Financial Performance - Net sales for Q1 2023 were $973.31 million, a decrease of 40.7% compared to $1.64 billion in Q1 2022[9] - Gross profit for Q1 2023 was $186.07 million, down 59.9% from $464.24 million in the same period last year[9] - Net income for Q1 2023 was $7.26 million, a significant decline of 96.3% compared to $196.18 million in Q1 2022[9] - Basic net income per share for Q1 2023 was $0.29, compared to $7.75 in Q1 2022, reflecting a decrease of 96.3%[9] - Consolidated net sales in Q1 2023 were $973.3 million, a 41% decrease from $1.6 billion in Q1 2022, primarily due to a nearly 60% decrease in North American towable RV wholesale shipments[92] - Net income for Q1 2023 was $7.3 million, or $0.29 per diluted share, compared to $196.2 million, or $7.71 per diluted share, in Q1 2022[92] Assets and Liabilities - Total assets as of March 31, 2023, were $3.21 billion, down from $3.25 billion at the end of 2022[14] - Cash and cash equivalents decreased to $23.47 million from $47.50 million at the end of 2022, representing a decline of 50.7%[14] - The company’s total stockholders' equity as of March 31, 2023, was $1.36 billion, down from $1.38 billion at the end of 2022[14] - As of March 31, 2023, accrued expenses and other current liabilities totaled $205.2 million, a decrease of 6.4% from $219.2 million on December 31, 2022[40] - Long-term indebtedness decreased to $1,055.6 million as of March 31, 2023, down from $1,095.9 million at the end of 2022, representing a reduction of 3.7%[42] Cash Flow and Capital Expenditures - The company reported a net cash flow from operating activities of $74.68 million for Q1 2023, down from $134.93 million in Q1 2022[17] - Capital expenditures for Q1 2023 were $17.16 million, a decrease of 59.1% compared to $42.04 million in Q1 2022[17] - Cash dividends paid in Q1 2023 amounted to $26.56 million, an increase from $22.87 million in Q1 2022[17] - Cash flows used in financing activities were $76.8 million in Q1 2023, primarily due to $36.1 million in net repayments under the revolving credit facility and $26.6 million in quarterly dividends[118] Segment Performance - The OEM Segment accounted for 78% of consolidated net sales in Q1 2023, down from 85% in Q1 2022, with net sales of $758.2 million[66] - The Aftermarket Segment represented 22% of consolidated net sales in Q1 2023, up from 15% in Q1 2022, with net sales of $215.1 million[67] - The OEM Segment reported an operating loss of $721,000 in Q1 2023, compared to an operating profit of $245.4 million in Q1 2022[69] - The Aftermarket Segment generated an operating profit of $20.8 million in Q1 2023, down from $24.3 million in Q1 2022[69] Economic and Market Conditions - The Company is exposed to risks from economic conditions, including inflation and interest rates, which could impact its financial performance[26] - The company expects full-year 2023 industry-wide wholesale shipments of RVs to be approximately 310,000 to 330,000 units, a decrease of 37% to 33% compared to 2022[85] - Industry-wide wholesale shipments of travel trailers and fifth-wheels decreased 60% to 61,200 units in Q1 2023 compared to 152,200 units in Q1 2022[81] Compliance and Financial Agreements - The Company is in compliance with all financial requirements under the Credit Agreement as of March 31, 2023[54] - The Credit Agreement includes a maximum net leverage ratio covenant, which limits the amount of consolidated outstanding indebtedness based on trailing twelve-month EBITDA[54] Stock and Dividends - The Company declared a quarterly dividend of $1.05 per share for Q1 2023, totaling $26.6 million, consistent with the previous quarter[61] - The Company has a stock repurchase program authorized for up to $200 million, with $24.1 million spent on repurchasing 253,490 shares in 2022[64] - The Company has paid regular quarterly dividends since 2016, with future policies determined by the Board of Directors based on financial needs and earnings[121]

LCI Industries Q1 2023 Earnings Conference Call FORWARD-LOOKING STATEMENTS 2 Financial Performance Ongoing Innovation Content Growth in RV | --- | --- | --- | |-----------------------------------------------------------------------------------------------------------------|-------|-------| | | | | | Quarterly Performance | | | | • Current 2023 North American forecast of 310 - 330k wholesale units; 77,200 wholesale units shipped in Q1 2023 | | | | • Q1 2023 RV OEM sales down 62% YoY due to softened retail de ...

