LCI INDUSTRIES (LCII)

Item 7.    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 our Consolidated Financial Statements and Notes thereto included in Part II, Item 8 of this Report.

This Management's Discussion and Analysis of Financial Condition and Results of Operations generally discusses 2024 and 2023 items and year-over-year comparisons between 2024 and 2023. A detailed discussion of 2022 items and year-over-year comparisons between 2023 and 2022 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 23, 2024.

We are a global leader in supplying engineered components to the outdoor recreation, transportation, and building products industries. In addition to serving original equipment manufacturers ("OEMs"), we also cater to aftermarket needs, selling through retail dealers, wholesale distributors, and service centers, as well as directly to consumers online.

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Sales and Profit - OEM and Aftermarket Segments

We have two reportable segments, the OEM Segment and the Aftermarket Segment. At December 31, 2024, we operated over 110 manufacturing and distribution facilities located throughout North America and Europe. Net sales and operating profit were as follows for the years ended December 31:

1 Corporate expenses are allocated between the segments based upon net sales.

Operating profit margins in 2024 were impacted by a number of factors, as further described below under “Results of Operations – Year Ended December 31, 2024 Compared to Year Ended December 31, 2023.”

Reportable Segments: Our two reportable segments consist of the OEM Segment and the Aftermarket Segment. Our OEM Segment drives innovation and manufacturing expertise, serving leading OEMs in recreation, transportation, and housing markets. Our Aftermarket Segment enhances the product lifecycle for the recreation and transportation markets by offering discretionary accessories, replacement parts, and upgrades. This approach drives recurring revenue, deepens customer engagement, and leverages our OEM expertise.

OEM Segment: Manufactures and distributes a broad array of 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.

Aftermarket Segment: Supplies many of our engineered components to the related aftermarket channels of the recreation and transportation 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, and fenders to the marine

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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.

See Part I, Item 1, "Business - Reportable Segments" for more detail on our reportable segments.

Diversification Strategy: Over the past several years, we have diversified our portfolio beyond the RV OEM market into marine, building products, transportation, international, and aftermarket sectors. Leveraging our manufacturing competencies in other industries can accelerate profitable growth and help to mitigate seasonal and cyclical market risk. For example, within our Aftermarket Segment, many of the optional upgrades and non-critical replacement parts for RVs are purchased outside the normal product selling season, thereby causing certain sales within this segment to be counter-seasonal.

Approximately 57 percent and 61 percent of net sales for the years ended December 31, 2024 and 2023, respectively, were generated outside of the North American RV OEM market, providing a balanced foundation for continued growth.

Industry Background

OEM Segment - North American Recreational Vehicle Industry: RVs are designed as temporary living quarters for recreational, camping, travel, or seasonal use. They can be either motorized, such as motorhomes, or towable, including travel trailers, fifth-wheel trailers, folding camping trailers, and truck campers. The RV industry generally follows a predictable annual sales cycle that starts after the annual fall "Open House" in Elkhart, Indiana:

•October - March: Dealers build inventory, leading wholesale shipments to historically outpace retail sales.

•April - September: Retail sales typically exceed wholesale shipments, driven by spring and summer demand.

In 2024, Recreation Vehicle Industry Association ("RVIA") data shows U.S. wholesale shipments of travel trailers and fifth-wheel RVs, the Company's primary market, increased 13 percent to 291,600 units compared with 2023. Retail demand decreased 6 percent to 307,000 units compared with 2023, reflecting a partial stabilization from the sharp declines of prior years. However, inflation and elevated interest rates continued to pressure consumer discretionary spending, dampening demand. Retail registration data is often revised upward in subsequent months due to reporting delays.

While we track our OEM Segment RV sales against wholesale shipment statistics, the health of the RV industry is ultimately determined by retail demand. The table below highlights trends in wholesale shipments, retail sales, and dealer inventory adjustments for travel trailers and fifth-wheel RVs, as reported by Statistical Surveys, Inc. ("Statistical Surveys").

Motorhomes, another key RV category, experienced a significant 24 percent decline in wholesale shipments to 34,900 units in 2024, while retail demand fell 12 percent, according to RVIA data.

OEM Segment - Adjacent Industries: LCI's expertise in RV components extends to adjacent industries, including boats, buses, trailers, trucks, trains, manufactured homes, and modular housing. These adjacent industries offer significant growth opportunities, including by helping us leverage our established relationships with OEMs that often operate in multiple sectors. While the potential content per unit we may supply to adjacent industries varies across these markets, and is different than RVs, they represent meaningful diversification opportunities. Key adjacent industries and the annual retail units sold of each include:

•Enclosed trailers: According to Statistical Surveys, approximately 191,900 units were sold in 2024, down from 200,800 in 2023 and 213,800 in 2022.

•Boats: Statistical Surveys also reported approximately 245,800 units were sold in 2024, compared to 269,100 in 2023 and 270,900 in 2022. Pontoon boats, a subset of this market, sold 53,600 units in 2024, compared to 61,300 in 2023 and 62,700 in 2022.

•School buses. According to School Bus Fleet, sales decreased to 40,300 units in 2024, down from 41,200 in 2023 and 40,600 in 2022.

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•Manufactured housing. According to the Institute for Building Technology and Safety, wholesale shipments totaled 102,600 units in 2024, up from 89,200 in 2023 but down from 112,900 in 2022.

Aftermarket Segment: Our Aftermarket Segment enhances the product lifecycle for the recreation and transportation markets by offering discretionary accessories, replacement parts, and upgrades through various channels, including retail dealers, wholesale distributors, and service centers, as well as direct-to-consumer platforms. These products support recreation and transportation markets, addressing both routine maintenance needs and customer-driven enhancements.

We also provide comprehensive customer support through multiple customer care centers, offering rapid responses to inquiries related to technical support, product delivery, and critical repair, designed to minimize consumer downtime. Dedicated teams deliver product, technical, and installation training, as well as marketing assistance, to enhance customer engagement and satisfaction.

Aftermarket offerings span a diverse product portfolio, including:

•Marine Products: Biminis, covers, buoys, and fenders.

•Recreation and Transportation Accessories: Towing products, truck accessories, replacement glass, and awnings.

•Core Systems: Appliances, air conditioners, televisions, sound systems, and tankless water heaters.

Aftermarket sales are influenced by seasonal trends, with many non-critical upgrades and replacement parts purchased outside peak selling periods, creating certain counter-seasonal demand.

Market Dynamics: The U.S. RV ownership base, which reached a record 8.1 million households in 2025 (Go RVing), drives robust demand for aftermarket products. Owners seek to enhance and maintain their units, replacing components that experience normal wear and tear. This vibrant and growing market represents a key driver of our Aftermarket Segment’s performance.

Strategic Expansion: We have strategically expanded our Aftermarket Segment through acquisitions that strengthen our product portfolio and market reach, including Curt Manufacturing LLC and Kaspar Ranch Hand Equipment, LLC.

CURT Manufacturing LLC: Acquired in 2019, CURT is a leading manufacturer of towing products and truck accessories, complementing our OEM markets. CURT contributed approximately 50% of Aftermarket Segment net sales in both 2024 and 2023, selling 1,061,000 hitches in 2024, up from 910,000 in 2023.

Kaspar Ranch Hand Equipment, LLC: Acquired in 2021, Ranch Hand broadened our offerings with custom bumpers, grill guards, and steps for the automotive aftermarket, reinforcing our position in complementary markets.

RESULTS OF OPERATIONS

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Consolidated Summary

•Consolidated net sales for 2024 were $3.7 billion, 1 percent lower than consolidated net sales for 2023 of $3.8 billion. The decrease was primarily driven by decreased industry production levels in the North American marine and utility trailer markets and the European RV market, mostly offset by a 7 percent increase in total North American RV wholesale shipments and sales from acquisitions. Net sales from acquisitions completed in 2023 and 2024 contributed approximately $21.4 million in 2024.

•Net income for 2024 was $142.9 million, or $5.60 per diluted share, compared to net income of $64.2 million, or $2.52 per diluted share, for 2023.

•Consolidated operating profit during 2024 was $218.2 million compared to $123.4 million in 2023. Operating profit margin was 5.8 percent in 2024 compared to 3.3 percent in 2023. The increase was primarily due to decreases in material, freight, and warranty costs.

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•The cost of steel and aluminum consumed in certain of our manufactured components decreased in 2024 compared to 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 24.5 percent for 2024 was higher than the prior year, primarily due to tax adjustments as discussed below under "Income Taxes."

•Interest expense, net in 2024 was $28.9 million compared to $40.4 million in 2023. The decrease was primarily due to net repayments of indebtedness of $89.2 million in 2024 and interest income of $5.1 million earned on cash and cash equivalent balances in 2024.

•In 2024, we paid quarterly dividends aggregating $4.30 per share, or $109.5 million.

OEM Segment

Net sales of the OEM Segment in 2024 decreased 1 percent, or $43.3 million, compared to 2023. Net sales of components to OEMs were to the following markets for the years ended December 31:

According to the RVIA, industry-wide wholesale shipments for the years ended December 31 were:

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 December 31, divided by the industry-wide wholesale shipments of the different product mix of RVs for the same period, was:

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. The increase in travel trailer and fifth-wheel content in 2024 compared to 2023 was driven primarily by market share gains and alignment in wholesale unit production and shipments, compared to wholesale unit shipments outpacing production as a result of inventory de-stocking efforts in 2023, partially offset by an increasing shift in unit mix towards lower content single axle travel trailers and pricing decreases indexed to commodity and freight indices.

Our increase in net sales to RV OEMs during 2024 was driven by a 13 percent increase in wholesale shipments of travel trailers and fifth wheel units and market share gains, partially offset by a 24 percent decrease in motorhome wholesale shipments and a shift in unit mix towards lower content single axle travel trailers.

Our decrease in net sales to OEMs in Adjacent Industries during 2024 was primarily due to lower sales to North American marine and utility trailer OEMs, driven by current dealer inventory levels, inflation, and elevated interest rates impacting retail consumers. North American marine OEM sales totaled $245.6 million, down 30% from 2023.

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Operating profit of the OEM Segment was $107.1 million in 2024, an increase of $89.7 million compared to 2023. The operating profit margin of the OEM Segment increased to 3.7 percent in 2024 compared to 0.6 percent in 2023, and was positively impacted by:

•Decreases in material costs, which positively impacted operating profit by $97.8 million compared to 2023, primarily related to lower in-bound freight costs, decreased steel prices, and material sourcing strategies.

•A decrease in warranty costs, primarily due to product quality initiatives that resulted in reduced warranty claim payments, which increased operating profit by $28.0 million compared to 2023.

Partially offset by:

•Sales mix increase of lower margin products, which negatively impacted operating profit by $12.1 million compared to 2023.

•Decreases in selling prices, which negatively impacted operating profit by $9.0 million related to prices contractually tied to indices of select commodities and $2.0 million related to targeted products.

Amortization expense on intangible assets for the OEM Segment was $39.8 million in 2024, compared to $41.6 million in 2023. Depreciation expense on fixed assets for the OEM Segment was $53.5 million in 2024, compared to $58.4 million in 2023.

