000
12% (22,100)
Quarter ended March 31, 2017 101,500
12% 72,800
16% 28,700
Quarter ended December 31, 2016 90,300
20% 58,300
17% 32,000
Twelve months ended September 30, 2017⁽¹⁾
411,600
18% 382,800
11% 28,800

Quarter ended September 30, 2016 82,400
20% 108,700
9% (26,300)
Quarter ended June 30, 2016 99,200
12% 122,800
9% (23,600)
Quarter ended March 31, 2016 90,800
11% 62,900
15% 27,900
Quarter ended December 31, 2015 75,000
4% 49,900
16% 25,100
Twelve months ended September 30, 2016 347,400
12% 344,300
12% 3,100

According to the RVIA, industry-wide wholesale shipments of motorhome RVs in the first ~~nine months~~quarter of ~~2017 increased 14~~2020 decreased 21 percent to ~~47,300~~10,100 units compared to ~~the same period of 2016. The Company estimates retail~~2019. Retail demand for motorhome RVs ~~increased 13~~also decreased 1 percent in the first ~~nine months~~quarter of ~~2017,~~2020, following ~~an 11~~a 19 percent ~~increase~~decrease in retail demand in ~~2016.~~2019.

The RVIA has projected an 11 percent increase in industry-wide wholesale shipments of travel trailer and fifth-wheel RVs for 2017 and a two percent increase for 2018. Several RV OEMs, however, are introducing new product lines, additional features and adding production capacity. Retail sales of RVs historically have been closely tied to general economic conditions, as well as consumer confidence which was above historical averages in 2016. Additionally, retail sales of travel trailer and fifth-wheel RVs have increased in 93 of the last 95 months on a year-over-year basis. Industry resources report strong attendance and high consumer interest at RV shows around the United States and Canada thus far in 2017.

Although future retail demand is inherently uncertain, RV industry fundamentals in the first nine months of 2017, including generally low unemployment, low fuel prices and available credit for dealers and RV consumers, were strong, as evidenced by the 10 percent increase in industry-wide retail sales of travel trailer and fifth-wheel RVs in the first nine months of 2017. The Company believes the strong RV industry fundamentals, aided by product innovation, demographic tailwinds, industry promotion and the advent of stronger dealer networks, are positive signs for the remainder of 2017. The Company also remains confident in its ability

~~LCI INDUSTRIES~~

~~ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF~~

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~(Continued)~~

to exceed industry growth rates through new product introductions, market share gains, aftermarket sales, acquisitions and ongoing investments in research and development, engineering, quality and customer service.

Over the long term, the Company expects RV industry sales to be aided by positive demographics and the continued popularity of the “RV Lifestyle”. The number of consumers between the ages of 55 and 70 are projected to total 56 million by 2020, 27 percent higher than in 2010, according to U.S. Census figures, and one in ten vehicle-owning households between the ages of 50 and 64 own at least one RV. The RVIA reported much of the success of the RV industry has been driven by the Baby Boomer generation. The size of that generation is beginning to wane, and younger generations (Generation X and Millennials) are becoming more relevant to future industry growth. Generation X and Millennials are more diverse, requiring new and creative marketing approaches to attract them to the RV industry. The RVIA has an advertising campaign promoting the “RV Lifestyle” targeted at both parents aged 30 - 49 with children at home, as well as couples aged 50 - 64 with no children at home. In addition, the RV OEMs have developed more entry level units, specifically targeting younger families, in both towables and motorhomes. The popularity of traveling in RVs to NASCAR and other sporting events, more family-oriented domestic vacations, and using RVs as second homes, are trends that could continue to motivate consumer demand for RVs. RVIA studies indicate RV vacations cost significantly less than other forms of vacation travel, even when factoring in fuel prices and the cost of RV ownership. More details can be found at www.RVIA.org.

The Company’s portfolio of products used in RVs can also be used in other applications, including buses; trailers used to haul boats, livestock, equipment and other cargo; trucks; ~~pontoon~~ boats; trains; manufactured homes; and modular housing (collectively, “Adjacent Industries”). In many cases, OEM customers of the Adjacent Industries are affiliated with RV OEMs through related subsidiaries. The Company believes there are significant opportunities in these Adjacent Industries and, as a result, five of the last eight business acquisitions completed by the Company were focused in Adjacent Industries.

The estimated potential content per unit the Company may supply to the Adjacent Industries varies by OEM product and differs from RVs. As a means to understand the potential of each of these markets, management reviews the number of retail units sold. The following are key target markets for Adjacent Industries component sales:

•Enclosed trailers. According to Statistical Surveys, approximately ~~192,000~~218,000 and ~~183,500~~219,100 enclosed trailers were sold in ~~2016~~2019 and ~~2015,~~2018, respectively.

