UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: September 30, 20202021

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

For the transition period from _________________ to _________________

Commission File Number: 001-13646
lcii-20210930_g1.jpg
LCI INDUSTRIES
(Exact name of registrant as specified in its charter)

Delaware13-3250533
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification Number)
3501 County Road 6 East46514
Elkhart,Indiana(Zip Code)
(Address of principal executive offices)
(574) 535-1125
(Registrant’s telephone number, including area code)

(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:

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.01 par valueLCIINew York Stock Exchange

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 every Interactive Data File required to be submitted 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 such files).    Yes      No  

1


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

Large accelerated filer                            Accelerated filer
Non-accelerated filer                         Smaller reporting company
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 30, 2020)29, 2021) was 25,154,18325,272,517 shares of common stock.

2




LCI INDUSTRIES

TABLE OF CONTENTS

Page
PART I  
  
 
  
 
  
 
 
  
 
  
 
  
 
  
 
  
 
  
PART II
  
 
  
 
  
 
  
 
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 

3




PART I – FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS

LCI INDUSTRIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

Three Months Ended 
September 30,
Nine Months Ended 
September 30,
Three Months Ended 
September 30,
Nine Months Ended 
September 30,
2020201920202019 2021202020212020
(In thousands, except per share amounts)(In thousands, except per share amounts)    (In thousands, except per share amounts)    
Net salesNet sales$827,729 $586,221 $2,013,164 $1,807,461 Net sales$1,165,309 $827,729 $3,259,287 $2,013,164 
Cost of salesCost of sales606,290 450,748 1,504,378 1,390,741 Cost of sales913,728 606,290 2,508,318 1,504,378 
Gross profitGross profit221,439 135,473 508,786 416,720 Gross profit251,581 221,439 750,969 508,786 
Selling, general and administrative expensesSelling, general and administrative expenses127,006 86,320 349,305 254,155 Selling, general and administrative expenses162,557 127,006 466,532 349,305 
Operating profitOperating profit94,433 49,153 159,481 162,565 Operating profit89,024 94,433 284,437 159,481 
Interest expense, netInterest expense, net1,948 1,900 10,843 6,506 Interest expense, net4,667 1,948 10,844 10,843 
Income before income taxesIncome before income taxes92,485 47,253 148,638 156,059 Income before income taxes84,357 92,485 273,593 148,638 
Provision for income taxesProvision for income taxes24,138 11,444 38,891 38,357 Provision for income taxes20,956 24,138 68,183 38,891 
Net incomeNet income$68,347 $35,809 $109,747 $117,702 Net income$63,401 $68,347 $205,410 $109,747 
Net income per common share:Net income per common share:    Net income per common share:    
BasicBasic$2.72 $1.43 $4.37 $4.71 Basic$2.51 $2.72 $8.14 $4.37 
DilutedDiluted$2.70 $1.42 $4.35 $4.70 Diluted$2.49 $2.70 $8.10 $4.35 
Weighted average common shares outstanding:Weighted average common shares outstanding:    Weighted average common shares outstanding:    
BasicBasic25,162 25,031 25,125 24,984 Basic25,286 25,162 25,247 25,125 
DilutedDiluted25,313 25,156 25,220 25,053 Diluted25,417 25,313 25,371 25,220 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
4


LCI INDUSTRIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

Three Months Ended 
September 30,
Nine Months Ended 
September 30,
Three Months Ended 
September 30,
Nine Months Ended 
September 30,
2020201920202019 2021202020212020
(In thousands)(In thousands)    (In thousands)    
Net incomeNet income$68,347 $35,809 $109,747 $117,702 Net income$63,401 $68,347 $205,410 $109,747 
Other comprehensive income (loss):Other comprehensive income (loss):Other comprehensive income (loss):
Net foreign currency translation adjustmentNet foreign currency translation adjustment3,399 819 (102)(1,850)Net foreign currency translation adjustment(1,793)3,399 (3,875)(102)
Actuarial gain on Dutch pension plans6,299 
Unrealized gain (loss) on fair value of derivative instruments(19)1,642 (2,061)
Actuarial gain on pension plansActuarial gain on pension plans— — 933 6,299 
Unrealized gain on fair value of derivative instrumentsUnrealized gain on fair value of derivative instruments— — — 1,642 
Total comprehensive incomeTotal comprehensive income$71,746 $36,609 $117,586 $113,791 Total comprehensive income$61,608 $71,746 $202,468 $117,586 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
5


LCI INDUSTRIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

September 30,December 31, September 30,December 31,
20202019 20212020
(In thousands, except per share amount)(In thousands, except per share amount)  (In thousands, except per share amount)  
ASSETSASSETS  ASSETS  
Current assetsCurrent assets  Current assets  
Cash and cash equivalentsCash and cash equivalents$68,187 $35,359 Cash and cash equivalents$72,615 $51,821 
Accounts receivable, net of allowances of $6,060 and $3,144 at September 30, 2020 and December 31, 2019, respectively313,264 199,976 
Accounts receivable, net of allowances of $7,454 and $5,642 at September 30, 2021 and December 31, 2020, respectivelyAccounts receivable, net of allowances of $7,454 and $5,642 at September 30, 2021 and December 31, 2020, respectively394,766 268,625 
Inventories, netInventories, net369,160 393,607 Inventories, net790,651 493,899 
Prepaid expenses and other current assetsPrepaid expenses and other current assets45,061 41,849 Prepaid expenses and other current assets102,434 55,456 
Total current assetsTotal current assets795,672 670,791 Total current assets1,360,466 869,801 
Fixed assets, netFixed assets, net368,422 366,309 Fixed assets, net421,053 387,218 
GoodwillGoodwill413,068 351,114 Goodwill568,885 454,728 
Other intangible assets, netOther intangible assets, net373,941 341,426 Other intangible assets, net518,300 420,885 
Operating lease right-of-use assetsOperating lease right-of-use assets97,580 98,774 Operating lease right-of-use assets164,142 104,179 
Other assetsOther assets62,000 34,181 Other assets55,339 61,220 
Total assetsTotal assets$2,110,683 $1,862,595 Total assets$3,088,185 $2,298,031 
LIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES AND STOCKHOLDERS’ EQUITY  LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilitiesCurrent liabilities  Current liabilities  
Current maturities of long-term indebtednessCurrent maturities of long-term indebtedness$19,861 $17,883 Current maturities of long-term indebtedness$74,311 $17,831 
Accounts payable, tradeAccounts payable, trade175,492 99,262 Accounts payable, trade297,347 184,931 
Current portion of operating lease obligationsCurrent portion of operating lease obligations23,772 21,693 Current portion of operating lease obligations28,751 25,432 
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities181,398 132,420 Accrued expenses and other current liabilities283,722 188,200 
Total current liabilitiesTotal current liabilities400,523 271,258 Total current liabilities684,131 416,394 
Long-term indebtednessLong-term indebtedness616,076 612,906 Long-term indebtedness1,012,078 720,418 
Operating lease obligationsOperating lease obligations77,619 79,848 Operating lease obligations143,839 82,707 
Deferred taxesDeferred taxes46,946 35,740 Deferred taxes56,309 53,833 
Other long-term liabilitiesOther long-term liabilities93,957 62,171 Other long-term liabilities160,688 116,353 
Total liabilitiesTotal liabilities1,235,121 1,061,923 Total liabilities2,057,045 1,389,705 
Stockholders’ equityStockholders’ equityStockholders’ equity
Common stock, par value $.01 per shareCommon stock, par value $.01 per share282 281 Common stock, par value $.01 per share284 282 
Paid-in capitalPaid-in capital222,257 212,485 Paid-in capital213,271 227,407 
Retained earningsRetained earnings702,223 644,945 Retained earnings871,600 731,710 
Accumulated other comprehensive incomeAccumulated other comprehensive income8,962 1,123 Accumulated other comprehensive income4,147 7,089 
Stockholders’ equity before treasury stockStockholders’ equity before treasury stock933,724 858,834 Stockholders’ equity before treasury stock1,089,302 966,488 
Treasury stock, at costTreasury stock, at cost(58,162)(58,162)Treasury stock, at cost(58,162)(58,162)
Total stockholders’ equityTotal stockholders’ equity875,562 800,672 Total stockholders’ equity1,031,140 908,326 
Total liabilities and stockholders’ equityTotal liabilities and stockholders’ equity$2,110,683 $1,862,595 Total liabilities and stockholders’ equity$3,088,185 $2,298,031 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
6


LCI INDUSTRIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Nine Months Ended 
September 30,
 20202019
(In thousands)  
Cash flows from operating activities:  
Net income$109,747 $117,702 
Adjustments to reconcile net income to cash flows provided by operating activities:  
Depreciation and amortization73,366 55,882 
Stock-based compensation expense13,646 12,061 
Other non-cash items1,818 837 
Changes in assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net(103,209)(42,367)
Inventories, net24,423 24,410 
Prepaid expenses and other assets(29,489)15,119 
Accounts payable, trade68,379 8,437 
Accrued expenses and other liabilities53,806 17,461 
Net cash flows provided by operating activities212,487 209,542 
Cash flows from investing activities:  
Capital expenditures(28,663)(47,767)
Acquisitions of businesses, net of cash acquired(94,909)(53,923)
Other investing activities3,972 364 
Net cash flows used in investing activities(119,600)(101,326)
Cash flows from financing activities:  
Vesting of stock-based awards, net of shares tendered for payment of taxes(4,807)(7,194)
Proceeds from revolving credit facility285,827 404,228 
Repayments under revolving credit facility(273,130)(443,921)
Repayments under term loan and other borrowings(15,385)
Payment of dividends(51,535)(47,533)
Other financing activities(176)(405)
Net cash flows used in financing activities(59,206)(94,825)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(853)(842)
Net increase in cash, cash equivalents, and restricted cash32,828 12,549 
Cash, cash equivalents, and restricted cash at beginning of period35,359 14,928 
Cash, cash equivalents, and restricted cash at end of period$68,187 $27,477 
Supplemental disclosure of cash flow information:  
Cash paid during the period for interest$12,743 $6,156 
Cash paid during the period for income taxes, net of refunds$16,457 $28,416 
Purchase of property and equipment in accrued expenses$2,588 $588 
 Nine Months Ended 
September 30,
 20212020
(In thousands)  
Cash flows from operating activities:  
Net income$205,410 $109,747 
Adjustments to reconcile net income to cash flows provided by operating activities:  
Depreciation and amortization80,211 73,366 
Stock-based compensation expense20,295 13,646 
Other non-cash items5,418 1,818 
Changes in assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net(140,768)(103,209)
Inventories, net(253,031)24,423 
Prepaid expenses and other assets(28,274)(29,489)
Accounts payable, trade97,071 68,379 
Accrued expenses and other liabilities25,961 53,806 
Net cash flows provided by operating activities12,293 212,487 
Cash flows from investing activities:  
Capital expenditures(73,872)(28,663)
Acquisitions of businesses, net of cash acquired(154,544)(94,909)
Other investing activities11,544 3,972 
Net cash flows used in investing activities(216,872)(119,600)
Cash flows from financing activities:  
Vesting of stock-based awards, net of shares tendered for payment of taxes(8,258)(4,807)
Proceeds from revolving credit facility832,493 285,827 
Repayments under revolving credit facility(912,547)(273,130)
Repayments under term loan and other borrowings(13,375)(15,385)
Proceeds from issuance of convertible notes460,000 — 
Purchases of convertible note hedge contracts(100,142)— 
Proceeds from issuance of warrants concurrent with note hedge contracts48,484 — 
Payment of debt issuance costs(11,955)— 
Payment of dividends(64,425)(51,535)
Payment of contingent consideration and holdbacks related to acquisitions(8,061)(9)
Other financing activities1,972 (167)
Net cash flows provided by (used in) financing activities224,186 (59,206)
Effect of exchange rate changes on cash and cash equivalents1,187 (853)
Net increase in cash and cash equivalents20,794 32,828 
Cash and cash equivalents at beginning of period51,821 35,359 
Cash and cash equivalents cash at end of period$72,615 $68,187 
Supplemental disclosure of cash flow information:  
Cash paid during the period for interest$9,127 $12,743 
Cash paid during the period for income taxes, net of refunds$75,822 $16,457 
Purchase of property and equipment in accrued expenses$4,036 $2,588 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
7


LCI INDUSTRIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)


(In thousands, except shares and per share amounts)(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
(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 
Balance - December 31, 2019Balance - December 31, 2019$281 $212,485 $644,945 $1,123 $(58,162)$800,672 
Net incomeNet income— — 34,366 — — 34,366 Net income— — 28,214 — — 28,214 
Issuance of 137,040 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes(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, 2019281 200,934 582,559 (3,933)(58,162)721,679 
Net income— — 47,527 — — 47,527 
Issuance of 27,965 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes— (795)— — — (795)
Issuance of 87,833 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxesIssuance of 87,833 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes(4,518)— — — (4,517)
Stock-based compensation expenseStock-based compensation expense— 4,115 — — — 4,115 Stock-based compensation expense— 3,295 — — — 3,295 
Other comprehensive lossOther comprehensive loss— — — (3,383)— (3,383)Other comprehensive loss— — — (3,540)— (3,540)
Cash dividends ($0.65 per share)Cash dividends ($0.65 per share)— — (16,267)— — (16,267)Cash dividends ($0.65 per share)— — (16,321)— — (16,321)
Dividend equivalents on stock-based awardsDividend equivalents on stock-based awards— 318 (318)— — Dividend equivalents on stock-based awards— 297 (297)— — — 
Balance - June 30, 2019281 204,572 613,501 (7,316)(58,162)752,876 
Balance - March 31, 2020Balance - March 31, 2020282 211,559 656,541 (2,417)(58,162)807,803 
Net incomeNet income— — 35,809 — — 35,809 Net income— — 13,186 — — 13,186 
Issuance of 1,429 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes— (50)— — — (50)
Issuance of 16,251 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxesIssuance of 16,251 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes— (99)— — — (99)
Stock-based compensation expenseStock-based compensation expense— 4,213 — — — 4,213 Stock-based compensation expense— 4,109 — — — 4,109 
Other comprehensive incomeOther comprehensive income— — 800 — 800 Other comprehensive income— — — 7,980 — 7,980 
Cash dividends ($0.65 per share)Cash dividends ($0.65 per share)— (16,267)— — (16,267)Cash dividends ($0.65 per share)— — (16,349)— — (16,349)
Dividend equivalents on stock-based awardsDividend equivalents on stock-based awards— 318 (318)— — Dividend equivalents on stock-based awards— 295 (295)— — — 
Balance - September 30, 2019$281 $209,053 $632,725 $(6,516)$(58,162)$777,381 
Balance - June 30, 2020Balance - June 30, 2020282 215,864 653,083 5,563 (58,162)816,630 
Net incomeNet income— — 68,347 — — 68,347 
Issuance of 3,998 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxesIssuance of 3,998 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes— (191)— — — (191)
Stock-based compensation expenseStock-based compensation expense— 6,242 — — — 6,242 
Other comprehensive incomeOther comprehensive income— — 3,399 — 3,399 
Cash dividends ($0.75 per share)Cash dividends ($0.75 per share)— (18,865)— — (18,865)
Dividend equivalents on stock-based awardsDividend equivalents on stock-based awards— 342 (342)— — — 
Balance - September 30, 2020Balance - September 30, 2020$282 $222,257 $702,223 $8,962 $(58,162)$875,562 


The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
8


LCI INDUSTRIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)