Aftermarket Segment

Net sales of the Aftermarket Segment in 2024 were consistent with 2023. Net sales of components in the Aftermarket Segment were as follows for the years ended December 31:

Our net sales to the Aftermarket Segment included lower volumes within the RV and marine aftermarkets, mostly offset by market share gains within the automotive aftermarket.

Operating profit of the Aftermarket Segment was $111.2 million in 2024, an increase of $5.1 million compared to 2023. The operating profit margin of the Aftermarket Segment was 12.6 percent in 2024, compared to 12.0 percent in 2023, and was positively impacted by:

•Decreases in material costs, which positively impacted operating profit by $16.8 million compared to 2023, primarily related to decreased steel prices, lower in-bound freight costs, product mix, and material sourcing strategies.

•Pricing changes to targeted products, resulting in an increase in operating profit of $5.1 million compared to 2023.

Partially offset by:

•Increases in production labor costs due to product mix, which negatively impacted operating profit by $10.2 million compared to 2023.

•Increased production facility costs resulting from investments to expand capacity in the automotive aftermarket over the past year, which reduced operating profit by $6.4 million.

Amortization expense on intangible assets for the Aftermarket Segment was $15.5 million in 2024, consistent with 2023. Depreciation expense on fixed assets for the Aftermarket Segment was $16.9 million in 2024, compared to $16.3 million in 2023.

Interest Expense

Interest expense, net was $28.9 million in 2024, compared to $40.4 million in 2023. The decrease in net interest expense was primarily due to net repayments on our revolving credit facility, principal payments on the Term Loan (as defined in Note 9 of the Notes to Consolidated Financial Statements), and $5.1 million of interest income earned on investments in money market mutual funds, partially offset by higher global interest rates early in 2024 on our adjustable rate Term Loan and revolving credit facility. We prepaid $35.0 million of principal on the Term Loan during 2024. These prepayments were applied to pay in full the scheduled principal amortization payments due through March 31, 2026. See Note 9 of the Notes to Consolidated Financial Statements for a description of our credit facilities.

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Income Taxes

The effective income tax rate for 2024 was 24.5 percent compared to 22.7 percent in 2023. The higher effective tax rate for 2024 was primarily due to increases in non-deductible executive compensation expenses and increases in the state effective tax rate. We estimate the 2025 effective income tax rate will be approximately 24 to 26 percent.

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 December 31, 2024, we had $165.8 million in cash and cash equivalents, and $452.5 million of availability under our revolving credit facility under the Credit Agreement (as defined in Note 9 of the Notes to 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 certain other conditions. See Note 9 of the Notes to 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 Consolidated Statements of Cash Flows reflect the following for the years ended December 31:

Discussion - Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Cash Flows from Operations

Net cash flows provided by operating activities were $370.3 million in 2024, compared to $527.2 million in 2023. The decrease in net cash flows provided by operating activities was primarily due to the decrease in inventory in 2023 of $235.3 million driven by decreasing commodity costs and initiatives to reduce inventory levels, compared to the decrease in inventories in 2024 of $46.3 million. The decrease in net cash flows provided by operating activities was partially offset by the $78.7 million increase in net income in 2024 compared to 2023.

Over the long term, based on our historical collection and payment patterns, as well as inventory turnover, and also giving consideration to emerging trends and changes to the sales mix, we expect working capital to increase or decrease equivalent to approximately 10 to 15 percent of the increase or decrease, respectively, in net sales. However, there are many factors that can impact this relationship, especially in the short term.

Depreciation and amortization was $125.7 million and $131.8 million in 2024 and 2023, respectively, and is expected to be approximately $115 to $125 million in 2025. Non-cash stock-based compensation expense was $18.7 million and $18.2 million in 2024 and 2023, respectively, and is expected to be approximately $18 to $23 million in 2025.

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Cash Flows from Investing Activities

Cash flows used in investing activities of $61.1 million in 2024 were primarily comprised of $42.3 million for capital expenditures and $20.0 million for a business acquisition. Cash flows used in investing activities of $83.7 million in 2023 were primarily comprised of $62.2 million for capital expenditures and $25.9 million for the acquisition of businesses.

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 2025 capital expenditures (excluding any potential business combinations) of $50 to $70 million, including investments in automation and lean projects, which we expect to fund with cash flows from operations or periodic borrowings under the revolving credit facility as needed.

The 2024 capital expenditures and acquisitions were funded by cash generated from operations and borrowings under our Credit Agreement. Capital expenditures and acquisitions in 2025 are expected to be funded primarily from cash generated from operations, as well as periodic borrowings under our revolving credit facility.

Cash Flows from Financing Activities

Cash flows used in financing activities of $208.2 million in 2024 were primarily comprised of payments of quarterly dividends of $109.5 million, $52.5 million in net repayments under our revolving credit facility, $36.7 million in repayments under our Term Loan and other borrowings, and cash outflows of $9.2 million related to vesting of stock-based awards, net of shares tendered for payment of taxes. Included in the repayments under our Term Loan were $35.0 million of principal prepayments in 2024. These prepayments were applied to pay in full the scheduled principal amortization payments due through March 31, 2026.

Cash flows used in financing activities of $426.2 million in 2023 were primarily comprised of $215.9 million in net repayments under our revolving credit facility, payments of quarterly dividends of $106.3 million, $61.1 million in repayments under our Term Loan and other borrowings, $31.9 million related to payment of contingent consideration and holdbacks related to acquisitions, and cash outflows of $9.6 million related to vesting of stock-based awards, net of shares tendered for payment of taxes.

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. At December 31, 2024, we were in compliance with all applicable financial covenants and expect to remain in compliance for the next twelve months.

We have paid regular quarterly dividends since 2016. Future dividend policy with respect to our common stock will be determined by our Board of Directors in light of our prevailing financial needs, earnings, and other relevant factors, including any limitations in our debt agreements, such as maintenance of certain financial ratios. In 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. Under this stock repurchase program, we purchased 253,490 shares at a weighted average price of $94.89 per share, totaling $24.1 million, during the year ended December 31, 2022. No shares were repurchased during the years ended December 31, 2024 and 2023. See Note 13 of the Notes to Consolidated Financial Statements for additional information related to our dividend and share repurchase programs.

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Future Cash Requirements

The following table summarizes our material estimated future cash requirements under our contractual obligations for indebtedness and operating leases at December 31, 2024, in total and disaggregated into current (payable in 2025) and long-term (payable after 2025) obligations.

a.See Note 9 of the Notes to Consolidated Financial Statements for additional information regarding the maturities of debt principal. Interest payments on our indebtedness are calculated using the outstanding balances and interest rates in effect on December 31, 2024.

b.See Note 11 of the Notes to Consolidated Financial Statements for additional information regarding the maturity of our lease obligations under operating leases. Our finance leases were not material at December 31, 2024.

Retirement and Other Benefit Plans

We consider various factors when making funding decisions, such as regulatory requirements, actuarially determined minimum contribution requirements, and contributions required to avoid benefit restrictions for defined benefit pension plans. For the year ended December 31, 2024, we made discretionary matching contributions of $11.6 million to our defined contribution 401(k) profit sharing plan. We expect to make matching contributions to our defined contribution 401(k) profit sharing plan in 2025 at a level similar to 2024; however, these contributions are discretionary and subject to change. See Note 8 of the Notes to Consolidated Financial Statements for further information related to our retirement and other benefit plans.

CORPORATE GOVERNANCE

We are in compliance with the corporate governance requirements of the SEC and the New York Stock Exchange. Our governance documents, 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

Additional information required by this item is included under Item 3 of Part I of this Annual Report on Form 10-K.

CRITICAL ACCOUNTING ESTIMATES

Our Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which requires certain estimates and assumptions to be made that affect the amounts and disclosures reported in those financial statements and the related accompanying notes. Actual results could differ from these estimates and assumptions. While our significant accounting policies are more fully described in Note 2 of the Notes to Consolidated Financial Statements, the following discussion addresses our most critical accounting estimates, which are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations. Management has discussed the development and selection of its critical accounting estimates with the Audit Committee of the Company’s Board of Directors, and the Audit Committee has reviewed the disclosure presented below relating to the critical accounting estimates.

Warranty

We provide warranty terms based upon the type of product sold. We use historical warranty costs, claim lag, sales, and current trends of repair costs as assumptions and inputs into our model to estimate future warranty claims and the associated warranty accrual. The accounting for warranty accruals requires us to make assumptions and judgments, and to the extent actual

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results differ from original estimates, adjustments to recorded accruals may be required. For further information on our warranty accrual, including a roll-forward of changes in the accrual, see Note 7 of the Notes to Consolidated Financial Statements.

Fair Value of Intangible Assets of Acquired Businesses

We value the intangible assets associated with the acquisitions of businesses on the respective acquisition dates. Depending upon the type of intangible asset acquired, we use different valuation techniques in determining the fair value. Those techniques include comparable market prices, long-term sales, profitability and cash flow forecasts, assumptions regarding future industry-specific economic and market conditions and a market participant’s weighted average cost of capital, as well as other techniques as circumstances require. By their nature, these assumptions require judgment, and if management had chosen different assumptions, the fair value of intangible assets of acquired businesses would have been different. For further information on acquired intangible assets, see Note 4 of the Notes to Consolidated Financial Statements.

New Accounting Pronouncements

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

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. Prices of these commodities have historically been volatile, and over the past few months prices have continued to fluctuate. Overall, we experienced reduced prices of these commodities in 2024, and at this time, we expect commodity prices to be generally stable in 2025; however, recent tariff activity could have an adverse impact. Please see "Results of Operations" above for additional information regarding the impact of raw material costs on our results of operations for the year ended December 31, 2024.

While we experienced deflation in the prices of our key raw materials in 2024, inflation on consumer products and elevated interest rates in 2024 impacted retail consumers' discretionary spending, which we believe contributed to our decline in sales, especially in our RV OEM and certain adjacent industries OEM markets, such as marine. Additionally, elevated interest rates in 2023 and through the first half of 2024 impacted retail dealers' cost of floorplan financing, which elevates the carrying cost of inventory on retail dealer lots. Interest rate reductions began in the last four months of 2024, and we expect potential further interest rate reductions in 2025, which we believe would favorably impact retail consumers, as well as retail dealers' floorplan financing.

Item 7.    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 our Consolidated Financial Statements and Notes thereto included in Part II, Item 8 of this Report.

This Management's Discussion and Analysis of Financial Condition and Results of Operations generally discusses 2023 and 2022 items and year-over-year comparisons between 2023 and 2022. A detailed discussion of 2021 items and year-over-year comparisons between 2022 and 2021 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 24, 2023.

The Company, through its wholly-owned subsidiary, LCI, supplies, domestically and internationally, a broad array of highly engineered components for the leading OEMs in the recreation and 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. 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.

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We have two reportable segments, the OEM Segment and the Aftermarket Segment. At December 31, 2023, we operated over 110 manufacturing and distribution facilities located throughout North America and Europe. Net sales and operating profit were as follows for the years ended December 31:

Corporate expenses are allocated between the segments based upon net sales.