Financial Performance - Consolidated net sales for the year ended December 31, 2022, were $5.2 billion, an increase of 16% from $4.5 billion in 2021[25]. - Net income for 2022 was $395 million, or $15.48 per diluted share, compared to $287.7 million, or $11.32 per diluted share, in 2021[26]. - Total net sales for the year ended December 31, 2022, were $5,207,143, an increase of 16.4% from $4,472,697 in 2021[174]. - Net sales of the OEM Segment increased 18% to $4.3 billion in 2022, with significant contributions from travel trailers, motorhomes, and adjacent industries[195]. - Aftermarket Segment net sales increased by 8% to $891.3 million in 2022, primarily due to acquisitions contributing approximately $63.4 million[200]. - Operating profit for the OEM Segment was $479,150, up 57.1% from $304,676 in 2021, while the Aftermarket Segment's operating profit decreased to $73,878 from $93,734[174]. - The effective income tax rate for 2022 was 24.8%, slightly higher than 24.7% in 2021, primarily due to discrete tax adjustments[202]. Segment Performance - The OEM Segment represented 83% of consolidated net sales and 87% of consolidated segment operating profit in 2022[33]. - Aftermarket Segment net sales increased 8% from $829.1 million in 2021 to $891.3 million in 2022[40]. - Approximately 61% of the OEM Segment net sales in 2022 were from products to manufacturers of travel trailer and fifth-wheel RVs[92]. - The average product content per travel trailer and fifth-wheel RV increased by 45% to $6,090 in 2022, while motorhome content rose by 43% to $4,099[195]. Market and Industry Trends - The company experienced a nearly 18% decrease in wholesale RV OEM shipments in 2022, negatively impacting net sales for the year[92]. - Industry-wide wholesale shipments of travel trailer and fifth-wheel RVs decreased by 21% to 421,700 units in 2022 compared to 2021[182]. - The company estimates that full-year 2023 industry-wide wholesale shipments will be approximately 330,000 to 350,000 units, a decline of 29% to 33% compared to 2022[184]. - The company faced a reduction in aftermarket volumes in 2022 due to inflation and rising interest rates impacting consumer discretionary spending[84]. Acquisitions and Investments - The company completed four acquisitions in 2022, contributing approximately $219 million to net sales[25][29][30][31]. - The company has made significant investments to expand sales in adjacent industries such as boats, buses, trucks, and trains, which may strain operational and financial capabilities[112]. - Capital expenditures for 2022 were $131 million, including over $40 million in automation investments[44]. - Future capital expenditures for 2023 are estimated at $80 to $100 million, focusing on automation and lean projects[213]. Operational Risks and Challenges - The company has experienced significant impacts from the COVID-19 pandemic, affecting its business operations and financial condition[79]. - The company is subject to numerous federal, state, and local regulations governing the manufacture and sale of its products, which may impact operations[50]. - The company faces various operational and financial risks when conducting business outside the United States, including integration challenges and regulatory compliance[118]. - The company noted that conditions in the credit market could limit consumers' ability to obtain retail financing for RVs, resulting in reduced demand[88]. Community Engagement and Employee Relations - In 2022, team members logged over 150,000 volunteer hours, with 75% participation, an increase of 20% from 2021[64]. - The company donated more than $1.8 million in 2022 to support community needs, focusing on children and families, educational programs, and health[64]. - The retention percentage for team members in North America for the year ended December 31, 2022, was 57%, down from 60% in the prior year, with a goal of 70% for 2023[62]. Financial Position and Debt - Total indebtedness as of December 31, 2022, was $1,128.0 million, with current obligations of $23.4 million and long-term obligations of $1,104.6 million[218]. - The company has incurred debt through various means, including a 1.125% convertible senior note due 2026, which may increase leverage and financial vulnerability[147][148]. - Cash flows used in financing activities included $105.3 million in net payments under the revolving credit facility and $102.7 million in quarterly dividends[215]. Compliance and Regulatory Issues - The company is subject to numerous international, federal, state, and local regulations, and failure to comply could result in significant penalties and operational disruptions[126]. - The company is subject to various data privacy and security laws, and non-compliance could lead to substantial penalties[137]. - The company maintains reserves for warranty claims, but there is no assurance that these reserves will remain adequate, which could adversely affect financial results[143].

LCI Industries Q4 2022 Earnings Conference Call 1 Forward-looking statements, including, without limitation, those relating to the Company's future business prospects, net sales, expenses and income (loss), capital expenditures, tax rate, cash flow, financial condition, liquidity, covenant compliance, retail and wholesale demand, integration of acquisitions, R&D investments, and industry trends, whenever they occur in this presentation are necessarily estimates reflecting the best judgment of the Company's ...