~~Pontoon~~•Traditional power boats. Statistical Surveys also reported approximately ~~49,600~~208,200 and ~~45,400~~217,600 traditional power boats were sold in 2019 and 2018, respectively. Traditional power boats include bass, deck, jet, pontoon, ski-wake, and other boats. Included in this total, Statistical Surveys reported approximately 57,200 and 58,600 pontoon boats were sold in ~~2016~~2019 and ~~2015,~~2018, respectively.

•School buses. According to ~~Wards Communications and R.L. Polk & Co.,~~School Bus Fleet, there were approximately ~~32,800 and 29,600~~44,400 school buses sold in ~~2016~~each of 2019 and ~~2015, respectively.~~2018.

•Manufactured housing. According to the Institute for Building Technology and Safety, there were approximately ~~81,100~~94,600 and ~~70,500~~96,600 manufactured home wholesale shipments in ~~2016~~2019 and ~~2015,~~2018, respectively.



Delaware			13-3250533
(State or other jurisdiction of			(I.R.S. Employer
incorporation or organization)			Identification Number)

3501 County Road 6 East			46514
Elkhart, ~~Indiana~~	Indiana	(Zip Code)
(Address of principal executive offices)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	LCII	New York Stock Exchange



	Page
PART I –		FINANCIAL INFORMATION

		ITEM 1 – FINANCIAL STATEMENTS

		CONDENSED CONSOLIDATED STATEMENTS OF INCOME	4

		CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	5

		CONDENSED CONSOLIDATED BALANCE SHEETS	6

		CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	7

		CONDENSED CONSOLIDATED ~~STATEMENT~~STATEMENTS OF STOCKHOLDERS’ EQUITY	8

		NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	9

		ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2223

		ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3334

		ITEM 4 – CONTROLS AND PROCEDURES	3334

PART II –		OTHER INFORMATION

		ITEM 1 – LEGAL PROCEEDINGS	3435

		ITEM 1A – RISK FACTORS	3435

		ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	36

		ITEM 6 – EXHIBITS	3437

SIGNATURES				3538

EXHIBIT 31.1 - SECTION 302 CEO CERTIFICATION

EXHIBIT 31.2 - SECTION 302 CFO CERTIFICATION

EXHIBIT 32.1 - SECTION 906 CEO CERTIFICATION

EXHIBIT 32.2 - SECTION 906 CFO CERTIFICATION


(In thousands, except per share data)	Per Share		Record Date	Payment Date	Total Paid
First Quarter 2019	$	0.60	03/08/19	03/22/19	$	14,999
Second Quarter 2019	0.65		06/07/19	06/21/19	16,267
Third Quarter 2019	0.65		09/06/19	09/20/19	16,267
Fourth Quarter 2019	0.65		12/06/19	12/20/19	16,280
Total 2019	$	2.55			$	63,813

First Quarter 2020	$	0.65	03/06/20	03/20/20	$	16,321


	Number of Shares	Weighted Average Price
Outstanding at December 31, 2019	346,148	$	87.54
Issued	2,175	66.83
Granted	135,475	98.01
Dividend equivalents	3,849	58.70
Forfeited	(3,354)	92.45
Vested	(130,266)	87.61
Outstanding at March 31, 2020	354,027	$	89.73



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Nine Months Ended September 30,				Three Months Ended September 30,
	2017		2016		2017		2016
(In thousands, except per share amounts)

Net sales	$	1,600,633	$	1,275,999	$	554,814	$	412,370
Cost of sales	1,224,312		945,104		433,594		306,820
Gross profit	376,321		330,895		121,220		105,550
Selling, general and administrative expenses	206,225		170,641		73,293		60,412
Operating profit	170,096		160,254		47,927		45,138
Interest expense, net	1,162		1,285		311		396
Income before income taxes	168,934		158,969		47,616		44,742
Provision for income taxes	53,514		55,597		15,478		14,898
Net income	$	115,420	$	103,372	$	32,138	$	29,844

Net income per common share:
Basic	$	4.62	$	4.20	$	1.28	$	1.21
Diluted	$	4.56	$	4.15	$	1.26	$	1.19

Weighted average common shares outstanding:
Basic	24,993		24,587		25,060		24,724
Diluted	25,332		24,882		25,459		25,060



	September 30,						December 31,
	2017			2016			2016
(In thousands, except per share amount)