Net sales and operating profit by segment, as a percent of the total, were as follows for the years ended December 31:

Operating profit margin by segment was as follows for the years ended December 31:

Operating profit margins in 2023 were impacted by a number of factors, as further described below under “Results of Operations – Year Ended December 31, 2023 Compared to Year Ended December 31, 2022.”

Our OEM Segment manufactures and distributes a broad array of 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;

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trains; manufactured homes; and modular housing. Approximately 47 percent of our OEM Segment net sales for the year ended December 31, 2023 were of components for travel trailer and fifth-wheel RVs, including:

The Aftermarket Segment supplies many of these engineered components to the related aftermarket channels of the recreation and transportation 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.

Diversification Strategy

We are executing a strategic initiative to diversify the markets we serve away from the historical concentration within the North American RV OEM industry. Approximately 61 percent of net sales for the year ended December 31, 2023 were generated outside of the North American RV OEM market compared to 46 percent in 2022, demonstrating positive results from our diversification strategy in 2023. While North American RV OEM wholesale shipments declined 37 percent year-over year, due to the effectiveness of our diversification strategy, consolidated net sales were only down 27 percent.

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.

According to the RVIA, industry-wide wholesale shipments from the United States of travel trailer and fifth-wheel RVs, the Company's primary RV market, decreased 39 percent to 259,100 units in 2023, compared to 2022, primarily due to decreased retail demand. Retail demand for travel trailer and fifth-wheel RVs decreased 17 percent in 2023 compared to 2022. Retail demand has declined from elevated post-pandemic levels, primarily driven by inflation and higher interest rates impacting retail 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

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Statistical Surveys, Inc., as well as the resulting estimated change in dealer inventories, for both the United States and Canada, is as follows:

According to the RVIA, industry-wide wholesale shipments of motorhome RVs in 2023 decreased 21 percent to 45,900 units compared to 2022. Retail demand for motorhome RVs decreased eight percent in 2023, compared to a 13 percent decrease in retail demand in 2022. Retail demand has declined from post-pandemic elevated levels, partially driven by inflation and higher interest rates impacting retail 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.

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

•Enclosed trailers. According to Statistical Surveys, approximately 184,300, 198,700, and 239,700 enclosed trailers were sold in 2023, 2022, and 2021, respectively.

•Traditional power boats. Statistical Surveys also reported approximately 178,900, 185,400, and 216,900 traditional power boats were sold in 2023, 2022, and 2021, respectively. Traditional power boats include bass, deck, jet, pontoon, ski-wake, and other boats. Included in this total, Statistical Surveys reported approximately 62,300, 62,300, and 67,800 pontoon boats were sold in 2023, 2022, and 2021, respectively.

•School buses. According to School Bus Fleet, there were approximately 41,200, 40,600, and 30,600 school buses sold in 2023, 2022, and 2021, respectively.

•Manufactured housing. According to the Institute for Building Technology and Safety, there were approximately 89.200, 112,900, and 105,800 manufactured home wholesale shipments in 2023, 2022, and 2021, respectively.

Aftermarket Segment

Many of our OEM Segment products are also sold through various aftermarket channels of the recreation and 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.

According to Go RVing, estimated RV ownership in the United States as of 2021 increased to 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.

In December 2019, we acquired CURT, a leading manufacturer and distributor of branded towing products and truck accessories for the aftermarket. Our CURT products are sold to the automotive and truck aftermarket, as well as the RV, marine, and trailer markets, all of which require towing products, which we believe complements the OEM markets we serve. Sales from CURT products accounted for approximately half of our Aftermarket Segment net sales in each of 2023 and 2022.

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CURT sold 910,000 hitches in 2023 compared to 860,000 in 2022. Additionally, with the acquisition of Kaspar Ranch Hand Equipment, LLC in April 2021, we continued to expand our product offering to include custom bumpers, grill guards, and steps for the automotive aftermarket.

RESULTS OF OPERATIONS

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

Consolidated Summary

•Consolidated net sales for 2023 were $3.8 billion, 27 percent lower than consolidated net sales for 2022 of $5.2 billion. The decrease was primarily driven by a nearly 37 percent decrease in total North American RV wholesale shipments, decreased selling prices which are indexed to select commodities, and lower North American marine production levels, partially offset by net sales from recent acquisitions. Net sales from acquisitions completed in 2022 and 2023 contributed approximately $73.6 million in 2023.

•Net income for 2023 was $64.2 million, or $2.52 per diluted share, compared to net income of $395.0 million, or $15.48 per diluted share, for 2022.

•Consolidated operating profit during 2023 was $123.4 million compared to $553.0 million in 2022. Operating profit margin was 3.3 percent in 2023 compared to 10.6 percent in 2022. The decrease was primarily due to decreased selling prices which are indexed to select commodities and the impact of fixed costs on reduced sales, partially offset by decreases in material commodity costs.

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

•The decrease in selling, general and administrative costs of $67.5 million in 2023 was primarily driven by personnel costs reductions of $41.5 million, discretionary spend reductions of $22.3 million, and a decrease in transportation costs of $17.5 million, due to lower volumes in 2023 compared to 2022, partially offset by incremental costs from recent acquisitions of $7.6 million.

•The effective tax rate of 22.7 percent for the full-year 2023 was lower than the prior year, primarily due to tax adjustments as discussed below under "Income Taxes."

•Interest expense in 2023 was $40.4 million compared to $27.6 million in 2022. The increase was primarily due to interest rate increases throughout the year on our variable rate indebtedness, partially offset by net repayments of indebtedness of $277.0 million in 2023.

•In 2023, we paid quarterly dividends aggregating $4.20 per share, or $106.3 million.

OEM Segment

Net sales of the OEM Segment in 2023 decreased 33 percent, or $1.4 billion, compared to 2022. Net sales of components to OEMs were to the following markets for the years ended December 31:

According to the RVIA, industry-wide wholesale shipments for the years ended December 31 were:

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

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OEMs for the different types of RVs produced for the twelve months ended December 31, divided by the industry-wide wholesale shipments of the different product mix of RVs for the same period, was:

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. The declines in content in 2023 compared to 2022 were driven primarily by decreased selling prices contractually tied to indices of select commodities, partially offset by organic and acquisition growth.

Our decrease in net sales to RV OEMs during 2023 was driven by a 37 percent reduction in North American wholesale shipments during 2023, primarily driven by dealer inventory levels, inflation, and higher interest rates impacting retail consumers.

Our decrease in net sales to OEMs in Adjacent Industries during 2023 was primarily due to lower sales to North American OEMs in the marine and manufactured housing markets, primarily driven by dealer inventory levels, inflation, and elevated interest rates impacting retail consumers.

Operating profit of the OEM Segment was $17.4 million in 2023, a decrease of $461.8 million compared to 2022. The operating profit margin of the OEM Segment decreased to 0.6 percent in 2023 compared to 11.1 percent in 2022 and was negatively impacted by:

•Selling prices contractually tied to indices of select commodities decreased, resulting in a decrease in operating profit of $213.7 million compared to 2022.

•The impact of fixed costs on reduced sales, which decreased operating profit by $84.7 million related to fixed production overhead costs and $63.8 million related to fixed selling, general, and administrative costs.

•Warranty costs decreased operating profit by $29.4 million due to increased warranty claim payments driven by retail dealers seeking service work to offset retail sales which declined in 2023 and higher claim activity associated with certain products.

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

•Sales mix increase of lower margin products from recent acquisitions and related integration costs, which negatively impacted operating profit by $19.7 million.

Partially offset by:

•Decreases in material commodity costs, which positively impacted operating profit by $114.7 million, primarily related to decreased steel and aluminum costs.

•A decrease in production labor primarily related to reduced overtime and temporary staffing, resulting in an increase in operating profit of $12.6 million compared to 2022.

•Pricing changes to targeted products, resulting in an increase in operating profit of $9.5 million compared to 2022.

Amortization expense on intangible assets for the OEM Segment was $41.6 million in 2023, compared to $41.3 million in 2022. Depreciation expense on fixed assets for the OEM Segment was $58.4 million in 2023, compared to $58.2 million in 2022.

Aftermarket Segment

Net sales of the Aftermarket Segment in 2023 decreased 1 percent, or $10.2 million, compared to 2022. Net sales of components in the Aftermarket Segment were as follows for the years ended December 31:

Our net sales to the Aftermarket Segment decreased during 2023 primarily driven by lower volumes within marine markets and the impacts of inflation and elevated interest rates on consumers' discretionary spending. The declines in the marine aftermarket were partially offset by strength in the automotive and RV aftermarkets, especially in the second half of 2023. The automotive aftermarket, in particular, experienced growth in the second half of 2023 primarily due to market share gains.

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Operating profit of the Aftermarket Segment was $106.1 million in 2023, an increase of $32.2 million compared to 2022. The operating profit margin of the Aftermarket Segment was 12.0 percent in 2023, compared to 8.3 percent in 2022, and was positively impacted by:

•Decreases in material commodity costs, which positively impacted operating profit by $34.4 million, primarily related to decreased steel and aluminum costs.

•Pricing changes to targeted products, resulting in an increase in operating profit of $6.8 million compared to the same period of 2022.

Partially offset by:

•Increases in outbound transportation costs due to changes in customer mix, which reduced operating profit by $5.1 million.

•The impact of fixed costs due to reduced volumes, which decreased operating profit by $2.7 million related to fixed selling, general, and administrative costs and $1.4 million related to fixed overhead costs.

Amortization expense on intangible assets for the Aftermarket Segment was $15.5 million in 2023, compared to $15.1 million in 2022. Depreciation expense on fixed assets for the Aftermarket Segment was $16.3 million in 2023, compared to $14.7 million in 2022.

Interest Expense

Interest expense, net was $40.4 million in 2023, compared to $27.6 million in 2022. The increase in interest expense was primarily due to higher global interest rates on our adjustable rate Term Loan (as defined in Note 9 of the Notes to Consolidated Financial Statements) and revolving credit facility, partially offset by principal payments on the Term Loan, net repayments on our revolving credit facility, and the payoff of the shelf loan balance in March 2022. We prepaid $37.5 million of principal on the Term Loan during 2023. These prepayments were applied to pay in full the scheduled principal amortization payments due through March 31, 2025, and are projected to save us approximately $1.9 million in annual interest expense based on interest rates in effect at December 31, 2023. See Note 9 of the Notes to Consolidated Financial Statements for a description of our credit facilities.

Income Taxes

The effective income tax rate for 2023 was 22.7 percent compared to 24.8 percent in 2022. The lower effective tax rate for 2023 was primarily due to an increase in the cash surrender value of life insurance, a decrease in non-deductible executive compensation expenses, and a decrease in the state effective tax rate. We estimate the 2024 effective income tax rate to be approximately 24 to 26 percent.

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 December 31, 2023, we had $66.2 million in cash and cash equivalents, and $245.3 million of availability under our revolving credit facility under the Credit Agreement (as defined in Note 9 of the Notes to 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 certain other conditions. See Note 9 of the Notes to 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.