Financial Performance - Net sales for the three months ended September 30, 2022, were $1,132,079, a decrease of 2.0% compared to $1,165,309 in the same period of 2021[9] - Gross profit for the nine months ended September 30, 2022, increased to $1,126,382, up 50.0% from $750,969 in the same period of 2021[9] - Operating profit for the three months ended September 30, 2022, was $87,575, a slight decrease of 1.6% from $89,024 in the same period of 2021[9] - Net income for the nine months ended September 30, 2022, was $412,103, representing a 100.5% increase compared to $205,410 in the same period of 2021[9] - The company reported a total comprehensive income of $49,070 for the three months ended September 30, 2022, down from $61,608 in the same period of 2021[11] - Net income for the quarter ending September 30, 2022, was $61,392,000, compared to $196,181,000 for the same quarter in 2021[21] - The Company reported an operating profit of $284.4 million for the nine months ended September 30, 2022, down from $576.1 million in the same period of 2021[92] - Operating profit for the OEM Segment was $65.2 million in the third quarter of 2022, an increase of $1.1 million compared to the same period in 2021, with an operating profit margin of 7.1%[121] - Operating profit for the OEM Segment rose to $501.1 million, a 143% increase from $206.7 million in the first nine months of 2021, with an operating profit margin of 14.0%[127] - Operating profit for the Aftermarket Segment was $74.9 million, a decrease of $2.8 million compared to the same period in 2021, with an operating profit margin of 10.3%[133] Assets and Liabilities - Total assets as of September 30, 2022, were $3,268,971, a slight decrease from $3,288,094 as of December 31, 2021[14] - Cash and cash equivalents decreased to $23,403 as of September 30, 2022, from $62,896 at the beginning of the period[14] - As of September 30, 2022, total stockholders' equity was $1,423,557,000, an increase from $1,092,875,000 on December 31, 2021[21] - Total liabilities decreased from $2,195,219 thousand on December 31, 2021, to $1,845,414 thousand on September 30, 2022, a reduction of approximately 15.9%[14] - Long-term indebtedness decreased to $1.04 billion as of September 30, 2022, down from $1.23 billion at December 31, 2021, a reduction of 15.5%[57] - The total long-term portion of contingent consideration liability decreased to $103,000 as of September 30, 2022, down from $6.911 million at the beginning of the period, primarily due to updated sales projections[74] Cash Flow and Capital Expenditures - Cash flows from operating activities were $485.5 million in the first nine months of 2022, significantly up from $12.3 million in the same period of 2021[143] - Capital expenditures for the nine months ended September 30, 2022, were $103,748, an increase from $73,872 in the same period of 2021[16] - Cash flows used in financing activities for the first nine months of 2022 totaled $364.9 million, primarily due to net repayments under the revolving credit facility and dividend payments[150] - The company expects full-year 2022 capital expenditures to be between $110 million and $130 million, focusing on automation and capacity expansions[148] Dividends and Shareholder Returns - The company paid dividends totaling $76,273 during the nine months ended September 30, 2022, compared to $64,425 in the same period of 2021[16] - Cash dividends paid were $26,701,000 for the quarter, with a dividend rate of $1.05 per share[21] - The Company declared total dividends of $3.00 per share for the year 2022, totaling $76.273 million, compared to $3.45 per share totaling $87.171 million for 2021[78] Acquisitions and Goodwill - The company acquired Girard Systems and Girard Products LLC for a total consideration of approximately $70.7 million, with $50.0 million paid in cash at closing[34] - The acquisition of Furrion in September 2021 had a total fair value of consideration of approximately $146.7 million, with $50.5 million paid in cash at closing[41] - Goodwill increased to $551.6 million as of September 30, 2022, reflecting acquisitions and measurement period adjustments[48] - The Company recorded goodwill of $12.7 million (tax deductible) from the acquisition, indicating that the consideration given exceeded the fair value of net assets acquired[36] - During the nine months ended September 30, 2022, the Company completed two other acquisitions for a total cash consideration of $5.0 million, resulting in $0.8 million of goodwill[37] Market and Operational Insights - The company operates over 130 manufacturing and distribution facilities across North America and Europe[23] - The company supplies engineered components primarily to the recreational vehicle (RV) market and related aftermarkets[23] - The OEM Segment accounted for 83% of consolidated net sales for the nine months ended September 30, 2022, with net sales of $3.585 billion, up from $2.627 billion in the same period of 2021[89] - The Aftermarket Segment contributed 17% of consolidated net sales for the nine months ended September 30, 2022, generating $727.5 million, compared to $632.1 million in the prior year[90] - Retail demand for travel trailer and fifth-wheel RVs decreased by 24% in the first nine months of 2022 compared to the same period in 2021, driven by elevated fuel prices and rising interest rates[106] - The company expects full-year 2022 industry-wide wholesale shipments of travel trailer, fifth-wheel, and motorhome RVs to be approximately 480,000 to 500,000 units, indicating a decrease of 45% to 50% in the second half of 2022 compared to the first half[110] Risks and Future Outlook - The company is closely monitoring the impact of COVID-19 and the Russia-Ukraine War on its financial condition and results of operations[28] - The company anticipates elevated prices for key raw materials, particularly steel and aluminum, to remain in the near term due to inflationary pressures[158] - The company expects to continue to comply with all financial covenants under its Credit Agreement and Shelf-Loan Facility, ensuring financial stability moving forward[71]

LCI Industries Q2 2022 Earnings Conference Call August 2, 2022 INDUSTRIES Whenever, wherever, we make your experience better. FORWARD-LOOKING STATEMENTS This presentation contains certain "forward-looking statements" with respect to our financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive position, growth opportunities, acquisitions, plans and objectives of management, markets for the Company's common stock, the impact of legal proceedings, and ot ...