(In thousands, except shares and per share amounts)(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
(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, 2019$281 $212,485 $644,945 $1,123 $(58,162)$800,672 
Balance - December 31, 2020Balance - December 31, 2020$282 $227,407 $731,710 $7,089 $(58,162)$908,326 
Net incomeNet income— — 28,214 — — 28,214 Net income— — 74,120 — — 74,120 
Issuance of 87,833 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes(4,518)— — — (4,517)
Issuance of 97,086 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxesIssuance of 97,086 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes(7,768)— — — (7,767)
Stock-based compensation expenseStock-based compensation expense— 3,295 — — — 3,295 Stock-based compensation expense— 7,436 — — — 7,436 
Other comprehensive lossOther comprehensive loss— — — (3,540)— (3,540)Other comprehensive loss— — — (3,589)— (3,589)
Cash dividends ($0.65 per share)— — (16,321)— — (16,321)
Dividend equivalents on stock-based awards— 297 (297)— — 
Balance - March 31, 2020282 211,559 656,541 (2,417)(58,162)807,803 
Net income— — 13,186 — — 13,186 
Issuance of 16,251 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes— (99)— — — (99)
Stock-based compensation expense— 4,109 — — — 4,109 
Other comprehensive income— — — 7,980 — 7,980 
Cash dividends ($0.65 per share)— — (16,349)— — (16,349)
Dividend equivalents on stock-based awards— 295 (295)— — 
Balance - June 30, 2020282 215,864 653,083 5,563 (58,162)816,630 
Net income— — 68,347 — — 68,347 
Issuance of 3,998 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes— (191)— — — (191)
Stock-based compensation expense— 6,242 — — — 6,242 
Other comprehensive income— — — 3,399 — 3,399 
Cash dividends ($0.75 per share)Cash dividends ($0.75 per share)— — (18,865)— — (18,865)Cash dividends ($0.75 per share)— — (18,939)— — (18,939)
Dividend equivalents on stock-based awardsDividend equivalents on stock-based awards— 342 (342)— — Dividend equivalents on stock-based awards— 325 (325)— — — 
Balance - September 30, 2020$282 $222,257 $702,223 $8,962 $(58,162)$875,562 
Balance - March 31, 2021Balance - March 31, 2021283 227,400 786,566 3,500 (58,162)959,587 
Net incomeNet income— — 67,889 — — 67,889 
Issuance of 16,324 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxesIssuance of 16,324 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes(159)— — — (158)
Stock-based compensation expenseStock-based compensation expense— 6,423 — — — 6,423 
Purchase of convertible note hedge contracts, net of taxPurchase of convertible note hedge contracts, net of tax— (75,750)— — — (75,750)
Issuance of warrantsIssuance of warrants— 48,484 — — — 48,484 
Other comprehensive incomeOther comprehensive income— — — 2,440 — 2,440 
Cash dividends ($0.90 per share)Cash dividends ($0.90 per share)— — (22,739)— — (22,739)
Dividend equivalents on stock-based awardsDividend equivalents on stock-based awards— 388 (388)— — — 
Balance - June 30, 2021Balance - June 30, 2021284 206,786 831,328 5,940 (58,162)986,176 
Net incomeNet income— — 63,401 — — 63,401 
Issuance of 3,385 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxesIssuance of 3,385 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes— (333)— — — (333)
Stock-based compensation expenseStock-based compensation expense— 6,436 — — — 6,436 
Other comprehensive lossOther comprehensive loss— — — (1,793)— (1,793)
Cash dividends ($0.90 per share)Cash dividends ($0.90 per share)— — (22,747)— — (22,747)
Dividend equivalents on stock-based awardsDividend equivalents on stock-based awards— 382 (382)— — — 
Balance - September 30, 2021Balance - September 30, 2021$284 $213,271 $871,600 $4,147 $(58,162)$1,031,140 


The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
9




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”("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”"Lippert Components," "LCI," or “LCI”"Lippert"), supplies, domestically and internationally, a broad array of engineered components for the leading original equipment manufacturers (“OEMs”("OEMs") in the recreation and transportation product markets, consisting primarily of recreational vehicles (“RVs”("RVs") and adjacent industries including buses; trailers used to haul boats, livestock, equipment, and other cargo; trucks; 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, 2020,2021, the Company operated over 90100 manufacturing and distribution facilities located throughout North America, Europe, and Europe.Asia.

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, 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, particularly as a result of the coronavirus ("COVID-19") pandemic and related impacts. Additionally, sales of certain engineered components to the aftermarket channels of these industries tend to be counter-seasonal, but may be different in 2020the remainder of 2021 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 have been prepared in accordance with the instructions to Form 10-Q, and therefore do not include some information necessary to conform to 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 right-of-use assets and obligations, asset retirement obligations, long-lived assets, pension and 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.

COVID-19 Update

The COVID-19 pandemic has caused significant uncertainty and disruption in the global economy and financial markets. The COVID-19 pandemic had an adverse effect on the Company's financial results during the first half of 2020 due to
10

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Impactgovernment-mandated plant shutdowns. The Company took a variety of COVID-19

On March 11,actions during 2020 to help mitigate the World Health Organization declaredadverse impacts, including temporary cost savings measures and delays and reductions in capital expenditures. Activity in most of the outbreakend markets the Company serves sequentially improved as 2020 progressed, and this trend has continued through the first nine months of 2021, especially in the RV and marine OEM markets and the Company's Aftermarket Segment. Management continues to closely monitor the impact of 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.

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 locations and furloughs for non-critical team members, lease payment deferrals, postponing merit increases for salaried employees until the endaspects of the fiscal year, and engaging with banking partners regarding options relative to future financial 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, and by later in the second quarter, the Company's facilities were fully operational. As the Company returned to fully operational status, several of the cost savings and cash preservation measures previously announced on April 8, 2020 were reversed, including executive salary and director retainer reductions, furloughs, and hiring freezes, and discussions with banking partners about financing options were halted. Due to the uncertainty surrounding the COVID-19 pandemic, the Company remains disciplined with other cost savings and cash preservation measures, such as delaying certain capital expenditures and reducing or eliminating non-critical business expenses including travel.

business. The extent to which COVID-19 may impact the Company's liquidity, financial condition, and results of operations in the future remains uncertain.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Condensed Consolidated Financial Statements presented herein have been prepared by the Company in accordance with the accounting policies described in its December 31, 20192020 Annual Report on Form 10-K 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.

Recent Accounting PronouncementsThe Company's accounting policies related to the convertible note hedge and warrant transactions, including the related earnings per share considerations, are disclosed in Note 3 and Note 12 of the Notes to Condensed Consolidated Financial Statements.

Recently issuedadopted accounting pronouncements not yet adoptedpronouncement

In December 2019,August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12,2020-06, Income Taxes (Topic 740)Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Simplifying the Accounting for Income Taxes, Convertible Instruments and Contracts in an Entity's Own Equitywhich ("ASU 2020-06"). This ASU simplifies the accounting for income taxes, eliminates certain exceptions within Accounting Standards Codification ("ASC") 740, Income Taxes, financial instruments with characteristics of liabilities and clarifies certain aspectsequity, including convertible instruments and contracts in an entity’s own equity. ASU 2020-06 also amends the diluted earnings per share calculation for convertible instruments by requiring the use of the current guidance to 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 be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.if-converted method. The Company is evaluatinghas chosen to early adopt ASU 2020-06 in 2021. This ASU had no retrospective changes but impacted how the effect of adopting this new accounting guidance.convertible debt the Company issued in May 2021 was both recognized and disclosed.

Recently adopted accounting pronouncements
3.    EARNINGS PER SHARE

In June 2016,The following reconciliation details the FASBdenominator used in the computation of basic and diluted earnings per share for the periods indicated:
 Three Months Ended 
September 30,
Nine Months Ended 
September 30,
(In thousands)2021202020212020
Weighted average shares outstanding for basic earnings per share25,286 25,162 25,247 25,125 
Common stock equivalents pertaining to stock-based awards131 151 124 95 
Weighted average shares outstanding for diluted earnings per share25,417 25,313 25,371 25,220 
Equity instruments excluded from diluted net earnings per share calculation as the effect would have been antidilutive140 119 142 113 
For the Company's 1.125 percent convertible senior notes due 2026 (the "Convertible Notes") issued in May 2021, the dilutive effect is calculated using the if-converted method in accordance with ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires2020-06. The Company is required, pursuant to the indenture governing the Convertible Notes, dated May 13, 2021, by and between the Company and U.S. Bank National Association, as trustee (the "Indenture"), to measuresettle the principal amount of the Convertible Notes in cash and may elect to settle the remaining conversion obligation (i.e., the stock price in excess of the conversion price) in cash, shares of the Company's common stock, or a combination thereof. Under the if-converted method, we include the number of shares required to satisfy the conversion obligation, assuming all expected credit lossesthe Convertible Notes are converted. The average closing price of the Company's common stock for financial instruments held at the reporting date basedthree and nine months ended September 30, 2021 is used as the basis for determining the dilutive effect on historical experience, current conditions,earnings per share. The average price of the Company's common stock for each of the three and reasonable forecasts. This ASU replacednine months ended September 30, 2021 was less than the previous incurred loss modelconversion price of $165.65, and, is applicable to the measurement of credit losses on financial assets, includingtherefore, all associated shares were antidilutive.
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LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
trade receivables.
In conjunction with the issuance of the Convertible Notes, the Company, in privately negotiated transactions with certain commercial banks ("the Counterparties") sold warrants to purchase 2.8 million shares of the Company's common stock (the "Warrants"). The Company adopted this ASU effective January 1, 2020 using the modified retrospective transition method. The adoption did notWarrants have a material impactstrike price of $259.84 per share, subject to customary anti-dilution adjustments. For calculating the dilutive effect of the Warrants, the Company uses the treasury stock method. With this method, the Company assumes exercise of the Warrants at the beginning of the period, or at time of issuance if later, and issuance of common shares upon exercise. Proceeds from the exercise of the Warrants are assumed to be used to repurchase shares of the Company's common stock at the average market price during the period. The incremental shares, representing the number of shares assumed to be received upon the exercise of the Warrants less the number of shares repurchased, are included in diluted shares. For periods where the Warrants' strike price of $259.84 per share is greater than the average share price of the Company's common stock for the period, the Warrants would be antidilutive. For each of the three and nine months ended September 30, 2021, the average share price was below the Warrant strike price, and therefore 2.8 million shares were considered antidilutive.

In connection with the issuance of the Convertible Notes, the Company entered into privately negotiated call option contracts on the Company's consolidated financial statements.common stock (the "Convertible Note Hedge Transactions") with the Counterparties. The Company paid an aggregate amount of $100.1 million to the Counterparties pursuant to the Convertible Note Hedge Transactions. The Convertible Note Hedge Transactions cover, subject to anti-dilution adjustments substantially similar to those in the Convertible Notes, approximately 2.8 million shares of the Company's common stock, the same number of shares initially underlying the Convertible Notes, at a strike price of approximately $165.65, subject to customary anti-dilution adjustments. The Convertible Note Hedge Transactions will expire upon the maturity of the Convertible Notes, subject to earlier exercise or termination. Exercise of the Convertible Note Hedge Transactions would reduce the number of shares of the Company's common stock outstanding, and therefore would be antidilutive.

3.4.    ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

Subsequent Event

Exertis

In October 2021, the Company acquired certain business assets of Stampede Presentation Products, Inc. d/b/a Exertis (“Exertis”), a global distribution company, in exchange for $39.7 million, subject to customary adjustments related to working capital. The acquisition qualifies as a business combination for accounting purposes and will support the recent acquisition of Furrion Holdings Limited ("Furrion") by allowing the Company to provide logistics and warehousing to serve Furrion's North American customer base.

Acquisitions Completed During the Nine Months Ended September 30, 20202021

PolyplasticFurrion

In September 2021, the Company acquired 100 percent of the share capital of Furrion, a leading distributor of a large range of appliances and other products to OEMs and aftermarket customers in the RV, specialty vehicle, utility trailer, horse trailer, marine, transit bus, and school bus industries. The total fair value of consideration, net of cash acquired, was approximately $146.7 million. The Company paid $50.5 million in cash consideration at closing, net of cash acquired, with $31.3 million due on each of the first and second anniversaries of the acquisition in September 2022 and September 2023. The deferred acquisition fixed payments are recorded at their respective discounted present values in the Condensed Consolidated Balance Sheet in accrued expenses and other current liabilities and other long-term liabilities at September 30, 2021.

In 2019, the Company and Furrion agreed to terminate an exclusive distribution and supply agreement, and transition all sale and distribution of Furrion products then handled by the Company to Furrion. Effective January 1, 2020, Furrion took responsibility 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 the date of the Furrion acquisition in September 2021, the Company had a receivable balance of $35.0 million and Furrion had a corresponding payable balance. In direct connection with the acquisition negotiations, the receivable and payable were
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LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
effectively settled in the acquisition and the receivable balance is included within the approximate $146.7 million of consideration transferred. No gain or loss was recognized in the effective settlement of the receivable.

The purchase price is subject to customary adjustments for cash, working capital, and indebtedness. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date, in both the Company's OEM and Aftermarket Segments. As this acquisition 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 in the process of determining the fair value of the assets acquired and liabilities assumed for the opening balance sheet, including net working capital, leases, fixed assets, deferred taxes, uncertain tax positions, and the fair value of intangible assets. The current estimates for intangible assets are based on the Company's historical acquisitions and estimated projections for the acquired company. These estimates will be updated to the valuation when it is finalized within the measurement period (not to exceed 12 months from the acquisition date). The acquisition of this business was preliminarily recorded as of the acquisition date as follows (in thousands):

Cash consideration, net of cash acquired$50,534 
Effective settlement of receivable34,956 
Discounted value of fixed deferred consideration61,191 
Total fair value of consideration given$146,681 
Identifiable intangible assets$95,000 
Other assets acquired and liabilities assumed, net5,811 
Tax liabilities(28,704)
Total fair value of net assets acquired$72,107 
Goodwill (not tax deductible)$74,574 

The Company incurred costs during the three and nine months ended September 30, 2021 related specifically to this acquisition of $0.8 million and $2.1 million, respectively, which are included in selling, general, and administrative expenses in the Condensed Consolidated Statement of Income.

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.

Schaudt

In April 2021, the Company acquired 100 percent of the equity interests of Polyplastic Group B.V. (with its subsidiaries “Polyplastic”Schaudt GmbH Elektrotechnik & Apparatebau ("Schaudt"), a premier windowleading supplier toof electronic controls and energy management systems for the caravanningEuropean caravan industry headquarteredlocated in Rotterdam, Netherlands.Markdorf, Germany. The purchase price was $95.8approximately $29.4 million. The purchase price is subject to customary adjustments for cash, working capital, and indebtedness. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date, primarily in the Company's OEM Segment. The Company is in the process of determining the fair value of the assets acquired and liabilities assumed for the opening balance sheet, including net working capital, fixed assets, and the fair value of intangible assets. As this acquisition is not considered to
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LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
have a material impact on the Company's financial statements, pro forma results of operations and other disclosures are not presented. The acquisition of this business was preliminarily recorded as of the acquisition date as follows (in thousands):

Cash consideration, net of cash acquired$29,383 
Customer relationships$10,000 
Other identifiable intangible assets2,500 
Net tangible assets564 
Total fair value of net assets acquired$13,064 
Goodwill (not tax deductible)$16,319 

The customer relationships intangible asset is being amortized over its estimated useful life of 8 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.

Ranch Hand

In April 2021, the Company acquired 100 percent of the equity interests of Kaspar Ranch Hand Equipment, LLC ("Ranch Hand"), a manufacturer of custom bumpers, grill guards, and steps for the automotive aftermarket headquartered in Shiner, Texas. The purchase price was approximately $56.9 million, plus contingent consideration up to $3.0 million. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date, primarily in the Company's Aftermarket Segment. The Company is in the process of determining the fair value of the assets acquired and liabilities assumed for the opening balance sheet, including the fair value of intangible assets. As this acquisition 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 acquisition of this business was preliminarily recorded on the acquisition date as follows (in thousands):

Cash consideration, net of cash acquired$56,857 
Contingent consideration3,000 
Total fair value of consideration given$59,857 
Customer relationships$24,200 
Other identifiable intangible assets9,100 
Net tangible assets16,923 
Total fair value of net assets acquired$50,223 
Goodwill (tax deductible)$9,634 

The customer relationships intangible asset is being amortized over its estimated useful life of 13 years. The fair value of this asset was 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.

Other Acquisitions in 2021

During the first nine months of 2021, the Company completed 2 other acquisitions totaling $17.8 million of cash purchase consideration, plus holdback payments of $2.1 million to be paid over the next two years and contingent consideration of up to $2.0 million. Holdback payments of $0.5 million were paid during the nine months ended September 30, 2021. The preliminary purchase price allocations resulted in $8.7 million of goodwill (tax deductible) and $7.8 million of acquired identifiable intangible assets.
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LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The accounting for these acquisitions is incomplete at September 30, 2021. The estimated fair values of assets acquired and liabilities assumed are based on preliminary allocations and will be finalized during the respective measurement periods, which will not exceed 12 months from the respective acquisition dates. As these acquisitions are not considered to have a material impact on the Company's financial statements, pro forma results of operations and other disclosures are not presented.

Acquisitions with Measurement Period Adjustments During the Nine Months Ended September 30, 2021

Veada

In December 2020, the Company acquired 100 percent of the outstanding capital stock of Veada Industries, Inc. ("Veada"), a manufacturer and distributor of boat seating and marine accessories based in New Paris, Indiana. The purchase price was $69.0 million, net of cash acquired, plus contingent considerationwhich included initial holdback payments of $12.2 million to be paid over the next two years. Holdback payments of $3.9 million were paid; these holdback payment requirements were reduced by $0.5 million during the nine months ended September 30, 2021 due to net working capital true-ups. The remaining holdback payments are recorded in the Condensed Consolidated Balance Sheet in accrued expenses and other current liabilities ($6.0 million) and other long-term liabilities ($1.8 million) at September 30, 2021. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date, primarily in the Company's OEM Segment.