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The Consolidated Statements of Cash Flows reflect the following for the years ended December 31:

Discussion - Year Ended December 31, 2023 Compared to Year Ended December 31, 2022

Cash Flows from Operations

Net cash flows provided by operating activities were $527.2 million in 2023, compared to $602.5 million in 2022. The decrease in net cash flows provided by operating activities was primarily due to a decrease in net income adjusted for depreciation and amortization, stock-based compensation expense, deferred taxes, and other non-cash items of $318.1 million. The decrease in net income was partially offset by the net change in assets and liabilities, net of acquired businesses, as it generated $242.8 million more cash than in 2022. The primary provider of cash generated from net assets in 2023 was the decrease in inventory of $235.3 million, due to decreasing material commodity costs and initiatives to reduce inventory as RV production demand has slowed from elevated post-pandemic levels seen during the first half of 2022.

Over the long term, based on our historical collection and payment patterns, as well as inventory turnover, and also giving consideration to emerging trends and changes to the sales mix, we expect working capital to increase or decrease equivalent to approximately 10 to 15 percent of the increase or decrease, respectively, in net sales. However, there are many factors that can impact this relationship, especially in the short term.

Depreciation and amortization was $131.8 million and $129.2 million in 2023 and 2022, respectively, and is expected to be approximately $130 to $140 million in 2024. Non-cash stock-based compensation expense was $18.2 million and $23.7 million in 2023 and 2022, respectively, and is expected to be approximately $20 to $25 million in 2024.

Cash Flows from Investing Activities

Cash flows used in investing activities of $83.7 million in 2023 were primarily comprised of $62.2 million for capital expenditures and $25.9 million for the acquisition of businesses. Cash flows used in investing activities of $241.8 million in 2022 were primarily comprised of $130.6 million for capital expenditures and $108.5 million for the acquisition of businesses.

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 2024 capital expenditures of $55 to $75 million, including investments in automation and lean projects, which we expect to fund with cash flows from operations or periodic borrowings under the revolving credit facility as needed.

The 2023 capital expenditures and acquisitions were funded by cash generated from operations and borrowings under our Credit Agreement. Capital expenditures and acquisitions in 2024 are expected to be funded primarily from cash generated from operations, as well as periodic borrowings under our revolving credit facility.

Cash Flows from Financing Activities

Cash flows used in financing activities of $426.2 million in 2023 were primarily comprised of $215.9 million in net repayments under our revolving credit facility, payments of quarterly dividends of $106.3 million, $61.1 million in repayments under our Term Loan and other borrowings, $31.9 million related to payments of contingent consideration and holdbacks related to acquisitions, and cash outflows of $9.6 million related to vesting of stock-based awards, net of shares tendered for payment of taxes. Included in the repayments under our Term Loan were $37.5 million of principal prepayments in 2023. These prepayments were applied to pay in full the scheduled principal amortization payments due through March 31, 2025.

Cash flows used in financing activities of $374.9 million in 2022 were primarily comprised of $105.3 million in net repayments under our revolving credit facility, payments of quarterly dividends of $102.7 million, $73.0 million in repayments under our shelf loan, Term Loan, and other borrowings, $60.2 million related to payment of contingent consideration and

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holdbacks related to acquisitions, $24.1 million in repurchases of common stock, and cash outflows of $11.0 million related to vesting of stock-based awards, net of shares tendered for payment of taxes.

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. During 2023, we entered into two amendments to the Credit Agreement that provided for adjustments to certain of the financial covenants for the second, third, and fourth fiscal quarters of 2023. At December 31, 2023, we were in compliance with all applicable financial covenants and expect to remain in compliance for the next twelve months.

We have paid regular quarterly dividends since 2016. Future dividend policy with respect to our common stock will be determined by our Board of Directors in light of our prevailing financial needs, earnings, and other relevant factors, including any limitations in our debt agreements, such as maintenance of certain financial ratios. In 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. Under this stock repurchase program, we purchased 253,490 shares at a weighted average price of $94.89 per share, totaling $24.1 million, during the year ended December 31, 2022. No shares were repurchased during the year ended December 31, 2023. See Note 13 of the Notes to Consolidated Financial Statements for additional information related to our dividend and share repurchase programs.

Future Cash Requirements

The following table summarizes our material estimated future cash requirements under our contractual obligations for indebtedness and operating leases at December 31, 2023, in total and disaggregated into current (payable in 2024) and long-term (payable after 2024) obligations.

a.See Note 9 of the Notes to Consolidated Financial Statements for additional information regarding the maturities of debt principal. Interest payments on our indebtedness are calculated using the outstanding balances and interest rates in effect on December 31, 2023.

b.See Note 11 of the Notes to Consolidated Financial Statements for additional information regarding the maturity of our lease obligations under operating leases. Our finance leases were not material at December 31, 2023.

Retirement and Other Benefit Plans

We consider various factors when making funding decisions, such as regulatory requirements, actuarially determined minimum contribution requirements, and contributions required to avoid benefit restrictions for defined benefit pension plans. For the year ended December 31, 2023, we made discretionary matching contributions of $12.1 million to our defined contribution 401(k) profit sharing plan. We anticipate making minimum required contributions of approximately $0.7 million to our Dutch pension plans in 2024 following curtailment of the plans at the end of 2022. We also expect to make matching contributions to our defined contribution 401(k) profit sharing plan in 2024 at a level similar to 2023; however, these contributions are discretionary and subject to change. See Note 8 of the Notes to Consolidated Financial Statements for further information related to our retirement and other benefit plans.

CORPORATE GOVERNANCE

We are in compliance with the corporate governance requirements of 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 the Company’s accounting, internal controls, auditing matters or other concerns. The Whistleblower Policy and procedure for complaints can be found on our website (www.lci1.com).

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CONTINGENCIES

Additional information required by this item is included under Item 3 of Part I of this Annual Report on Form 10-K.

CRITICAL ACCOUNTING ESTIMATES

Our Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which requires certain estimates and assumptions to be made that affect the amounts and disclosures reported in those financial statements and the related accompanying notes. Actual results could differ from these estimates and assumptions. While our significant accounting policies are more fully described in Note 2 of the Notes to Consolidated Financial Statements, the following discussion addresses our most critical accounting estimates, which are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations. Management has discussed the development and selection of its critical accounting estimates with the Audit Committee of the Company’s Board of Directors and the Audit Committee has reviewed the disclosure presented below relating to the critical accounting estimates.

Warranty

We provide warranty terms based upon the type of product sold. We estimate the warranty accrual based upon various factors, including historical warranty costs, warranty claim lag, and sales. The accounting for warranty accruals requires us to make assumptions and judgments, and to the extent actual results differ from original estimates, adjustments to recorded accruals may be required. In 2023, we experienced an increase in warranty claims paid year-over-year, which grew while net sales contracted. We believe the unfavorable trend in relation to net sales is due to increased warranty claim payments driven by retail dealers seeking service work to offset retail sales which declined in 2023 and higher claim activity associated with certain products. The increase in warranty claim lag time was driven by units remaining on dealer lots for longer periods due to the slower sales environment. For further information on our warranty accrual, including a roll-forward of changes in the accrual, see Note 7 of the Notes to Consolidated Financial Statements.

Fair Value of Intangible Assets of Acquired Businesses

We value the intangible assets associated with the acquisitions of businesses on the respective acquisition dates. Depending upon the type of intangible asset acquired, we use different valuation techniques in determining the fair value. Those techniques include comparable market prices, long-term sales, profitability and cash flow forecasts, assumptions regarding future industry-specific economic and market conditions and a market participant’s weighted average cost of capital, as well as other techniques as circumstances require. By their nature, these assumptions require judgment, and if management had chosen different assumptions, the fair value of intangible assets of acquired businesses would have been different. For further information on acquired intangible assets, see Note 4 of the Notes to Consolidated Financial Statements.

New Accounting Pronouncements

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

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. Prices of these commodities have historically been volatile, and over the past few months prices have continued to fluctuate. Overall, we experienced reduced prices of these commodities in 2023, and at this time, we expect commodity prices to be generally stable in 2024. Please see "Results of Operations" above for additional information regarding the impact of raw material costs on our results of operations for the year ended December 31, 2023.

While we experienced deflation in the prices of our key raw materials in 2023, inflation on consumer products and interest rates that increased throughout 2023 impacted retail consumers' discretionary spending, which we believe contributed to our decline in sales, especially in our RV OEM and certain adjacent industries OEM markets such as marine. Additionally, increasing interest rates in 2023 impacted retail dealers' cost of floorplan financing, which elevates the carrying cost of inventory on retail dealer lots. We expect that the potential for interest rate reductions later in 2024 would favorably impact retail consumers, as well as retail dealers' floorplan financing.

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Item 7.    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 our Consolidated Financial Statements and Notes thereto included in Part II, Item 8 of this Report.

This Management's Discussion and Analysis of Financial Condition and Results of Operations generally discusses 2022 and 2021 items and year-over-year comparisons between 2022 and 2021. A detailed discussion of 2020 items and year-over-year comparisons between 2021 and 2020 that are not included in this Annual Report on Form 10-K can be found in

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"Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 25, 2022.

The Company, through its wholly-owned subsidiary, LCI, supplies, domestically and internationally, a broad array of engineered components for the leading OEMs in the recreation and transportation product markets, consisting primarily of RVs and adjacent industries including 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. At December 31, 2022, we operated over 130 manufacturing and distribution facilities located throughout North America and Europe.

Net sales and operating profit were as follows for the years ended December 31:

Corporate expenses are allocated between the segments based upon net sales.

Net sales and operating profit by segment, as a percent of the total, were as follows for the years ended December 31:

Operating profit margin by segment was as follows for the years ended December 31:

Operating profit margins for the Aftermarket Segment in 2022 were negatively impacted by a number of factors, as further described below under “Results of Operations – Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 – Aftermarket Segment.”

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Our OEM Segment manufactures and distributes a broad array of 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 61 percent of our OEM Segment net sales for the year ended December 31, 2022 were of components for travel trailer and fifth-wheel RVs, including:

The Aftermarket Segment supplies many of these engineered components to the related aftermarket channels of the recreation and transportation product markets, primarily to retail dealers, wholesale distributors, and service centers, 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.

Diversification Strategy

We are executing a strategic initiative to diversify the markets we serve away from the historical concentration within the North American RV OEM industry. Approximately 46 percent of net sales for the year ended December 31, 2022 were generated outside of the North American RV OEM market compared to 47 percent in 2021. The percentage of net sales generated outside of the North American RV OEM market in 2022 decreased compared to the 2021 percentage due to continued content growth in the North American RV OEM market during 2022, which more than offset our diversification efforts.

COVID-19 Pandemic

The COVID-19 pandemic has caused significant uncertainty and disruption in the global economy and financial markets since early 2020. With RV retail demand at record levels throughout 2021, the industry faced challenges with supply chain constraints, rising material and freight costs, and increases in direct labor costs due to higher production volumes and a tightened labor market, especially in Northern Indiana. These trends continued through the first nine months of 2022, and, with regard to supply chain constraints and freight costs, have also been impacted by the conflict between Russia and Ukraine (the "Russia-Ukraine War"), as well as heightened tensions between China and Taiwan. To address these challenges, we have continued to strategically manage working capital, including carrying elevated levels of certain inventory items to avoid future shortages. As we adjust inventory levels, we also closely monitor our liquidity, and may need to seek additional financing, though such additional financing may not be available on terms favorable to us, or at all. See "Liquidity and Capital Resources" below for further discussion. We continue to focus on our culture and leadership development programs to focus on team member retention. We continue to closely monitor the impact of COVID-19, the Russia-Ukraine War, and relations between China and Taiwan on all aspects of our business. The extent to which COVID-19, the Russia-Ukraine War, and/or relations between China and Taiwan may impact our liquidity, financial condition, and results of operations in the future remains uncertain.