Financial Performance - Net sales for the three months ended June 30, 2022, were $1,536,150, a 40.5% increase from $1,093,720 in the same period of 2021[9] - Gross profit for the six months ended June 30, 2022, was $873,328, up 75.1% from $499,388 in the prior year[9] - Net income for the three months ended June 30, 2022, was $154,530, representing a 128.5% increase compared to $67,889 in the same period of 2021[11] - Operating profit for the six months ended June 30, 2022, was $488,490, a significant increase of 149.0% from $195,413 in the same period of 2021[9] - The company reported a total comprehensive income of $348,126 for the six months ended June 30, 2022, compared to $140,860 in the same period of 2021[11] - Net income for the second quarter of 2022 was $154.53 million, compared to $196.18 million in the same period of 2021, reflecting a decrease of approximately 21.3%[21] - The company’s net income for the first half of 2022 was $196.18 million, compared to $74.12 million in the first half of 2021, indicating a substantial increase[21] - The company reported a total operating profit of $218,789,000 for the three months ended June 30, 2022, compared to $93,982,000 in the same period of 2021[92] - Net income for the six months ended June 30, 2022, was $350,711,000, a significant increase from $142,009,000 in the same period of 2021, representing a growth of 147%[16] Assets and Liabilities - Total assets as of June 30, 2022, were $3,482,696, an increase from $3,288,094 as of December 31, 2021[14] - Cash and cash equivalents at the end of the period were $54,988, down from $62,896 at the beginning of the period[16] - Current liabilities decreased slightly to $638.24 million as of June 30, 2022, from $627.22 million at the end of 2021[14] - Long-term indebtedness decreased to $1,101,787,000 as of June 30, 2022, from $1,231,959,000 at December 31, 2021, a reduction of approximately 10.5%[57] - The Company had $286,700,000 available under its revolving credit facility as of June 30, 2022[59] - The company reported an accumulated other comprehensive loss of $3.08 million as of June 30, 2022, compared to a loss of $501,000 as of December 31, 2021[21] Shareholder Information - Total stockholders' equity as of June 30, 2022, was $1.39 billion, an increase from $1.09 billion as of December 31, 2021, representing a growth of about 27.8%[21] - Cash dividends paid in the second quarter of 2022 were $26.70 million, with a dividend rate of $1.05 per share, compared to $22.87 million at $0.90 per share in the same quarter of 2021[21] - The Company declared a total dividend of $1.95 per share for 2022, compared to $3.45 per share for 2021, reflecting a decrease in total dividends paid[78] - The company paid $49,572,000 in dividends during the period, an increase from $41,678,000 in the prior year, reflecting a commitment to returning value to shareholders[16] Acquisitions - The company acquired Girard Systems for a total consideration of approximately $70.0 million, with $50.0 million paid in cash at closing and $20.0 million deferred[34] - The acquisition of Furrion had a total fair value of consideration of approximately $146.7 million, with $50.5 million paid in cash at closing and fixed payments of $31.3 million due on the first and second anniversaries[41] - The Company acquired Girard Systems and Girard Products LLC in March 2022, which specializes in awnings and tankless water heaters for the RV industry[34] - The Company completed another acquisition during the six months ended June 30, 2022, for $1.7 million, resulting in $0.8 million of goodwill[37] Operational Insights - The company operates over 130 manufacturing and distribution facilities across North America and Europe, supporting its supply chain for engineered components[23] - The OEM Segment accounted for 84% of consolidated net sales for the six months ended June 30, 2022, up from 80% in the same period of 2021[89] - Approximately 66% of the OEM Segment's net sales for the six months ended June 30, 2022, were derived from components for travel trailer and fifth-wheel RVs[89] - Retail demand for travel trailer and fifth-wheel RVs decreased by 26% in the first six months of 2022 compared to the same period in 2021[106] - The Aftermarket Segment accounted for 16% of consolidated net sales for the six months ended June 30, 2022, down from 20% in the same period of 2021[90] Market Conditions - The ongoing COVID-19 pandemic and the Russia-Ukraine War have introduced significant uncertainty and disruption in the global economy, impacting the company's operations[28] - The company continues to monitor the impact of economic conditions and consumer confidence on retail sales, particularly in the RV and related markets[24] - The company expects a decrease of 35% to 45% in industry-wide wholesale shipments in the second half of 2022 compared to the first half of 2022[110] - The company anticipates continued reduction in aftermarket volumes in the second half of 2022 due to fully stocked distribution channels and inflation impacts[115] Cost and Expenses - Increased material commodity costs negatively impacted operating profit by $52.0 million, primarily due to rising steel and aluminum prices[133] - The effective tax rate for the six months ended June 30, 2022, was 26.3%, up from 25.0% in the prior year[118] - The company incurred capital expenditures of $70,837 for the six months ended June 30, 2022, compared to $42,005 in the prior year[16] - Total lease costs for the three months ended June 30, 2022, increased to $16.1 million from $13.0 million in the same period of 2021, representing a 23.7% increase[73] Future Outlook - The company believes there are significant opportunities in Adjacent Industries, which include buses, trailers, and manufactured homes[111] - The company plans to fund future capital expenditures and acquisitions primarily through cash generated from operations and periodic borrowings[147] - The company expects working capital to fluctuate by approximately 10 to 15 percent in relation to net sales changes[143]

