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: ~~June 30, 2023~~March 31, 2024


☐			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

LCI INDUSTRIES

(Exact name of registrant as specified in its charter)


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

3501 County Road 6 East		46514
Elkhart,	Indiana	(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 class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	LCII	New 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 ☐

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 ~~(July 31, 2023)~~(April 30, 2024) was ~~25,324,433~~25,449,794 shares of common stock.

LCI INDUSTRIES

TABLE OF CONTENTS


		Page
PART I –	FINANCIAL INFORMATION

	ITEM 1 – FINANCIAL STATEMENTS

	CONDENSED CONSOLIDATED STATEMENTS OF INCOME	4

	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	5

	CONDENSED CONSOLIDATED BALANCE SHEETS	6

	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	7

	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY	8

	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	109

	ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2220

	ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3229

	ITEM 4 – CONTROLS AND PROCEDURES	3229

PART II –	OTHER INFORMATION

	ITEM 1 – LEGAL PROCEEDINGS	3330

	ITEM 1A – RISK FACTORS	3330

	ITEM 5 – OTHER INFORMATION	3330

	ITEM 6 – EXHIBITS	3330

SIGNATURES		3431

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

PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

LCI INDUSTRIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)






		Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
(In thousands, except per share amounts)	(In thousands, except per share amounts)
(In thousands, except per share amounts)
(In thousands, except per share amounts)

Net sales

Net sales

Net sales	Net sales	$	1,014,639	$	1,536,150	$	1,987,949	$	3,180,718
Cost of sales	Cost of sales	796,519		1,127,065		1,583,758		2,307,390
Cost of sales
Cost of sales
Gross profit
Gross profit
Gross profit	Gross profit	218,120		409,085		404,191		873,328
Selling, general and administrative expenses	Selling, general and administrative expenses	162,946		190,296		328,974		384,838
Selling, general and administrative expenses
Selling, general and administrative expenses
Operating profit
Operating profit
Operating profit	Operating profit	55,174		218,789		75,217		488,490
Interest expense, net	Interest expense, net	10,249		6,191		20,643		12,443
Interest expense, net
Interest expense, net
Income before income taxes
Income before income taxes
Income before income taxes	Income before income taxes	44,925		212,598		54,574		476,047
Provision for income taxes	Provision for income taxes	11,499		58,068		13,889		125,336
Provision for income taxes
Provision for income taxes
Net income
Net income
Net income	Net income	$	33,426	$	154,530	$	40,685	$	350,711

Net income per common share:	Net income per common share:

Net income per common share:

Net income per common share:
Basic	Basic	$	1.32	$	6.07	$	1.61	$	13.82
Basic
Basic
Diluted
Diluted
Diluted	Diluted	$	1.31	$	6.06	$	1.60	$	13.76

Weighted average common shares outstanding:	Weighted average common shares outstanding:

Weighted average common shares outstanding:

Weighted average common shares outstanding:
Basic
Basic
Basic	Basic	25,329		25,438		25,273		25,377
Diluted	Diluted	25,437		25,518		25,359		25,483
Diluted
Diluted

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

LCI INDUSTRIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)






		Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
(In thousands)	(In thousands)
(In thousands)
(In thousands)

Net income	Net income	$	33,426	$	154,530	$	40,685	$	350,711
Other comprehensive income (loss):

Net income

Net income
Other comprehensive (loss) income:
Other comprehensive (loss) income:
Other comprehensive (loss) income:
Net foreign currency translation adjustment	Net foreign currency translation adjustment	763		(13,688)		2,763		(16,570)
Actuarial gain on pension plans		100		13,985		100		13,985
Net foreign currency translation adjustment
Net foreign currency translation adjustment

Total comprehensive income	Total comprehensive income	$	34,289	$	154,827	$	43,548	$	348,126

Total comprehensive income

Total comprehensive income

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

LCI INDUSTRIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)




		June 30,		December 31,	March 31,					December 31,
		2023				2022			2024		2023
(In thousands, except per share amount)	(In thousands, except per share amount)							(In thousands, except per share amount)

ASSETS	ASSETS
ASSETS
ASSETS
Current assets	Current assets							Current assets
Cash and cash equivalents	Cash and cash equivalents	$	22,094			$	47,499

Accounts receivable, net of allowances of $7,790 and $5,904 at June 30, 2023 and December 31, 2022, respectively		299,469				214,262
Accounts receivable, net of allowances of $7,181 and $5,701 at March 31, 2024 and December 31, 2023, respectively
Accounts receivable, net of allowances of $7,181 and $5,701 at March 31, 2024 and December 31, 2023, respectively
Accounts receivable, net of allowances of $7,181 and $5,701 at March 31, 2024 and December 31, 2023, respectively
Inventories, net	Inventories, net	830,020				1,029,705

Prepaid expenses and other current assets
Prepaid expenses and other current assets
Prepaid expenses and other current assets	Prepaid expenses and other current assets	83,662				99,310
Total current assets	Total current assets	1,235,245				1,390,776
Fixed assets, net	Fixed assets, net	478,885				482,185
Goodwill	Goodwill	584,312				567,063
Other intangible assets, net	Other intangible assets, net	477,307				503,320
Operating lease right-of-use assets	Operating lease right-of-use assets	241,146				247,007

Other long-term assets	Other long-term assets	59,502				56,561
Other long-term assets
Other long-term assets
Total assets	Total assets	$	3,076,397			$	3,246,912

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities	Current liabilities							Current liabilities
Current maturities of long-term indebtedness	Current maturities of long-term indebtedness	$	27,712			$	23,086
Accounts payable, trade	Accounts payable, trade	182,637				143,529

Current portion of operating lease obligations
Current portion of operating lease obligations
Current portion of operating lease obligations	Current portion of operating lease obligations	35,004				35,447
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	196,099				219,238
Total current liabilities	Total current liabilities	441,452				421,300
Long-term indebtedness	Long-term indebtedness	915,756				1,095,888
Operating lease obligations	Operating lease obligations	217,979				222,478
Deferred taxes	Deferred taxes	26,900				30,580
Other long-term liabilities	Other long-term liabilities	103,413				95,658
Total liabilities	Total liabilities	1,705,500				1,865,904
Stockholders' equity	Stockholders' equity
Common stock, par value $.01 per share	Common stock, par value $.01 per share	286				285
Common stock, par value $.01 per share
Common stock, par value $.01 per share
Paid-in capital	Paid-in capital	235,507				234,956
Retained earnings	Retained earnings	1,207,753				1,221,279
Accumulated other comprehensive income	Accumulated other comprehensive income	9,567				6,704
Stockholders' equity before treasury stock	Stockholders' equity before treasury stock	1,453,113				1,463,224
Treasury stock, at cost	Treasury stock, at cost	(82,216)				(82,216)
Total stockholders' equity	Total stockholders' equity	1,370,897				1,381,008
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	3,076,397			$	3,246,912

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

LCI INDUSTRIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


		Six Months Ended June 30,					Three Months Ended March 31,
(In thousands)	(In thousands)	2023		2022		(In thousands)	2024	2023

Cash flows from operating activities:	Cash flows from operating activities:
Cash flows from operating activities:
Cash flows from operating activities:
Net income	Net income	$	40,685	$	350,711
Adjustments to reconcile net income to cash flows provided by operating activities:
Adjustments to reconcile net income to cash flows (used in) provided by operating activities:						Adjustments to reconcile net income to cash flows (used in) provided by operating activities:
Depreciation and amortization	Depreciation and amortization	65,549		63,719
Stock-based compensation expense	Stock-based compensation expense	9,080		13,701
Deferred taxes		—		(2,401)

Other non-cash items
Other non-cash items
Other non-cash items	Other non-cash items	2,192		2,025
Changes in assets and liabilities, net of acquisitions of businesses:	Changes in assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net
Accounts receivable, net
Accounts receivable, net	Accounts receivable, net	(80,952)		(95,479)
Inventories, net	Inventories, net	209,346		(51,811)
Prepaid expenses and other assets	Prepaid expenses and other assets	11,607		25,746
Accounts payable, trade	Accounts payable, trade	37,949		5,312
Accrued expenses and other liabilities	Accrued expenses and other liabilities	(21,891)		36,448
Net cash flows provided by operating activities		273,565		347,971
Net cash flows (used in) provided by operating activities
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(34,082)		(70,837)
Acquisitions of businesses	Acquisitions of businesses	(25,851)		(51,789)

Other investing activities

Other investing activities

Other investing activities	Other investing activities	4,344		2,204
Net cash flows used in investing activities	Net cash flows used in investing activities	(55,589)		(120,422)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Vesting of stock-based awards, net of shares tendered for payment of taxes	Vesting of stock-based awards, net of shares tendered for payment of taxes	(9,585)		(10,773)
Proceeds from revolving credit facility	Proceeds from revolving credit facility	234,200		729,400
Repayments under revolving credit facility	Repayments under revolving credit facility	(402,726)		(836,500)
Repayments under shelf loan, term loan, and other borrowings		(10,703)		(60,902)
Repayments under term loan and other borrowings

Payment of dividends	Payment of dividends	(53,154)		(49,572)
Payment of contingent consideration and holdbacks related to acquisitions		(517)		(6,039)

Payment of dividends

Payment of dividends

Other financing activities
Other financing activities
Other financing activities	Other financing activities	(834)		(4)
Net cash flows used in financing activities	Net cash flows used in financing activities	(243,319)		(234,390)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(62)		(1,067)
Net decrease in cash and cash equivalents	Net decrease in cash and cash equivalents	(25,405)		(7,908)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	47,499		62,896
Cash and cash equivalents cash at end of period		$	22,094	$	54,988
Cash and cash equivalents at end of period

Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:
Cash paid during the period for interest		$	20,804	$	10,558
Cash paid during the period for income taxes, net of refunds		$	5,724	$	110,871
Supplemental disclosure of cash flow information:
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest
Interest
Interest
Income taxes, net of refunds
Non-cash investing and financing activities:
Purchase of property and equipment in accrued expenses	Purchase of property and equipment in accrued expenses	$	1,704	$	3,157
Purchase of property and equipment in accrued expenses
Purchase of property and equipment in accrued expenses

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

LCI INDUSTRIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


(In thousands, except shares and per share amounts)	(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, 2021		$	284	$	220,459	$	930,795	$	(501)	$	(58,162)	$	1,092,875
Balance - December 31, 2022
Net income	Net income	—		—		196,181		—		—		196,181
Issuance of 138,208 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes		1		(10,570)		—		—		—		(10,569)
Issuance of 119,091 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes
Stock-based compensation expense	Stock-based compensation expense	—		6,517		—		—		—		6,517
Other comprehensive loss		—		—		—		(2,882)		—		(2,882)
Cash dividends ($0.90 per share)		—		—		(22,870)		—		—		(22,870)
Dividend equivalents on stock-based awards		—		392		(392)		—		—		—
Balance - March 31, 2022		$	285	$	216,798	$	1,103,714	$	(3,383)	$	(58,162)	$	1,259,252
Net income		—		—		154,530		—		—		154,530
Issuance of 18,245 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes		—		(204)		—		—		—		(204)
Stock-based compensation expense		—		7,184		—		—		—		7,184