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

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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. 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 RVIA, industry-wide wholesale shipments from the United States of travel trailer and fifth-wheel RVs, the Company's primary RV market, decreased 21 percent to 421,700 units in 2022, compared to 2021, primarily due to decreased retail demand. Retail demand for travel trailer and fifth-wheel RVs decreased 23 percent in 2022 compared to 2021. Retail demand has declined from recent elevated levels, partially driven by elevated fuel prices and rising interest rates impacting retail consumers. 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:

According to the RVIA, industry-wide wholesale shipments of motorhome RVs in 2022 increased four percent to 58,400 units compared to 2021. Retail demand for motorhome RVs decreased 13 percent in 2022, compared to a four percent increase in retail demand in 2021. Retail demand has declined from recent elevated levels, partially driven by elevated fuel prices and rising 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 are approximately 330,000 to 350,000 units. This estimate suggests a decrease of 33 to 29 percent compared to actual wholesale shipments in 2022. This projected decline is being driven by current dealer inventory levels, as well as elevated gas prices and rising interest rates impacting retail consumers.

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.

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

•Enclosed trailers. According to Statistical Surveys, approximately 188,700, 234,600, and 233,300 enclosed trailers were sold in 2022, 2021, and 2020, respectively.

•Traditional power boats. Statistical Surveys also reported approximately 188,300, 211,400, and 233,800 traditional power boats were sold in 2022, 2021, and 2020, respectively. Traditional power boats include bass, deck, jet, pontoon, ski-wake, and other boats. Included in this total, Statistical Surveys reported approximately 62,100, 66,000, and 69,000 pontoon boats were sold in 2022, 2021, and 2020, respectively.

•School buses. According to School Bus Fleet, there were approximately 40,600, 30,600, and 36,000 school buses sold in 2022, 2021, and 2020, respectively.

•Manufactured housing. According to the Institute for Building Technology and Safety, there were approximately 112.900, 105,800, and 94,400 manufactured home wholesale shipments in 2022, 2021, and 2020, respectively.

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

Aftermarket Segment

Many of our OEM Segment products are also sold through various aftermarket channels of the recreation and transportation product 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 replacements 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.

According to Go RVing, estimated RV ownership in the United States as of 2020 had increased to over 11 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.

In December 2019, we acquired CURT, a leading manufacturer and distributor of branded towing products and truck accessories for the aftermarket. Our CURT products are sold to the automotive and truck aftermarket, as well as the RV, marine, and trailer markets, all of which require towing products, which we believe compliments the OEM markets we serve. Sales from CURT products accounted for approximately half of our Aftermarket Segment net sales in each of 2022 and 2021. CURT sold 0.9 million hitches in 2022 and 1.2 million in 2021. Additionally, with the acquisition of Kasper Ranch Hand Equipment, LLC in April 2021, we continued to expand our product offering to include custom bumpers, grill guards, and steps for the automotive aftermarket.

We currently expect to see a slight increase in aftermarket volume in 2023 as distribution stocking levels return to normal and the new vehicle chip shortage ameliorates. We expect these gains will be tempered by the impact of inflation and rising interest rates on consumers' discretionary spending.

RESULTS OF OPERATIONS

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

Consolidated Summary

•Consolidated net sales for 2022 were $5.2 billion, 16 percent higher than consolidated net sales for 2021 of $4.5 billion. The increase was primarily driven by price realization, market share growth, acquisitions, and an increase in net sales to OEMs in Adjacent Industries, partially offset by a nearly 18 percent decrease in wholesale RV OEM shipments. Net sales from acquisitions completed in 2021 and 2022, primarily Furrion and Girard, contributed approximately $219.0 million in 2022.

•Net income for 2022 increased 37.3 percent to $395.0 million, or $15.48 per diluted share, compared to net income of $287.7 million, or $11.32 per diluted share, for 2021.

•Consolidated operating profit during 2022 was $553.0 million compared to $398.4 million in 2021. Operating profit margin was 10.6 percent in 2022 compared to 8.9 percent in 2021. The increase was primarily a result of increased selling prices which are indexed to select commodities and pricing changes to targeted products, partially offset by increased raw material and freight costs.

•The cost of aluminum and steel used in certain of the Company's manufactured components increased in 2022 compared to 2021. Raw material costs are subject to continued fluctuation and are being offset, in part, by contractual selling prices that are indexed to select commodities.

•The increase in selling, general and administrative costs of $75.6 million in 2022 was primarily driven by increases in personnel costs of $25.0 million, incremental costs from recent acquisitions of $21.9 million,

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increases in information systems costs of $12.0 million, incremental amortization of intangible assets from acquired businesses of $11.1 million, and increases in transportation costs of $9.3 million, due to higher volumes and rising freight costs in 2022 compared to 2021.

•The effective tax rate of 24.8 percent for the full-year 2022 was higher than the prior year, primarily due to discrete tax adjustments as discussed below under "Provision for Income Taxes."

•In 2022, we returned $126.8 million to shareholders through $102.7 million of dividends and $24.1 million in share repurchases.

OEM Segment

Net sales of the OEM Segment in 2022 increased 18 percent, or $0.7 billion, compared to 2021. Net sales of components to OEMs were to the following markets for the years ended December 31:

According to the RVIA, industry-wide wholesale shipments for the years ended December 31 were:

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 December 31, divided by the industry-wide wholesale shipments of the different product mix of RVs for the same period, was:

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 market share gains, acquisitions, new product introductions, and changes in selling prices for our products, as well as changes in the types of RVs produced industry-wide.

Our increase in net sales to RV OEMs of travel trailers, fifth-wheel, and motorhome components during 2022 was primarily driven by selling price increases, market share gains, and acquisitions, partially offset by a nearly 18 percent decrease in wholesale RV OEM shipments.

Our increase in net sales to OEMs in Adjacent Industries during 2022 was primarily driven by selling price increases, market share gains, and wholesale production growth. We continue to believe there are significant opportunities in Adjacent Industries.

Operating profit of the OEM Segment was $479.2 million in 2022, an increase of $174.5 million compared to 2021. The operating profit margin of the OEM Segment increased to 11.1 percent in 2022 compared to 8.4 percent in 2021 and was positively impacted by:

•Selling prices contractually tied to indices of select commodities increased, resulting in an increase in operating profit of $282.6 million compared to 2021.

•Pricing changes to targeted products, resulting in an increase in operating profit of $198.9 million compared to 2021.

Partially offset by:

•Increases in material commodity costs, which negatively impacted operating profit by $226.3 million, primarily related to increased steel and aluminum costs.

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•Absorption of fixed cost structure while supporting temporary slowdown in RV volumes in the second half of 2022, which negatively impacted operating profit by $38.2 million.

•Increased warranty costs driven by increased retail dealer service work, product mix, and recent periods of elevated sales, which negatively impacted operating profit by $17.6 million.

•Sales mix increase of lower margin products from recent acquisitions and related integration costs, which negatively impacted operating profit by $14.2 million.

•Higher production facility costs resulting from previous investments to expand capacity, which reduced operating profit by $14.1 million.

•Inventory cost and reserve related charges of $10.8 million.

•Additional amortization related to intangible assets from acquisitions completed in the last twelve months, which reduced operating profit by $9.7 million.

Amortization expense on intangible assets for the OEM Segment was $41.3 million in 2022, compared to $32.9 million in 2021. Depreciation expense on fixed assets for the OEM Segment was $58.2 million in 2022, compared to $50.8 million in 2021.

Aftermarket Segment

Net sales of the Aftermarket Segment in 2022 increased 8 percent, or $62.2 million, compared to 2021. Net sales of components in the Aftermarket Segment were as follows for the years ended December 31:

Our net sales to the Aftermarket Segment increased during 2022 primarily due to net sales from acquisitions completed in 2022 and 2021, which contributed approximately $63.4 million.

Operating profit of the Aftermarket Segment was $73.9 million in 2022, a decrease of $19.9 million compared to 2021. The operating profit margin of the Aftermarket Segment was 8.3 percent in 2022, compared to 11.3 percent in 2021, and was negatively impacted by:

•Increases in material commodity costs and production supplies, which negatively impacted operating profit by $78.6 million, primarily related to increased steel and aluminum costs.

•The impact of fixed costs on reduced organic volumes, which decreased operating profit by $19.5 million related to fixed selling, general, and administrative costs and $7.8 million related to fixed overhead costs.

•Investments in marketing costs and administrative structure of $12.0 million.

•Increases in production labor costs due to production volumes and a tight labor market, which reduced operating profit by $10.7 million.

•Increases in transportation costs, primarily for third-party freight, which reduced operating profit by $7.3 million.

•Higher production facility costs in the current period resulting from investments to expand capacity over the past year, which reduced operating profit by $4.5 million in the current period.

•Inventory cost and reserve related charges of $3.9 million.

Partially offset by:

•Pricing changes to targeted products, resulting in an increase in operating profit of $109.0 million compared to 2021.

•Sales mix increase of higher margin products from the acquisition of Furrion, which positively impacted operating profit by $9.4 million.

Amortization expense on intangible assets for the Aftermarket Segment was $15.1 million in 2022, compared to $14.7 million in 2021. Depreciation expense on fixed assets for the Aftermarket Segment was $14.7 million in 2022, compared to $13.9 million in 2021.

Provision for Income Taxes

The effective income tax rate for 2022 was 24.8 percent compared to 24.7 percent in 2021. The effective tax rate of 24.8 percent for the full-year 2022 was higher than the prior year, primarily due to a decrease in the excess tax benefit related to the vesting of equity-based compensation awards, a decrease in the cash surrender value of life insurance, and a discrete tax

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expense for an acquisition-related tax election, partially offset by a decrease in non-deductible executive compensation expenses. We estimate the 2023 effective income tax rate to be approximately 24 to 26 percent.

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 December 31, 2022, we had $47.5 million in cash and cash equivalents, and $306.5 million of availability under our revolving credit facility. 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 certain other conditions. See Note 9 of the Notes to Consolidated Financial Statements for a description of our credit facilities.

We believe the availability under the revolving credit facility under the Credit Agreement (as defined in Note 9 of the Notes to Consolidated Financial Statements), along with our cash flows from operations, are adequate to finance our anticipated cash requirements for the next twelve months.