During the nine months ended September 30, 2021, the Company adjusted the preliminary purchase price allocation reported at December 31, 2020 to account for updates to net working capital balances and assumptions and estimates related to the fair value of fixed assets and intangible assets. 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.

Challenger

In November 2020, the Company acquired substantially all of the business assets of Challenger Door, LLC ("Challenger"), a leading manufacturer and distributor of branded doors for the RV industry and products for specialty and cargo trailers, based in Nappanee, Indiana. The purchase price was $35.0 million, which included holdback payments of up to $7.7$4.5 million based on future salesto be paid over the next two years. These holdback payment requirements were reduced by this operation.$1.7 million during the nine months ended September 30, 2021 due to net working capital true-ups. The remaining holdback payments are recorded in the Condensed Consolidated Balance Sheet in accrued expenses and other current liabilities ($1.8 million) and other long-term liabilities ($1.0 million) at September 30, 2021. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition 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.

During the threenine months ended September 30, 2020,2021, the Company adjusted the preliminary purchase price allocation reported at June 30,December 31, 2020 to account for updates to net working capital balances and assumptions and estimates which increasedrelated to the fair value of customer relationshipsfixed assets and other intangible assets by $10.0 million, and decreased net tangible assets, excluding pension obligations by $0.4 million. The valuationsassets. 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 assumed pension plan obligations and intangible assets are still in process.acquisition date. The purchase price allocation is subject to adjustment for the fair value of intangible assets as additional information is obtained within the measurement period (not to exceed 12 months from the acquisition date). The
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LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Goodwill

Goodwill by reportable segment was as follows:
(In thousands)OEM SegmentAftermarket SegmentTotal
Net balance – December 31, 2020$305,953 $148,775 $454,728 
Acquisitions – 202174,059 35,194 109,253 
Measurement period adjustments9,456 (23)9,433 
Foreign currency translation(4,539)10 (4,529)
Net balance – September 30, 2021$384,929 $183,956 $568,885 
Goodwill represents the excess of the total consideration given in an acquisition of thisa business was recorded, as updated, onover the acquisition date as followsfair 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.
(in thousands):
Cash consideration, net of cash acquired$95,766 
Contingent consideration2,796 
Total fair value of consideration given$98,562 
Customer relationship and other identifiable intangible assets$63,626 
Net tangible assets, excluding pension obligation15,460 
Unfunded pension benefit obligation(28,665)
Total fair value of net assets acquired$50,421 
Goodwill (not tax deductible)$48,141 
Other Intangible Assets

Other intangible assets consisted of the following at September 30, 2021:
(In thousands)Gross
Cost
Accumulated
Amortization
Net
Balance
Estimated Useful
Life in Years
Customer relationships$450,736 $118,405 $332,331 6to17
Patents109,195 51,517 57,678 3to20
Trade names (finite life)125,012 16,284 108,728 3to20
Trade names (indefinite life)7,600 — 7,600 Indefinite
Non-compete agreements12,064 4,890 7,174 3to6
Other309 207 102 2to12
Purchased research and development4,687 — 4,687 Indefinite
Other intangible assets$709,603 $191,303 $518,300    

Other intangible assets consisted of the following at December 31, 2020:
(In thousands)Gross
Cost
Accumulated
Amortization
Net
Balance
Estimated Useful
Life in Years
Customer relationships$398,613 $95,443 $303,170 6to17
Patents92,128 47,090 45,038 3to20
Trade names (finite life)69,686 11,272 58,414 3to20
Trade names (indefinite life)7,600 — 7,600 Indefinite
Non-compete agreements6,478 4,617 1,861 3to6
Other309 194 115 2to12
Purchased research and development4,687 — 4,687 Indefinite
Other intangible assets$579,501 $158,616 $420,885    

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LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5.    INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out (FIFO) method) or net realizable value. Cost includes material, labor, and overhead. Inventories consisted of the following at:
 September 30,December 31,
(In thousands)20212020
Raw materials$590,194 $356,921 
Work in process46,646 24,189 
Finished goods153,811 112,789 
Inventories, net$790,651 $493,899 

6.    FIXED ASSETS

Fixed assets consisted of the following at:
 September 30,December 31,
(In thousands)20212020
Fixed assets, at cost$825,415 $750,138 
Less accumulated depreciation and amortization404,362 362,920 
Fixed assets, net$421,053 $387,218 

7.    ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following at:
 September 30,December 31,
(In thousands)20212020
Employee compensation and benefits$95,870 $62,555 
Deferred acquisition payments and contingent consideration*53,637 16,627 
Current portion of accrued warranty30,436 32,451 
Customer rebates7,206 23,670 
Other96,573 52,897 
Accrued expenses and other current liabilities$283,722 $188,200 
* Includes current portion of contingent consideration (Note 11) and deferred consideration and holdback payments related to acquisitions (Note 4).
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, (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 months ended September 30:
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LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)20212020
Balance at beginning of period$47,091 $47,167 
Provision for warranty expense18,798 14,443 
Warranty liability from acquired businesses5,611 — 
Warranty costs paid(22,054)(16,568)
Balance at end of period49,446 45,042 
Less long-term portion19,010 15,320 
Current portion of accrued warranty at end of period$30,436 $29,722 
Warranty costs paid for the nine months ended September 30, 2021 include $3.0 million of payments related to a specific warranty issue known at the time of acquisition of CURT Acquisition Holdings, Inc. (with its subsidiaries, "CURT") in December 2019. These payments will be reimbursed to the Company by the sellers of CURT under the terms of the stock purchase agreement.

8.    PENSION PLANS

The acquisition of Polyplastic Group B.V. in January 2020 included the assumption of two partially-funded defined benefit pension plans (the "Dutch pension plans") based in the Netherlands. The Dutch pension plans, which are qualified defined benefit pension plans, provide benefits based on years of service and average pay. The benefits earned by the employees are immediately vested. The Company funds the future obligations of the Dutch pension plans by purchasing an insurance contract from a large multi-national insurance company. Each year, the Company will makemakes premium payments to the insurance company (1) to provide for the benefit obligation of the current year of service based on each employee's age, gender, and current salary, and (2) for indexations for both active and post-active participants. The Company determines the fair value of the plan assetassets with the assistance of an actuary using observableunobservable inputs (Level 2)3), which is determined as the present value of the accrued benefits guaranteed by the insurer. The Company recorded the estimated unfunded pension benefit obligationcomponents of the Dutch pension plans in other long-term liabilities on the Condensed Consolidated Balance Sheet. The key assumptions used to measure the benefit obligation at the acquisition date were a discount rate of 1.2 percent, an expected rate of return on plan assets of 1.2 percent, wage inflation of 2.0 percent, and expected indexation that conforms to the growth path established by Dutch pension law, which ranged from 0.0 percent at acquisition to 2.0 percent in 2033. The Company also recorded a deferred tax asset related to the Dutch pension plans, which is included in net tangible assets in the above table. Contributions and net periodic pension costscost for the Dutch pension plans were not material for the period from the acquisition date through September 30, 2020.as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2021202020212020
Net service cost$(1,084)$(859)$(3,300)$(2,484)
Interest cost(163)(259)(495)(745)
Expected return on plan assets105 161 322 463 
Administrative charges(71)(73)(214)(203)
Net periodic pension cost$(1,213)$(1,030)$(3,687)$(2,969)

The customer relationship intangible asset is being amortized over its estimated useful life of 15 years. The fair value of this asset was determined using a discounted cash flow model, which is a level 3 input in the fair value hierarchy. The
18
12

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 with Measurement Period Adjustments During the Nine Months Ended September 30, 2020

CURT

In December 2019, the Company acquired 100 percent of the equity interests of CURT Acquisition Holdings, Inc. (with its subsidiaries “CURT”), a leading manufacturer and distributor of branded towing products and truck accessories for the aftermarket, headquartered in Eau Claire, Wisconsin. The purchase price was $336.6 million, net of cash acquired. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date, primarily in the Company’s Aftermarket Segment.

During the nine months ended September 30, 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, and to adjust the purchase price for final net working capital balances. 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 purchase price allocation is subject to adjustment as additional information is obtained within the measurement period (not to exceed 12 months from the acquisition date). The acquisition of this business was recorded, as updated, on the acquisition date as follows (in thousands):
Preliminary at December 31, 2019Measurement Period AdjustmentsAs Adjusted at September 30, 2020
Cash consideration, net of cash acquired$337,640 $(1,053)$336,587 
Assets Acquired
Accounts receivable$28,611 $— $28,611 
Inventories88,765 (6,648)82,117 
Fixed assets24,036 — 24,036 
Customer relationship112,000 (7,800)104,200 
Tradename and other identifiable intangible assets37,705 (300)37,405 
Operating lease right-of-use assets27,925 — 27,925 
Other tangible assets4,060 (1,550)2,510 
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 $(14,546)$220,175 
Goodwill (not tax deductible)$102,919 $13,493 $116,412 

The fair values of the customer relationship and tradename intangible assets are being amortized over their estimated useful lives of 16 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.

13

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Lewmar Marine Ltd.

In August 2019, the Company acquired 100 percent of the equity interests of Lewmar Marine Ltd. and related entities (collectively, “Lewmar”), a supplier of leisure marine equipment, headquartered in Havant, United Kingdom. The purchase price was $43.2 million, net of cash acquired. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date in the Company’s OEM Segment and Aftermarket Segment.

During the nine months ended September 30, 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 acquisition of this business was recorded, as updated, on the acquisition date as follows (in thousands):
Preliminary at December 31, 2019Measurement Period AdjustmentsAs Adjusted at September 30, 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 assets3,286 (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 

The customer 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.

Goodwill

Goodwill by reportable segment was as follows:
(In thousands)OEM SegmentAftermarket SegmentTotal
Net balance – December 31, 2019$215,620 $135,494 $351,114 
Acquisitions – 202048,141 48,141 
Measurement period adjustments(2,251)12,613 10,362 
Foreign currency translation3,575 (124)3,451 
Net balance – September 30, 2020$265,085 $147,983 $413,068 

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.

14

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Other Intangible Assets

Other intangible assets consisted of the following at September 30, 2020:
(In thousands)Gross
Cost
Accumulated
Amortization
Net
Balance
Estimated Useful
Life in Years
Customer relationships$352,370 $88,674 $263,696 6to17
Patents88,340 45,691 42,649 3to20
Trade names (finite life)63,766 10,516 53,250 3to20
Trade names (indefinite life)7,600 — 7,600 Indefinite
Non-compete agreements6,379 4,439 1,940 3to6
Other309 190 119 2to12
Purchased research and development4,687 — 4,687 Indefinite
Other intangible assets$523,451 $149,510 $373,941    

Other intangible assets consisted of the following at December 31, 2019:
(In thousands)Gross
Cost
Accumulated
Amortization
Net
Balance
Estimated Useful
Life in Years
Customer relationships$319,934 $69,008 $250,926 6to17
Patents76,206 44,611 31,595 3to19
Trade names (finite life)50,917 7,086 43,831 3to20
Trade names (indefinite life)7,600 — 7,600 Indefinite
Non-compete agreements7,598 4,947 2,651 3to6
Other309 173 136 2to12
Purchased research and development4,687 — 4,687 Indefinite
Other intangible assets$467,251 $125,825 $341,426    

4.    INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out (FIFO) method) or net realizable value. Cost includes material, labor, and overhead. Inventories consisted of the following at:
 September 30,December 31,
(In thousands)20202019
Raw materials$261,724 $256,850 
Work in process19,186 23,653 
Finished goods88,250 113,104 
Inventories, net$369,160 $393,607 

5.    FIXED ASSETS

Fixed assets consisted of the following at:
 September 30,December 31,
(In thousands)20202019
Fixed assets, at cost$719,007 $678,367 
Less accumulated depreciation and amortization350,585 312,058 
Fixed assets, net$368,422 $366,309 
15

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

6.    ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following at:
 September 30,December 31,
(In thousands)20202019
Employee compensation and benefits$68,125 $45,612 
Current portion of accrued warranty29,722 29,898 
Customer rebates23,094 14,129 
Other60,457 42,781 
Accrued expenses and other current liabilities$181,398 $132,420 

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, (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 months ended September 30:
(In thousands)20202019
Balance at beginning of period$47,167 $46,530 
Provision for warranty expense14,443 24,861 
Warranty costs paid(16,568)(21,741)
Balance at end of period45,042 49,650 
Less long-term portion15,320 15,940 
Current portion of accrued warranty at end of period$29,722 $33,710 

7.9.    LONG-TERM INDEBTEDNESS

Long-term indebtedness consisted of the following at:
September 30,December 31, September 30,December 31,
(In thousands)(In thousands)20202019(In thousands)20212020
Convertible NotesConvertible Notes$460,000 $— 
Revolving Credit LoanRevolving Credit Loan305,074 394,888 
Term LoanTerm Loan$288,750 $300,000 Term Loan273,750 285,000 
Revolving Credit Loan286,140 266,214 
Shelf-Loan FacilityShelf-Loan Facility50,000 50,000 Shelf-Loan Facility50,000 50,000 
OtherOther12,426 16,349 Other9,324 9,652 
Unamortized deferred financing feesUnamortized deferred financing fees(1,379)(1,774)Unamortized deferred financing fees(11,759)(1,291)
635,937 630,789 1,086,389 738,249 
Less current portionLess current portion(19,861)(17,883)Less current portion(74,311)(17,831)
Long-term indebtednessLong-term indebtedness$616,076 $612,906 Long-term indebtedness$1,012,078 $720,418 

Amended Credit Agreement

On December 14, 2018, the Company and certain of its subsidiaries refinanced its credit agreement with JPMorgan Chase, N.A., Wells Fargo Bank, N.A., Bank of America, N.A., and other bank lenders (as amended, the “Amended Credit Agreement”). The Amended Credit Agreement amended and restated an existing credit agreement dated April 27, 2016 and now expires on December 14, 2023. The Amended Credit Agreement increased the revolving credit facility from $325.0 million to $600.0 million, and permits the Company to borrow up to $250.0 million in approved foreign currencies, including Australian dollars, Canadian dollars, pounds sterling, and euros ($156.1160.1 million, or €133.0€138.0 million drawn at September 30, 2020)2021).

16

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
On December 19, 2019, the Company and certain of its subsidiaries 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 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 Amended Credit Agreement was increased from $600.0 million to $900.0 million.

On May 7, 2021, the Company and certain of its subsidiaries entered into an Amendment No. 2 of the Amended Credit Agreement with several banks, which modified provisions to, among other things, permit the issuance of the Convertible Notes and permit the entry into the related Convertible Note Hedge Transactions and Warrant transactions ("Warrant Transactions"). See Note 12 of the Notes to Condensed Consolidated Financial Statements for further details of the Convertible Note Hedge Transactions and Warrant Transactions.

On September 7, 2021, the Company and certain of its subsidiaries entered into an Amendment No. 3 of the Amended Credit Agreement with several banks, which modified provisions of the Amended Credit Agreement, to, among other things, permit the Company to acquire Furrion and to revise the benchmark replacement language relating to Eurocurrency borrowings.

Interest on borrowings under the revolving credit facility 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 (0.4(0.375 percent at September 30, 2020)2021) depending on the Company’s 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 0.875 percent to 1.625 percent (1.625(1.375 percent at
19

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2020)2021) depending on the Company’s total net leverage ratio. At September 30, 2020,2021, the Company had $2.9$27.8 million in issued, but undrawn, standby letters of credit under the revolving credit facility. Availability under the Company’s revolving credit facility was $310.9$267.2 million at September 30, 2020.2021.

Shelf-Loan Facility

On February 24, 2014, the Company and certain of its subsidiaries entered into a $150.0 million 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, 2020.2021. The net proceeds of the Series B Notes were used to repay the Series A Notes. On November 11, 2019, the Company and certain of its subsidiaries amended and restated the Shelf-Loan Facility to provide for a new $200.0 million shelf facility pursuant to which the Series B Notes are currently outstanding and to conform certain covenants to the Amended Credit Agreement. The Shelf-Loan Facility expires on November 11, 2022.

On March 31, 2020, the Company and certain of its subsidiaries 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. On September 21, 2020, the Company and certain of its subsidiaries entered into a Second Amendment to the Shelf-Loan Facility to conform additional covenants to the Amended Credit Agreement. TheOn May 7, 2021, the Company and certain of its subsidiaries entered into a Third Amendment to the Shelf-Loan Facility expires on November 11, 2022.to permit the issuance of the Convertible Notes and permit the entry into the related Convertible Note Hedge Transactions and Warrant Transactions. On September 7, 2021, the Company and certain of its subsidiaries entered into a Fourth Amendment to the Shelf-Loan Facility to permit the Company to, among other things, acquire Furrion.

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 B 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.