Other comprehensive income	Other comprehensive income	—		—		—		297		—		297
Cash dividends ($1.05 per share)	Cash dividends ($1.05 per share)	—		—		(26,702)		—		—		(26,702)
Dividend equivalents on stock-based awards	Dividend equivalents on stock-based awards	—		453		(453)		—		—		—
Balance - June 30, 2022		$	285	$	224,231	$	1,231,089	$	(3,086)	$	(58,162)	$	1,394,357
Balance - March 31, 2023

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

~~LCI INDUSTRIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY~~

~~(Unaudited)~~

(In thousands, except shares and per share amounts) Common
Stock Paid-in
Capital Retained
Earnings Accumulated Other Comprehensive Income (Loss) Treasury
Stock Total
Stockholders’
Equity
Balance - December 31, 2022 $ 285 $ 234,956 $ 1,221,279 $ 6,704 $ (82,216) $ 1,381,008
Net income — — 7,259 — — 7,259
Issuance of 119,091 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes 1 (8,889) — — — (8,888)
Stock-based compensation expense — 4,695 — — — 4,695
Other comprehensive income — — — 2,000 — 2,000
Cash dividends ($1.05 per share) — — (26,563) — — (26,563)
Dividend equivalents on stock-based awards — 532 (532) — — —
Balance - March 31, 2023 $ 286 $ 231,294 $ 1,201,443 $ 8,704 $ (82,216) $ 1,359,511
Net income — — 33,426 — — 33,426
Issuance of 26,445 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes — (697) — — — (697)
Stock-based compensation expense — 4,385 — — — 4,385
Other comprehensive income — — — 863 — 863
Cash dividends ($1.05 per share) — — (26,591) — — (26,591)
Dividend equivalents on stock-based awards — 525 (525) — — —
Balance - June 30, 2023 $ 286 $ 235,507 $ 1,207,753 $ 9,567 $ (82,216) $ 1,370,897



Balance - December 31, 2023	$	287	$	245,659	$	1,177,034	$	14,272	$	(82,216)	$	1,355,036
Net income	—		—		36,545		—		—		36,545
Issuance of 122,023 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes	1		(9,041)		—		—		—		(9,040)
Stock-based compensation expense	—		4,327		—		—		—		4,327
Other comprehensive loss	—		—		—		(3,263)		—		(3,263)
Cash dividends ($1.05 per share)	—		—		(26,721)		—		—		(26,721)
Dividend equivalents on stock-based awards	—		569		(569)		—		—		—
Balance - March 31, 2024	$	288	$	241,514	$	1,186,289	$	11,009	$	(82,216)	$	1,356,884

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

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

The Condensed Consolidated Financial Statements include the accounts of LCI Industries and its wholly-owned subsidiaries ("LCII" and collectively with its subsidiaries, the "Company," "we," "us," or "our"). LCII has no unconsolidated subsidiaries. LCII, through its wholly-owned subsidiary, Lippert Components, Inc. and its subsidiaries (collectively, "Lippert Components," "LCI," or "Lippert"), supplies, domestically and internationally, a broad array of highly engineered components for the leading original equipment manufacturers ("OEMs") in the recreation ~~transportation products,~~ and ~~housing~~transportation markets, consisting primarily of recreational vehicles ("RVs") and adjacent industries, including boats; buses; trailers used to haul boats, livestock, equipment, and other cargo; trucks; 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, as well as direct to retail customers via the Internet. At ~~June 30, 2023,~~March 31, 2024, the Company operated over ~~120~~110 manufacturing and distribution facilities located throughout North America and Europe.

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

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. All significant intercompany balances and transactions have been eliminated. Certain prior year balances have been reclassified to conform to the current year presentation.

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.

~~LCI INDUSTRIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Risks and Uncertainties

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

including changes in tariffs, sanctions, international treaties, and other trade restrictions, ~~including heightened~~geopolitical tensions, ~~between China and Taiwan, the occurrence of a~~armed conflicts, natural ~~disaster~~disasters or global public health ~~crisis, such as the COVID-19 pandemic, or armed conflicts, such as the conflict between Russia and Ukraine,~~crises, have negatively impacted, and could continue to negatively impact, the Company’s business, liquidity, financial condition and results of operations.

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, ~~2022~~2023 Annual Report on Form 10-K and should be read in conjunction with the Notes to Consolidated Financial Statements which appear in that report.

~~There are no recent~~Recent Accounting Pronouncements

Recently issued accounting pronouncements ~~that have been issued and~~ not yet adopted

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 820): Improvements to Reportable Segment Disclosures, which requires entities to report incremental information about significant segment expenses included in a segment's profit or loss measure as well as the name and title of the chief operating decision maker. The new standard also requires interim disclosures related to reportable segment profit or loss and assets that ~~are expected~~had previously only been disclosed annually. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is evaluating the effect of adopting this new accounting guidance.

In December 2023, the FASB issued ASU 2023-09, Income Taxes - Improvements to ~~have~~Income Tax Disclosures, requiring enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid. The new standard also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. This ASU is effective for fiscal years beginning after December 15, 2024 on a ~~material impact on our Condensed Consolidated Financial Statements.~~prospective basis and retrospective application is permitted. The Company is evaluating the effect of adopting this new accounting guidance.

3. EARNINGS PER SHARE

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




		Three Months Ended June 30,		Six Months Ended June 30,
(In thousands)	(In thousands)	2023	2022	2023	2022
(In thousands)
(In thousands)
Weighted average shares outstanding for basic earnings per share
Weighted average shares outstanding for basic earnings per share
Weighted average shares outstanding for basic earnings per share	Weighted average shares outstanding for basic earnings per share	25,329	25,438	25,273	25,377
Common stock equivalents pertaining to stock-based awards	Common stock equivalents pertaining to stock-based awards	108	80	86	106
Common stock equivalents pertaining to stock-based awards
Common stock equivalents pertaining to stock-based awards
Weighted average shares outstanding for diluted earnings per share
Weighted average shares outstanding for diluted earnings per share
Weighted average shares outstanding for diluted earnings per share	Weighted average shares outstanding for diluted earnings per share	25,437	25,518	25,359	25,483

Equity instruments excluded from diluted net earnings per share calculation as the effect would have been antidilutive	Equity instruments excluded from diluted net earnings per share calculation as the effect would have been antidilutive	165	112	162	111

Equity instruments excluded from diluted net earnings per share calculation as the effect would have been antidilutive

Equity instruments excluded from diluted net earnings per share calculation as the effect would have been antidilutive

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. 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 settle 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, the Company includes the number of shares required to satisfy the conversion obligation, assuming all the Convertible Notes are converted. Because the average closing price of the Company's common stock for ~~each of~~ the three ~~and six~~ months ended ~~June 30, 2023,~~March 31, 2024, which is used as the basis for determining the dilutive effect on earnings per share, was less than the conversion price of $165.65, all associated shares were antidilutive.

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~~

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(the "Warrants"). The Warrants have a strike 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 shares of common stock 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 ~~each of~~ the three ~~and six~~ months ended ~~June 30, 2023,~~March 31, 2024, the average share price was below the Warrant strike price of $259.84 per share, and therefore 2.8 million shares were considered antidilutive.

~~LCI INDUSTRIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

In connection with the issuance of the Convertible Notes, the Company entered into privately negotiated call option contracts on the Company's 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.

4. ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

~~Acquisitions Completed During the Six Months Ended June 30, 2023~~Subsequent Event

During the six months ended June 30, 2023, the Company completed two acquisitions for an aggregate $25.8 million of cash purchase consideration, plus holdback payments of $0.5 million to be paid over two years. The preliminary purchase price allocations resulted in $18.3 million of goodwill (tax deductible). 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.Camping World Furniture

~~Acquisitions with Measurement Period Adjustments During the Six Months Ended June 30, 2023~~

~~Way~~

In ~~November 2022,~~May 2024, the Company acquired ~~substantially all~~the business and certain assets of the ~~business assets~~furniture operations of ~~Way Interglobal Network~~CWDS, LLC, ~~("Way")~~a subsidiary of Camping World Holdings, Inc., ~~a distributor~~in exchange for cash consideration of ~~innovative appliances and electronics to OEMs in the RV industry.~~$20 million. The ~~purchase price was $54.8 million,~~acquisition, which ~~includes a holdback payment of $2.0 million due on the first anniversary of the acquisition in November 2023, and remains subject to adjustment~~qualifies as a ~~result of net working capital true-up procedures. The results of the acquired~~ business ~~have been included in the Condensed Consolidated Statements of Income since the acquisition date, primarily in~~combination for accounting purposes, expands the Company's furniture portfolio and will serve customers in both the OEM ~~Segment. As the operations of this acquisition 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.~~Aftermarket segments.

During the six months ended June 30, 2023, the Company adjusted the preliminary purchase price allocation reported in the Company's December 31, 2022 Annual Report on Form 10-K to account for updates to 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 further adjustment for net working capital and the fair value of intangible assets as additional information is obtained within the measurement period (not to exceed 12 months from the acquisition date).

Goodwill

Changes in the carrying amount of goodwill by reportable segment were as follows:

(In thousands) OEM Segment Aftermarket Segment Total
Net balance – December 31, 2022 $ 399,736 $ 167,327 $ 567,063
Acquisitions – 2023 18,314 — 18,314
Measurement period adjustments (2,905) (143) (3,048)
Foreign currency translation 1,721 262 1,983
Net balance – June 30, 2023 $ 416,866 $ 167,446 $ 584,312


(In thousands)	OEM Segment		Aftermarket Segment		Total
Net balance – December 31, 2023	$	421,701	$	167,849	$	589,550


Foreign currency translation	(1,575)		(184)		(1,759)
Net balance – March 31, 2024	$	420,126	$	167,665	$	587,791

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.