Financial Data and Key Metrics Changes - The company reported record revenues of $1.6 billion for Q1 2022, representing a 64% year-over-year increase, driven by strong demand across all markets [5][26] - Gross margins improved to 28.2% compared to 24.2% in the prior year, supported by operational leverage and price realization [29] - GAAP net income for Q1 2022 was $196.2 million, or $7.71 per diluted share, compared to $74.1 million, or $2.93 per diluted share in Q1 2021 [33] Business Line Data and Key Metrics Changes - RV OEM sales increased by 84% year-over-year, reaching nearly $1 billion, primarily due to strong demand for RVs [6][27] - Aftermarket segment sales grew by 35% year-over-year, benefiting from organic and inorganic growth [11][29] - Adjacent market revenues rose by 42%, driven by heightened demand in the RV business and strong content growth [15][28] Market Data and Key Metrics Changes - International business grew by 15% year-over-year, despite challenges in the European RV market due to semiconductor shortages [17] - North American marine sales increased by 49%, reflecting similar trends seen in the RV OEM market [28] Company Strategy and Development Direction - The company is focusing on integrating recent acquisitions and investing in innovation and operational enhancements to drive efficiency and profitability [22] - There is a strong emphasis on customer experience programs and community engagement to build trust and relationships with consumers [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted that while retail demand has softened compared to 2021, they anticipate a strong summer selling season [30][72] - The company expects some margin contraction in the near term due to reduced production rates and input cost fluctuations, but remains confident in long-term profitability [31][36] Other Important Information - The company has invested heavily in automation and continuous improvement projects, which have driven efficiency gains [10] - A focus on culture and leadership development has improved employee retention rates, reducing overall labor costs [21] Q&A Session Summary Question: What contributed to the gross margin improvement? - Management indicated that volume exceeded expectations and operational efficiencies were significant contributors to the margin improvement [39][40] Question: How much of the gross margin improvement was due to pricing? - Approximately 5% of the improvement was attributed to volume increases and operational excellence, with the remainder from pricing improvements [40][41] Question: What are the expectations for gross margins moving forward? - Management expects a reduction in gross margins of approximately 250 to 350 basis points moving into Q2 due to declining RV production volumes [73] Question: How is the supply chain situation compared to previous months? - Management noted improvements in supply chain conditions, although challenges remain, particularly with semiconductor shortages [48] Question: What are the drivers of recent market share gains? - The company highlighted core products and the successful integration of Furrion as key drivers of market share gains [96] Question: How is inflation impacting retail demand? - Management acknowledged that inflation has affected consumer buying decisions, but they expect some relief in pricing for customers by Q3 [97]

Financial Performance - Net sales for the three months ended March 31, 2022, were $1,644,568, a 64.4% increase from $1,000,258 in the same period of 2021[9] - Gross profit for the same period was $464,243, representing a gross margin of 28.2%, compared to $241,777 and a margin of 24.2% in 2021[9] - Net income increased to $196,181, a 164.5% rise from $74,120 in the prior year, resulting in a diluted earnings per share of $7.71[9][12] - Consolidated net sales in Q1 2022 were $1.6 billion, a 64% increase from $1.0 billion in Q1 2021, driven by record wholesale shipments and Aftermarket Segment sales growth[118] - Net income for Q1 2022 was $196.2 million, or $7.71 per diluted share, compared to $74.1 million, or $2.93 per diluted share, in Q1 2021[118] Assets and Equity - Total assets as of March 31, 2022, were $3,640,723, up from $3,288,094 at the end of 2021, reflecting a growth of 10.7%[15] - Total stockholders' equity increased to $1,259,252 as of March 31, 2022, from $1,092,875 at the end of 2021, marking a growth of 15.2%[15] - Goodwill increased to $562.038 million as of March 31, 2022, from $543.180 million at December 31, 2021, reflecting acquisitions and measurement period adjustments[48] - Other intangible assets totaled $539.004 million at March 31, 2022, up from $519.957 million at December 31, 2021, with customer relationships accounting for $365.139 million[49][51] Cash Flow and Capital Expenditures - Cash flows provided by operating activities were $134,926, significantly higher than $4,847 in the same quarter of 2021[17] - The company incurred capital expenditures of $42,037 during the quarter, compared to $20,957 in the