Convertible Notes

On May 13, 2021, the Company issued $460.0 million in aggregate principal amount of 1.125 percent convertible senior notes due 2026 in a private placement to certain qualified institutional buyers, resulting in net proceeds to the Company of approximately $448.0 million after deducting the initial purchasers' discounts and offering expenses payable by the Company. The Convertible Notes bear interest at a coupon rate of 1.125 percent per annum, payable semiannually in arrears on May 15 and November 15 of each year, beginning on November 15, 2021. The Convertible Notes will mature on May 15, 2026, unless earlier converted, redeemed, or repurchased, in accordance with their terms. No sinking fund is provided for the Convertible Notes. There are no registration rights associated with the Convertible Notes or the common stock issuable upon conversion of the Convertible Notes.

The initial conversion rate of the Convertible Notes is 6.0369 shares of the Company's common stock per $1,000 principal amount of the Convertible Notes, which is equal to an initial conversion price of approximately $165.65 per share of the Company's common stock. The conversion rate of the Convertible Notes is subject to adjustment upon the occurrence of certain specified events, but will not be adjusted for accrued and unpaid interest on any Convertible Note being converted, except in limited circumstances. In addition, upon the occurrence of a make-whole fundamental change (as defined in the Indenture) or upon a notice of redemption, the Company will, in certain circumstances, increase the conversion rate for a holder that elects to convert its Convertible Notes in connection with such make-whole fundamental change or notice of redemption, as the case may be.

Prior to the close of business on the business day immediately preceding January 15, 2026, the Convertible Notes are convertible at the option of the holders only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021 (and only during such calendar quarter), if the last reported sale price (as defined in the Indenture) per share of the Company's common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding
20

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
calendar quarter is greater than or equal to 130 percent of the conversion price for the Convertible Notes on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the "measurement period") in which the trading price (as defined in the Indenture) per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98 percent of the product of the last reported sale price of the Company's common stock and the conversion rate on each such trading day; (3) if the Company calls such Convertible Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the Convertible Notes called (or deemed called) for redemption; or (4) upon the occurrence of certain specified corporate events described in the Indenture. On or after January 15, 2026, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Convertible Notes at any time, regardless of the foregoing circumstances. Upon conversion, the Company will pay cash up to the aggregate principal amount of the notes to be converted and pay or deliver, as the case may be, cash, shares of the Company's common stock, or a combination of cash and shares of the Company's common stock, at the Company's election, in respect of the remainder, if any, of the Company's conversion obligation in excess of the aggregate principal amount of the notes being converted.

The Company may not redeem the Convertible Notes prior to May 20, 2024. On or after May 20, 2024, the Company may redeem for cash all or any portion of the Convertible Notes, at the Company's option, if the last reported sale price of the Company's common stock has been at least 130 percent of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100 percent of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. Upon the occurrence of a fundamental change (as defined in the Indenture), subject to certain conditions, holders of the Convertible Notes may require the Company to repurchase for cash all or any portion of their Convertible Notes in principal amounts of $1,000 or an integral multiple thereof at a repurchase price equal to 100 percent of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest on such notes to, but not including, the fundamental change repurchase date (as defined in the Indenture).

The Convertible Notes are senior unsecured obligations and rank senior in right of payment to all of the Company's indebtedness that is expressly subordinated in right of payment to the Convertible Notes, equal in right of payment with all the Company's liabilities that are not so subordinated, effectively junior to any of the Company's secured indebtedness to the extent of the value of the assets securing such indebtedness, and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries. The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the named trustee or the holders of at least 25 percent of the aggregate principal amount of the outstanding Convertible Notes may declare 100 percent of the principal of, and accrued and unpaid interest, if any, on all the outstanding Convertible Notes to be due and payable.

The Convertible Notes are not registered securities nor listed on any securities exchange but may be actively traded by qualified institutional buyers. The fair value of the Convertible Notes of $478.4 million at September 30, 2021 was estimated using Level 1 inputs, as it is based on quoted prices for these instruments in active markets.

General

At September 30, 2020,2021, the fair value of the Company’sCompany's long-term debt under the Amended Credit Agreement and the 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 Amended Credit Agreement and the 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.subsidiaries (including up to 65 percent of the equity interests of certain "controlled foreign corporations").

Pursuant to the Amended Credit Agreement and Shelf-Loan Facility, the Company shall not permit its net leverage ratio to exceed certain limits, shall maintain a minimum debt service coverage ratio, and must meet certain other financial requirements. At September 30, 2020,2021, the Company was in compliance with all such requirements.

17

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Amended Credit Agreement and the Shelf-Loan Facility include a maximum net leverage ratio covenant which limits the amount of consolidated outstanding indebtedness that the Company may incur on a trailing twelve-month EBITDA, as defined in the Amended Credit Agreement and the Shelf-Loan Facility. This limitation did not impact the Company’sCompany's ability to incur additional indebtedness under its revolving credit facility at September 30, 2020.2021. The aggregatecombined remaining availability
21

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
under the revolving credit facility and the potential additional notes issuable under the Shelf-Loan Facility was $460.9$417.2 million at September 30, 2020.2021. The Company believes the availability of $267.2 million under the revolving credit facility and the potential issuances under the Shelf-Loan Facility,Amended Credit Agreement, along with its cash flows from operations, are adequate to finance the Company’s anticipated cash requirements for the next twelve months.

8.10.    LEASES

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 66 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 recognizedincrease 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 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 incurredthe three and includednine months ended September 30, 2021 compared to the three and nine months ended September 30, 2020 was primarily driven by capacity expansions and leases assumed 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.recent acquisitions. The components of lease cost were as follows:
Three Months Ended 
September 30,
Nine Months Ended 
September 30,
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)(in thousands)2020201920202019(in thousands)2021202020212020
Operating lease costOperating lease cost$8,343 $5,481 $24,319 $16,263 Operating lease cost$11,280 $8,343 $31,695 $24,319 
Short-term lease costShort-term lease cost475 522 1,744 1,996 Short-term lease cost1,247 475 3,122 1,744 
Variable lease costVariable lease cost553 501 1,700 1,331 Variable lease cost923 553 2,354 1,700 
Total lease costTotal lease cost$9,371 $6,504 $27,763 $19,590 Total lease cost$13,450 $9,371 $37,171 $27,763 

9.11.    COMMITMENTS AND CONTINGENCIES

Contingent Consideration

In connection with several business acquisitions, if certain performance targets for the acquired products are achieved, the Company would pay additional cash consideration. The Company has recorded a liability for the fair value of this contingent consideration at September 30, 2020,2021, based on the present value of the expected future cash flows using a market participant’s weighted average cost of capital of 11.513.3 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 months ended September 30, 2020:
18

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2021:
(In thousands)
Balance at beginning of period$4,3964,609 
Acquisitions2,7965,000 
Payments(9)(3,183)
Accretion (a)
591173 
Fair value adjustments (a) (b)
(1,885)394 
Net foreign currency translation adjustment269 (141)
Balance at end of the period (c)(b)
6,1586,852 
Less current portion in accrued expenses and other current liabilities(4,163)(5,006)
Total long-term portion in other long-term liabilities$1,9951,846 
(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 September 30, 20202021 were $7.3$8.4 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
22

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In July 2015, the Company entered into a 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 provided the Company with the rights to distribute Furrion’s complete line of products to OEMs and aftermarket customers in the RV, specialty vehicle, utility trailer, horse trailer, marine, transit bus, manufactured housing, and school bus industries throughout the United States and Canada.(Unaudited)

In August 2019, the Company and Furrion agreed to terminate the 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 took responsibility 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 September 30, 2020 and December 31, 2019, the Company had a receivable of $49.0 million and $40.0 million, respectively, recorded for purchases of inventory stock by Furrion. The agreement required Furrion to make periodic payments throughout 2020 and the first six months of 2021. Due to the impacts of the COVID-19 pandemic, the Company is currently in negotiations that would impact the timing of the repayment of this receivable. Accordingly, the Company has classified $27.0 million of the receivable as long-term, and recorded the receivable at its present value at September 30, 2020 based on the currently proposed payment plan.

Product Recalls

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 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.

Environmental

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, 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.

19

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Litigation

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, 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, 2020,2021, would not be material to the Company’s financial position or results of operations.

10.12.    STOCKHOLDERS’ EQUITY

The following table summarizes information about shares of the Company’sCompany's common stock at:
 September 30,December 31,
(In thousands)20202019
Common stock authorized75,000 75,000 
Common stock issued28,241 28,133 
Treasury stock3,087 3,087 

The following reconciliation details the denominator used in the computation of basic and diluted earnings per share for the periods indicated:
 Three Months Ended 
September 30,
Nine Months Ended 
September 30,
(In thousands)2020201920202019
Weighted average shares outstanding for basic earnings per share25,162 25,031 25,125 24,984 
Common stock equivalents pertaining to stock-based awards151 125 95 69 
Weighted average shares outstanding for diluted earnings per share25,313 25,156 25,220 25,053 
Equity instruments excluded from diluted net earnings per share calculation as the effect would have been anti-dilutive119 123 113 122 
 September 30,December 31,
(In thousands)20212020
Common stock authorized75,000 75,000 
Common stock issued28,360 28,243 
Treasury stock3,087 3,087 
Common stock outstanding25,273 25,156 

The table below summarizes the regular quarterly dividends declared and paid during the periods ended September 30, 20202021 and December 31, 2019:2020:
(In thousands, except per share data)(In thousands, except per share data)Per ShareRecord DatePayment DateTotal Paid(In thousands, except per share data)Per ShareRecord DatePayment DateTotal Paid
First Quarter 2019$0.60 03/08/1903/22/19$14,999 
Second Quarter 20190.65 06/07/1906/21/1916,267 
Third Quarter 20190.65 09/06/1909/20/1916,267 
Fourth Quarter 20190.65 12/06/1912/20/1916,280 
Total 2019$2.55 $63,813 
First Quarter 2020First Quarter 2020$0.65 03/06/2003/20/20$16,321 First Quarter 2020$0.65 03/06/2003/20/20$16,321 
Second Quarter 2020Second Quarter 20200.65 06/05/2006/19/2016,349 Second Quarter 20200.65 06/05/2006/19/2016,349 
Third Quarter 2020Third Quarter 20200.75 09/04/2009/18/2018,865 Third Quarter 20200.75 09/04/2009/18/2018,865 
Fourth Quarter 2020Fourth Quarter 20200.75 12/04/2012/18/2018,866 
Total 2020Total 2020$2.05 $51,535 Total 2020$2.80 $70,401 
First Quarter 2021First Quarter 2021$0.75 03/12/2103/26/21$18,939 
Second Quarter 2021Second Quarter 20210.90 06/04/2106/18/2122,739 
Third Quarter 2021Third Quarter 20210.90 09/03/2109/17/2122,747 
Total 2021Total 2021$2.55 $64,425 

2023

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Deferred and Restricted Stock Units

The LCI Industries 2018 Omnibus Incentive Plan (“the 2018 Plan”(the "2018 Plan") provides for the grant or issuance of stock units, including those that have deferral periods, such as deferred stock units (“DSUs”("DSUs"), and those with time-based vesting provisions, such as restricted stock units (“RSUs”("RSUs"), to directors, employees, and other eligible persons. Recipients of DSUs and RSUs are entitled to receive shares at the end of a specified vesting or deferral period. Holders of DSUs and RSUs receive dividend equivalents based on dividends granted to 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”(the "2011 Plan") or the 2018 Plan, as applicable, are summarized as follows:
Number of SharesWeighted Average PriceNumber of SharesWeighted Average Price
Outstanding at December 31, 2019346,148 $87.54 
Outstanding at December 31, 2020Outstanding at December 31, 2020335,087 $90.04 
IssuedIssued4,582 89.53 Issued3,662 132.68 
GrantedGranted150,319 97.70 Granted104,930 142.98 
Dividend equivalentsDividend equivalents8,185 86.22 Dividend equivalents5,547 129.82 
ForfeitedForfeited(15,219)91.53 Forfeited(4,883)115.05 
VestedVested(153,411)87.64 Vested(163,179)87.63 
Outstanding at September 30, 2020340,604 $89.98 
Outstanding at September 30, 2021Outstanding at September 30, 2021281,164 $109.85 

Stock Awards and Performance Stock Units

The 2011 Plan provides for stock awards and the 2018 Plan provides for performance stock units (“PSUs”("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 2011 Plan or the 2018 Plan as applicable, are summarized as follows:
Number of SharesWeighted Average PriceNumber of SharesWeighted Average Price
Outstanding at December 31, 2019129,128 $96.21 
Outstanding at December 31, 2020Outstanding at December 31, 2020119,727 $89.92 
GrantedGranted66,029 98.98Granted40,102 143.54
Dividend equivalentsDividend equivalents2,636 87.02Dividend equivalents2,891 129.79
ForfeitedForfeited(73,581)107.91Forfeited(1,053)96.55
VestedVested(5,152)100.46Vested(12,593)95.03
Outstanding at September 30, 2020119,060 $89.92 
Outstanding at September 30, 2021Outstanding at September 30, 2021149,074 $104.01 

Convertible Note Hedge Transactions

The Company paid an aggregate amount of $100.1 million to the Counterparties pursuant to the Convertible Note Hedge Transactions. The Convertible Note Hedge Transactions cover, subject to anti-dilution adjustments substantially similar to those in the Convertible Notes, approximately 2.8 million shares of the Company's common stock, the same number of shares initially underlying the Convertible Notes, at a strike price of approximately $165.65, subject to customary anti-dilution adjustments. The Convertible Note Hedge Transactions will expire upon the maturity of the Convertible Notes, subject to earlier exercise or termination. The Convertible Note Hedge Transactions are expected generally to reduce the potential dilutive effect to the Company's common stock of the conversion of the Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of the Convertible Notes which are converted, as the case may be, in the event the price per share of the Company's common stock, as measured under the terms of the Convertible Note Hedge Transactions, is greater than the strike price of the Convertible Note Hedge Transactions. The Convertible Note Hedge Transactions meet the criteria in Accounting Standards Codification ("ASC") 815-40 to be classified within stockholders' equity, and therefore the Convertible Note Hedge Transactions are not revalued after their issuance.

The Convertible Notes and the Convertible Note Hedge Transactions will be integrated for tax purposes. The accounting impact of this tax treatment makes the Convertible Note Hedge Transactions deductible as original issue discount
24

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
for tax purposes over the term of the Convertible Notes, and results in a $24.4 million deferred tax asset recognized through equity.

Warrant Transactions

In addition, concurrently with entering into the Convertible Note Hedge Transactions, the Company entered into separate, privately-negotiated Warrant Transactions with the Counterparties, whereby the Company sold Warrants to purchase 2.8 million shares of the Company's common stock at an initial strike price of $259.84 per share, subject to customary anti-dilution adjustments, which is approximately 100 percent above the last reported sale price of the Company's common stock on May 10, 2021. The Company received aggregate proceeds of $48.5 million from the Warrant Transactions with the Counterparties, with such proceeds partially offsetting the costs of entering into the Convertible Note Hedge Transactions. The Warrants expire in August 2026. If the market value per share of the Company's common stock, as measured under the Warrant Transactions, exceeds the strike price of the Warrants, the Warrants will have a dilutive effect on the Company's earnings per share, unless the Company elects, subject to certain conditions, to settle the Warrants in cash. The Warrants meet the criteria in ASC 815-40 to be classified within stockholders' equity, and therefore the Warrants are not revalued after issuance.

11.13.    FAIR VALUE MEASUREMENTS

Recurring

The following table presents the Company’sCompany's assets and liabilities measured at fair value on a recurring basis at:
September 30, 2020December 31, 2019 September 30, 2021December 31, 2020
(In thousands)(In thousands)TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3(In thousands)TotalLevel 1Level 2Level 3TotalLevel 1Level 2Level 3
AssetsAssets        
Pension plan assets (Note 8)Pension plan assets (Note 8)$52,123 $— $— $52,123 $61,936 $— $— $61,936 
LiabilitiesLiabilitiesLiabilities
Contingent considerationContingent consideration$6,158 $$6,158 $4,396 $$$4,396 Contingent consideration$6,852 $— $— $6,852 $4,609 $— $— $4,609 

21

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Contingent Consideration Related to Acquisitions

Liabilities for contingent consideration related to acquisitions were estimated at fair value using management’smanagement'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’sparticipant's weighted average cost of capital. Over the next six years, the Company’sCompany's long-term sales growth forecasts for products subject to contingent consideration arrangements average approximately 1413 percent per year. For further information on the inputs used in determining the fair value, and a roll forward of the contingent consideration liability, see Note 911 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.

12.14.    SEGMENT REPORTING

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

The OEM Segment, which accounted for 7781 percent and 8877 percent of consolidated net sales for the nine months ended September 30, 20202021 and 2019,2020, respectively, manufactures or distributes a broad array of engineered components for the leading OEMs in the recreation and transportation product markets, consisting primarily of RVs and adjacent industries, including buses; trailers used to haul boats, livestock, equipment and other cargo; trucks; boats; trains; manufactured homes;
25

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
and modular housing. Approximately 6162 percent of the Company’sCompany's OEM Segment net sales for the nine months ended September 30, 20202021 were of components for travel trailer and fifth-wheel RVs.