1211

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Other Intangible Assets

Other intangible assets consisted of the following at ~~June 30, 2023:~~March 31, 2024:


(In thousands)	(In thousands)	Gross Cost		Accumulated Amortization		Net Balance		Estimated Useful Life in Years			(In thousands)	Gross Cost			Accumulated Amortization				Net Balance					Estimated Useful Life in Years
Customer relationships	Customer relationships	$	517,588	$	180,257	$	337,331	6	to	20	Customer relationships	$	508,140	$	$	199,501	$		$	308,639		6			6		to		20
Patents	Patents	122,373		67,697		54,676		3	to	20	Patents	114,459		69,815		69,815		44,644			44,644		3			3		to		20
Trade names (finite life)	Trade names (finite life)	98,650		24,050		74,600		3	to	20	Trade names (finite life)	99,136		28,587		28,587		70,549			70,549		3			3		to		20
Trade names (indefinite life)	Trade names (indefinite life)	7,600		—		7,600		Indefinite			Trade names (indefinite life)	7,432		—		—		7,432			7,432		Indefinite							Indefinite
Non-compete agreements	Non-compete agreements	11,484		8,728		2,756		3	to	6	Non-compete agreements	10,104		8,948		8,948		1,156			1,156		3			3		to		6
Other	Other	609		265		344		2	to	12	Other	609		301		301		308			308		2			2		to		12

Other intangible assets	Other intangible assets	$	758,304	$	280,997	$	477,307
Other intangible assets
Other intangible assets												$	739,880		$	307,152			$	432,728

Other intangible assets consisted of the following at December 31, ~~2022:~~2023:


(In thousands)	(In thousands)	Gross Cost		Accumulated Amortization		Net Balance		Estimated Useful Life in Years			(In thousands)	Gross Cost			Accumulated Amortization				Net Balance					Estimated Useful Life in Years
Customer relationships	Customer relationships	$	520,273	$	163,562	$	356,711	6	to	20	Customer relationships	$	509,505	$	$	189,967	$		$	319,538		6			6		to		20
Patents	Patents	121,167		62,841		58,326		3	to	20	Patents	114,864		67,602		67,602		47,262			47,262		3			3		to		20
Trade names (finite life)	Trade names (finite life)	97,810		21,380		76,430		3	to	20	Trade names (finite life)	99,366		26,978		26,978		72,388			72,388		3			3		to		20
Trade names (indefinite life)	Trade names (indefinite life)	7,600		—		7,600		Indefinite			Trade names (indefinite life)	7,600		—		—		7,600			7,600		Indefinite							Indefinite
Non-compete agreements	Non-compete agreements	11,584		7,698		3,886		3	to	6	Non-compete agreements	10,104		8,453		8,453		1,651			1,651		3			3		to		6
Other	Other	609		242		367		2	to	12	Other	609		289		289		320			320		2			2		to		12

Other intangible assets	Other intangible assets	$	759,043	$	255,723	$	503,320
Other intangible assets
Other intangible assets												$	742,048		$	293,289			$	448,759

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:




		June 30,		December 31,	March 31,					December 31,
(In thousands)	(In thousands)	2023				2022		(In thousands)	2024		2023
Raw materials	Raw materials	$	503,777			$	600,601
Work in process	Work in process	45,379				44,850
Finished goods	Finished goods	280,864				384,254
Inventories, net	Inventories, net	$	830,020			$	1,029,705

At ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the Company had recorded inventory obsolescence reserves of ~~$61.5~~$76.1 million and ~~$55.9~~$71.3 million, respectively.

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

6. FIXED ASSETS

Fixed assets consisted of the following at:

June 30, December 31,
(In thousands) 2023 2022
Fixed assets, at cost $ 976,047 $ 945,255
Less accumulated depreciation and amortization 497,162 463,070
Fixed assets, net $ 478,885 $ 482,185

~~LCI INDUSTRIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~


	March 31,		December 31,
(In thousands)	2024			2023
Fixed assets, at cost	$	986,971		$	983,548
Less accumulated depreciation and amortization	532,900			517,767
Fixed assets, net	$	454,071		$	465,781

7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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

June 30, December 31,
(In thousands) 2023 2022
Employee compensation and benefits $ 54,837 $ 77,804
Current portion of accrued warranty 41,988 35,148
Deferred acquisition payments and contingent consideration* 33,692 34,013
Other 65,582 72,273
Accrued expenses and other current liabilities $ 196,099 $ 219,238

* Includes current portion of contingent consideration (Note 10) and deferred acquisition payments (Note 4).


	March 31,		December 31,
(In thousands)	2024			2023
Employee compensation and benefits	$	58,183		$	58,999

Current portion of accrued warranty	46,725			48,468
Customer rebates	20,697			19,403

Other	51,612			47,567
Accrued expenses and other current liabilities	$	177,217		$	174,437

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 historical warranty costs, warranty claim lag, and 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 ~~six~~three months ended ~~June 30:~~March 31:

(In thousands) 2023 2022
Balance at beginning of period $ 54,528 $ 52,114
Provision for warranty expense 40,128 28,164
Warranty costs paid (31,968) (18,646)
Balance at end of period 62,688 61,632
Less long-term portion (20,700) (21,460)
Current portion of accrued warranty at end of period $ 41,988 $ 40,172


(In thousands)	2024		2023
Balance at beginning of period	$	71,578	$	54,528
Provision for warranty expense	13,123		20,827

Warranty costs paid	(14,586)		(15,227)
Balance at end of period	70,115		60,128
Less long-term portion	(23,390)		(19,770)
Current portion of accrued warranty at end of period	$	46,725	$	40,358

8. LONG-TERM INDEBTEDNESS

Long-term debt consisted of the following:




		June 30,		December 31,	March 31,					December 31,
(In thousands)	(In thousands)	2023				2022		(In thousands)	2024		2023

Convertible Notes	Convertible Notes	$	460,000			$	460,000
Convertible Notes
Convertible Notes
Term Loan	Term Loan	365,000				375,000
Revolving Credit Loan	Revolving Credit Loan	122,960				289,067

Other	Other	3,440				3,959
Other
Other
Unamortized deferred financing fees	Unamortized deferred financing fees	(7,932)				(9,052)
		943,468				1,118,974
	855,342
Less current portion	Less current portion	(27,712)				(23,086)
Long-term indebtedness	Long-term indebtedness	$	915,756			$	1,095,888

1413

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Credit Agreement

The Company and certain of its subsidiaries are party to a credit agreement dated December 14, 2018 with JPMorgan Chase, N.A., as a lender and administrative agent, and other bank lenders (as amended, the "Credit Agreement"). The Credit Agreement provides for a $600.0 million revolving credit facility (of which $50.0 million is available for the issuance of letters of credit (the "LC Facility") and up to $400.0 million is available in approved foreign currencies). The Credit Agreement also provides for term loans (the "Term Loan") to the Company in an aggregate principal amount of $400.0 million. The maturity date of the Credit Agreement is December 7, 2026. The Term Loan is required to be repaid in an amount equal to 1.25 percent of the original principal amount of the Term Loan for the first eight quarterly periods commencing with the quarter ended December 31, 2021, 1.875 percent of the original principal amount of the Term Loan for the next eight quarterly periods, and then 2.50 percent of the original principal amount of the Term Loan of each additional payment until the maturity date. The Company prepaid $37.5 million of principal on the Term Loan during 2023, which was applied to pay in full the scheduled principal amortization payments due through March 31, 2025. The Credit Agreement also permits the Company to request an increase to the revolving and/or term loan facility by up to an additional $400.0 million in the aggregate upon the approval of the lenders providing any such increase and the satisfaction of certain other conditions.

Borrowings under the Credit Agreement in U.S. dollars are designated from time to time by the Company as (i) base rate loans which bear interest at a base rate plus additional interest ranging from 0.0 percent to 0.875 percent (0.625 percent was applicable at ~~June 30, 2023)~~March 31, 2024) depending on the Company’s total net leverage ratio or (ii) term benchmark loans which bear interest at term Secured Overnight Financing Rate ("SOFR") plus a credit spread adjustment of 0.1 percent for an interest period selected by the Company plus additional interest ranging from 0.875 percent to 1.875 percent (1.625 percent was applicable at ~~June 30, 2023)~~March 31, 2024) depending on the Company’s total net leverage ratio. Foreign currency borrowings have the same additional interest margins applicable to term benchmark loans based on the Company's total net leverage ratio. At ~~June 30, 2023,~~March 31, 2024, the Company had ~~$4.6~~$4.8 million in issued, but undrawn, standby letters of credit under the LC Facility. Availability under the Company’s revolving credit facility, giving effect to certain limitations related to compliance with the maximum net leverage ratio covenant, was $270.0 million at June 30, 2023. A commitment fee ranging from 0.150 percent to 0.275 percent (0.225 percent was applicable at ~~June 30, 2023)~~March 31, 2024) depending on the Company's total net leverage ratio accrues on the actual daily amount that the revolving commitment exceeds the revolving credit exposure.

~~Shelf-Loan Facility~~Pursuant to the Credit Agreement, 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 March 31, 2024, the Company was in compliance with all financial covenants. The maximum net leverage ratio covenant limits the amount of consolidated outstanding indebtedness that the Company may incur on a trailing twelve-month EBITDA. Availability under the Company’s revolving credit facility, giving effect to this limitation, was $153.8 million at March 31, 2024. The Company believes the availability under the revolving credit facility under the Credit Agreement, along with its cash flows from operations, are adequate to finance the Company's anticipated cash requirements for the next twelve months.

~~The Company~~At March 31, 2024, the fair value of the Company's floating rate long-term debt under the Credit Agreement approximates the carrying value, as estimated using quoted market prices and certain of its subsidiaries had a $150.0 million shelf-loan facility (the "Shelf-Loan Facility") with PGIM, Inc. (formerly Prudential Investment Management, Inc.) and its affiliates ("Prudential"). 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. The Series B Notes were paid in full in March 2022, and the Shelf-Loan Facility expireddiscounted future cash flows based on ~~November 11, 2022.~~similar borrowing arrangements.

Convertible Notes

On May 13, 2021, the Company issued $460.0 million in aggregate principal amount of 1.125 percent Convertible Notes due 2026 in a private placement to certain qualified institutional buyers, resulting in net proceeds to the Company of approximately $447.8 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.

As of ~~June 30, 2023,~~March 31, 2024, the conversion rate of the Convertible Notes was ~~6.1469~~6.1946 shares of the Company's common stock per $1,000 principal amount of the Convertible Notes. The conversion rate of the Convertible Notes is subject to further adjustment upon the occurrence of certain specified events. 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 certain circumstances as set forth in the Indenture. On or after January 15,

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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. Upon conversion, the Company will pay cash up to the aggregate principal amount of the Convertible Notes to be converted and pay or deliver, as the case may be, cash, shares of the

~~LCI INDUSTRIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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 Convertible 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 Convertible 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 ~~$443.9~~$454.5 million at ~~June 30, 2023~~March 31, 2024 was estimated using Level 1 inputs, as it is based on quoted prices for these instruments in active markets.

~~General~~

At June 30, 2023, the fair value of the Company's long-term debt under the Credit Agreement approximates the carrying value, as estimated using quoted market prices and discounted future cash flows based on similar borrowing arrangements.

Pursuant to the Credit Agreement, 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. On May 23, 2023, the Company entered into an amendment to the Credit Agreement that, among other things, provided for adjustments to certain of the financial covenants by increasing the maximum total net leverage ratio and decreasing the minimum debt service coverage ratio, in each case for the two fiscal quarters ending June 30, 2023 and September 30, 2023. At June 30, 2023, the Company was in compliance with all financial covenants.