prior year[17] - Cash flows used in investing activities were $92.3 million in Q1 2022, mainly for business acquisitions ($50.1 million) and capital expenditures ($42.0 million)[136] - Capital expenditures for the full year 2022 are estimated to be between $130 million and $150 million, including capacity expansions to meet elevated demand[137] Dividends and Shareholder Returns - The company paid dividends of $22,870, reflecting an increase from $18,939 in the same quarter of the previous year[17] - The Company declared a quarterly dividend of $0.90 per share for the first quarter of 2022, totaling $22.870 million paid[82] Acquisitions - The total fair value of consideration for the acquisition of Girard Systems was approximately $70.0 million, with $50.0 million paid in cash at closing and $20.0 million due on July 1, 2022[34] - The acquisition of Furrion had a total fair value of consideration of approximately $146.7 million, with $50.5 million paid in cash at closing and fixed payments of $31.3 million due on the first and second anniversaries of the acquisition[41] - The Company acquired Girard, a manufacturer of proprietary awnings and tankless water heaters, in March 2022, expanding its product offerings in the RV market[34] Segment Performance - The OEM Segment accounted for 85% of consolidated net sales for the three months ended March 31, 2022, with net sales of $1.396 billion, up from $816.3 million in the same period of 2021[94][98] - The Aftermarket Segment contributed 15% of consolidated net sales for the same period, totaling $248 million, compared to $184 million in 2021[95][98] - The Company's operating profit for the OEM Segment was $245.4 million, while the Aftermarket Segment reported an operating profit of $24.3 million[98] Inventory and Working Capital - Inventories rose to $1.136 billion as of March 31, 2022, compared to $1.096 billion at December 31, 2021, driven by increases in raw materials and finished goods[52] - The Company is strategically managing working capital and maintaining elevated inventory levels to mitigate supply chain constraints[107] Financial Obligations and Liabilities - Long-term indebtedness stood at $1.265 billion as of March 31, 2022, slightly up from $1.232 billion at December 31, 2021[58] - The company reported a provision for warranty expense of $15.441 million for the three months ended March 31, 2022, compared to $6.977 million in the same period of 2021[56] - The company’s accrued expenses and other current liabilities totaled $345.486 million as of March 31, 2022, compared to $243.438 million at December 31, 2021[55] Market Conditions and Risks - The Company is closely monitoring the impacts of COVID-19 and the Russia-Ukraine War on its liquidity and financial condition, with future impacts remaining uncertain[27] - The ongoing COVID-19 pandemic and the Russia-Ukraine War have created significant uncertainty affecting the Company's financial condition and results of operations[27] Tax and Compliance - The effective tax rate for Q1 2022 was 25.5%, up from 24.9% in Q1 2021, primarily due to a decrease in excess tax benefits[127] - The Company expects to maintain compliance with financial requirements under the Credit Agreement and Shelf-Loan Facility for the next twelve months[72]

Part I [Business Overview](index=5&type=section&id=Item%201.%20BUSINESS.) LCI Industries is a leading component supplier for RVs and adjacent markets, achieving record 2021 net sales of $4.5 billion Financial Highlights | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | **Consolidated Net Sales** | $4.5 billion | $2.8 billion | +60% | | **Net Income** | $287.7 million | $158.4 million | +81.6% | | **Diluted EPS** | $11.32 | $6.27 | +80.5% | - The company operates through two reportable segments: the Original Equipment Manufacturers (OEM) Segment and the Aftermarket Segment, with over 120 facilities across North America and Europe as of December 31, 2021[21](index=21&type=chunk)[22](index=22&type=chunk) Major Customers | Customer | % of 2021 Consolidated Net Sales | | :--- | :--- | | Thor Industries, Inc. | 23% | | Berkshire Hathaway Inc. (Forest River, Clayton Homes) | 20% | - Completed six acquisitions in 2021, including Furrion and Ranch Hand, which contributed approximately **$269.9 million** to 2021 net sales[25](index=25&type=chunk)[29](index=29&type=chunk)[32](index=32&type=chunk) - The company's diversification strategy resulted in **47% of net sales** generated outside the North American RV OEM market, a slight decrease from 50% in 2020 due to record RV demand[34](index=34&type=chunk) - As of December 31, 2021, the company had approximately **13,900 full-time team members**[62](index=62&type=chunk) [Risk Factors](index=13&type=section&id=Item%201A.%20RISK%20FACTORS.) The company faces risks from the COVID-19 pandemic, economic cyclicality, customer concentration, and supply chain disruptions - The COVID-19 pandemic presents ongoing risks, including supply chain disruptions, cost increases, potential demand volatility, and cybersecurity risks[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) - The business is subject to industry and economic risks, as the RV and boat markets are cyclical and sensitive to consumer discretionary spending[85](index=85&type=chunk)[87](index=87&type=chunk)[90](index=90&type=chunk) - Significant customer concentration risk exists, with two customers (Thor Industries and Berkshire Hathaway) accounting for **43% of consolidated net sales** in 2021[94](index=94&type=chunk) - The company faces risks from volatile raw material costs, particularly for steel and aluminum, which represented approximately **45% and 15% of raw material costs** in 2021, respectively[95](index=95&type=chunk) - International expansion subjects the company to risks including adverse political conditions, trade protection measures, and currency fluctuations[115](index=115&type=chunk)[116](index=116&type=chunk)[117](index=117&type=chunk) - Financial risks include servicing substantial debt, adhering to debt covenants, and potential dilution from the conversion of the company's Convertible Notes[146](index=146&type=chunk)[147](index=147&type=chunk)[151](index=151&type=chunk) [Properties](index=24&type=section&id=Item%202.