The Aftermarket Segment, which accounted for 2319 percent and 1223 percent of consolidated net sales for the nine months ended September 30, 20202021 and 2019,2020, respectively, supplies engineered components to the related aftermarket channels of the recreation and 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.

Decisions concerning the allocation of the Company’sCompany's resources are made by the Company’sCompany's chief operating decision maker (“CODM”("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’ssegment'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 2 of the Notes to Consolidated Financial Statements ofin the Company’sCompany's Annual Report on Form 10-K for the year ended December 31, 2019.2020.

22

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following tables present the Company’sCompany's revenues disaggregated by segment and geography based on the billing address of the Company’sCompany's customers:
Three Months Ended September 30, 2020Three Months Ended September 30, 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$407,485 $9,565 $417,050 $311,446 $2,610 $314,056 
Motorhomes29,707 14,734 44,441 25,944 8,866 34,810 
Adjacent Industries OEMs151,572 28,991 180,563 143,264 19,420 162,684 
Total OEM Segment net sales588,764 53,290 642,054 480,654 30,896 511,550 
Aftermarket Segment:
Total Aftermarket Segment net sales179,510 6,165 185,675 70,284 4,387 74,671 
Total net sales$768,274 $59,455 $827,729 $550,938 $35,283 $586,221 

Nine Months Ended September 30, 2020Nine Months Ended September 30, 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$916,144 $20,532 $936,676 $964,838 $9,140 $973,978 
Motorhomes70,126 37,115 107,241 86,808 34,359 121,167 
Adjacent Industries OEMs406,727 91,579 498,306 455,754 45,799 501,553 
Total OEM Segment net sales1,392,997 149,226 1,542,223 1,507,400 89,298 1,596,698 
Aftermarket Segment:
Total Aftermarket Segment net sales455,799 15,142 470,941 199,686 11,077 210,763 
Total net sales$1,848,796 $164,368 $2,013,164 $1,707,086 $100,375 $1,807,461 

Three Months Ended September 30, 2021Three Months Ended September 30, 2020
(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$586,830 $15,599 $602,429 $407,485 $9,565 $417,050 
Motorhomes39,679 23,580 63,259 29,707 14,734 44,441 
Adjacent Industries OEMs246,582 34,011 280,593 151,572 28,991 180,563 
Total OEM Segment net sales873,091 73,190 946,281 588,764 53,290 642,054 
Aftermarket Segment:
Total Aftermarket Segment net sales204,566 14,462 219,028 179,510 6,165 185,675 
Total net sales$1,077,657 $87,652 $1,165,309 $768,274 $59,455 $827,729 
Nine Months Ended September 30, 2021Nine Months Ended September 30, 2020
(In thousands)U.S. (a)Int’l (b)TotalU.S. (a)Int’l (b)Total
OEM Segment:
RV OEMs:
Travel trailers and fifth-wheels$1,582,182 $50,877 $1,633,059 $916,144 $20,532 $936,676 
Motorhomes118,872 74,233 193,105 70,126 37,115 107,241 
Adjacent Industries OEMs690,759 110,262 801,021 406,727 91,579 498,306 
Total OEM Segment net sales2,391,813 235,372 2,627,185 1,392,997 149,226 1,542,223 
Aftermarket Segment:
Total Aftermarket Segment net sales585,973 46,129 632,102 455,799 15,142 470,941 
Total net sales$2,977,786 $281,501 $3,259,287 $1,848,796 $164,368 $2,013,164 
(a) Net sales to customers in the United States of America
(b) Net sales to customers in countries domiciled outside of the United States of America

The following table presents the Company’s operating profit by segment:
 Three Months Ended 
September 30,
Nine Months Ended 
September 30,
(In thousands)2020201920202019
Operating profit:
OEM Segment$65,533 $38,347 $110,485 $131,434 
Aftermarket Segment28,900 10,806 48,996 31,131 
Total operating profit$94,433 $49,153 $159,481 $162,565 

2326

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following table presents the Company’sCompany's operating profit by segment:
 Three Months Ended 
September 30,
Nine Months Ended 
September 30,
(In thousands)2021202020212020
Operating profit:
OEM Segment$64,136 $65,533 $206,757 $110,485 
Aftermarket Segment24,888 28,900 77,680 48,996 
Total operating profit$89,024 $94,433 $284,437 $159,481 

The following table presents the Company's revenue disaggregated by product:
Three Months Ended 
September 30,
Nine Months Ended 
September 30,
(In thousands)2020201920202019
OEM Segment:
Chassis, chassis parts, and slide-out mechanisms$253,182 $193,354 $586,985 $610,946 
Windows and doors173,102 145,360 438,829 453,343 
Furniture and mattresses105,226 79,512 250,068 264,431 
Axles and suspension solutions42,708 31,405 103,450 97,597 
Other67,836 61,919 162,891 170,381 
Total OEM Segment net sales642,054 511,550 1,542,223 1,596,698 
Total Aftermarket Segment net sales185,675 74,671 470,941 210,763 
Total net sales$827,729 $586,221 $2,013,164 $1,807,461 
Three Months Ended 
September 30,
Nine Months Ended 
September 30,
(In thousands)2021202020212020
OEM Segment:
Chassis, chassis parts, and slide-out mechanisms$351,837 $253,182 $948,135 $586,985 
Windows and doors254,526 173,102 761,168 438,829 
Furniture and mattresses184,741 105,226 508,789 250,068 
Axles and suspension solutions68,120 42,708 184,092 103,450 
Other87,057 67,836 225,001 162,891 
Total OEM Segment net sales946,281 642,054 2,627,185 1,542,223 
Total Aftermarket Segment net sales219,028 185,675 632,102 470,941 
Total net sales$1,165,309 $827,729 $3,259,287 $2,013,164 

2427

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

This Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company’sCompany's Condensed Consolidated Financial Statements and Notes thereto included in Item 1 of Part 1 of this Report,report, as well as the Company’sCompany's Annual Report on Form 10-K for the year ended December 31, 2019.2020.

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

The Company hasWe have two reportable segments, the OEM Segment and the Aftermarket Segment. Intersegment sales are insignificant. At September 30, 2020, the Company2021, we operated over 90100 manufacturing and distribution facilities located throughout the United States and in Canada, Germany, Ireland, Italy, the Netherlands, and the United Kingdom. See Note 1214 of the Notes to Condensed Consolidated Financial Statements for further information regarding the Company’sour segments.

The Company’sOur OEM Segment manufactures or distributes a broad array of engineered components for the leading OEMs of leisure and mobile transportation industries. Approximately 6162 percent of the Company’sour OEM Segment net sales for the twelve months ended September 30, 20202021 were of components for travel trailer and fifth-wheel RVs, including:
● Steel chassis and related componentsEntry, luggage, patio,Electric and ramp doorsmanual entry steps
● Axles and suspension solutionsFurnitureAwnings and mattressesawning accessories
● Slide-out mechanisms and solutionsElectric and manual entry stepsElectronic components
● Thermoformed bath, kitchen, and other productsAwnings and awning accessoriesAppliances
● Vinyl, aluminum, and frameless windowsElectronic componentsAir conditioners
● Manual, electric, and hydraulic stabilizer and 
   leveling systems
Televisions and sound systems
● Entry, luggage, patio, and ramp doorsOther accessories
● Furniture and mattresses

The Aftermarket Segment supplies many of these engineered components to the related aftermarket channels of the recreation and 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, appliances, air conditioners, sound systems, and the sale of replacement glass and awnings to fulfill insurance claims.

Most industries where the Company sellswe sell products or where itsour products are used historically have been seasonal and are generally at the highest levels when the weather is moderate. Accordingly, the Company’sour 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, consumer confidence on retail sales of RVs and other products for which the Company sells itswe sell our 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, 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 this may be different in 2020the remainder of 2021 and future years as a result of the COVID-19 pandemic and related impacts.

IMPACT OF COVID-19 UPDATE

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 COVID-19 pandemic has caused significant uncertainty and disruption in the global economy and financial markets. The Company continuesCOVID-19 pandemic had an adverse effect on our financial results during the first half of 2020 due to closely monitor the impact of COVID-19 on all aspects of its business. For risks relating to the COVID-19 outbreak, see Item 1A. Risk Factors in Part II of this Report.

2528

LCI INDUSTRIES
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Healthgovernment-mandated plant shutdowns. We took a variety of actions during 2020 to help mitigate the adverse impacts, including temporary cost savings measures and Safetydelays and reductions in capital expenditures.

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 membersActivity 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. Team members 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.

The Company enacted rigorous health and safety protocols as it resumed production in early May. For example, the Company implemented health screenings of team members for potential symptoms, conducts extensive and frequent disinfecting of workspaces, implemented social distancing restrictions for production personnel, provided masks to team members who must be physically present, and set up temporary COVID-19 testing sites for team members with symptoms or potential exposure. These health and safety protocols remain in effect currently.

Operations

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, face mask requirements, 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. These temporary production shutdowns continued through April, and most of the Company's facilities reopened in early May. By later in the second quarter, all of the Company's facilities were fully operational,end markets we serve sequentially improved as 2020 progressed, and theythis trend has continued to be fully operational through the third quarter of 2020. The shutdowns negatively impacted the Company's results of operations through the first halfnine months of the second quarter of 2020.

The Company instituted several cost saving and cash preservation measures starting in late March and continuing into the second quarter 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 the 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. As the Company returned to fully operational status later in the second quarter, several of the cost savings and cash preservation measures listed above were reversed, including executive salary and director retainer reductions, furloughs, and hiring freezes. Due to the uncertainty surrounding the COVID-19 pandemic, the Company remains disciplined with other cost savings and cash preservation measures, such as delaying certain capital expenditures and reducing or eliminating non-critical business expenses including travel.

Most of the OEM customers the Company supplies in North America resumed 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, and by later in the second quarter, all of the Company's facilities were fully operational. Retail demand,2021, especially in the RV and marine OEM markets picked up significantly
26

LCI INDUSTRIES
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
later in the second quarter, leading to aand our Aftermarket Segment. With RV retail demand at record month of June for net sales for the Company with fully operational facilities. Retail demand continued at elevated levels through the third quarter of 2020 with net sales for the Company remaining at record levels. While production at the Company's facilities has continued through the third quarter, 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 16first nine months of consecutive year-over-year declines, and provided an indication that the inventory re-balancing2021, the industry had been addressing had reached its conclusion.has faced challenges with supply chain constraints, rising material costs, and a tightened labor market, especially in northern Indiana. To address these challenges, we have strategically managed working capital, including intentionally building up levels of certain inventory items to avoid future shortages. We continue to focus on our culture and leadership development programs to focus on team member retention and regularly hold hiring events, with COVID-19 safety measures, to fill open positions. As a result of the COVID-19 pandemicwe build inventory levels and many government mandated stay-at-home ordersinvest in additional production capacity, we also closely monitor our liquidity, and campground closures, retail sales abruptly declined beginning in mid-March. Despite the abrupt decline in retail salesmay need to the Company's OEM channels, many aftermarket channels remained open through the period as dealerships remained openseek additional financing, though such additional financing may not be available on terms favorable to service customers' products.us, or at all. See "Liquidity and Capital Resources" below for further discussion.

The Company stayedhealth and safety of our team members have remained our top priority. We continue to maintain the rigorous health and safety protocols we established in close communication2020. We leased a location to provide drive-thru rapid COVID-19 tests for our team members in northern Indiana. We have encouraged team members to seek vaccination when eligible and partnered with its OEM customers in regardsa local hospital to host private vaccination days for our eligible northern Indiana team members and their plans to resume operations and ramped up production quickly to meet its customers' demand when facilities reopened in early May. As noted above, later in the second quarter, retail demand in the North American RV and marine markets increased significantly resulting in the highest monthly total net sales in Company history in June, July, August and September. The sharp rebound in sales following the shutdowns also resulted in a significant increase in accounts receivable. The Company continuesfamilies.

We continue to closely monitor cash collectionsthe impact of its trade receivables, and to date has not identified any significant collection concerns with its customers.

The Company experienced a positive impact following the initial shutdown from the COVID-19 pandemic, as interest rates and fuel prices remain at historic lows, both of which are favorable for the industries the Company serves, and retail consumers are looking 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, can 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 ultimately be counter to, and outweigh, any positive vacation and recreation factors.

Suppliers

Certainon all aspects of our suppliers have or are expected to face difficulties maintaining operations due to government-ordered restrictions, future outbreaks, and shelter-in-place mandates. Although the Company regularly monitors 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, which has continued through the third quarter and is expected to continue into the foreseeable future. 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.

Liquidity

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. During the second quarter, the Company also engaged with banking partners regarding options relative to future liquidity. The Company made net repayments on its revolving credit facility of approximately $162 million from May through September 30, 2020 as production resumed and operating cash flow improved with the increase in retail demand. The Company also ceased its discussions with banking partners about financing options. See "Liquidity and Capital Resources - Credit Facilities" section below for further discussion on liquidity.

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(Continued)
FURRION UPDATE

In August 2019, the Company and Furrion Limited ("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 took responsibility 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 September 30, 2020 the Company had a receivable of $49.0 million recorded for purchases of inventory stock by Furrion. The agreement required Furrion to make periodic payments throughout 2020 and the first six months of 2021. Due to the impacts of the COVID-19 pandemic, the Company is currently in negotiations that would impact the timing of the repayment of this receivable. Accordingly, the Company has classified $27.0 million of the receivable as long-term, and recorded the receivable at its present value at September 30, 2020 based on the currently proposed payment plan.

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.

(In thousands)Q1 2019Q2 2019Q3 2019Q4 2019Full Year 2019
OEM Segment Furrion sales:
RV OEMs:
Travel trailers and fifth-wheel RVs$23,574 $25,636 $23,375 $22,393 $94,978 
Motorhomes830 1,037 971 780 3,618 
Adjacent industries OEMs490 612 573 607 2,282 
Total OEM Segment Furrion sales24,894 27,285 24,919 23,780 100,878 
Aftermarket Segment Furrion sales:
Total Aftermarket Segment Furrion sales8,915 9,545 8,473 3,614 30,547 
Total Furrion Sales$33,809 $36,830 $33,392 $27,394 $131,425 

(In thousands)Q1 2018Q2 2018Q3 2018Q4 2018Full Year 2018
OEM Segment Furrion sales:
RV OEMs:
Travel trailers and fifth-wheel RVs$23,367 $22,964 $23,117 $21,572 $91,020 
Motorhomes739 812 828 875 3,254 
Adjacent industries OEMs468 485 309 281 1,543 
Total OEM Segment Furrion sales24,574 24,261 24,254 22,728 95,817 
Aftermarket Segment Furrion sales:
Total Aftermarket Segment Furrion sales3,951 7,011 5,454 3,250 19,666 
Total Furrion Sales$28,525 $31,272 $29,708 $25,978 $115,483 
business.

INDUSTRY BACKGROUND

OEM Segment

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).
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(Continued)
The annual sales cycle for the RV industry generally starts in October after the “Open House”"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. Due to the COVID-19 pandemic, the 2021 and 2020 Open House wasHouses were canceled. 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 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 nine months of 2020, the Company’s2021, our primary RV market, decreased oneincreased 51 percent to 264,900401,000 units, compared to the first nine months of 2019,2020, primarily due to OEM plant shutdowns in response to COVID-19, partially offset by higherincreased retail demand.demand and dealers rebuilding inventory levels. Retail demand for travel trailer and fifth-wheel RVs increased seven15 percent in the first nine months of 20202021 compared to the same period in 2019.2020. Retail demand is typically revised upward in subsequent months, primarily due to delayed RV registrations.
While the Company measures itswe measure our 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
 WholesaleRetailUnit Impact on
 UnitsChangeUnitsChangeDealer Inventories
Quarter ended September 30, 2020110,100 37%151,100 28%(41,000)
Quarter ended June 30, 202066,800 (34)%131,100 (6)%(64,300)
Quarter ended March 31, 202088,000 4%74,500 (4)%13,500
Quarter ended December 31, 201983,300 (8)%63,600 (6)%19,700
Twelve months ended September 30, 2020348,200 (2)%420,300 5%(72,100)
Quarter ended September 30, 201980,600 (13)%118,000 (6)%(37,400)
Quarter ended June 30, 2019101,000 (13)%138,800 (7)%(37,800)
Quarter ended March 31, 201984,800 (27)%77,400 (5)%7,400
Quarter ended December 31, 201890,300 (17)%67,500 (1)%22,800
Twelve months ended September 30, 2019356,700 (18)%401,700 (5)%(45,000)
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(Continued)
     Estimated
 WholesaleRetailUnit Impact on
 UnitsChangeUnitsChangeDealer Inventories
Quarter ended September 30, 2021136,000 24%126,300 (21)%9,700
Quarter ended June 30, 2021133,800 100%180,200 36%(46,400)
Quarter ended March 31, 2021131,200 49%114,400 52%16,800
Quarter ended December 31, 2020115,200 38%89,400 41%25,800
Twelve months ended September 30, 2021516,200 48%510,300 19%5,900
Quarter ended September 30, 2020110,100 37%159,100 35%(49,000)
Quarter ended June 30, 202066,800 (34)%132,500 (5)%(65,700)
Quarter ended March 31, 202088,000 4%75,100 (3)%12,900
Quarter ended December 31, 201983,300 (8)%63,600 (6)%19,700
Twelve months ended September 30, 2020348,200 (2)%430,300 7%(82,100)
According to the RVIA, industry-wide wholesale shipments of motorhome RVs in the first nine months of 2020 decreased 222021 increased 51 percent to 28,30042,800 units compared to the first nine months of 2019,2020, primarily due to OEM plant shutdowns in response to COVID-19.COVID-19 in the 2020 period. Retail demand for motorhome RVs decreased 10increased 4 percent year-over-year in the first nine months of 2020, following2021, compared to a 132 percent year-over-year decrease in retail demand in the same period of 2019.2020.