The Credit Agreement includes 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. This limitation reduced the Company's remaining availability under its revolving credit facility at June 30, 2023. The Company believes the availability of $270.0 million under the revolving credit facility under the Credit Agreement, along with its cash flows from operations, are adequate to finance the Company's anticipated cash requirements for the next twelve months.

~~LCI INDUSTRIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

9. 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 components of lease expense were as follows:


		Three Months Ended June 30,				Six Months Ended June 30,
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
(In thousands)
(In thousands)
(In thousands)	(In thousands)	2023		2022		2023		2022
Operating lease expense	Operating lease expense	$	15,670	$	13,236	$	30,914	$	26,148
Operating lease expense
Operating lease expense
Short-term lease expense
Short-term lease expense
Short-term lease expense	Short-term lease expense	1,307		1,934		2,787		3,774
Variable lease expense	Variable lease expense	1,200		936		2,200		1,649
Variable lease expense
Variable lease expense
Total lease expense	Total lease expense	$	18,177	$	16,106	$	35,901	$	31,571
Total lease expense
Total lease expense

10. COMMITMENTS AND CONTINGENCIES

Holdback Payments and Contingent Consideration

From time to time, the Company finances a portion of its business combinations with deferred acquisition payments ("holdback payments") and/or contingent earnout provisions. Holdback payments are fixed payments and are accrued at their discounted present value. As required, the liability for 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

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

consideration, the Company could record adjustments in future periods. ~~See Note 4 - Acquisitions, Goodwill~~Holdback payment and ~~Other Intangible Assets for information on certain holdback payments. Contingent~~contingent consideration balances were not material at ~~June 30, 2023.~~March 31, 2024.

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. Product recall reserves were not material at March 31, 2024.

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. Environmental reserves were not material at March 31, 2024.

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 ~~June 30, 2023,~~March 31, 2024, would not be material to the Company's financial position or results of operations.

~~LCI INDUSTRIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

11. STOCKHOLDERS' EQUITY

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




		June 30,	December 31,	March 31,				December 31,
(In thousands)	(In thousands)	2023			2022	(In thousands)	2024		2023
Common stock authorized	Common stock authorized	75,000			75,000
Common stock issued	Common stock issued	28,665			28,519
Treasury stock	Treasury stock	3,341			3,341
Common stock outstanding	Common stock outstanding	25,324			25,178

The table below summarizes the regular quarterly dividends declared and paid during the periods ended ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022:~~2023:

(In thousands, except per share data) Per Share Record Date Payment Date Total Paid
First Quarter 2022 $ 0.90 03/11/22 03/25/22 $ 22,870
Second Quarter 2022 1.05 06/03/22 06/17/22 26,702
Third Quarter 2022 1.05 09/02/22 09/16/22 26,701
Fourth Quarter 2022 1.05 12/02/22 12/16/22 26,453
Total 2022 $ 4.05 $ 102,726
First Quarter 2023 $ 1.05 03/10/23 03/24/23 $ 26,563
Second Quarter 2023 1.05 06/02/23 06/16/23 26,591
Total 2023 $ 2.10 $ 53,154


(In thousands, except per share data)	Per Share		Record Date	Payment Date	Total Paid
First Quarter 2023	$	1.05	03/10/23	03/24/23	$	26,563
Second Quarter 2023	1.05		06/02/23	06/16/23	26,591
Third Quarter 2023	1.05		09/01/23	09/15/23	26,590
Fourth Quarter 2023	1.05		12/01/23	12/15/23	26,592
Total 2023	$	4.20			$	106,336

First Quarter 2024	$	1.05	03/08/24	03/22/24	$	26,721

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Deferred and Restricted Stock Units

The LCI Industries 2018 Omnibus Incentive 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"), and those with time-based vesting provisions, such as restricted stock units ("RSUs"), to directors, employees, and other eligible persons. Recipients of DSUs and RSUs are entitled to receive shares at the 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 2018 Plan are summarized as follows:


		Number of Shares	Weighted Average Price
Outstanding at December 31, 2022		277,774	$	120.92
	Number of Shares				Number of Shares	Weighted Average Price
Outstanding at December 31, 2023
Issued	Issued	1,630	117.45
Granted	Granted	159,640	114.22
Dividend equivalents	Dividend equivalents	5,695	112.11
Forfeited	Forfeited	(13,752)	121.41
Vested	Vested	(129,583)	112.24
Outstanding at June 30, 2023		301,404	$	118.55
Outstanding at March 31, 2024

~~LCI INDUSTRIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Performance Stock Units

The 2018 Plan provides for performance stock units ("PSUs") that vest at a specific future date based on achievement of specified performance conditions. Transactions in PSUs under the 2018 Plan are summarized as follows:


		Number of Shares	Weighted Average Price
Outstanding at December 31, 2022		162,381	$	120.12
	Number of Shares							Number of Shares			Weighted Average Price
Outstanding at December 31, 2023

Granted	Granted	140,953	108.42
Granted
Granted						108,096			132.77
Dividend equivalents	Dividend equivalents	3,727	112.19		Dividend equivalents	2,136	116.35			116.35
Forfeited		(3,245)	96.55

Vested	Vested	(100,046)	101.11
Outstanding at June 30, 2023		203,770	$	122.57
Vested
Vested						(78,695)			143.54
Outstanding at March 31, 2024

Stock Repurchase Program

On May 19, 2022, the Company's Board of Directors authorized a stock repurchase program granting the Company authority to repurchase up to $200.0 million of the Company's common stock over a three-year period, ending on May 19, 2025. The timing of stock repurchases, and the number of shares will depend upon the market conditions and other factors. Share repurchases, if any, will be made in the open market and in privately negotiated transactions in accordance with applicable securities laws. The stock repurchase program may be modified, suspended, or terminated at any time by the Board of Directors. In 2022, the Company purchased 253,490 shares at a weighted average price of $94.89 per share, totaling $24.1 million. No purchases were made during the ~~six~~three months ended ~~June 30, 2023.~~March 31, 2024.

12. SEGMENT REPORTING

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

The OEM Segment, which accounted for ~~76 percent and 84~~78 percent of consolidated net sales for each of the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022, respectively,~~ manufactures and distributes a broad array of highly engineered components for the leading OEMs in the recreation ~~transportation products,~~ and ~~housing~~transportation markets, consisting primarily of RVs and adjacent industries, including boats; buses; trailers used to haul boats, livestock, equipment, and other cargo; trucks; trains; manufactured homes; and modular housing.

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Approximately 4452 percent of the Company's OEM Segment net sales for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 were of components for travel trailer and fifth-wheel RVs.

The Aftermarket Segment, which accounted for ~~24 percent and 16~~22 percent of consolidated net sales for each of the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 2023, ~~and 2022, respectively,~~ supplies engineered components to the related aftermarket channels of the recreation and transportation products, ~~and housing markets,~~ primarily to retail dealers, wholesale distributors, and service centers, as well as direct to retail customers via the Internet. The Aftermarket Segment also includes biminis, covers, buoys, fenders to the marine industry, towing products, truck accessories, appliances, air conditioners, televisions, sound systems, tankless water heaters, and the sale of replacement glass and awnings to fulfill insurance claims.

Decisions concerning the allocation of the Company's resources are made by the Company's chief operating decision maker ("CODM"), with oversight by the Board of Directors. The CODM evaluates the performance of each segment based upon segment operating profit or loss, generally defined as income or loss before interest and income taxes. Decisions concerning the allocation of resources are also based on each segment's utilization of assets. Management of debt is a corporate function. The accounting policies of the OEM and Aftermarket Segments are the same as those described in Note 2 of the Notes to Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

~~LCI INDUSTRIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The following tables present the Company's revenues disaggregated by segment and geography based on the billing address of the Company's customers:


		Three Months Ended June 30, 2023						Three Months Ended June 30, 2022
	Three Months Ended March 31, 2024																Three Months Ended March 31, 2024				Three Months Ended March 31, 2023
(In thousands)	(In thousands)	U.S. (a)		Int’l (b)		Total		U.S. (a)		Int’l (b)		Total		(In thousands)	U.S. (a)	Int’l (b)		Total	U.S. (a)	Int’l (b)		Total
OEM Segment:	OEM Segment:
RV OEMs:	RV OEMs:
RV OEMs:
RV OEMs:
Travel trailers and fifth-wheels
Travel trailers and fifth-wheels
Travel trailers and fifth-wheels	Travel trailers and fifth-wheels	$	326,824	$	11,915	$	338,739	$	800,315	$	14,194	$	814,509
Motorhomes	Motorhomes	40,689		30,496		71,185		64,008		27,472		91,480
Adjacent Industries OEMs	Adjacent Industries OEMs	298,355		50,729		349,084		323,715		46,574		370,289
Total OEM Segment net sales	Total OEM Segment net sales	665,868		93,140		759,008		1,188,038		88,240		1,276,278
Aftermarket Segment:	Aftermarket Segment:
Total Aftermarket Segment net sales	Total Aftermarket Segment net sales	234,901		20,730		255,631		240,246		19,626		259,872
Total Aftermarket Segment net sales
Total Aftermarket Segment net sales
Total net sales	Total net sales	$	900,769	$	113,870	$	1,014,639	$	1,428,284	$	107,866	$	1,536,150

		Six Months Ended June 30, 2023						Six Months Ended June 30, 2022
(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		$	641,806	$	27,486	$	669,292	$	1,737,950	$	29,785	$	1,767,735
Motorhomes		84,693		56,043		140,736		124,154		54,580		178,734
Adjacent Industries OEMs		607,820		99,332		707,152		635,363		91,028		726,391
Total OEM Segment net sales		1,334,319		182,861		1,517,180		2,497,467		175,393		2,672,860
Aftermarket Segment:
Total Aftermarket Segment net sales		435,388		35,381		470,769		470,413		37,445		507,858
Total net sales		$	1,769,707	$	218,242	$	1,987,949	$	2,967,880	$	212,838	$	3,180,718

(a) Net sales to customers in the United States of America

(b) Net sales to customers domiciled in countries ~~domiciled~~ outside of the United States of America

The following table presents the Company's operating profit (loss) by segment:




		Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	(In thousands)	2023		2022		2023		2022
Operating profit:
(In thousands)
(In thousands)
Operating profit (loss):
Operating profit (loss):
Operating profit (loss):
OEM Segment
OEM Segment
OEM Segment	OEM Segment	$	18,642	$	190,577	$	17,921	$	435,951
Aftermarket Segment	Aftermarket Segment	36,532		28,212		57,296		52,539
Aftermarket Segment
Aftermarket Segment
Total operating profit	Total operating profit	$	55,174	$	218,789	$	75,217	$	488,490
Total operating profit
Total operating profit

2018

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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