The Consolidated Statements of Cash Flows reflect the following for the years ended December 31:

Discussion - Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

Cash Flows from Operations

Net cash flows provided by operating activities were $602.5 million in 2022, compared to cash used in operating activities of $111.6 million in 2021. This change was primarily due to changes in net assets and liabilities, net of acquisitions of businesses, which generated $603.4 million more cash than in 2021. During 2021, in an effort to address challenges with supply chain constraints, rising material costs, and a tightened labor market, we strategically managed working capital, including intentionally building up levels of certain inventory items and expanding production capacity, resulting in the use of cash in 2021. As a result of declining sales volumes and actions taken in the second half of 2022, decreases in inventory of $117.4 million and in receivables related to decreased wholesale RV demand of $115.7 million were the primary providers of cash generated from net assets in 2022. The increase was also assisted by a $110.7 million increase in net income, adjusted for depreciation and amortization, stock-based compensation expense, deferred taxes, and other non-cash items.

Over the long term, based on our historical collection and payment patterns, as well as inventory turnover, and also giving consideration to emerging trends and changes to the sales mix, we expect working capital to increase or decrease equivalent to approximately 10 to 15 percent of the increase or decrease, respectively, in net sales. However, there are many factors that can impact this relationship, especially in the short term.

Depreciation and amortization was $129.2 million and $112.3 million in 2022 and 2021, respectively, and is expected to be approximately $130 to $140 million in 2023. Non-cash stock-based compensation expense was $23.7 million and $27.2 million in 2022 and 2021, respectively, and is expected to be approximately $25 to $30 million in 2023.

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Cash Flows from Investing Activities

Cash flows used in investing activities of $241.8 million in 2022 were primarily comprised of $130.6 million for capital expenditures and $108.5 million for the acquisition of businesses. Cash flows used in investing activities of $281.2 million in 2021 were primarily comprised of $194.1 million for the acquisition of businesses and $98.5 million for capital expenditures. This increase in capital expenditures in 2022 was primarily due to increased investments in growth and automation projects of $30.3 million.

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 2023 capital expenditures of $80 to $100 million, including investments in automation and lean projects, which we expect to fund with cash flows from operations or periodic borrowings under the revolving credit facility as needed.

The 2022 capital expenditures and acquisitions were funded by cash generated from operations and borrowings under our Credit Agreement. Capital expenditures and acquisitions in 2023 are expected to be funded primarily from cash generated from operations, as well as periodic borrowings under our revolving credit facility.

Cash Flows from Financing Activities

Cash flows used in financing activities in 2022 were primarily comprised of:

•$105.3 million in net payments under our revolving credit facility;

•payments of quarterly dividends of $102.7 million;

•$73.0 million in repayments under our shelf loan, term loan, and other borrowings;

•$60.2 million in payments of contingent consideration and holdbacks related to acquisitions;

•$24.1 million in repurchases of common stock; and

•cash outflows of $11.0 million related to vesting of stock-based awards, net of shares tendered for payment of taxes.

Cash flows provided by financing activities in 2021 were primarily comprised of:

•proceeds from the issuance of the convertible notes and warrants, net of debt issuance costs and call option contracts of $396.6 million;

•$124.2 million in borrowings under the term loan; and

•$22.0 million in net borrowings under our revolving credit facility.

Partially offset by:

•payments of quarterly dividends of $87.2 million;

•$22.8 million in payments of contingent consideration and holdbacks related to acquisitions;

•$21.5 million in repayments under the term loan and other borrowings; and

•cash outflows of $8.3 million related to vesting of stock-based awards, net of shares tendered for payment of taxes.

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. At December 31, 2022, we were in compliance with all such requirements, and we expect to remain in compliance for the next twelve months.

We have paid regular quarterly dividends since 2016. Future dividend policy with respect to our common stock will be determined by our Board of Directors in light of our prevailing financial needs, earnings, and other relevant factors, including any limitations in our debt agreements, such as maintenance of certain financial ratios. In 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. Under this stock repurchase program, we purchased 253,490 shares at a weighted average price of $94.89 per share, totaling $24.1 million, during the year ended December 31, 2022. No shares were repurchased during the year ended December 31, 2021. See Note 13 of the Notes to Consolidated Financial Statements for additional information related to our dividend and share repurchase programs.

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Future Cash Requirements

The following table summarizes our material estimated future cash requirements under our contractual obligations for indebtedness and operating leases at December 31, 2022, in total and disaggregated into current (payable in 2023) and long-term (payable after 2023) obligations.

a.See Note 9 of the Notes to Consolidated Financial Statements for additional information regarding the maturities of debt principal. Interest payments on our indebtedness are calculated using the outstanding balances and interest rates in effect on December 31, 2022.

b.See Note 11 of the Notes to Consolidated Financial Statements for additional information regarding the maturity of our lease obligations under operating leases. Our finance leases were not material at December 31, 2022.

Retirement and Other Benefit Plans

We consider various factors when making funding decisions, such as regulatory requirements, actuarially determined minimum contribution requirements, and contributions required to avoid benefit restrictions for defined benefit pension plans. For the year ended December 31, 2022, we contributed $1.6 million to our Dutch pension plans assumed with the acquisition of Polyplastic Group B.V. and made discretionary matching contributions of $12.9 million to our defined contribution 401(k) profit sharing plan. We anticipate making minimum required contributions of approximately $0.7 million to our Dutch pension plans in 2023 following curtailment of the plans at the end of 2022. We also expect to make matching contributions to our defined contribution 401(k) profit sharing plan in 2023 at a level similar to 2022; however, these contributions are discretionary and subject to change. See Note 8 of the Notes to Consolidated Financial Statements for further information related to our retirement and other benefit plans.

Holdback Payments

With certain business acquisitions, we hold back purchase consideration for the purposes of working capital adjustments, indemnity claims, and other items, as defined in each respective purchase agreement. At December 31, 2022, we had current holdback payments accrued of $33.5 million related to certain acquisitions completed in 2022 and 2021. The ultimate cash settlement amounts of these holdback accruals are subject to change based on various factors defined in the respective purchase agreements. See Note 4 of the Notes to Consolidated Financial Statements for further information related to these holdback payments.

CORPORATE GOVERNANCE

We are in compliance with the corporate governance requirements of the SEC and the New York Stock Exchange. Our governance documents and committee charters and key practices have been posted to 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 the Company’s 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

Additional information required by this item is included under Item 3 of Part I of this Annual Report on Form 10-K.

CRITICAL ACCOUNTING ESTIMATES

Our Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which requires certain estimates and assumptions to be made that affect the amounts and disclosures reported in those financial statements and the related accompanying notes. Actual results could differ from these estimates and assumptions. While our significant accounting policies are more fully described in Note 2 of the Notes to

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Consolidated Financial Statements, the following discussion addresses our most critical accounting estimates, which are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations. Management has discussed the development and selection of its critical accounting estimates with the Audit Committee of the Company’s Board of Directors and the Audit Committee has reviewed the disclosure presented below relating to the critical accounting estimates.

Warranty

We provide warranty terms based upon the type of product sold. We estimate the warranty accrual based upon various factors, including historical warranty costs, warranty claim lag, and sales. The accounting for warranty accruals requires us to make assumptions and judgments, and to the extent actual results differ from original estimates, adjustments to recorded accruals may be required. In 2022, we experienced an increase in claims paid year-over-year, which grew at a higher rate than the growth in net sales. We believe the unfavorable trend in relation to net sales is the result of retail dealers seeking service work as retail sales of RVs slowed in the second half of 2022, and as a result of higher warranty claims on new appliance product offerings from recent acquisitions. Despite these unfavorable trends, warranty claim lag time has continued to decline as we focus on addressing warranty claims promptly, which favorably impacts our warranty reserves. For further information on our warranty accrual, including a roll-forward of changes in the accrual, see Note 7 of the Notes to Consolidated Financial Statements.

Fair Value of Intangible Assets of Acquired Businesses

We value the intangible assets associated with the acquisitions of businesses on the respective acquisition dates. Depending upon the type of intangible asset acquired, we use different valuation techniques in determining the fair value. Those techniques include comparable market prices, long-term sales, profitability and cash flow forecasts, assumptions regarding future industry-specific economic and market conditions and a market participant’s weighted average cost of capital, as well as other techniques as circumstances require. By their nature, these assumptions require judgment, and if management had chosen different assumptions, the fair value of intangible assets of acquired businesses would have been different. For further information on acquired intangible assets, see Note 4 of the Notes to Consolidated Financial Statements.

New Accounting Pronouncements

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

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 elevated prices of these commodities in 2022, and we expect commodity prices to remain elevated in 2023. Prices of these commodities have historically been volatile, and over the past few months prices have continued to fluctuate. Please see "Results of Operations" above for additional information regarding the impact of raw material costs on our results of operations for the year ended December 31, 2022.

As a result of the competitive labor market and strong demand for our products, we experienced increased labor costs in 2022 attributable to higher wages and increased overtime and additional shifts for our team members, and we expect labor costs to normalize in 2023. Please see "Results of Operations" above for additional information regarding the impact of labor costs on our results of operations for the year ended December 31, 2022.

Item 7.    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 our Consolidated Financial Statements and Notes thereto included in Part II, Item 8 of this Report.

This Management's Discussion and Analysis of Financial Condition and Results of Operations generally discusses 2021 and 2020 items and year-over-year comparisons between 2021 and 2020. A detailed discussion of 2019 items and year-over-year comparisons between 2020 and 2019 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021.

The Company, through its wholly-owned subsidiary, LCI, supplies, domestically and internationally, a broad array of engineered components for the leading OEMs in the recreation and transportation product markets, consisting of RVs and adjacent industries including buses; trailers used to haul boats, livestock, equipment and other cargo; trucks; boats; 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.

We have two reportable segments, the OEM Segment and the Aftermarket Segment. At December 31, 2021, we operated over 120 manufacturing and distribution facilities located throughout North America and Europe.

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Net sales and operating profit were as follows for the years ended December 31:

Corporate expenses are allocated between the segments based upon net sales.

Net sales and operating profit by segment, as a percent of the total, were as follows for the years ended December 31:

Operating profit margin by segment was as follows for the years ended December 31:

Operating profit margins in 2020 were negatively impacted by government-mandated shutdowns related to the COVID-19 pandemic from late March through early May 2020, that caused a significant reduction in net sales while still incurring certain employee salary and wages, healthcare and safety expenses, and other fixed costs.

Our OEM Segment manufactures and distributes a broad array of engineered components for the leading OEMs of RVs and adjacent industries, including buses; trailers used to haul boats, livestock, equipment and other cargo; trucks; boats;

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trains; manufactured homes; and modular housing. Approximately 63 percent of our OEM Segment net sales for the year ended December 31, 2021 were of components for travel trailer and fifth-wheel RVs, including:

The Aftermarket Segment supplies many of these engineered components to the related aftermarket channels of the recreation and transportation product markets, primarily to retail dealers, wholesale distributors, and service centers, 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, and the sale of replacement glass and awnings to fulfill insurance claims.

Diversification Strategy

We are executing a strategic initiative to diversify the markets we serve away from the historical concentration within the North American RV OEM industry. Approximately 47 percent of net sales for the year ended December 31, 2021 were generated outside of the North American RV OEM market compared to 50 percent in 2020. The percentage of net sales generated outside of the North American RV OEM market in 2021 declined compared to the 2020 percentage due to record demand in the North American RV OEM market, which more than offset our diversification efforts. Over the past three years, most of our acquisitions have contributed to net sales growth outside of the North American RV OEM industry.