Adjacent Industries

The Company’sOur 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; boats; trains; manufactured homes; and modular housing (collectively, “Adjacent Industries”"Adjacent Industries"). In many cases, OEM customers of the Adjacent Industries are affiliated with RV OEMs through related subsidiaries. The Company believesWe believe 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.

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(Continued)
Aftermarket Segment

Many of the Company’sour OEM Segment products are also sold through various aftermarket channels, including dealerships, wholesale distributors, and service centers, as well as direct to retail customers via the Internet. This includes discretionary accessories and replacement service parts. The Company hasWe have teams dedicated to product technical and installation training as well as marketing support for itsour Aftermarket Segment customers. The CompanyWe also supportssupport multiple call centers to provide responses to customers for both product delivery and technical support. This support is designed for a rapid response to critical repairs, so customer downtime is minimized. The Company's call centers are considered essential services and have continued to provide service throughout the COVID-19 pandemic. The Aftermarket Segment also includes biminis, covers, buoys, fenders to the marine industry, towing products, truck accessories, appliances, air conditioners, televisions, sound systems, and the sale of replacement glass and awnings to fulfill insurance claims. Many of the optional upgrades and non-critical replacements for RVs are purchased outside the normal product selling seasons, thereby causing certain Aftermarket Segment sales to be counter-seasonal, but this may be different in 2020the remainder of 2021 and future years as a result of the COVID-19 pandemic and related impacts.

According to the RVIA,Go RVing, estimated RV ownership in the United States hasas of 2020 had increased to over nine11 million units. Additionally, as a result of a vibrant secondary market, one-third of current owners purchased their RV new while the remaining two-thirds purchased a previously owned RV.households. This vibrant secondary market is a key driver for aftermarket sales, as the Company anticipateswe anticipate owners of previously owned RVs will likely upgrade their units as well as replace parts and accessories which have been subjected to normal wear and tear.

RESULTS OF OPERATIONS

Consolidated Highlights

Consolidated net sales in the third quarter of 20202021 were $827.7 million,$1.2 billion, 41 percent higher than consolidated net sales for the same period of 20192020 of $586.2$827.7 million. The increase was primarily driven by a recovery inrecord RV retail demand and strong Aftermarket Segment sales growth. Net sales from acquisitions completed in 2020 and the RVfirst nine months
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(Continued)
of 2021, primarily Furrion Holdings Limited ("Furrion"), Veada Industries, Inc. and marine markets beginning laterChallenger Door, LLC, contributed approximately $78.5 million in the second quarter and continuing into the third quarter of 2020, as well as sales from acquired businesses of $98.6 million primarily from the CURT and Polyplastic acquisitions.2021.
Net income for the third quarter of 20202021 was $68.3$63.4 million, or $2.70$2.49 per diluted share, compared to net income of $35.8$68.3 million, or $1.42$2.70 per diluted share, for the same period of 2019.2020.
Consolidated operating profit during the third quarter of 20202021 was $94.4$89.0 million compared to $49.2$94.4 million in the same period of 2019.2020. Operating profit margin was 11.47.6 percent in the third quarter of 20202021 compared to 8.411.4 percent in the same period of 2019,2020. The decline is primarily as a result of fixed costs being spread over a larger sales base.increased raw material, labor, and freight costs.
The cost of aluminum and steel used in certain of the Company’sour manufactured components decreasedincreased in the third quarter of 20202021 compared to the same period of 2019.2020. Raw material costs are subject to continued fluctuation and are being offset, in part, by contractual selling prices that are indexed to select commodities.
The increase in selling, general, and administrative costs of $40.7 million was driven by incremental costs from recent acquisitions of $30.7 million, including warehousing and distribution costs of $13.1 million associated with CURT, and amortization on intangible assets from acquired businesses of $4.2 million, in the third quarter of 2020 compared to the same period of 2019.
The effective tax rate of 26.224.9 percent for the nine months ended September 30, 20202021 was higherlower than the comparable prior year period of 24.626.2 percent, primarily due to a year-over-year reductionthe reduced rate impact of permanent tax differences with the growth in income before income taxes and an increase in the excess tax benefitsbenefit related to the vesting of equity-based compensation awards the reduction of income before income taxes, and an increaseinvestments in non-deductible expenses,life insurance contracts, as discussed below under “Income"Income Taxes."
In March, June, and September 2020, the Company2021, we paid a quarterly dividend of $0.65, $0.65,$0.75, $0.90, and $0.75$0.90 per share, aggregating to $16.3$18.9 million, $16.3$22.7 million, and $18.9$22.7 million respectively.

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(Continued)
OEM Segment - Third Quarter

Net sales of the OEM Segment in the third quarter of 20202021 increased $130.5$304.2 million, compared to the same period of 2019.2020. Net sales of components to OEMs were to the following OEMs markets for the three months ended September 30:30 were:
(In thousands)(In thousands)20202019Change(In thousands)20212020Change
RV OEMs:RV OEMs: RV OEMs: 
Travel trailers and fifth-wheelsTravel trailers and fifth-wheels$417,050 $314,056 33 %Travel trailers and fifth-wheels$602,429 $417,050 44 %
MotorhomesMotorhomes44,441 34,810 28 %Motorhomes63,259 44,441 42 %
Adjacent Industries OEMsAdjacent Industries OEMs180,563 162,684 11 %Adjacent Industries OEMs280,593 180,563 55 %
Total OEM Segment net salesTotal OEM Segment net sales$642,054 $511,550 26 %Total OEM Segment net sales$946,281 $642,054 47 %

According to the RVIA, industry-wide wholesale unit shipments for the three months ended September 30 were:
20202019Change 20212020Change
Travel trailer and fifth-wheel RVsTravel trailer and fifth-wheel RVs110,100 80,600 37 %Travel trailer and fifth-wheel RVs136,200 110,100 24 %
MotorhomesMotorhomes11,300 10,800 %Motorhomes13,300 11,300 18 %

The Company'sIn order to enhance comparability, our calculations of content in the OEM Segment discussion that follows were adjusted to remove the Company's sales of Furrion salesproducts from allperiods prior periods to enhance comparability between periods following the termination of the Company's distribution and supply agreement with Furrion at the end of 2019.

The trend in the Company’sour average product content per RV produced is an indicator of the Company’sour overall market share of components for new RVs. The Company’sOur average product content per type of RV, calculated based upon the Company’sour net sales of components to domestic RV OEMs for the different types of RVs produced for the twelve months ended September 30, divided by the industry-wide wholesale shipments of the different product mix of RVs for the same period, was:
Content per:Content per:20202019ChangeContent per:20212020Change
Travel trailer and fifth-wheel RVTravel trailer and fifth-wheel RV$3,428 $3,268 %Travel trailer and fifth-wheel RV$3,786 $3,428 10 %
MotorhomeMotorhome$2,399 $2,328 %Motorhome$2,732 $2,399 14 %

The Company’sOur average product content per type of RV excludes international sales and sales to the Aftermarket Segment and Adjacent Industries. Content per RV is impacted by market share gains, acquisitions, new product introductions, and changes in selling prices for the Company’sour products, as well as changes in the types of RVs produced industry-wide.

The Company’s increase in net sales to RV OEMs of travel trailers, fifth-wheel, and motorhome components during the third quarter of 2020 was primarily driven by a recovery in RV retail demand beginning later in the second quarter and continuing into the third quarter of 2020, partially offset by the termination of the Furrion supply agreement. The net sales increase further benefited from content gains during the third quarter of 2020.

The Company's increase in net sales to OEMs in Adjacent Industries during the third quarter of 2020 was driven by a recovery in retail demand for the marine industry and other adjacent markets beginning later in the second quarter and continuing into the third quarter of 2020.

Operating profit of the OEM Segment was $65.5 million in the third quarter of 2020, an increase of $27.2 million compared to the same period of 2019. The operating profit margin of the OEM Segment in the third quarter of 2020 increased to 10.2 percent compared to 7.5 percent for the same period of 2019 and was positively impacted by:
Leveraging of fixed costs over a larger sales base, net of lost Furrion product sales, which increased operating profit by $6.9 million related to fixed overhead costs and $9.5 million related to fixed selling, general, and administrative costs.
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(Continued)
Our increase in net sales to RV OEMs of travel trailers, fifth-wheel, and motorhome components during the third quarter of 2021 was primarily driven by a recovery in RV retail demand beginning later in the second quarter of 2020 and continuing through the third quarter of 2021. The net sales increase further benefited from content gains and price increases during the third quarter of 2021.

Our increase in net sales to OEMs in Adjacent Industries during the third quarter of 2021 was driven by acquisitions and a recovery in retail demand for the marine industry and other adjacent markets beginning later in the second quarter of 2020 and continuing through the third quarter of 2021.

Operating profit of the OEM Segment was $64.1 million in the third quarter of 2021, a decrease of $1.4 million compared to the same period of 2020. The operating profit margin of the OEM Segment in the third quarter of 2021 decreased to 6.8 percent compared to 10.2 percent for the same period of 2020 and the operating profit margin was negatively impacted by:
ReductionsIncreases in material commodity pricing of $5.6and production supplies, which negatively impacted operating profit by $98.3 million, primarily related to decreasedincreased steel and aluminum costs.
Increases in production labor costs due to higher production volumes and a tight labor market, which reduced operating profit by $15.7 million.
Increases in transportation costs, primarily for third party freight, which reduced operating profit by $5.7 million.
Partially offset by:
Selling price changes from contractual reductions indexedprices contractually tied to indexes of select commodities increased, resulting in an increase in operating profit of $5.3 million.$52.5 million compared to the same period of 2020.
Additional amortization relatedPricing changes to intangible assets from acquisitionstargeted products, resulting in an increase in operating profit of $31.4 million compared to the past twelve months,same period of 2020.
Leveraging of fixed costs over a larger sales base, which reducedincreased operating profit by $2.0 million.$11.5 million related to fixed selling, general, and administrative costs and $5.4 million related to fixed overhead costs.
Amortization expense on intangible assets for the OEM Segment was $6.9$8.6 million in the third quarter of 2020,2021, compared to $5.3$6.9 million in the same period of 2019.in 2020. Depreciation expense on fixed assets for the OEM Segment was $11.9$12.8 million in the third quarter of 2020,2021, compared to $11.4$11.9 million in the same period of 2019.2020.

OEM Segment – Year to Date

Net sales of the OEM Segment in the first nine months of 2020 decreased 32021 increased 70 percent, or $54.5 million,$1.1 billion, compared to the first nine months of 2019.2020. Net sales of components to OEMs were to the following markets for the nine months ended September 30:
(In thousands)(In thousands)20202019Change(In thousands)20212020Change
RV OEMs:RV OEMs:   RV OEMs:   
Travel trailers and fifth-wheelsTravel trailers and fifth-wheels$936,676 $973,978 (4)%Travel trailers and fifth-wheels$1,633,059 $936,676 74 %
MotorhomesMotorhomes107,241 121,167 (11)%Motorhomes193,105 107,241 80 %
Adjacent Industries OEMsAdjacent Industries OEMs498,306 501,553 (1)%Adjacent Industries OEMs801,021 498,306 61 %
Total OEM Segment net salesTotal OEM Segment net sales$1,542,223 $1,596,698 (3)%Total OEM Segment net sales$2,627,185 $1,542,223 70 %

According to the RVIA, industry-wide wholesale unit shipments for the nine months ended September 30, were:
20202019Change 20212020Change
Travel trailer and fifth-wheel RVsTravel trailer and fifth-wheel RVs264,900 266,400 (1)%Travel trailer and fifth-wheel RVs401,000 264,800 51 %
MotorhomesMotorhomes28,300 36,400 (22)%Motorhomes42,400 28,300 50 %

The Company’s decreaseOur increase in net sales to RV OEMs of travel trailers, fifth-wheel, and motorhome components during the first nine months of 2020 related to the termination of the Furrion supply agreement as well as declines2021 was primarily driven by a recovery in motorhome wholesale unit shipments. The net sales decrease was partially offset by content gains during the first nine months of 2020 for both travel trailer and fifth-wheel RVs and motorhomes.

The Company’s net sales to Adjacent Industries OEMs decreased during the first nine months of 2020, primarily due to OEM plant shutdowns in response to COVID-19. The net sales decrease was almost fully offset by market share gains. OEM marine net sales were $118.1 millionRV retail demand beginning later in the first nine months of 2020 a decrease of $8.9 million compared to the same period of 2019. The Company continues to believe there are significant opportunities in Adjacent Industries.

Operating profit of the OEM Segment was $110.5 million in the first nine months of 2020, a decrease of $20.9 million compared to the same period of 2019. The operating profit margin of the OEM Segment in the first nine months of 2020 decreased to 7.2 percent compared to 8.2 percent for the same period of 2019 and was negatively impacted by:
The impact of COVID-19 as OEMs suspended production beginning in March 2020 due to government mandates and a temporary reduction in customer demand during the COVID-19 pandemic, which negatively impacted operating profit by an estimated $31.0 million.
Selling price changes from contractual reductions indexed to select commodities of $18.8 million.
Additional amortization related to intangible assets from acquisitions in the past twelve months, which reduced operating profit by $5.8 million.
Partially offset by:
Reductions in material commodity pricing of $15.1 million, primarily related to decreased steel and aluminum costs.
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(Continued)
continuing through the first nine months of 2021. The net sales increase further benefited from content gains during the first nine months of 2021.

Our increase in net sales to OEMs in Adjacent Industries during the first nine months of 2021 was driven by acquisitions and a recovery in retail demand for the marine industry and other adjacent markets beginning later in the first nine months of 2020 and continuing through the first nine months of 2021. We continue to believe there are significant opportunities in Adjacent Industries.

Operating profit of the OEM Segment was $206.8 million in the first nine months of 2021, an increase of $96.3 million compared to the same period of 2020. The operating profit margin of the OEM Segment in the first nine months of 2021 increased to 7.9 percent compared to 7.2 percent for the same period of 2020 and the operating profit margin was positively impacted by:
InvestmentsLeveraging of fixed costs over a larger sales base, partially related to COVID-19 shutdowns in 2020, which increased operating profit by $72.2 million related to fixed selling, general, and administrative costs and $36.0 million related to fixed overhead costs.
Selling prices contractually tied to indexes of select commodities increased, resulting in an increase in operating profit of $69.9 million compared to the past several yearssame period of 2020.
Pricing changes to improvetargeted products, resulting in an increase in operating efficiencies, including lean manufacturing initiativesprofit of $51.3 million compared to the same period of 2020.
Partially offset by:
Increases in material commodity pricing, which negatively impacted operating profit by $165.8 million, primarily related to increased steel and increased use of automation,aluminum costs.
Increases in direct labor costs due to higher production volumes and a tight labor market, which reduced labor expensesoperating profit by $9.8$28.6 million.
Increases in transportation costs, primarily for third party freight, which reduced operating profit by $12.7 million.

Aftermarket Segment - Third Quarter

Net sales of the Aftermarket Segment in the third quarter of 20202021 increased 14918 percent, or $111.0$33.4 million, compared to the same period of 2019.2020. Net sales of components in the Aftermarket Segment were as follows for the three months ended September 30:
(In thousands)(In thousands)20202019Change(In thousands)20212020Change
Total Aftermarket Segment net salesTotal Aftermarket Segment net sales$185,675 $74,671 149 %Total Aftermarket Segment net sales$219,028 $185,675 18 %

The Company’sOur net sales to the Aftermarket Segment increased during the third quarter of 2020,2021, primarily due to acquisitions that contributed approximately $78.0 millionincreased consumer demand in sales, increases inthe outdoor recreational and transportation market share, and the Company’s focus on building out well-qualified, customer-focused teams, and infrastructure to service this market. The increase was partially offset by lost sales related to the termination of the Furrion supply agreement.our distributor customers rebuilding their inventory levels.