ASSETS
Current assets
Cash and cash equivalents	$	19,762		$	95,060		$	86,170
Accounts receivable, net	139,144			89,626			57,374
Inventories, net	229,763			161,312			188,743
Prepaid expenses and other current assets	45,384			28,572			35,107
Total current assets	434,053			374,570			367,394
Fixed assets, net	210,304			153,167			172,748
Goodwill	123,001			93,925			89,198
Other intangible assets, net	134,761			109,553			112,943
Deferred taxes	32,380			29,208			31,989
Other assets	21,277			14,095			12,632
Total assets	$	955,776		$	774,518		$	786,904

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable, trade	$	88,148		$	55,681		$	50,616
Accrued expenses and other current liabilities	109,849			97,733			98,735
Total current liabilities	197,997			153,414			149,351
Long-term indebtedness	49,918			49,940			49,949
Other long-term liabilities	60,805			39,796			37,335
Total liabilities	308,720			243,150			236,635

Stockholders’ equity
Common stock, par value $.01 per share	276			273			274
Paid-in capital	201,814			179,434			185,981
Retained earnings	472,154			381,723			395,279
Accumulated other comprehensive income (loss)	2,279			(595		)	(1,798		)
Stockholders’ equity before treasury stock	676,523			560,835			579,736
Treasury stock, at cost	(29,467		)	(29,467		)	(29,467		)
Total stockholders’ equity	647,056			531,368			550,269
Total liabilities and stockholders’ equity	$	955,776		$	774,518		$	786,904



Cash consideration, net of cash acquired	$	13,501
Contingent consideration	2,366
Total fair value of consideration given	$	15,867

Customer relationships	$	7,000
Other identifiable intangible assets	2,150
Net tangible assets	167
Total fair value of net assets acquired	$	9,317

Goodwill (not tax deductible)	$	6,550



Cash consideration	$	40,062

Customer relationships	$	16,900
Other identifiable intangible assets	1,820
Net tangible assets	4,928
Total fair value of net assets acquired	$	23,648

Goodwill (tax deductible)	$	16,414



Cash consideration, net of cash acquired	$	6,502
Contingent consideration	4,922
Total fair value of consideration given	$	11,424

Customer relationships	$	3,189
Other identifiable intangible assets	1,329
Net tangible assets	585
Total fair value of net assets acquired	$	5,103

Goodwill (not tax deductible)	$	6,321



Cash consideration, net of cash acquired	$	16,618
Contingent consideration	1,322
Total fair value of consideration given	$	17,940

Customer relationships	$	9,696
Other identifiable intangible assets	6,141
Net other liabilities	(3,482		)
Total fair value of net assets acquired	$	12,355

Goodwill (not tax deductible)	$	5,585



Cash consideration	$	8,100

Customer relationships	$	3,700
Net other assets	2,378
Total fair value of net assets acquired	$	6,078

Goodwill (tax deductible)	$	2,022



Cash consideration	$	10,000

Customer relationships	$	8,100
Net tangible assets	1,307
Total fair value of net assets acquired	$	9,407

Goodwill (tax deductible)	$	593


Fair value adjustments^{(a) (b)}	~~Amounts represent the fair value of estimated remaining payments. The total estimated remaining payments as of September~~ 30 ~~2017 are $20.2 million undiscounted. The liability for contingent consideration expires~~
Net foreign currency translation adjustment	(123)
Balance at ~~various dates through September 2029. Certain~~end of the ~~contingent consideration arrangements are subject to a maximum payment amount, while the remaining arrangements have no maximum contingent consideration.~~period^(c)	7,333
Less current portion in accrued expenses and other current liabilities	(5,244)
Total long-term portion in other long-term liabilities	$	2,089



	September 30, 2017								December 31, 2016
(In thousands)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets
Unrealized gain on derivative instruments	$	1,180	$	—	$	1,180	$	—	$	2,296	$	—	$	2,296	$	—
Liabilities
Contingent consideration	$	17,045	$	—	$	—	$	17,045	$	9,241	$	—	$	—	$	9,241


	Three Months Ended March 31, 2020										Three Months Ended March 31, 2019
(In thousands)	U.S. ^(a)		Int’l ^(b)		Total		U.S. ^(a)		Int’l ^(b)		Total
OEM Segment:
RV OEMs:
Travel trailers and fifth-wheels	$	303,682	$	3,426	$	307,108	$	313,367	$	3,504	$	316,871
Motorhomes	26,914		11,173		38,087		31,921		13,079		45,000
Adjacent Industries OEMs	146,601		40,561		187,162		156,736		13,173		169,909
Total OEM Segment net sales	477,197		55,160		532,357		502,024		29,756		531,780
Aftermarket Segment:
Total Aftermarket Segment net sales	121,618		5,695		127,313		56,532		3,860		60,392
Total net sales	$	598,815	$	60,855	$	659,670	$	558,556	$	33,616	$	592,172