Impact of COVID-19

The COVID-19 pandemic has caused significant uncertainty and disruption in the global economy and financial markets. The COVID-19 pandemic had an adverse effect on our financial results during the first half of 2020 due to government-mandated plant shutdowns. We took a variety of actions during 2020 to help mitigate the adverse impacts, including temporary cost savings measures and delays and reductions in capital expenditures.

Activity in most of the end markets we serve sequentially improved as 2020 progressed, and this trend continued through 2021, especially in the RV and marine OEM markets and our Aftermarket Segment. With RV retail demand at record levels throughout 2021, the industry faced challenges with supply chain constraints, rising material costs, increased transportation costs, primarily for third party freight, and increases in direct labor costs due to higher production volumes and a tightened labor market, especially in northern Indiana. To address these challenges, we strategically managed working capital, including intentionally building up levels of certain inventory items to avoid future shortages. We continue to focus on our culture and leadership development programs to focus on team member retention and regularly hold hiring events, with COVID-19 safety measures, to fill open positions. As we build inventory levels and invest in additional production capacity, we also closely monitor our liquidity, and may need to seek additional financing, though such additional financing may not be available on terms favorable to us, or at all. See "Liquidity and Capital Resources" below for further discussion.

The health and safety of our team members have remained our top priority. We continue to maintain rigorous health and safety protocols. We leased a location to provide drive-thru rapid COVID-19 tests for our team members in northern Indiana. We have encouraged team members to seek vaccination when eligible and partnered with a local hospital to host private vaccination days for our eligible northern Indiana team members and their families.

We continue to closely monitor the impact of COVID-19 on all aspects of our business. For risks relating to the COVID-19 pandemic, see Item 1A. "Risk Factors" in Part I of this Report.

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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. The seasonality of the RV industry has been, and will likely continue to be, impacted by the COVID-19 pandemic, and the timing of a return to historical seasonality is not possible to predict at this time.

According to the RVIA, industry-wide wholesale shipments from the United States of travel trailer and fifth-wheel RVs, the Company's primary RV market, increased 40 percent to 531,200 units in 2021, compared to 2020, primarily due to increased retail demand and dealers rebuilding inventory levels. Retail demand for travel trailer and fifth-wheel RVs increased 10 percent in 2021 compared to 2020. 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:

According to the RVIA, industry-wide wholesale shipments of motorhome RVs in 2021 increased 38 percent to 56,200 units compared to 2020, primarily due to OEM plant shutdowns in response to COVID-19 in 2020. Retail demand for motorhome RVs increased 4 percent in 2021, compared to a 2 percent decrease in retail demand in 2020.

Adjacent Industries

Our portfolio of products used in RVs can also be used in other applications, including buses; trailers used to haul boats, livestock, equipment, and other cargo; trucks; boats; trains; manufactured homes; and modular housing (collectively, "Adjacent Industries"). 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.

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

•Enclosed trailers. According to Statistical Surveys, approximately 233,100, 231,100, and 220,400 enclosed trailers were sold in 2021, 2020, and 2019, respectively.

•Traditional power boats. Statistical Surveys also reported approximately 214,200, 231,400, and 202,500 traditional power boats were sold in 2021, 2020, and 2019, respectively. Traditional power boats include bass, deck, jet, pontoon, ski-wake, and other boats. Included in this total, Statistical Surveys reported approximately 64,400, 67,500, and 55,200 pontoon boats were sold in 2021, 2020, and 2019, respectively.

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•School buses. According to School Bus Fleet, there were approximately 30,600, 36,000, and 44,400 school buses sold in 2021, 2020, and 2019, respectively.

•Manufactured housing. According to the Institute for Building Technology and Safety, there were approximately 105,800, 94,400, and 94,600 manufactured home wholesale shipments in 2021, 2020, and 2019, respectively.

Aftermarket Segment

Many of our OEM Segment products are also sold through various aftermarket channels of the recreation and transportation product 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 both 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, and the sale of replacement glass and awnings to fulfill insurance claims. Many of the optional upgrades and non-critical replacements for RVs are purchased outside the normal product selling seasons, thereby causing certain Aftermarket Segment sales to be counter-seasonal, but this has been, and may in the future be, different as a result of the COVID-19 pandemic and related impacts.

According to Go RVing, estimated RV ownership in the United States as of 2020 had increased to over 11 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.

In December 2019, we acquired CURT, a leading manufacturer and distributor of branded towing products and truck accessories for the aftermarket. Our CURT products are sold to the automotive and truck aftermarket, as well as the RV, marine, and trailer markets, all of which require towing products, which we believe compliments the OEM markets we serve. Sales from CURT products accounted for approximately half of our Aftermarket Segment net sales in each of 2021 and 2020. CURT sold 1.2 million hitches in both 2021 and 2020. Additionally, with the acquisition of Ranch Hand in April 2021, we continued to expand our product offering to include custom bumpers, grill guards, and steps for the automotive aftermarket.

RESULTS OF OPERATIONS

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

Consolidated Summary

•Consolidated net sales for the full-year 2021 were $4.5 billion, 60 percent higher than consolidated net sales for the full-year 2020 of $2.8 billion. The increase in year-over-year net sales was primarily driven by record RV retail demand and strong Aftermarket Segment sales growth. Net sales from acquisitions completed in 2020 and 2021, primarily Furrion, Veada Industries, Inc., and Challenger Door LLC, contributed approximately $269.9 million in 2021.

•Net income for the full-year 2021 increased 81.6 percent to $287.7 million, or $11.32 per diluted share, compared to net income of $158.4 million, or $6.27 per diluted share, for full-year 2020.

•Consolidated operating profit during 2021 was $398.4 million compared to $222.9 million in 2020. Operating profit margin was 8.9 percent in 2021 compared to 8.0 percent in 2020, primarily due to leveraging fixed costs over higher sales volumes, partially offset by increased raw material, labor, and freight costs.

•The cost of aluminum and steel used in certain of the Company's manufactured components increased in 2021 compared to 2020. Raw material costs are subject to continued fluctuation and are being offset, in part, by contractual selling prices that are indexed to select commodities.

•The increase in selling, general and administrative costs of $161.5 million in 2021 was primarily driven by increases in transportation costs of $60.5 million, due to higher volumes and rising freight costs, increases in personnel costs of $39.5 million, incremental costs from recent acquisitions of $25.9 million, and incremental amortization of intangible assets from acquired businesses of $12.5 million in 2021 compared to 2020.

•The effective tax rate of 24.7 percent for the full-year 2021 was higher than the prior year, primarily due to an increase in non-deductible expenses, as discussed below under "Provision for Income Taxes."

•In 2021, we paid quarterly dividends aggregating $3.45 per share, or $87.2 million.

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OEM Segment

Net sales of the OEM Segment in 2021 increased 68 percent, or $1.5 billion, compared to 2020. Net sales of components to OEMs were to the following markets for the years ended December 31:

According to the RVIA, industry-wide wholesale shipments for the years ended December 31 were:

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 December 31, divided by the industry-wide wholesale shipments of the different product mix of RVs for the same period, was:

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 market share gains, acquisitions, new product introductions, and changes in selling prices for our products, as well as changes in the types of RVs produced industry-wide.

Our increase in net sales to RV OEMs of travel trailers, fifth-wheel, and motorhome components during 2021 was primarily driven by a recovery in RV retail demand beginning later in the second quarter of 2020 and continuing through 2021. The net sales increase further benefited from content gains and price increases during 2021.

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

Operating profit of the OEM Segment was $304.7 million in 2021, an increase of $148.6 million compared to 2020, of which $106.3 million was driven by volume increases. The operating profit margin of the OEM Segment increased to 8.4 percent in 2021 compared to 7.2 percent in 2020 and was positively impacted by:

•Selling prices contractually tied to indexes of select commodities increased, resulting in an increase in operating profit of $207.7 million compared to 2020.

•Pricing changes to targeted products, resulting in an increase in operating profit of $128.9 million compared to 2020.

•Leveraging of fixed costs over an increased sales base in 2021, which increased operating profit by $71.7 million related to fixed selling, general and administrative costs and $28.4 million related to fixed overhead costs.

Partially offset by:

•Increases in material commodity pricing, which negatively impacted operating profit by $306.2 million, primarily related to increased steel and aluminum costs.

•Increases in direct labor costs due to higher production volumes and a tight labor market, which reduced operating profit by $36.1 million.

•Increases in transportation costs, primarily for third party freight, which reduced operating profit by $17.5 million.

•Additional amortization related to intangible assets from acquisitions completed in 2021 and 2020, which reduced operating profit by $9.8 million.

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Aftermarket Segment

Net sales of the Aftermarket Segment in 2021 increased 32 percent, or $200.8 million, compared to 2020. Net sales of components in the Aftermarket Segment were as follows for the years ended December 31:

Our net sales to the Aftermarket Segment increased during 2021 primarily due to organic growth of $149.0 million and net sales from acquisitions completed in 2021 and 2020, which contributed approximately $51.8 million.

Operating profit of the Aftermarket Segment was $93.7 million in 2021, an increase of $26.9 million compared to 2020, of which $21.3 million was due to the growth in sales primarily driven by sales from organic growth and the impact of COVID-19 in 2020. The operating profit margin of the Aftermarket Segment was 11.3 percent in 2021, compared to 10.6 percent in 2020, and was positively impacted by:

•Pricing changes to targeted products, resulting in an increase in operating profit of $31.7 million compared to 2020.

•Leveraging of fixed costs over an increased sales base in 2021, which increased operating profit by $16.1 million related to fixed selling, general and administrative costs and $9.9 million related to fixed overhead costs.

•The recognition of higher cost of sales during 2020, due to the inventory fair value step-up for CURT of $7.3 million.

Partially offset by:

•Increases in material commodity pricing and production supplies, which negatively impacted operating profit by $31.1 million, primarily related to increased steel and aluminum costs.

•Increases in transportation costs, primarily for third party freight, which reduced operating profit by $15.4 million.

•Increases in direct labor costs due to higher production volumes and a tight labor market, which reduced operating profit by $7.6 million.

Provision for Income Taxes

The effective income tax rate for 2021 was 24.7 percent compared to 24.4 percent in 2020. The effective tax rate of 24.7 percent for the full-year 2021 was higher than the prior year, primarily due to a year-over-year increase in non-deductible items related to executive compensation limitations, partially offset by discrete adjustments. We estimate the 2022 effective income tax rate to be approximately 24 to 26 percent.

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, and future investments or acquisitions. 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 December 31, 2021, we had $62.9 million in cash and cash equivalents, and $168.3 million of availability on our revolving credit facility. Additionally, we have the ability to request up to $150.0 million in additional Senior Promissory Notes be purchased by Prudential under our Shelf-Loan Facility (each as defined in Note 9 of the Notes to Consolidated Financial Statements), subject to Prudential's approval. We also have the ability to request an increase to the revolving and/or incremental term loan facility by up to an additional $400.0 million in the aggregate upon approval of the lenders and certain other consents. See Note 9 of the Notes to Consolidated Financial Statements for a description of our credit facilities.