		Three Months Ended June 30,				Six Months Ended June 30,
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
(In thousands)
(In thousands)
(In thousands)	(In thousands)	2023		2022		2023		2022
OEM Segment:	OEM Segment:
OEM Segment:
OEM Segment:
Chassis, chassis parts, and slide-out mechanisms
Chassis, chassis parts, and slide-out mechanisms
Chassis, chassis parts, and slide-out mechanisms	Chassis, chassis parts, and slide-out mechanisms	$	202,735	$	486,591	$	400,791	$	1,046,311
Windows and doors	Windows and doors	220,094		301,985		438,705		632,343
Windows and doors
Windows and doors
Furniture and mattresses	Furniture and mattresses	125,346		229,520		265,909		471,746
Axles and suspension solutions		88,635		93,378		164,384		190,423
Furniture and mattresses
Furniture and mattresses
Axles, ABS, and suspension solutions
Axles, ABS, and suspension solutions
Axles, ABS, and suspension solutions
Other
Other
Other	Other	122,198		164,804		247,391		332,037
Total OEM Segment net sales	Total OEM Segment net sales	759,008		1,276,278		1,517,180		2,672,860
Total OEM Segment net sales
Total OEM Segment net sales
Total Aftermarket Segment net sales
Total Aftermarket Segment net sales
Total Aftermarket Segment net sales	Total Aftermarket Segment net sales	255,631		259,872		470,769		507,858
Total net sales	Total net sales	$	1,014,639	$	1,536,150	$	1,987,949	$	3,180,718
Total net sales
Total net sales

2119

LCI INDUSTRIES

ITEM 2 – MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company's Condensed Consolidated Financial Statements and Notes thereto included in Item 1 of Part 1I of this report, as well as the Company's Annual Report on Form 10-K for the year ended December 31, ~~2022.~~2023.

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

We have two reportable segments, the OEM Segment and the Aftermarket Segment. Intersegment sales are insignificant. At ~~June 30, 2023,~~March 31, 2024, we operated over ~~120~~110 manufacturing and distribution facilities located throughout North America and Europe. See Note 12 of the Notes to Condensed Consolidated Financial Statements for further information regarding our segments.

Our OEM Segment manufactures orand distributes a broad array of highly engineered components for the leading OEMs of RVs and adjacent industries, including boats; buses; trailers used to haul boats, livestock, equipment, and other cargo; trucks; trains; manufactured homes; and modular housing. Approximately 5849 percent of our OEM Segment net sales for the twelve months ended ~~June 30, 2023~~March 31, 2024 were of components for travel trailer and fifth-wheel RVs, including:


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

The Aftermarket Segment supplies many of these engineered components to the related aftermarket channels of the recreation and transportation products, ~~and housing markets,~~ primarily to retail dealers, wholesale distributors, and service centers, as well as direct to retail customers via the Internet. The Aftermarket Segment also includes biminis, covers, buoys, fenders to the marine industry, towing products, truck accessories, appliances, air conditioners, televisions, sound systems, tankless water heaters, and the sale of replacement glass and awnings to fulfill insurance claims.

We are executing a strategic initiative to diversify the markets we serve outside of the historical concentration within the North American RV OEM industry. Approximately 57 percent of net sales for the three months ended March 31, 2024 were generated outside of the North American RV OEM market. We believe our diversification strategy has helped offset downswings in the North American RV OEM industry, while maintaining our strong position and ability to ramp up quickly to take advantage of upswings.

Most industries where we sell products or where our products are used historically have been seasonal and are generally at the highest levels when the weather is moderate. Accordingly, our 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 we 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 have been, and may in the future be, different than in prior years due to various factors, including fluctuations in dealer inventories and the timing of dealer orders, the impact of international, national, and regional economic conditions and consumer confidence on retail sales of RVs and other products for which the Company sells its components, the impact of severe weather conditions on the timing of industry-wide shipments from time to time, as well as the coronavirus ("COVID-19") pandemic and related impacts.years. Additionally, many of the optional upgrades and non-critical replacement parts for RVs are purchased outside the normal product selling season, thereby causing certain Aftermarket Segment sales to be ~~counter-seasonal, but this has been, and may in the future be, different as a result of the COVID-19 pandemic and related impacts.~~counter-seasonal.

Negative conditions in the general economy in the United States or abroad, including conditions resulting from financial and credit market fluctuations, increased inflation and interest rates, changes in economic policy, trade uncertainty, including changes in tariffs, sanctions, international treaties, and other trade restrictions, including heightened tensions between China and Taiwan, the occurrence of a natural disaster or global public health crisis, such as the COVID-19 pandemic, or armed

2220

LCI INDUSTRIES

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Continued)

including changes in tariffs, sanctions, international treaties, and other trade restrictions, geopolitical tensions, armed conflicts, ~~such as the conflict between Russia and Ukraine,~~natural disasters, or global public health crises, have negatively impacted, and could continue to negatively impact, the Company’s business, liquidity, financial condition and results of operations.

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).

The annual sales cycle for the RV industry generally starts in October after the "Open House" in Elkhart, Indiana where many of the largest RV OEMs display product to RV retail dealers and ends after the conclusion of the summer selling season in September in the following calendar year. Between October and March, industry-wide wholesale shipments of travel trailer and fifth-wheel RVs have historically exceeded retail sales as dealers build inventories to support anticipated sales. Between April and September, the spring and summer selling seasons, retail sales of travel trailer and fifth-wheel RVs have historically exceeded industry-wide wholesale shipments. Due to the COVID-19 pandemic, the 2021 and 2020 Open Houses were canceled, but an Open House was held in September 2022, and this year's Open House is scheduled for September 2023. The seasonality of the RV industry has been 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, our primary RV market, ~~decreased 54~~increased 17 percent to ~~132,800~~73,500 units in the first ~~six~~three months of ~~2023,~~2024, compared to the first ~~six~~three months of ~~2022, primarily due~~2023, as retail dealers restocked inventories in the first quarter of 2024 compared to ~~decreased retail demand.~~destocking efforts in the same period of 2023. Retail demand for travel trailer and fifth-wheel RVs decreased 218 percent in the first ~~six~~three months of ~~2023~~2024 compared to the same period in ~~2022.~~2023. Retail demand has declined from ~~recent~~ elevated post-pandemic levels, ~~partially~~primarily driven by ~~rising~~inflation and higher interest rates impacting retail ~~consumers.~~consumers' discretionary spending. Retail demand is typically revised upward in subsequent months, primarily due to delayed RV registrations.

While we 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
Wholesale Retail Unit Impact on
Units Change Units Change Dealer Inventories
Quarter ended June 30, 2023 71,600 (46)% 105,300 (19)% (33,700)
Quarter ended March 31, 2023 61,200 (60)% 71,400 (25)% (10,200)
Quarter ended December 31, 2022 62,000 (52)% 59,000 (23)% 3,000
Quarter ended September 31, 2022 73,400 (46)% 106,000 (19)% (32,600)
Twelve months ended June 30, 2023 268,200 (51)% 341,700 (21)% (73,500)
Quarter ended June 30, 2022 133,800 0% 129,600 (28)% 4,200
Quarter ended March 31, 2022 152,400 16% 95,000 (17)% 57,400
Quarter ended December 31, 2021 130,400 13% 76,700 (14)% 53,700
Quarter ended September 30, 2021 136,000 24% 131,000 (18)% 5,000
Twelve months ended June 30, 2022 552,600 13% 432,300 (20)% 120,300


					Estimated
	Wholesale		Retail		Unit Impact on
	Units	Change	Units	Change	Dealer Inventories
Quarter ended March 31, 2024	73,500	17%	66,400	(8)%	7,100
Quarter ended December 31, 2023	63,400	2%	53,700	(9)%	9,700
Quarter ended September 30, 2023	61,500	(16)%	92,000	(13)%	(30,500)
Quarter ended June 30, 2023	71,600	(47)%	109,000	(16)%	(37,400)
Twelve months ended March 31, 2024	270,000	(19)%	321,100	(12)%	(51,100)

Quarter ended March 31, 2023	62,700	(58)%	71,800	(24)%	(9,100)
Quarter ended December 31, 2022	62,000	(52)%	59,100	(23)%	2,900
Quarter ended September 30, 2022	73,300	(46)%	106,000	(19)%	(32,700)
Quarter ended June 30, 2022	133,900	0%	129,600	(28)%	4,300
Twelve months ended March 31, 2023	331,900	(40)%	366,500	(24)%	(34,600)

According to the RVIA, industry-wide wholesale shipments of motorhome RVs in the first ~~six~~three months of ~~2023~~2024 decreased 1722 percent to ~~25,500~~10,400 units compared to the first ~~six~~three months of ~~2022.~~2023. Retail demand for motorhome RVs decreased 12ten percent year-over-year in the first ~~six~~three months of ~~2023,~~2024, compared to a 1115 percent year-over-year decrease in retail demand ~~in the~~

2321

LCI INDUSTRIES

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Continued)

in the same period of ~~2022. We believe the decline in retail~~2023. Retail demand has ~~been~~declined from post-pandemic elevated levels, partially driven by inflation and ~~rising~~higher interest rates impacting retail ~~consumers.~~

Our current estimate for full-year 2023 industry-wide wholesale shipments from the United States of travel trailer, fifth-wheel, and motorhome RVs is approximately 290,000 to 310,000 units. This estimate is based on the current RVIA forecast and suggests a decrease of 41 to 37 percent compared to actual wholesale shipments in 2022. This projected decline is being driven by current dealer inventory levels, inflation, and rising interest rates impacting retail consumers.consumers' discretionary spending.

Adjacent Industries

Our portfolio of products used in RVs can also be used in other applications, including boats; buses; trailers used to haul boats, livestock, equipment, and other cargo; trucks; trains; manufactured homes; and modular housing (collectively, "Adjacent Industries"). In many cases, OEM customers of the Adjacent Industries are affiliated with RV OEMs through related subsidiaries. We believe there are significant opportunities in these Adjacent Industries.

We currently expect economic uncertainty to negatively impact consumer discretionary purchases such as trailers and boats as we progress further into the second half of 2023; however, we currently anticipate that production of manufactured homes, buses, and trains should remain at or near current run rates through 2023.

Aftermarket Segment

Many of our OEM Segment products are also sold through various aftermarket channels of the recreation ~~transportation products,~~ and ~~housing~~transportation markets, primarily to retail dealers, wholesale distributors, and service centers, as well as direct to retail customers via the Internet. This includes discretionary accessories and replacement service parts. We have teams dedicated to product, technical, and installation training as well as marketing support for our Aftermarket Segment customers. We also support multiple call centers to provide responses to customers for product, delivery, and technical support. This support is designed for a rapid response to critical repairs, so customer downtime is minimal. The Aftermarket Segment also includes biminis, covers, buoys, fenders to the marine industry, towing products, truck accessories, appliances, air conditioners, televisions, sound systems, tankless water heaters, and the sale of replacement glass and awnings to fulfill insurance claims. Many of the optional upgrades and non-critical replacement parts for RVs are purchased outside the normal product selling season, thereby causing certain Aftermarket Segment sales to be ~~counter-seasonal, but this has been, and may in the future be, different as a result of the COVID-19 pandemic and the continuing impact of market and supply chain disruptions.~~counter-seasonal.