%20PROPERTIES.) As of year-end 2021, the company operated 143 owned and leased facilities across North America and Europe Facilities by Segment and Location | Segment | Type | North America | Europe | Total | Owned | | :--- | :--- | :--- | :--- | :--- | :--- | | **OEM** | Manufacturing | 67 | 20 | 87 | 36 | | | Other | 16 | 5 | 21 | 5 | | **Aftermarket** | Manufacturing | 12 | — | 12 | — | | | Other | 23 | — | 23 | 1 | | **Total** | | **118** | **25** | **143** | **42** | [Legal Proceedings](index=25&type=section&id=Item%203.%20LEGAL%20PROCEEDINGS.) The company is subject to various legal proceedings not expected to have a material financial impact - In the normal course of business, the company is subject to various legal proceedings, but management does not expect the outcomes to have a material financial impact[159](index=159&type=chunk) [Mine Safety Disclosures](index=25&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES.) This item is not applicable to the company Part II [Market for Common Equity and Related Matters](index=26&type=section&id=Item%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%2C%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES.) The company's stock trades on the NYSE under "LCII" and it has maintained a regular quarterly dividend program since 2016 - The company's common stock trades on the New York Stock Exchange under the symbol **"LCII"**[163](index=163&type=chunk) - The company initiated a regular quarterly dividend program in 2016, with future policy determined by the Board of Directors[166](index=166&type=chunk) [Management's Discussion and Analysis (MD&A)](index=26&type=section&id=Item%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) Management discusses the significant 60% growth in net sales to $4.5 billion, segment performance, and overall financial condition Key Financial Results | (In thousands) | 2021 | 2020 | | :--- | :--- | :--- | | **Total net sales** | $4,472,697 | $2,796,166 | | **Total operating profit** | $398,410 | $222,934 | - The company's diversification strategy resulted in **47% of net sales** for 2021 being generated outside the North American RV OEM market, compared to 50% in 2020[176](index=176&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Consolidated net sales grew 60% to $4.5 billion in 2021, driven by strong performance in both OEM and Aftermarket segments OEM Segment Net Sales (In thousands) | OEM Segment Net Sales (In thousands) | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Travel trailers and fifth-wheels | $2,295,612 | $1,321,567 | 74% | | Motorhomes | $258,995 | $158,096 | 64% | | Adjacent Industries OEMs | $1,089,005 | $688,248 | 58% | | **Total OEM Segment** | **$3,643,612** | **$2,167,911** | **68%** | Average Product Content per RV | Average Product Content per RV | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Travel trailer and fifth-wheel RV | $4,198 | $3,390 | 24% | | Motorhome | $2,856 | $2,479 | 15% | - Aftermarket Segment net sales increased **32% to $829.1 million** in 2021, driven by $149.0 million in organic growth and $51.8 million from acquisitions[197](index=197&type=chunk) - Operating profit margins increased in both segments (**OEM: 7.2% to 8.4%; Aftermarket: 10.6% to 11.3%**) due to leveraging fixed costs over higher sales[196](index=196&type=chunk)[198](index=198&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) Operating cash flow turned negative due to a strategic inventory build, while financing was bolstered by a convertible notes issuance Cash Flow Activity (In thousands) | Cash Flow Activity (In thousands) | 2021 | 2020 | | :--- | :--- | :--- | | Net cash from operating activities | $(111,573) | $231,400 | | Net cash used in investing activities | $(281,218) | $(232,301) | | Net cash from financing activities | $404,563 | $14,048 | - The negative operating cash flow in 2021 was primarily due to a strategic increase in inventory of **$516.7 million** to address supply chain constraints[203](index=203&type=chunk) - In May 2021, the company issued **$460.0 million in convertible senior notes**, which provided net proceeds of $396.6 million after hedges and costs[209](index=209&type=chunk)[210](index=210&type=chunk) Future Cash Requirements (In thousands) | Future Cash Requirements (In thousands) | Total | Current (2022) | Long-Term | | :--- | :--- | :--- | :--- | | Total indebtedness | $1,314,950 | $71,382 | $1,243,568 | | Interest on indebtedness | $77,913 | $17,276 | $60,637 | | Operating leases | $210,426 | $36,416 | $174,010 | [Critical Accounting Estimates](index=35&type=section&id=CRITICAL%20ACCOUNTING%20ESTIMATES) Key estimates include product warranty accruals and the fair value of intangible assets from business acquisitions - Product warranty accrual is a critical estimate, with the accrual balance at **$52.1 million** at the end of 2021, up