We believe the availability under the revolving credit facility under the Amended Credit Agreement (as defined in Note 9 of the Notes to Consolidated Financial Statements), along with our cash flows from operations, are adequate to finance our anticipated cash requirements for the next twelve months.

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The Consolidated Statements of Cash Flows reflect the following for the years ended December 31:

Discussion - Year Ended December 31, 2021 Compared to Year Ended December 31, 2020

Cash Flows from Operations

Net cash flows used in operating activities were $111.6 million in 2021, compared to cash provided by operating activities of $231.4 million in 2020. This change was primarily due to changes in net assets and liabilities, net of acquisitions of businesses, which used $498.7 million more cash than in 2020. During 2021, in an effort to address challenges with supply chain constraints, rising material costs, and a tightened labor market, we strategically managed working capital, including intentionally building up levels of certain inventory items and expanding production capacity. As a result, increases in inventory of $516.7 million and in receivables related to increased wholesale RV demand of $58.8 million were the primary uses of cash generated from net assets. The decrease was partially offset by a $155.8 million increase in net income, adjusted for depreciation and amortization, stock-based compensation expense, deferred taxes, and other non-cash items.

Over the long term, based on our historical collection and payment patterns, as well as inventory turnover, and also giving consideration to emerging trends and changes to the sales mix, we expect working capital to increase or decrease equivalent to approximately 10 to 15 percent of the increase or decrease, respectively, in net sales. However, there are many factors that can impact this relationship, especially in the short term.

Depreciation and amortization was $112.3 million and $98.0 million in 2021 and 2020, respectively, and is expected to be approximately $140 to $150 million in 2022. Non-cash stock-based compensation expense was $27.2 million and $18.5 million in 2021 and 2020, respectively, and is expected to be approximately $25 to $30 million in 2022.

Cash Flows from Investing Activities

Cash flows used in investing activities of $281.2 million in 2021 were primarily comprised of $194.1 million for the acquisition of businesses and $98.5 million for capital expenditures. Cash flows used in investing activities of $232.3 million in 2020 were primarily comprised of $182.1 million for the acquisition of businesses and $57.3 million for capital expenditures. This increase in capital expenditures was primarily due to increased maintenance and replacement investments of $25.8 million as well as increased investments in automation projects of $15.4 million.

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 2022 capital expenditures of $130 to $150 million, including capacity expansions to meet elevated demand, which we expect to fund with cash flows from operations or periodic borrowings under the revolving credit facility as needed.

The 2021 capital expenditures and acquisitions were funded by cash borrowings under our credit agreement, and net proceeds from the issuance of our 1.125 percent convertible senior notes due 2026 (the "Convertible Notes"). Capital expenditures and acquisitions in 2022 are expected to be funded primarily from cash generated from operations, as well as periodic borrowings under our revolving credit facility.

Cash Flows from Financing Activities

Cash flows provided by financing activities in 2021 were primarily comprised of:

•proceeds from the issuance of the Convertible Notes and warrants to purchase 2.8 million shares of the Company's common stock (the "Warrants"), net of debt issuance costs, and from the privately negotiated call option contracts on the Company's common stock (the "Convertible Note Hedge Transactions") of $396.6 million.

•$124.2 million in borrowings under the term loan.

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•$22.0 million in net borrowings under our revolving credit facility.

Partially offset by:

•payments of quarterly dividends of $87.2 million;

•$22.8 million in payments of contingent consideration and holdbacks related to acquisitions;

•$21.5 million in repayments under the term loan and other borrowings; and

•cash outflows of $8.3 million related to vesting of stock-based awards, net of shares tendered for payment of taxes.

On May 13, 2021, we issued $460.0 million in aggregate principal amount of the Convertible Notes in a private placement to certain qualified institutional buyers, resulting in net proceeds to us of approximately $447.8 million after deducting initial purchasers' discounts and offering expenses payable by us on the Convertible Notes. In connection with the issuance of the Convertible Notes, we entered into the Convertible Note Hedge Transactions and transactions related to the issuance of warrants (the "Warrant Transactions"). We used approximately $51.6 million of the net proceeds of the offering of the Convertible Notes to pay the $100.1 million cost of the Convertible Note Hedge Transactions (after such cost was partially offset by the $48.5 million of proceeds from the Warrant Transactions). The remainder of the net proceeds from the Convertible Notes were used to repay outstanding borrowings under our revolving credit facility, and for general corporate purposes. See Note 3 and Note 9 to the Notes to Consolidated Financial Statements for further description of these transactions.

Cash flows provided by financing activities in 2020 primarily included net borrowings on the revolving credit facility of $113.6 million, partially offset by the payment of dividends to stockholders of $70.4 million, and repayments under our term loan and other borrowings of $22.4 million.

The Amended Credit Agreement and Shelf-Loan Facility include both financial and non-financial covenants. The covenants dictate that we shall not permit our net leverage ratio to exceed certain limits, shall maintain a minimum debt service coverage ratio, and must meet certain other financial requirements. At December 31, 2021, we were in compliance with all such requirements, and we expect to remain in compliance for the next twelve months.

We have paid regular quarterly dividends since 2016. Future dividend policy with respect to our common stock will be determined by our Board of Directors in light of our prevailing financial needs, earnings, and other relevant factors, including any limitations in our debt agreements, such as maintenance of certain financial ratios. In October 2018, our Board of Directors authorized a stock repurchase program which expired in October 2021. No shares were repurchased during the years ended December 31, 2021 and 2020. See Note 13 of the Notes to Consolidated Financial Statements for additional information related to our dividend and share repurchase programs.

Future Cash Requirements

The following table summarizes our material estimated future cash requirements under our contractual obligations for indebtedness and operating leases at December 31, 2021, in total and disaggregated into current (payable in 2022) and long-term (payable after 2022) obligations.

a.See Note 9 of the Notes to Consolidated Financial Statements for additional information regarding the maturities of debt principal. Interest payments on our indebtedness are calculated using the outstanding balances and interest rates in effect on December 31, 2021.

b.See Note 11 of the Notes to Consolidated Financial Statements for additional information regarding the maturity of our lease obligations under operating leases. Our finance leases were not material at December 31, 2021.

Retirement and Other Benefit Plans

We consider various factors when making funding decisions, such as regulatory requirements, actuarially determined minimum contribution requirements, and contributions required to avoid benefit restrictions for defined benefit pension plans. For the year ended December 31, 2021, we contributed $1.4 million to our Dutch pension plans assumed with the acquisition of

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Polyplastic Group B.V., and made discretionary matching contributions of $11.6 million to our defined contribution 401(k) profit sharing plan. We anticipate making minimum required contributions of $1.4 million to our Dutch pension plans in 2022. We also expect to make matching contributions to our defined contribution 401(k) profit sharing plan in 2022 at a level similar to 2021; however, these contributions are discretionary and subject to change. See Note 8 of the Notes to Consolidated Financial Statements for further information related to our retirement and other benefit plans.

Holdback Payments and Contingent Consideration

With certain business acquisitions, we hold back purchase consideration for the purposes of working capital adjustments, indemnity claims, and other items, as defined in each respective purchase agreement. At December 31, 2021, we had current holdback payments accrued of $34.0 million and long-term holdback payments accrued of $31.0 million related to certain acquisitions completed in 2021 and 2020. The ultimate cash settlement amounts of these holdback accruals are subject to change based on various factors defined in the respective purchase agreements.

In connection with certain business acquisitions, we agree that if certain sales targets for the acquired products are achieved, we will pay additional cash consideration. We record a liability for the fair value of this contingent consideration based on the present value of the expected future cash flows using a market participant's weighted average cost of capital. At December 31, 2021, we had current contingent consideration accrued of $5.0 million and long-term contingent consideration accrued of $1.9 million. The ultimate cash settlement amounts of these contingent consideration arrangements are subject to change based on the level of attainment of the performance targets in the respective agreements.

See Note 4 and Note 12 of the Notes to Consolidated Financial Statements for further information related to these holdback payments and contingent consideration.

Deferred Social Security Payments Under the CARES Act

In 2020, we elected to defer employer-side Social Security payments under provisions of the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). We deferred $18 million of payments in 2020 under the CARES Act and paid $9 million of deferred Social Security taxes in 2021 and will pay $9 million in 2022.

CORPORATE GOVERNANCE

We are in compliance with the corporate governance requirements of the SEC and the New York Stock Exchange. Our governance documents and committee charters and key practices have been posted to 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 the Company’s 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

Additional information required by this item is included under Item 3 of Part I of this Annual Report on Form 10-K.

CRITICAL ACCOUNTING ESTIMATES

Our Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which requires certain estimates and assumptions to be made that affect the amounts and disclosures reported in those financial statements and the related accompanying notes. Actual results could differ from these estimates and assumptions. While our significant accounting policies are more fully described in Note 2 of the Notes to Consolidated Financial Statements, the following discussion addresses our most critical accounting estimates, which are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations. Management has discussed the development and selection of its critical accounting estimates with the Audit Committee of the Company’s Board of Directors and the Audit Committee has reviewed the disclosure presented below relating to the critical accounting estimates.

Warranty

We provide warranty terms based upon the type of product sold. We estimate the warranty accrual based upon various factors, including historical warranty costs, warranty claim lag, and sales. The accounting for warranty accruals requires us to

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make assumptions and judgments, and to the extent actual results differ from original estimates, adjustments to recorded accruals may be required. In 2021, we experienced an increase in claims paid year-over-year, but at a much lower rate than the growth in net sales. We believe the favorable trend in relation to net sales is the result of concentrated efforts related to product quality and customer service. Additionally, the increase in RV retail demand has shortened our warranty claim lag time, which favorably impacts our warranty reserves. For further information on our warranty accrual, including a roll-forward of changes in the accrual, see Note 7 of the Notes to Consolidated Financial Statements.

Fair Value of Intangible Assets of Acquired Businesses

We value the intangible assets associated with the acquisitions of businesses on the respective acquisition dates. Depending upon the type of intangible asset acquired, we use different valuation techniques in determining the fair value. Those techniques include comparable market prices, long-term sales, profitability and cash flow forecasts, assumptions regarding future industry-specific economic and market conditions and a market participant’s weighted average cost of capital, as well as other techniques as circumstances require. By their nature, these assumptions require judgment, and if management had chosen different assumptions, the fair value of intangible assets of acquired businesses would have been different. For further information on acquired intangible assets, see Note 4 of the Notes to Consolidated Financial Statements.

New Accounting Pronouncements

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

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 elevated prices of these commodities in 2021, and we expect commodity prices to remain elevated in 2022. Prices of these commodities have historically been volatile, and over the past few months prices have continued to fluctuate. Please see "Results of Operations" above for additional information regarding the impact of raw material costs on our results of operations for the year ended December 31, 2021.

As a result of the competitive labor market and strong demand for our products, we experienced increased labor costs in 2021 attributable to higher wages and increased overtime and additional shifts for our team members, and we expect labor costs to remain elevated in 2022. Please see "Results of Operations" above for additional information regarding the impact of labor costs on our results of operations for the year ended December 31, 2021.