Operating profit of the Aftermarket Segment was $28.9$24.9 million in the third quarter of 2020, an increase2021, a decrease of $18.1$4.0 million compared to the same period of 2019 primarily due to sales from acquisitions.2020. The operating profit margin of the Aftermarket Segment was 11.4 percent in the third quarter of 2021, compared to 15.6 percent in the same period in 2020, compared to 14.5 percent in 2019, and the operating profit margin was positivelynegatively impacted by:
Leveraging of fixedIncreases in material commodity pricing and production supplies, which negatively impacted operating profit by $9.9 million, primarily related to increased steel and aluminum costs.
Increases in transportation costs, overprimarily for third party freight, which reduced operating profit by $3.9 million.
Increases in direct labor costs due to higher production volumes and a larger sales base, net of lost Furrion product sales,tight labor market, which increasedreduced operating profit by $1.8 million related to fixed overhead costs and $1.7 million related to fixed selling, general, and administrative costs.million.
Partially offset by:
Additional amortization and depreciation related to long-lived assets from the CURT and Lewmarrecent acquisitions, which reduced operating profit by $2.2$1.0 million.
Amortization expense on intangible assets for the Aftermarket Segment was $2.9 million in the third quarter of 2020, compared to $0.7 million in the same period of 2019. Depreciation expense on fixed assets for the Aftermarket Segment was $2.9 million in the third quarter of 2020, compared to $1.4 million in the same period of 2019.

Aftermarket Segment – Year to Date

Net sales of the Aftermarket Segment in the first nine months of 2020 increased 123 percent, or $260.2 million, compared to the same period of 2019. Net sales of components in the Aftermarket Segment were as follows for the nine months ended September 30:
(In thousands)20202019Change
Total Aftermarket Segment net sales$470,941 $210,763 123 %

The Company’s net sales to the Aftermarket Segment increased during the first nine months of 2020 primarily due to sales from acquisitions of $220.7 million and organic growth of $39.5 million.
Operating profit of the Aftermarket Segment was $49.0 million in the first nine months of 2020, an increase of $17.9 million compared to the same period of 2019, primarily due to sales from acquisitions, partially offset by the impact of COVID-19. The operating profit margin of the Aftermarket Segment was 10.4 percent in 2020, compared to 14.8 percent in 2019, and was negatively impacted by:
Sales mix of lower margin CURT and Lewmar products, which negatively impacted operating profit by $9.3 million.
The recognition of higher cost of sales due to the inventory fair value step-up for CURT of $7.3 million.
Additional amortization and depreciation related to long-lived assets from the CURT and Lewmar acquisitions, which reduced operating profit by $6.8million.
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LCI INDUSTRIES
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Partially offset by:
The benefitPricing changes to targeted products, resulting in an increase in operating profit of organic sales growth coupled with no$9.8 million compared to the same period of 2020.
Amortization expense on intangible assets for the Aftermarket Segment was $3.9 million in the third quarter of 2021, compared to $2.9 million in the same period of 2020. Depreciation expense on fixed assets for the Aftermarket Segment was $3.7 million in the third quarter of 2021, compared to $2.9 million in the same period of 2020.

Aftermarket Segment – Year to Date

Net sales of lower-margin Furrion productsthe Aftermarket Segment in the first nine months of 2021 increased 34 percent, or $161.2 million, compared to the same period of 2020. Net sales of components in the Aftermarket Segment were as a resultfollows for the nine months ended September 30:
(In thousands)20212020Change
Total Aftermarket Segment net sales$632,102 $470,941 34 %

Our net sales to the Aftermarket Segment increased during the first nine months of 2021 primarily due to organic growth of $135.8 million and sales from acquisitions of $25.4 million.
Operating profit of the terminationAftermarket Segment was $77.7 million in the first nine months of 2021, an increase of $28.7 million compared to the same period of 2020, primarily due to sales from organic growth, and the impact of COVID-19 in 2020. The operating profit margin of the Furrion supply agreement,Aftermarket Segment was 12.3 percent in the first nine months of 2021, compared to 10.4 percent in the same period in 2020, and the operating profit margin was positively impacted by:
Leveraging of fixed costs over a larger sales base, partially related to COVID-19 shutdowns in 2020, which increased operating profit by $6.0$16.8 million related to fixed selling, general, and administrative costs and $10.0 million related to fixed overhead costs.
Pricing changes to targeted products, resulting in an increase in operating profit of $17.5 million compared to the same period of 2020.
The recognition of higher cost of sales during the first nine months of 2020 due to the inventory fair value step-up for CURT of $7.3 million.
Partially offset by:
Increases in material commodity pricing and production supplies, which negatively impacted operating profit by $21.4 million, primarily related to increased steel and aluminum costs.
Increases in transportation costs, primarily for third party freight, which reduced operating profit by $13.7 million.
Increases in direct labor costs due to higher production volumes and a tight labor market, which reduced operating profit by $4.4 million.

Income Taxes

The effective tax rates for the nine months ended September 30, 2021 and 2020 and 2019 were 26.224.9 percent and 24.626.2 percent, respectively. The effective tax rate for the nine months ended September 30, 20202021 differed from the Federal statutory rate primarily due to state taxes, foreign taxes, and non-deductible expenses, partially offset by the recognition of excess tax benefits as a component of the provision for income taxes, and Federal and Indiana research and development credits. The increasedecrease in the effective tax rate for the nine months ended September 30, 20202021 as compared to the same period in 20192020 was primarily due primarily to a reductionthe decreased rate impact of permanent tax differences with the growth in income before income taxes and an increase in the excess tax benefitsbenefit related to the vesting of equity-based compensation awards an increaseand investments in non-deductible expenses, and lower income before income taxes.life insurance contracts.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

As of September 30, 2021, we had $72.6 million in cash and cash equivalents, and $267.2 million of availability under our revolving credit facility under the Amended Credit Agreement (as defined in Note 9 of the Notes to Condensed
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ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Consolidated Financial Statements). Additionally, we have the ability to request up to $150.0 million in additional Senior Promissory Notes be purchased by Prudential under our Shelf-Loan Facility (each as defined in Note 9 of the Notes to Condensed Consolidated Financial Statements), subject to Prudential's approval. See Note 9 of the Notes to Condensed Consolidated Financial Statements for a description of our credit facilities.

We maintain a level of liquidity sufficient to allow us to meet our cash needs in the short term. Over the long term, we manage our cash and capital structure to maximize shareholder return, maintain our financial condition, and maintain flexibility for our future strategic investments. We continuously assess our capital requirements, working capital needs, debt and leverage levels, debt and lease maturity schedules, capital expenditure requirements, dividends, future investments or acquisitions, and potential share repurchases. As discussed above under "COVID-19 Update," with RV retail demand at record levels through the first nine months of 2021, the industry has faced challenges with supply chain constraints, rising material costs, and a tightened labor market, especially in northern Indiana. To address these challenges, we have strategically managed working capital, including intentionally building up levels of certain inventory items to avoid future shortages, and have expanded our production capacity. As we build inventory levels and invest in additional production capacity, we also closely monitor our liquidity. In the event additional needs for cash arise, or if we refinance our existing debt, we may raise additional funds from a combination of sources, including the potential issuance of debt or equity securities. Additional financing might not be available on terms favorable to us, or at all.
We believe the availability under the revolving credit facility under the Amended Credit Agreement, along with our cash flows from operations, are adequate to finance our anticipated cash requirements for the next twelve months.

The Condensed Consolidated Statements of Cash Flows reflect the following for the nine months ended September 30:
(In thousands)(In thousands)20202019(In thousands)20212020
Net cash flows provided by operating activitiesNet cash flows provided by operating activities$212,487 $209,542 Net cash flows provided by operating activities$12,293 $212,487 
Net cash flows used in investing activitiesNet cash flows used in investing activities(119,600)(101,326)Net cash flows used in investing activities(216,872)(119,600)
Net cash flows used in financing activities(59,206)(94,825)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(853)(842)
Net increase in cash, cash equivalents, and restricted cash$32,828 $12,549 
Net cash flows provided by (used in) financing activitiesNet cash flows provided by (used in) financing activities224,186 (59,206)
Effect of exchange rate changes on cash and cash equivalentsEffect of exchange rate changes on cash and cash equivalents1,187 (853)
Net increase in cash and cash equivalentsNet increase in cash and cash equivalents$20,794 $32,828 

Cash Flows from Operations
Net cash flows provided by operating activities were $12.3 million in the first nine months of 2021, compared to $212.5 million in the first nine months of 2020, compared to $209.5 million in the first nine months of 2019.2020. The increasedecrease in net cash flows provided by operating activities was primarily due to changes in net assets and liabilities, net of acquisitions of businesses, which generated $313.0 million less cash than in the first nine months of 2020. During the first nine months of 2021, in an effort to address challenges with supply chain constraints, rising material costs, and a $12.1tightened labor market, we strategically managed working capital, including intentionally building up levels of certain inventory items and expanding production capacity. As a result, increases in inventory and receivables related to increased wholesale RV demand were the primary uses of cash generated from net assets. The decrease was partially offset by a $112.8 million increase in net income, adjusted for depreciation and amortization, stock-based compensation expense, deferred taxes, and other non-cash items. Changes in net assets and liabilities, net of acquisitions of businesses, in the first nine months of 2020 generated $9.2 million less cash than in the first nine months of 2019. Increased receivables as OEMs resumed production was the primary use of cash generated from net assets.
Over the long term, based on the Company’sour historical collection and payment patterns, as well as inventory turnover, and also giving consideration to emerging trends and changes to the sales mix, the Company expectswe expect working capital to increase or decrease equivalent to approximately 10 to 15 percent of the increase or decrease, respectively, in net sales. However, there are many factors that can impact this relationship, especially in the short term.
Depreciation and amortization was $73.4$80.2 million in the first nine months of 2020,2021, and is expected to be approximately $95 million$110 to $105$120 million for the full year 2020.2021. Non-cash stock-based compensation expense in the first nine months of 20202021 was $13.6$20.3 million. Non-cash stock-based compensation expense is expected to be approximately $15 million$25 to $20$30 million for the full year 2020.2021.

Cash Flows from Investing Activities
Cash flows used in investing activities of $216.9 million in the first nine months of 2021 were primarily comprised of $154.5 million for the acquisitions of businesses, net of cash acquired, and $73.9 million for capital expenditures. Cash flows
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LCI INDUSTRIES
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
used in investing activities of $119.6 million in the first nine months of 2020 were primarily comprised of $94.9 million for the acquisitions of businesses, net of cash acquired, and $28.7 million for capital expenditures. Cash flows used in investing activities of $101.3 million in the first nine months of 2019 were primarily comprised of $53.9 million for the acquisitions of businesses, net of cash acquired, and $47.8 million for capital expenditures.
The Company’sOur capital expenditures are primarily for replacement and growth.growth, and during the first nine months of 2021 have included capacity expansions to meet elevated demand. Over the long term, based on the Company’sour historical capital expenditures, the replacement portion of capital expenditures has averaged approximately one to two percent of net sales, while the growth portion has averaged approximately two to three percent of net sales. However, there are many factors that can impact actual spending compared to these historical averages.
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LCI INDUSTRIES
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
We estimate full year 2021 capital expenditures of $130 to $150 million, including capacity expansions to meet elevated demand, which we expect to fund with cash flows from operations or periodic borrowings under the revolving credit facility as needed.
Capital expenditures and acquisitions in the first nine months of 20202021 were funded by cash from operations, and borrowings under our credit agreement, and net proceeds from the Company's credit agreement. In response to the COVID-19 pandemic, the Company delayed certain non-essential capital expenditures. Although sales volume rebounded beginning in the second halfissuance of the second quarter, the Company plans to remain disciplined with capital spending going forward.our 1.125 percent convertible senior notes due 2026 (the "Convertible Notes"). Capital expenditures and acquisitions in the remainder of fiscal year 20202021 are expected to be funded primarily from cash generated from operations, as well as periodic borrowings under the Company’sour revolving credit facility.

Cash Flows from Financing Activities
Cash flows provided by financing activities of $224.2 million in the first nine months of 2021 were primarily comprised of proceeds from the issuance of the Convertible Notes and warrants to purchase 2.8 million shares of the Company's common stock (the "Warrants"), net of debt issuance costs, and from the privately negotiated call option contracts on the Company's common stock (the "Convertible Note Hedge Transactions") of $396.6 million, partially offset by $80.1 million in net repayments under our revolving credit facility, payments of quarterly dividends of $64.4 million, repayments of $13.4 million under the term loan and other borrowings, and cash outflows of $8.3 million related to vesting of stock-based awards, net of shares tendered for payment of taxes.
On May 13, 2021, we issued $460.0 million in aggregate principal amount of the Convertible Notes in a private placement to certain qualified institutional buyers, resulting in net proceeds to us of approximately $448.0 million after deducting initial purchasers' discounts and offering expenses payable by us on the Convertible Notes. In connection with the issuance of the Convertible Notes, we entered into the Convertible Note Hedge Transactions and Warrant Transactions. We used approximately $51.6 million of the net proceeds of the offering of the Convertible Notes to pay the $100.1 million cost of the Convertible Note Hedge Transactions (after such cost was partially offset by the $48.5 million of proceeds from the Warrant Transactions). The remainder of the net proceeds from the Convertible Notes were used to repay outstanding borrowings under our revolving credit facility, and for general corporate purposes. See Note 9 and Note 12 to the Notes to Condensed Consolidated Financial Statements for further description of these transactions.
Cash flows used in financing activities of $59.2 million in the first nine months of 2020 were primarily comprised of payments of quarterly dividends of $51.5 million, repayments of $15.4 million under theour term loan and other borrowings, and $12.7 million in net borrowings under the Company’s revolving credit facility. In addition, the Company had cash outflows of $4.8 million related to vesting of stock-based awards, net of shares tendered for payment of taxes.
Cash flows used in financing activities in the first nine months of 2019 were primarily comprised of $39.7 million in net repayments under the Company's revolving credit facility. In addition, the Company had cash outflows of $7.2 million related to the vesting of stock-based awards, net of shares tendered for payment of taxes.taxes, partially offset by $12.7 million of net borrowings under our revolving credit facility.
In connection with certain business acquisitions, if established sales targets for the acquired business are achieved, the Companywe will pay additional cash consideration. The Company hasWe have recorded a $6.2$6.9 million liability for the aggregate fair value of these expected contingent consideration liabilities at September 30, 2020.2021. For further information, see Note 911 of the Notes to Condensed Consolidated Financial Statements.
The Amended Credit FacilitiesAgreement and Shelf-Loan Facility include both financial and non-financial covenants. The covenants dictate that we shall not permit our net leverage ratio to exceed certain limits, shall maintain a minimum debt service coverage ratio, and must meet certain other financial requirements. At September 30, 2021, we were in compliance with all such requirements, and we expect to remain in compliance for the next twelve months.
We have paid regular quarterly dividends since 2016. Future dividend policy with respect to our common stock will be determined by our Board of Directors in light of our prevailing financial needs, earnings, and other relevant factors, including any limitations in our debt agreements, such as maintenance of certain financial ratios. In October 2018, our Board of Directors authorized a stock repurchase program. No shares were repurchased in the first nine months of 2021. See Note 712 of the Notes to Condensed Consolidated Financial Statements for a description ofadditional information related to our credit facilities.
The Company believes its cash flows from operations and the availability under the revolving credit facility and potential note issuances under the Shelf-Loan Facility (as defined in Note 7 of the Notes to Condensed Consolidated Financial Statements) are adequate to finance the Company’s anticipated cash requirements for the next twelve months.
The Company's debt agreements require that it maintain certain financial and other covenants. Although the Company currently expects continued compliance with its debt covenants and believes it has adequate liquidity, events resulting from the effects of COVID-19 may negatively impact the Company's ability to comply with these covenants or require the Company to pursue alternative financing.dividend program.

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LCI INDUSTRIES
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
CORPORATE GOVERNANCE

The Company isWe are in compliance with the corporate governance requirements of the Securities and Exchange Commission (“SEC”) and the New York Stock Exchange. The Company’sOur governance documents and committee charters and key practices have been posted to the “Investors” section of the Company’sour website (www.lci1.com) and are updated periodically. The website also contains, or provides direct links to, all SEC filings, press releases and investor presentations. The Company hasWe have also established a Whistleblower Policy, which includes a toll-free hotline (877-373-9123) to report complaints about the Company’sour accounting, internal controls, auditing matters or other concerns. The Whistleblower Policy and procedure for complaints can be found on the Company’sour website (www.lci1.com).