According to Go RVing, estimated RV ownership in the United States as of ~~2020 had~~2021 increased to ~~over 11~~a record-high 11.2 million households. This vibrant market is a key driver for aftermarket sales, as we anticipate owners will likely upgrade their units as well as replace parts and accessories which have been subjected to normal wear and tear.

We currently expect to see a slight increase in aftermarket sales over prior year levels in the second half of 2023 as distribution channel inventories stabilize. We expect these gains will be tempered by the impact of inflation and rising interest rates on consumers' discretionary spending.

RESULTS OF OPERATIONS

Consolidated Highlights

•Consolidated net sales in the ~~second~~first quarter of ~~2023~~2024 were ~~$1.0 billion, 34 percent lower than consolidated net sales~~$968.0 million, down slightly from $973.3 million for the same period of 2022 of $1.5 billion. The decrease was primarily driven by a nearly 44 percent decrease in North American RV wholesale shipments and decreased selling prices which are indexed to select commodities, partially offset by acquisitions. Net sales from acquisitions completed in the twelve months ended June 30, 2023 contributed approximately $17.2 million in the second quarter of 2023.

•Net income for the ~~second~~first quarter of ~~2023~~2024 was ~~$33.4~~$36.5 million, or ~~$1.31~~$1.44 per diluted share, compared to net income of ~~$154.5~~$7.3 million, or ~~$6.06~~$0.29 per diluted share, for the same period of ~~2022.~~2023.

•Consolidated operating profit during the ~~second~~first quarter of ~~2023~~2024 was ~~$55.2~~$57.6 million, compared to ~~$218.8~~$20.0 million in the same period of ~~2022.~~2023. Operating profit margin was ~~5.4~~6.0 percent in the ~~second~~first quarter of ~~2023~~2024 compared to ~~14.2~~2.1 percent in the same period of ~~2022.~~2023. The ~~decrease~~increase was primarily due to ~~decreased selling prices which are indexed~~

~~LCI INDUSTRIES~~

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

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~(Continued)~~

~~to select commodities and the impact of fixed costs on reduced organic sales, partially offset by~~ decreases in material commodity and freight costs.

•The cost of steel and aluminum consumed in certain of our manufactured components decreased in the ~~second~~first quarter of ~~2023~~2024 compared to the same period of ~~2022.~~2023. Raw material costs are subject to continued fluctuation and impact certain contractual selling prices which are indexed to select commodities.

•The effective tax rate of 25.4 percent for the six months ended June 30, 2023 was lower than the comparable prior year period of 26.3 percent, primarily due to an increased discrete benefit related to the cash surrender value of life insurance, as discussed below under "Income Taxes."

•In ~~June 2023,~~March 2024, we paid a quarterly dividend of $1.05 per share, aggregating to ~~$26.6~~$26.7 million.

•~~We made net repayments of long-term indebtedness of $179.2 million year-to-date through June 30, 2023.~~

LCI INDUSTRIES

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Continued)

OEM Segment - ~~Second~~First Quarter

Net sales of the OEM Segment in the ~~second~~first quarter of ~~2023 decreased $517.3~~2024 increased by $0.1 million, compared to the same period of ~~2022.~~2023. Net sales of components to OEMs were to the following ~~OEMs~~ markets for the three months ended ~~June 30 were:~~March 31:


(In thousands)	(In thousands)	2023		2022		Change		(In thousands)	2024			2023				Change
RV OEMs:	RV OEMs:							RV OEMs:
Travel trailers and fifth-wheels	Travel trailers and fifth-wheels	$	338,739	$	814,509	(58)	%	Travel trailers and fifth-wheels	$	390,763	$	$	330,553	18			18		%
Motorhomes	Motorhomes	71,185		91,480		(22)	%	Motorhomes	68,838		69,551		69,551		(1)			(1)		%
Adjacent Industries OEMs	Adjacent Industries OEMs	349,084		370,289		(6)	%	Adjacent Industries OEMs	298,710		358,069		358,069		(17)			(17)		%
Total OEM Segment net sales	Total OEM Segment net sales	$	759,008	$	1,276,278	(41)	%	Total OEM Segment net sales	$	758,311	$	$	758,173	—			—		%

According to the RVIA, industry-wide wholesale unit shipments for the three months ended ~~June 30~~March 31 were:


		2023	2022	Change			2024		2023			Change
Travel trailer and fifth-wheels	Travel trailer and fifth-wheels	71,600	133,800	(46)	%	Travel trailer and fifth-wheels	73,500	62,700		62,700	17		17	%
Motorhomes	Motorhomes	12,100	14,800	(18)	%	Motorhomes	10,400	13,400		13,400	(22)		(22)	%

The trend in our average product content per RV produced is an indicator of our overall market share of components for new RVs. Our average product content per type of RV, calculated based upon our net sales of components to domestic RV OEMs for the different types of RVs produced for the twelve months ended ~~June 30,~~March 31, divided by the industry-wide wholesale shipments of the different product mix of RVs for the same period, was:


Content per:	Content per:	2023		2022		Change		Content per:	2024			2023			Change
Travel trailer and fifth-wheel	Travel trailer and fifth-wheel	$	5,487	$	5,379	2	%	Travel trailer and fifth-wheel	$	5,097	$	$	5,861	(13)		(13)	%
Motorhome	Motorhome	$	3,760	$	3,557	6	%	Motorhome	$	3,656	$	$	3,993	(8)		(8)	%

Our 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 changes in selling prices for our products, market share gains, and acquisitions. For the twelve months ended March 31, 2024, travel trailer and fifth-wheel RV content declined year-over-year primarily due to pricing decreases indexed to commodity and freight indices and unit mix, partially offset by market share gains.

Our ~~decrease~~increase in net sales to RV OEMs during the ~~second~~first quarter of ~~2023~~2024 was driven by a 44nine percent ~~reduction~~increase in North American RV wholesale shipments during the ~~second~~first quarter of ~~2023, driven by~~2024, primarily due to current dealer inventory ~~levels, inflation, and rising interest rates impacting retail consumers. The decrease was~~restocking, partially offset by ~~average product content expansion.~~decreased selling prices which are indexed to select commodities.

Our decrease in net sales to OEMs in Adjacent Industries during the ~~second~~first quarter of ~~2023~~2024 was primarily due to lower sales to North American marine OEMs, ~~and in manufactured housing,~~ driven by inflation and rising interest rates impacting retail consumers.

Operating profit of the OEM Segment was ~~$18.6~~$32.8 million in the ~~second~~first quarter of ~~2023, a decrease~~2024, an increase of ~~$171.9~~$33.6 million compared to an operating ~~profit~~loss of the OEM Segment of ~~$190.6~~$0.7 million in the same period of ~~2022.~~2023. The operating profit margin of the OEM Segment in the ~~second~~first quarter of ~~2023 decreased~~2024 increased to ~~2.5~~4.3 percent compared to the operating ~~profit~~loss margin of ~~14.9~~0.1 percent for the same period of ~~2022~~2023 and was ~~negatively~~positively impacted by:

•Decreases in material commodity and freight costs, which positively impacted operating profit by $28.0 million, primarily related to decreased steel and aluminum costs.

•A decrease in warranty costs primarily due to reduced warranty claim payments, resulting in an increase in operating profit of $7.2 million compared to the same period of 2023.

•A decrease in production labor to align with current demand levels, resulting in an increase in operating profit of $6.2 million compared to the same period of 2023.

•Price increases to targeted products, resulting in an increase in operating profit of $2.8 million compared to the same period of 2023.

LCI INDUSTRIES

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Continued)

•~~Selling prices contractually tied to indices of select commodities decreased,~~A reduction in general and administrative costs resulting in ~~a decrease~~an increase in operating profit of ~~$83.1~~$2.4 million compared to the same period of ~~2022.~~2023.

•The impact of fixed costs on reduced organic sales, which decreased operating profit by $27.8 million related to fixed selling, general, and administrative costs and $22.9 million related to fixed production overhead costs.Partially offset by:

•Sales mix increase of lower margin products, which negatively impacted operating profit by ~~$8.3~~$12.0 million.

~~Partially offset by:~~

•~~Decreases in material commodity costs, which positively impacted operating profit by $37.3 million, primarily related to decreased steel costs.~~

•~~A reduction in general and administrative costs resulting in an increase in operating profit of $7.8 million compared to the same period of 2022.~~

•~~Price increases to targeted products, resulting in an increase in operating profit of $4.4 million compared to the same period of 2022.~~

•~~A decrease in production labor primarily related to reduced overtime and temporary staffing, resulting in an increase in operating profit of $1.9 million compared to the same period of 2022.~~

Amortization expense on intangible assets for the OEM Segment was $10.2 million in the second quarter of 2023, compared to $10.1 million in the same period in 2022. Depreciation expense on fixed assets for the OEM Segment was $14.7 million in the second quarter of 2023, compared to $14.4 million in the same period of 2022.

~~OEM Segment – Year to Date~~

Net sales of the OEM Segment in the first six months of 2023 decreased 43 percent, or $1.2 billion, compared to the first six months of 2022. Net sales of components to OEMs were to the following markets for the six months ended June 30:

(In thousands) 2023 2022 Change
RV OEMs:
Travel trailers and fifth-wheels $ 669,292 $ 1,767,735 (62) %
Motorhomes 140,736 178,734 (21) %
Adjacent Industries OEMs 707,152 726,391 (3) %
Total OEM Segment net sales $ 1,517,180 $ 2,672,860 (43) %

~~According to the RVIA, industry-wide wholesale unit shipments for the six months ended June 30 were:~~

2023 2022 Change
Travel trailer and fifth-wheel RVs 132,800 286,200 (54) %
Motorhomes 25,500 30,700 (17) %

Our decrease in net sales to RV OEMs during the first six months of 2023 was driven by a 50 percent reduction in North American wholesale shipments during the first six months of 2023, driven by current dealer inventory levels, inflation, and rising interest rates impacting retail consumers. The decrease was partially offset by average product content expansion.

Our decrease in net sales to OEMs in Adjacent Industries during the first six months of 2023 was primarily due to lower sales to North American marine OEMs and in manufactured housing, driven by inflation and rising interest rates impacting retail consumers. We continue to believe there are significant opportunities in Adjacent Industries.