(In thousands)	Q1 2019		Q2 2019		Q3 2019		Q4 2019		Full Year 2019
OEM Segment Furrion sales:
RV OEMs:
Travel trailers and fifth-wheel RVs	$	23,574	$	25,636	$	23,375	$	22,393	$	94,978
Motorhomes	830		1,037		971		780		3,618
Adjacent industries OEMs	490		612		573		607		2,282
Total OEM Segment Furrion sales	24,894		27,285		24,919		23,780		100,878
Aftermarket Segment Furrion sales:
Total Aftermarket Segment Furrion sales	8,915		9,545		8,473		3,614		30,547
Total Furrion Sales	$	33,809	$	36,830	$	33,392	$	27,394	$	131,425


(In thousands)	Q1 2018		Q2 2018		Q3 2018		Q4 2018		Full Year 2018
OEM Segment Furrion sales:
RV OEMs:
Travel trailers and fifth-wheel RVs	$	23,367	$	22,964	$	23,117	$	21,572	$	91,020
Motorhomes	739		812		828		875		3,254
Adjacent industries OEMs	468		485		309		281		1,543
Total OEM Segment Furrion sales	24,574		24,261		24,254		22,728		95,817
Aftermarket Segment Furrion sales:
Total Aftermarket Segment Furrion sales	3,951		7,011		5,454		3,250		19,666
Total Furrion Sales	$	28,525	$	31,272	$	29,708	$	25,978	$	115,483



					Estimated
	Wholesale		Retail		Unit Impact on
	Units	Change	Units	Change	Dealer Inventories
Quarter ended September 30, 2017⁽¹⁾	103,900	26%	113,700	5%	(9,800)
Quarter ended June 30, 2017	115,900	17%	138,000	12%	(22,100)
Quarter ended March 31, 2017	101,500	12%	72,800	16%	28,700
Quarter ended December 31, 2016	90,300	20%	58,300	17%	32,000
Twelve months ended September 30, 2017⁽¹⁾	411,600	18%	382,800	11%	28,800

Quarter ended September 30, 2016	82,400	20%	108,700	9%	(26,300)
Quarter ended June 30, 2016	99,200	12%	122,800	9%	(23,600)
Quarter ended March 31, 2016	90,800	11%	62,900	15%	27,900
Quarter ended December 31, 2015	75,000	4%	49,900	16%	25,100
Twelve months ended September 30, 2016	347,400	12%	344,300	12%	3,100


⁽¹⁾	~~Retail sales data for September 2017 has not been published; therefore retail and dealer inventory data includes a Company estimate for retail units sold in September.~~


◦	In May 2017, the Company acquired the business and certain assets of Lexington LLC (“Lexington”), a manufacturer of high quality seating solutions for the marine, RV, transportation, medical and office furniture industries located in Elkhart, Indiana. The purchase price was $40.1 million paid at closing.


◦	In February 2017, the Company acquired 100 percent of the outstanding shares of Sessa Klein S.p.A. (“Sessa Klein”), a manufacturer of highly engineered side window systems for both high speed and commuter trains, located near Varese, Italy. The purchase price was $8.5 million paid at closing, plus contingent consideration based on future sales by this operation.


Content per:	2020		2019		Change
Travel trailer and fifth-wheel RV	$	3,354	$	3,265	3	%
Motorhome	$	2,327	$	2,437	(5)	%


2)	~~31.2~~ ~~Certification of Chief Financial Officer required by Rule 13a-14(a). Exhibit 31.2 is filed herewith.~~


3)	~~32.1~~ ~~Certification of Chief Executive Officer required by Rule 13a-14(b) and Section 1350 Chapter 63 of Title 18 of the United States Code. Exhibit 32.1 is filed herewith.~~


4)	~~32.2~~ ~~Certification of Chief Financial Officer required by Rule 13a-14(b) and Section 1350 Chapter 63 of Title 18 of the United States Code. Exhibit 32.2 is filed herewith.~~


LCI INDUSTRIES
Registrant

~~LCI INDUSTRIES~~
~~Registrant~~
By

By	/s/ Brian M. Hall
Brian M. Hall
Chief Financial Officer
~~November~~May 7, ~~2017~~2020