CONTINGENCIES

Information required by this item is included in Note 911 of the Notes to Condensed Consolidated Financial Statements.Statements and is incorporated herein by reference.

INFLATION

The prices of key raw materials, consisting primarily of steel and aluminum, and components used by the Companyus which are made from these raw materials, are influenced by demand and other factors specific to these commodities, rather than being directly affected by inflationary pressures. Prices of these commodities have historically been volatile, and over the past few months prices have continued to fluctuate. The Companyincrease. We did not experience any significant increases in itsour labor costs in the first nine months of 20202021 related to inflation. The increase in labor costs experienced in the first nine months of 2021 was primarily driven by increased overtime and temporary staffing due to a tight labor market.

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LCI INDUSTRIES
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
NEW ACCOUNTING PRONOUNCEMENTS

Information required by this item is included in Note 2 of the Notes to Condensed Consolidated Financial Statements.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Companyus 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 itswe evaluate our 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 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 itsWe base our 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.

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains certain “forward-looking statements” with respect to the Company’sour financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive position, growth opportunities, acquisitions, plans and objectives of management, markets for the Company’s common stock, the impact of legal proceedings, and other matters. Statements in this Form 10-Q that are not historical facts are “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended, and involve a number of risks and uncertainties.

Forward-looking statements, including, without limitation, those relating to the Company’s future business prospects, net sales, expenses and income (loss), capital expenditures, tax rate, cash flow, financial condition, liquidity, covenant compliance, consumerretail and wholesale demand, integration of acquisitions, R&D investments, and resumption or suspension of normal operations,industry trends, whenever they occur in this Form 10-Q are necessarily estimates reflecting the best judgment of the Company’s senior management at the time such statements were made. There are a number of factors, many of which are beyond the Company’s control, which could
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LCI INDUSTRIES
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
cause actual results and events to differ materially from those described in the forward-looking statements. These factors include, in addition to other matters described in this Form 10-Q, the impacts of COVID-19, or other future pandemics, on the global economy and on the Company's customers, suppliers, employees, business and cash flows, pricing pressures due to domestic and foreign competition, costs and availability of, and tariffs on, raw materials (particularly steel and aluminum) and other components, seasonality and cyclicality in the industries to which the Company sells itswe sell our products, availability of credit for financing the retail and wholesale purchase of products for which the Company sells itswe sell our components, inventory levels of retail dealers and manufacturers, availability of transportation for products for which the Company sells itswe sell our components, the financial condition of the Company’sour customers, the financial condition of retail dealers of products for which the Company sells itswe sell our components, retention and concentration of significant customers, the costs, pace of and successful integration of acquisitions and other growth initiatives, availability and costs of production facilities and labor, team member benefits, team member retention, realization and impact of expansion plans, efficiency improvements and cost reductions, the disruption of business resulting from natural disasters or other unforeseen events, the successful entry into new markets, the costs of compliance with environmental laws, laws of foreign jurisdictions in which the Company operates,we operate, other operational and financial risks related to conducting business internationally, and increased governmental regulation and oversight, information technology performance and security, the ability to protect intellectual property, warranty and product liability claims or product recalls, interest rates, oil and gasoline prices, and availability, the impact of international, national and regional economic conditions and consumer confidence on the retail sale of products for which the Company sells itswe sell our components, and other risks and uncertainties discussed more fully under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019,2020, and in the Company’s subsequent filings with the SEC, including the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020, and this Quarterly Report on Form 10-Q. Readers of this report are cautioned not to place undue reliance on these forward-looking statements, since there can be no assurance that these forward-looking statements will prove to be accurate. The Company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law.
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ITEM 3 – QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The Company isWe are exposed to market risk related to changes in short-term interest rates on our variable rate debt. Depending on the interest rate option selected as more fully described in Note 79 of the Notes to Condensed Consolidated Financial Statements, interest is charged based on an indexed rate plus an applicable margin. Assuming a hypothetical increase of 0.25 percent in the indexed interest rate (which approximates a ten percent increase of the weighted-average interest rate on our borrowings as of September 30, 2020)2021), our results of operations would not be materially affected.
The Company isWe are also exposed to changes in the prices of raw materials, specifically steel and aluminum. The Company has,We have, from time to time, entered into derivative instruments for the purpose of managing a portion of the exposures associated with fluctuations in steel and aluminum prices. While these derivative instruments are subject to fluctuations in value, these fluctuations are generally offset by the changes in fair value of the underlying exposures. We had no outstanding derivative instruments on commodities at September 30, 2021 and December 31, 2020.
The Company hasWe have historically been able to obtain sales price increases to partially offset the majority of raw material cost increases. However, there can be no assurance future cost increases, if any, can be partially or fully passed on to customers, or that the timing of such sales price increases will match raw material cost increases.
Additional information required by this item is included under the caption “Inflation”"Inflation" in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this Report.report.

ITEM 4 – CONTROLS AND PROCEDURES
a.Evaluation of Disclosure Controls and Procedures
The Company maintainsWe maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’sour Exchange Act reports is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to the Company’sour management, including itsour principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure, in accordance with the definition of “disclosure controls and procedures” in Rule 13a-1513a-15(e) under the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance of achieving the desired control objectives. Management included in its evaluation the cost-benefit relationship of possible controls and procedures. The CompanyWe continually evaluates itsevaluate our disclosure controls and procedures to determine if changes are appropriate based upon changes in the Company’sour operations or the business environment in which it operates.we operate.
As of the end of the period covered by this Form 10-Q, the Companywe performed an evaluation, under the supervision and with the participation of the Company’sour management, including the Company’sour principal executive officer and the Company’sour principal financial officer, of the effectiveness of the design and operation of the Company’sour disclosure controls and procedures. Based on the foregoing, the Company’sour principal executive officer and principal financial officer concluded that the Company’sour disclosure controls and procedures were effective as of September 30, 2020.2021.
b.Changes in Internal Control over Financial Reporting
There were no changes in the Company’sour internal control over financial reporting during the quarter ended September 30, 2020,2021, which have materially affected, or are reasonably likely to materially affect, the Company’sour internal control over financial reporting.
The CompanyWe began implementation of a new enterprise resource planning (“ERP”) system in late 2013. To date, 35 locations have been put on this ERP system. The roll-out plan is continually evaluated in the context of priorities for the business and may change as the needs of the business dictate. The Company anticipatesWe anticipate enhancements to controls due to both the installation of the new ERP system and business process changes resulting therefrom.
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PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS
In the normal course of business, the Company iswe are 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 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, 2020,2021, would not be material to the Company’sour financial position or results of operations.

ITEM 1A – RISK FACTORS

There have been no material changes to the matters discussed in Part I, Item 1A – Risk Factors in our Annual Report on Form 10-K as filed with the SEC on February 27, 2020,26, 2021, except forthat the following:following risk factors are added or updated:
The coronavirus (COVID-19) pandemic,
Inadequate or other outbreaksinterrupted supply of diseaseraw materials or similar public health threats, has materially andcomponents used to make our products could adversely affected, and could in the future materially and adversely affectimpact our business, financial condition and operating results of operations, the nature and extent of which are highly uncertain and unpredictable..
The recent COVID-19 pandemic, and any other outbreaks of contagious diseases or other adverse public health developments in the United States or internationally, has had, and in the future could again have a material adverse effect
Our business depends on our business,ability to source raw materials, such as steel, aluminum, glass, wood, fabric and foam, and certain components such as electric motors, in a timely and cost-efficient manner. Most materials and components are readily available from a variety of sources. However, a few key components are currently produced by only a small group of quality suppliers that have the capacity to supply large quantities. If raw materials or components that are used in manufacturing our products or for which we act as a distributor, particularly those which we import, become unavailable, or if the supply of these raw materials and components is interrupted or delayed, our manufacturing and distribution operations could be adversely affected, which could adversely impact our financial condition and results of operations. operating results.

In 2020, COVID-19 has significantly impactedwe imported, or purchased from suppliers who imported, approximately 30 percent of our raw materials and components. Consequently, we rely on the global economyfree flow of goods through open and financial markets,operational ports and it could continue to negatively impacton a consistent basis for a significant portion of our raw materials and components. Adverse political conditions, trade embargoes, increased tariffs or import duties, inclement weather, natural disasters, epidemics, public health crises, war, terrorism or labor disputes at various ports or otherwise adversely impacting our suppliers create significant risks for our business, particularly if these conditions or disputes result in a number of ways. These effects include, but are not limited to:
Disruptions or restrictions on our employees' ability to work effectively due to illness, quarantines, travel bans, shelter-in-place ordersslowdowns, lockouts, strikes, facilities closures, supply chain interruptions, or other limitations.
Temporary closures of our facilities or the facilities of our customers or suppliers, which could impact our ability to timely meet our customers' orders or negatively impact our supply chain.
Our election to, or a government's requirement that we, allocate manufacturing capacity (for example, pursuant to the U.S. Defense Production Act) in an effort to increase the availability of needed medicaldisruptions, and other supplies and products in a way that adversely affects our regular operations and negatively impacts our reputation and customer and supplier relationships.
Resulting costs increases from the effects of a pandemic such as COVID-19 may not be fully recoverable.
The failure of third parties on which we rely, including our suppliers, customers, contractors, commercial banks and other business partners, to meet their respective obligations to the Company, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties.
Significant increases in economic and demand uncertainty have led to disruption and volatility in the global credit and financial markets, which increases the cost of capital and adversely impacts access to capital for both the Company and our customers and suppliers.
Negative impacts of the COVID-19 pandemic could result in a breach of the covenants and/or restrictions contained in our debt agreements. Breaches of these covenants could result in defaults under the instruments governing the applicable indebtedness, which may permit the lenders under these debt agreements to exercise remedies. These defaults could have an adverse material impact on our business,operating results if we are unable to fulfill customer orders or are required to accumulate excess inventory or find alternate sources of operations and financial condition.supply, if available, at higher costs.

Commodity costs haveThe raw materials and components used in the manufacture of Furrion products are provided by a small group of suppliers that are principally located in China. If those raw materials or components become more volatile due to the COVID-19 pandemic, and that volatility may worsen and/unavailable or last for an extended period of time.
Reduced demand by our OEMstheir supply is interrupted or consumers, potentially for an extended period of time.
Increased cybersecurity and privacy risks and risks related to the reliability of technology to support remote operations.
The Companydelayed, we may not be able to return cash to shareholders through quarterly cash dividendsidentify alternative sources in a timely or cost-effective manner, or at all. Further as a result of our acquisition of Furrion, the same amount it hasportion of our raw materials and components that are exported from their country of origin will increase, which could heighten the risks set forth in the past,immediately preceding paragraph, including in particular increased tariffs or at all.import duties.

Conversion of the Convertible Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock.

The conversion of some or all of the Convertible Notes may dilute the ownership interests of our stockholders. Upon conversion of the Convertible Notes, we have the option to pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock in respect of the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the notes being converted. If we elect to settle the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the Convertible Notes being converted in shares of our common stock or a combination of cash and shares of our common stock, any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the Convertible Notes may encourage short selling by market participants because the conversion of the Convertible Notes could be used to satisfy short positions, or anticipated conversion of the Convertible Notes into shares of our common stock could depress the price of our common stock.

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Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.

Disruptions
Our ability to make scheduled payments of the principal of, to pay interest on or uncertainties related to refinance our indebtedness, including the COVID-19 pandemic for an extended periodConvertible Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of timethese activities or engage in these activities on desirable terms, which could result in delays or modifications toa default on our strategic plans and hinder our ability to achieve our strategic goals.debt obligations.

The extent to whichconditional conversion feature of the COVID-19 pandemic, or other outbreaks of disease or similar public health threats, materially andConvertible Notes, if triggered, may adversely impactsaffect our business, financial condition and results of operations is highly uncertain and will depend on future developments. Such developments may include the geographic spread and duration of the virus, the severity of the disease and the actions that may be taken by various governmental authorities and other third parties in response to the outbreak. In addition, how quickly, and to what extent, normal economic and operating conditions can resume cannot be predicted, and the resumption of normal operations may be delayed or constrained by lingering effects of the COVID-19 pandemic on our suppliers, third-party service providers, and/or customers.results.

In addition, the COVID-19 pandemic could exacerbateevent the conditional conversion feature of the Convertible Notes is triggered, holders will be entitled to convert their Convertible Notes at any time during specified periods at their option. If one or trigger other risks discussed in our Annual Report on Form 10-K as filed withmore holders elect to convert their Convertible Notes, we would be required to settle any converted principal amount of such Convertible Notes through the SEC on February 27, 2020, anypayment of cash, which could haveadversely affect our liquidity. In addition, even if holders do not elect to convert their Convertible Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Convertible Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

Certain provisions in the Indenture governing the Convertible Notes may delay or prevent an otherwise beneficial takeover attempt of us.

Certain provisions in the Indenture may make it more difficult or expensive for a third party to acquire us. For example, the Indenture will require us, subject to certain exceptions, to repurchase the Convertible Notes for cash upon the occurrence of a fundamental change and, adversein certain circumstances, to increase the conversion rate for a holder that converts its Convertible Notes in connection with a make-whole fundamental change. A takeover of us may trigger the requirement that we repurchase the Convertible Notes and/or increase the conversion rate, which could make it more costly for a potential acquirer to engage in such takeover. Such additional costs may have the effect on our business, results of operations, and financial condition.delaying or preventing a takeover of us that would otherwise be beneficial to investors.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
There has been no activity with respect to the Company’sour stock repurchase program during the nine months ended September 30, 2020.2021. At September 30, 2020, the Company has2021, we had $121.3 million remaining in the current share repurchase authorization. Please refer to our Annual Report on Form 10-K as filed with the SEC on February 27, 202026, 2021 for further information on the program.
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ITEM 6 – EXHIBITS

a)    Exhibits as required by item 601 of Regulation S-K:

1LCI Industries Restated Certificate of Incorporation, as amended effective December 30, 2016 (incorporated by reference to Exhibit 3.1 included in the Registrant’s Form 10-K for the year ended December 31, 2016).
2Amended and Restated Bylaws of LCI Industries, as amended May 25, 2017 (incorporated by reference to Exhibit 3.2 included in the Registrant’s Form 8-K filed on May 31, 2017).
3.Second Amendment to Fifth Amended and Restated Note Purchase and Private Shelf Agreement, dated as of September 21, 2020, among Lippert Components, Inc., LCI Industries, PGIM, Inc. and the Noteholders party thereto. Exhibit 10.1 is filed herewith.
4.Certification of Chief Executive Officer required by Rule 13a-14(a). Exhibit 31.1 is filed herewith.
5.Certification of Chief Financial Officer required by Rule 13a-14(a). Exhibit 31.2 is filed herewith.
6.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.
7.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.
8.101
The following financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, formatted in Inline XBRL: (i) Condensed Consolidated Statements of Income; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Cash Flows; (v) Condensed Consolidated Statements of Stockholders’ Equity; and (vi) Notes to Condensed Consolidated Financial Statements.
9.104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
1LCI Industries Restated Certificate of Incorporation, as amended effective December 30, 2016 (incorporated by reference to Exhibit 3.1 included in the Registrant’s Form 10-K for the year ended December 31, 2016).
2Amended and Restated Bylaws of LCI Industries, as amended May 25, 2017 (incorporated by reference to Exhibit 3.2 included in the Registrant’s Form 8-K filed on May 31, 2017).
3Amendment No. 3 to Fourth Amended and Restated Credit Agreement, dated as of September 7, 2021, by and among LCI Industries, Lippert Components, Inc., LCI Industries B.V., LCI Industries Pte. Ltd., each other Subsidiary of the Company listed on the signature pages thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent.
4Fourth Amendment to Fifth Amended and Restated Note Purchase and Private Shelf Agreement, dated as of September 7, 2021, by and among PGIM, Inc. and the noteholders party thereto, Lippert Components, Inc., LCI Industries and the other parties thereto.
5Certification of Chief Executive Officer required by Rule 13a-14(a).
6Certification of Chief Financial Officer required by Rule 13a-14(a).
7Certification of Chief Executive Officer required by Rule 13a-14(b) and Section 1350 Chapter 63 of Title 18 of the United States Code.
8Certification of Chief Financial Officer required by Rule 13a-14(b) and Section 1350 Chapter 63 of Title 18 of the United States Code.
9101
The following financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, formatted in Inline XBRL: (i) Condensed Consolidated Statements of Income; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Cash Flows; (v) Condensed Consolidated Statements of Stockholders’ Equity; and (vi) Notes to Condensed Consolidated Financial Statements.
10104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).



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LCI INDUSTRIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

LCI INDUSTRIES
Registrant
By/s/ Brian M. Hall
Brian M. Hall
Chief Financial Officer
November 2, 20202021

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