Operating profit of the OEM Segment was $17.9 million in the first six months of 2023, a decrease of $418.0 million compared to the same period of 2022. The operating profit margin of the OEM Segment in the first six months of 2023 decreased to 1.2 percent, compared to 16.3 percent for the same period of 2022, and was negatively impacted by:

•Selling prices contractually tied to indices of select commodities decreased, resulting in a decrease in operating profit of ~~$149.2~~$3.6 million compared to the same period of ~~2022.~~

•The impact of fixed costs on reduced organic sales, which decreased operating profit by $59.7 million related to fixed selling, general, and administrative costs and $51.5 million related to fixed production overhead costs.

~~LCI INDUSTRIES~~

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

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~(Continued)~~

•~~Incremental costs incurred due to volatile OEM schedules resulting in a decrease in operating profit of $20.2 million compared to the same period of 2022.~~

•~~Sales mix increase of lower margin products from recent acquisitions and related integration costs, which negatively impacted operating profit by $12.3 million.~~

~~Partially offset by:~~

•~~Decreases in material commodity costs, which positively impacted operating profit by $57.6 million, primarily related to decreased steel costs.~~

•~~A reduction in general and administrative costs resulting in an increase in operating profit of $11.6 million compared to the same period of 2022.~~

•~~Pricing changes to targeted products, resulting in an increase in operating profit of $4.1 million compared to the same period of 2022.~~2023.

Amortization expense on intangible assets for the OEM Segment was ~~$20.7~~$10.3 million in the first ~~six months~~quarter of ~~2023,~~2024, compared to ~~$20.2~~$10.5 million in the same period ~~of 2022.~~in 2023. Depreciation expense on fixed assets for the OEM Segment was ~~$29.0~~$14.0 million in the first ~~six months~~quarter of ~~2023,~~2024, compared to ~~$28.9~~$14.4 million in the same period of ~~2022.~~2023.

Aftermarket Segment - ~~Second~~First Quarter

Net sales of the Aftermarket Segment in the ~~second~~first quarter of ~~2023~~2024 decreased by ~~$4.2~~$5.4 million, compared to the same period of ~~2022.~~2023. Net sales of components in the Aftermarket Segment were as follows for the three months ended ~~June 30:~~March 31:


(In thousands)	(In thousands)	2023		2022		Change		(In thousands)	2024			2023			Change
Total Aftermarket Segment net sales	Total Aftermarket Segment net sales	$	255,631	$	259,872	(2)	%	Total Aftermarket Segment net sales	$	209,718	$	$	215,137	(3)		(3)	%

Net sales of the Aftermarket Segment for the ~~second~~first quarter of ~~2023~~2024 were slightly lower than for the same period in ~~2022,~~2023, primarily driven by ~~inflationary pressures impacting consumer demand.~~lower volumes within marine markets and the impacts of inflation and elevated interest rates on consumers' discretionary spending, partially offset by growth in the automotive aftermarket driven by market share gains.

Operating profit of the Aftermarket Segment was ~~$36.5~~$24.8 million in the ~~second~~first quarter of ~~2023,~~2024, an increase of ~~$8.3~~$4.0 million compared to the same period of ~~2022.~~2023. The operating profit margin of the Aftermarket Segment was ~~14.3~~11.8 percent in the ~~second~~first quarter of ~~2023,~~2024, compared to ~~10.9~~9.7 percent in the same period in ~~2022,~~2023, and was positively impacted by:

•Decreases in material commodity and freight costs, which positively impacted operating profit by ~~$9.5 million, primarily related to decreased steel costs.~~

•~~Pricing changes to targeted products, resulting in an increase in operating profit of $2.6 million compared to the same period of 2022.~~

~~Partially offset by:~~

•The impact of fixed costs on reduced organic sales, which decreased operating profit by $1.0 million related to fixed selling, general, and administrative costs and $0.4 million related to fixed production overhead costs.

•Increases in production overhead costs in the current period resulting from investments to expand capacity over the past year, which negatively impacted operating profit by $0.7 million in the current period.

Amortization expense on intangible assets for the Aftermarket Segment was $4.0 million in the second quarter of 2023, compared to $3.8 million in the same period of 2022. Depreciation expense on fixed assets for the Aftermarket Segment was $4.2 million in the second quarter of 2023, compared to $3.6 million in the same period of 2022.

~~Aftermarket Segment – Year to Date~~

Net sales of the Aftermarket Segment in the first six months of 2023 decreased 7 percent, or $37.1 million, compared to the same period of 2022. Net sales of components in the Aftermarket Segment were as follows for the six months ended June 30:

(In thousands) 2023 2022 Change
Total Aftermarket Segment net sales $ 470,769 $ 507,858 (7) %

~~LCI INDUSTRIES~~

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

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~(Continued)~~

Net sales of the Aftermarket Segment decreased during the first six months of 2023 primarily driven by lower volumes within the truck and marine markets due to fully stocked distribution channels and the impacts of inflation and rising interest rates on consumers' discretionary spending.

Operating profit of the Aftermarket Segment was $57.3 million in the first six months of 2023, an increase of $4.8 million compared to the same period of 2022. The operating profit margin of the Aftermarket Segment was 12.2 percent in the first six months of 2023, compared to 10.3 percent in the same period in 2022, and was positively impacted by:

•~~Decreases in material commodity costs, which positively impacted operating profit by $12.7~~$4.6 million, primarily related to decreased steel and aluminum costs.

•Pricing changes to targeted products, resulting in an increase in operating profit of ~~$6.7~~$1.9 million compared to the same period of ~~2022.~~2023.

•Partially offset by:

•The impact of fixed costs due to reduced ~~organic~~ volumes, which decreased operating profit by ~~$7.3~~$1.2 million related to fixed selling, general, and administrative costs and ~~$2.4~~$0.6 million related to fixed overhead costs.

•~~Higher production facility costs in the current period resulting from investments to expand capacity over the past year, which reduced operating profit by $2.0 million in the current period.~~

Amortization expense on intangible assets for the Aftermarket Segment was ~~$7.8~~$3.8 million in the first ~~six months~~quarter of ~~2023, compared to $7.6 million in~~2024, consistent with the same period of ~~2022.~~2023. Depreciation expense on fixed assets for the Aftermarket Segment was ~~$8.1~~$4.6 million in the first ~~six months~~quarter of ~~2023,~~2024, compared to ~~$7.1~~$3.9 million in the same period of ~~2022.~~2023.

Interest Expense

Interest expense, net was ~~$20.6~~$9.3 million for the ~~six~~three months ended ~~June 30, 2023,~~March 31, 2024, compared to ~~$12.4~~$10.4 million in the same period of ~~2022.~~2023. The ~~increase~~decrease in interest expense was primarily due to ~~higher global interest rates~~net repayments of $215.9 million on the revolving credit facility during 2023 and principal prepayments of $37.5 million on our ~~adjustable rate~~ Term Loan (as defined in Note 8 of the Notes to Condensed Consolidated Financial Statements) in the third and fourth quarters of 2023, partially offset by higher global interest rates on our adjustable rate debt including the Term Loan and revolving credit facility, ~~partially offset by principal payments~~and net borrowings on the ~~Term Loan, net repayments on our~~ revolving credit facility ~~and~~in the ~~payoff~~first three months of ~~the shelf loan balance in March 2022.~~2024. See Note 8 of the Notes to Condensed Consolidated Financial Statements for a description of our credit facilities.

Income Taxes

The effective tax rates for the ~~six~~three months ended ~~June 30,~~March 31, 2024 and 2023 ~~and 2022~~ were ~~25.4~~24.3 percent and ~~26.3~~24.8 percent, respectively. The effective tax rate for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 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 on stock-based compensation as a component of the provision for income taxes, and Federal and Indiana research and development

LCI INDUSTRIES

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Continued)

credits. The decrease in the effective tax rate for the ~~six~~three months ended ~~June 30, 2023~~March 31, 2024 as compared to the same period in ~~2022~~2023 was primarily due to ~~an increased benefit related to the cash surrender value of life insurance.~~decreases in non-deductible executive compensation costs and effective state tax rates.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

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. We believe our operating cash flows, credit facilities, as well as any potential future borrowings, will be sufficient to fund our future payments and long-term initiatives.

As of ~~June 30, 2023,~~March 31, 2024, we had ~~$22.1~~$22.6 million in cash and cash equivalents, and ~~$270.0~~$153.8 million of availability under our revolving credit facility under the Credit Agreement (as defined in Note 8 of the Notes to Condensed Consolidated Financial Statements). We also have the ability to request an increase to the revolving and/or incremental term loan facilities by up to an additional $400.0 million in the aggregate upon approval of the lenders providing any such increase and the satisfaction of

~~LCI INDUSTRIES~~

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

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~(Continued)~~

certain other conditions. See Note 8 of the Notes to Condensed Consolidated Financial Statements for a description of our credit facilities.

We believe the availability under the revolving credit facility under the 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 ~~six~~three months ended ~~June 30:~~March 31:


(In thousands)	(In thousands)	2023		2022		(In thousands)	2024	2023
Net cash flows provided by operating activities		$	273,565	$	347,971
Net cash flows (used in) provided by operating activities
Net cash flows used in investing activities	Net cash flows used in investing activities	(55,589)		(120,422)
Net cash flows used in financing activities	Net cash flows used in financing activities	(243,319)		(234,390)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(62)		(1,067)
Net decrease in cash and cash equivalents	Net decrease in cash and cash equivalents	$	(25,405)	$	(7,908)

Cash Flows from Operations

Net cash flows used in operating activities were $7.7 million in the first three months of 2024, compared to cash provided by operating activities ~~were $273.6~~of $74.7 million in the first ~~six~~three months of ~~2023, compared to $348.0 million in the first six months of 2022.~~2023. The ~~decrease~~change in net cash flows ~~provided by~~used in operating activities was primarily due to ~~a decrease in net income of $310.0 million. The decrease in net income was partially offset by~~ the net change in assets and liabilities, net of acquired businesses, as it ~~generated $235.8~~used $111.7 million more cash in the first ~~six~~three months of ~~2023~~2024 compared to the same period in ~~2022.~~2023. The net change in assets and liabilities was partially offset by an increase in net income of $29.3 million. The primary ~~provider~~use of cash ~~generated from~~in net assets was the increase of $131.1 million in accounts receivable due to seasonally higher sales in the first ~~six~~three months of 2024. While we continued to reduce inventory in the first three months of 2024, the larger decrease in inventory in the first three months of 2023 was ~~the decrease in inventory of $209.3 million,~~ due to decreasing commodity and freight costs and initiatives to reduce inventory as RV production demand ~~has~~ slowed from record levels seen during the first half of 2022. ~~The primary use of cash in net assets was the increase of $81.0 million in accounts receivable due to seasonally higher sales in the first six months of 2023.~~

Depreciation and amortization was ~~$65.5~~$32.7 million in the first ~~six~~three months of ~~2023,~~2024, and is expected to be approximately $130 to $140 million for the full year ~~2023.~~2024. Non-cash stock-based compensation expense in the first ~~six~~three months of ~~2023~~2024 was ~~$9.1~~$4.3 million. Non-cash stock-based compensation expense is expected to be approximately $18 to $23 million for the full year ~~2023.~~2024.