from $47.1 million in 2020[226](index=226&type=chunk)[244](index=244&type=chunk)[329](index=329&type=chunk) - The fair value of intangible assets of acquired businesses is another critical estimate, determined using techniques like discounted cash flow forecasts[228](index=228&type=chunk) [Market Risk Disclosures](index=36&type=section&id=Item%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK.) The company is primarily exposed to market risk from interest rate fluctuations and raw material price volatility - The company is exposed to interest rate risk on its **$799.0 million of variable-rate debt**; a hypothetical **100 basis point increase** would reduce annual cash flows by approximately **$8.0 million**[232](index=232&type=chunk) - The company experienced elevated prices for key raw materials like steel and aluminum in 2021 and expects them to remain elevated in 2022[230](index=230&type=chunk) [Financial Statements and Supplementary Data](index=37&type=section&id=Item%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA.) This section presents the audited 2021 consolidated financial statements, the auditor's report, and accompanying notes [Report of Independent Registered Public Accounting Firm](index=37&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion, identifying product warranty accruals as a critical audit matter - KPMG LLP issued an unqualified opinion, stating the financial statements are presented fairly and the company maintained effective internal control[236](index=236&type=chunk) - The audit of internal controls excluded the 2021 acquisitions of Furrion Holdings Limited and Exertis, as permitted by SEC guidance[237](index=237&type=chunk) - The estimation of certain product warranty accruals was identified as a **Critical Audit Matter**, requiring complex auditor judgment[244](index=244&type=chunk)[245](index=245&type=chunk) [Consolidated Financial Statements](index=39&type=section&id=Consolidated%20Financial%20Statements) The statements show significant 2021 growth, with net sales of $4.47B, net income of $287.7M, and assets of $3.29B Consolidated Statements of Income Data | (In thousands) | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | **Net sales** | $4,472,697 | $2,796,166 | $2,371,482 | | **Gross profit** | $1,043,035 | $706,090 | $539,202 | | **Operating profit** | $398,410 | $222,934 | $200,210 | | **Net income** | $287,739 | $158,440 | $146,509 | | **Diluted EPS** | $11.32 | $6.27 | $5.84 | Consolidated Balance Sheets Data | (In thousands) | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total current assets** | $1,566,885 | $869,801 | | **Total assets** | $3,288,094 | $2,298,031 | | **Total current liabilities** | $627,216 | $416,394 | | **Total liabilities** | $2,195,219 | $1,389,705 | | **Total stockholders' equity** | $1,092,875 | $908,326 | [Notes to Consolidated Financial Statements](index=45&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, 2021 acquisitions, debt structure including new convertible notes, and segment reporting - Note 4 details the six acquisitions completed in 2021, including Furrion for total consideration of **~$146.7M** and Ranch Hand for **~$59.9M**[298](index=298&type=chunk)[300](index=300&type=chunk)[310](index=310&type=chunk) - Note 9 describes the company's long-term debt, which totaled **$1.3B** at year-end, including a $400M New Term Loan and a $460M issuance of convertible notes[338](index=338&type=chunk)[343](index=343&type=chunk)[348](index=348&type=chunk) - Note 15 provides a detailed breakdown of revenue, showing the **OEM segment at 81% of sales** and the **Aftermarket at 19%**, with Thor and Berkshire Hathaway as top customers[399](index=399&type=chunk)[400](index=400&type=chunk)[403](index=403&type=chunk) [Controls and Procedures](index=75&type=section&id=Item%209A.%20CONTROLS%20AND%20PROCEDURES.) Management concluded that disclosure controls and internal control over financial reporting were effective as of year-end 2021 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of December 31, 2021[408](index=408&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2021, based on the COSO framework[411](index=411&type=chunk) - The assessment of internal control over financial reporting excluded the 2021 acquisitions of Furrion and Exertis, as permitted by SEC guidance[412](index=412&type=chunk) Part III [Directors, Executive Compensation, and Corporate Governance](index=76&type=section&id=Item%2010-14) Information on directors, compensation, and governance is incorporated by reference from the 2022 Proxy Statement - Information regarding directors, executive officers, corporate governance, executive compensation, and security ownership is incorporated by reference from the company's 2022 Proxy Statement[418](index=418&type=chunk)[422](index=422&type=chunk)[423](index=423&type=chunk)[424](index=424&type=chunk) - The company's independent registered public accounting firm is KPMG LLP[425](index=425&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=77&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES.) This section lists all financial statements and exhibits filed with the Form 10-K, including key agreements and certifications - This section contains a comprehensive list of all exhibits filed with the 10-K, including governance documents, debt agreements, and executive certifications[429](index=429&type=chunk)[430](index=430&type=chunk)[431](index=431&type=chunk) [Form 10-K Summary](index=82&type=section&id=Item%2016.%20FORM%2010-K%20SUMMARY.) This item is not applicable