Cash Flows from Investing Activities

Cash flows used in investing activities of ~~$55.6~~$8.4 million in the first ~~six~~three months of 2024 were primarily comprised of $8.6 million for capital expenditures. Cash flows used in investing activities of $21.4 million in the first three months of 2023 were primarily comprised of ~~$34.1~~$17.2 million for capital expenditures and ~~$25.9~~$6.3 million for the acquisitions of businesses. Cash flows used in investing activities of $120.4 million in the first six months of 2022 were primarily comprised of $70.8 million for capital expenditures and $51.8 million for the acquisitions of businesses, net of cash acquired.

LCI INDUSTRIES

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Continued)

Our capital expenditures are primarily for replacement and growth. Over the long term, based on our historical capital expenditures, the replacement portion 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 the actual spending compared to these historical averages. We estimate full year ~~2023~~2024 capital expenditures of ~~$60~~$55 to ~~$80~~$75 million, including investments in automation and lean projects.

Capital expenditures ~~and acquisitions~~ in the first ~~six~~three months of ~~2023~~2024 were funded by cash ~~generated from operations~~on hand and borrowings under our Credit Agreement. Capital expenditures and any acquisitions in the remainder of fiscal year ~~2023~~2024 are expected to be funded primarily from cash generated from operations, as well as periodic borrowings under our revolving credit ~~facility as needed.~~facility.

Cash Flows from Financing Activities

Cash flows used in financing activities of ~~$243.3~~$26.4 million in the first ~~six~~three months of 2024 were primarily comprised of payments of quarterly dividends of $26.7 million and cash outflows of $9.0 million related to vesting of stock-based awards, net of shares tendered for payment of taxes, partially offset by $9.3 million in net borrowings under our revolving credit facility.

Cash flows used in financing activities of $76.8 million in the first three months of 2023 were primarily comprised of ~~$168.5~~$36.1 million in net repayments under our revolving credit facility, payments of quarterly dividends of ~~$53.2~~$26.6 million, ~~$10.7 million in repayments under our Term Loan and other borrowings, and~~ cash outflows of ~~$9.6~~$8.9 million related to vesting of stock-based awards, net of shares tendered for payment of ~~taxes.~~

~~LCI INDUSTRIES~~

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

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~(Continued)~~

~~Cash flows used in financing activities of $234.4 million in the first six months of 2022 were primarily comprised of $107.1 million in net repayments under our revolving credit facility, $60.9~~taxes, and $5.3 million in repayments under our ~~shelf loan,~~ Term Loan and other ~~borrowings, payments of quarterly dividends of $49.6 million, and cash outflows of $10.8 million related to vesting of stock-based awards, net of shares tendered for payment of taxes.~~borrowings.

The Credit Agreement includes 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. On May 23, 2023, we entered into an amendment to the Credit Agreement that, among other things, provided for adjustments to certain of the financial covenants by increasing the maximum total net leverage ratio and decreasing the minimum debt service coverage ratio, in each case for the two fiscal quarters ending June 30, 2023 and September 30, 2023. At ~~June 30, 2023,~~March 31, 2024, we were in compliance with all financial covenants. ~~The amendment to the Credit Agreement also provided for the transition from LIBOR to term SOFR as the benchmark rate for purposes of calculating interest on certain outstanding borrowings.~~

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~~considering our prevailing financial needs, earnings, and other relevant factors, including any limitations in our debt agreements, such as maintenance of certain financial ratios.

In May 2022, our Board of Directors authorized a stock repurchase program for the purchase of up to $200.0 million of our common stock over a three-year period ending on May 19, 2025. No shares were repurchased during the three months ended March 31, 2024 and 2023. As of March 31, 2024, there was $175.9 millionremaining under the stock repurchase program.

CORPORATE GOVERNANCE

We are in compliance with the corporate governance requirements of the Securities and Exchange Commission ~~(“SEC”~~(the “SEC”) and the New York Stock Exchange. Our governance documents and committee charters and key practices have been posted to the “Investors” section of our 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. We have also established a Whistleblower Policy, which includes a toll-free hotline (800-461-9330) to report complaints about our accounting, internal controls, auditing matters or other concerns. The Whistleblower Policy and procedure for complaints can be found on our website (www.lci1.com).

CONTINGENCIES

Information required by this item is included in Note 10 of the Notes to Condensed Consolidated Financial Statements and is incorporated herein by reference.

RAW MATERIALS INFLATION

The prices of key raw materials, consisting primarily of steel and aluminum, and components used by us which are made from these raw materials, are influenced by demand and other factors specific to these commodities, as well as by inflationary pressures. We experienced reduced prices of these commodities in the first ~~six~~three months of ~~2023,~~2024, but prices of these commodities have historically been ~~volatile, and over the past few months prices have continued to fluctuate.~~volatile. As a result, while we currently expect commodity prices ~~in upcoming quarters in 2023~~for the remainder of the year to remain generally consistent with ~~prices in~~ the first ~~six months~~quarter of ~~2023,~~2024, there can be no assurance that raw material costs will not

LCI INDUSTRIES

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Continued)

increase. Please see "Results of Operations" above for additional information regarding the impact of raw material costs on our results of operations for the first ~~six~~three months of ~~2023.~~2024.

NEW ACCOUNTING PRONOUNCEMENTS

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

~~USE OF~~CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us 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, we 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,

~~LCI INDUSTRIES~~

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

~~FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~(Continued)~~

pension and post-retirement benefits, stock-based compensation, segment allocations, contingent consideration, environmental liabilities, contingencies and litigation. We 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.

For a discussion of our critical accounting estimates, refer to Management's Discussion and Analysis of Results of Operations and Financial Condition in our Annual Report on Form 10-K for the year ended December 31, 2023. There have been no material changes to our critical accounting estimates as described in that Annual Report.

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains certain "forward-looking statements" with respect to our financial condition, results of operations, profitability, margin growth, 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 production levels, future business prospects, net sales, expenses and income (loss), capital expenditures, tax rate, cash flow, financial condition, liquidity, covenant compliance, retail and wholesale demand, integration of acquisitions, R&D investments, commodity prices, addressable markets, and 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 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, ~~the Russia-Ukraine war, and heightened~~geopolitical tensions, ~~between China and Taiwan~~armed conflicts, or natural disasters 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 we sell our products, availability of credit for financing the retail and wholesale purchase of products for which we sell our components, inventory levels of retail dealers and manufacturers, availability of transportation for products for which we sell our components, the financial condition of our customers, the financial condition of retail dealers of products for which we 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 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 we sell our components, and other risks and uncertainties discussed more fully under the caption "Risk Factors" in the Company's Annual Report on Form

LCI INDUSTRIES

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Continued)

10-K for the year ended December 31, ~~2022,~~2023, and in the Company's subsequent filings with the SEC, including the Company's Quarterly Reports 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

We 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~~further described in Note 8 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 ~~seven~~six percent increase of the weighted-average interest rate on our borrowings as of ~~June 30, 2023)~~March 31, 2024), our results of operations would not be materially affected.

We are also exposed to changes in the prices of raw materials, specifically steel and aluminum. 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 ~~June 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023.

We 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 ~~that~~ 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"~~"Raw Materials Inflation" in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of this report.

ITEM 4 – CONTROLS AND PROCEDURES

a.Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the ~~Securities~~ Exchange Act ~~of 1934, as amended (the "Exchange Act"),~~ 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 our management, including our 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-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. We continually evaluate our disclosure controls and procedures to determine if changes are appropriate based upon changes in our operations or the business environment in which we operate.

As of the end of the period covered by this Form 10-Q, we performed an evaluation, under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of ~~June 30, 2023.~~March 31, 2024.

b.Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended ~~June 30, 2023,~~March 31, 2024, which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

In the normal course of business, we 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 ~~June 30, 2023,~~March 31, 2024, would not be material to our 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 ~~24, 2023.~~23, 2024.

ITEM 5 - OTHER INFORMATION

~~During the three months ended June 30, 2023, none~~On March 1, 2024, Jason Lippert, our Chief Executive Officer and a member of our board of directors, ~~or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated any contract, instruction, or written plan for the purchase or sale of our securities that was~~entered into a 10b5-1 trading arrangement intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) ofpromulgated under the Exchange ~~Act or any non-Rule 10b5-1~~Act. The trading arrangement ~~(as~~will terminate on the earlier of December 31, 2024 or the date all shares are sold thereunder, and may be terminated earlier in the limited circumstances defined in ~~Item 408(c)~~the trading arrangement. An aggregate of ~~Regulation S-K).~~

up to 35,000 shares may be sold pursuant to the trading arrangement.

ITEM 6 – EXHIBITS

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


1	1	3.1	LCI 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).	1	3.1	LCI 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).
2	2	3.2	Amended and Restated Bylaws of LCI Industries, effective March 9, 2023 (incorporated by reference to Exhibit 3.2 included in the Registrant's Form 10-Q filed on May 9, 2023).	2	3.2	Amended and Restated Bylaws of LCI Industries, effective March 9, 2023 (incorporated by reference to Exhibit 3.2 included in the Registrant's Form 10-Q filed on May 9, 2023).
3	3	10.1	Amendment No. 5 to Fourth Amended and Restated Credit Agreement, dated as of May 23, 2023, 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 (incorporated by reference to Exhibit 10.1 included in the Registrant’s Form 8-K filed on May 24, 2023).	3	10.1	Form of Performance Stock Unit Award Agreement under the LCI Industries 2018 Omnibus Incentive Plan.
4	4	31.1	Certification of Chief Executive Officer required by Rule 13a-14(a).	4	31.1	Certification of Chief Executive Officer required by Rule 13a-14(a).
5	5	31.2	Certification of Chief Financial Officer required by Rule 13a-14(a).	5	31.2	Certification of Chief Financial Officer required by Rule 13a-14(a).
6	6	32.1	Certification of Chief Executive Officer required by Rule 13a-14(b) and Section 1350 Chapter 63 of Title 18 of the United States Code.	6	32.1	Certification of Chief Executive Officer required by Rule 13a-14(b) and Section 1350 Chapter 63 of Title 18 of the United States Code.
7	7	32.2	Certification of Chief Financial Officer required by Rule 13a-14(b) and Section 1350 Chapter 63 of Title 18 of the United States Code.	7	32.2	Certification of Chief Financial Officer required by Rule 13a-14(b) and Section 1350 Chapter 63 of Title 18 of the United States Code.
8	8	101	The following financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, 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.	8	101	The following information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, 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; (vi) Notes to Condensed Consolidated Financial Statements; and (vii) information in Part II, Item 5.
9	9	104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).	9	104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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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/ Lillian D. Etzkorn
Lillian D. Etzkorn
Chief Financial Officer
~~August~~May 8, ~~2023~~2024

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