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Lci Industries (LCII)

Business Summary

LCI Industries is a global leader in supplying engineered components to the outdoor recreation, transportation, marine, and housing industries. The company serves original equipment manufacturers (OEMs) and aftermarket needs through retail dealers, wholesale distributors, service centers, and direct-to-consumer sales via online platforms. Operations are global, supporting a diverse customer base across North America and Europe. The RV industry generally follows a predictable annual sales cycle, with sales and profits typically highest in the second quarter and lowest in the fourth quarter. The company operates in two primary segments: OEM and Aftermarket.

The industry is highly competitive, with competition based on product quality and reliability, product innovation, price, and customer service and satisfaction. Primary competitors are numerous, and barriers to entry are generally low, though compliance with industry standards and initial capital investments are necessary. The company believes its competitive edge lies in product quality, reliability, innovation, price, and customer service. It holds leading market shares across key product categories and is actively gaining share in critical markets through investment in innovation and operational excellence. Key customers include Berkshire Hathaway Inc. (through its subsidiaries Forest River, Inc. and Clayton Homes, Inc.), which accounted for 18% of consolidated net sales in 2025, and Thor Industries, Inc., which accounted for 15% of consolidated net sales in 2025.

The company generates revenue through two reportable segments: OEM and Aftermarket. The OEM Segment manufactures and distributes engineered components for leading OEMs in RV, transportation, marine, and housing markets. The Aftermarket Segment supplies discretionary accessories, replacement parts, and upgrades to the RV, transportation, marine, and automotive markets. Revenue is recognized when control of products transfers to customers, typically upon shipment. The company also generates recurring revenue through the Aftermarket Segment, which deepens customer engagement and leverages OEM expertise.

The OEM Segment contributed 77% of consolidated net sales and 66% of consolidated operating profit in 2025. Within the OEM Segment, sales to RV OEMs were $1.9 billion , representing 61% of OEM Segment net sales. Sales to adjacent industries OEMs were $1.2 billion , representing 39% of OEM Segment net sales. Key product categories include chassis and slide-out mechanisms, windows and doors, furniture and mattresses, axles and suspension solutions, and appliances. The Aftermarket Segment contributed 23% of consolidated net sales and 34% of consolidated operating profit in 2025. Aftermarket net sales totaled $932.4 million in 2025. Products from subsidiary CURT Manufacturing LLC contributed approximately half of Aftermarket sales in both 2025 and 2024. CURT sold 907,000 hitches in 2025, down from 1,061,000 in 2024.

In 2025, the company completed four acquisitions for an aggregate of $112.7 million of cash purchase consideration. Aggregate net sales for the companies acquired were approximately $194 million for the twelve months preceding the respective acquisition. In April 2025, the company acquired Freedman Seating Company for total fair value consideration of approximately $76.8 million . The company also completed three other acquisitions totaling $43.3 million of cash purchase consideration. In March 2025, the company issued $460.0 million in aggregate principal amount of 3.000% convertible senior notes due 2030 (the "2030 Convertible Notes"). The company repurchased $368.0 million aggregate principal amount of its 1.125% convertible senior notes due 2026 (the "2026 Convertible Notes"). In 2025, the company returned an aggregate of $242.6 million to shareholders, including through share repurchases of $128.6 million and quarterly dividends aggregating $4.60 per share , or $114.0 million . The company also sold two owned real estate locations for combined net cash proceeds of $22.7 million , resulting in a total net gain of $19.7 million .

Consolidated net sales for 2025 were $4.1 billion , an increase of 10% from consolidated net sales for 2024 of $3.7 billion . Net income for 2025 was $188.3 million , or $7.57 per diluted share , compared to net income of $142.9 million , or $5.60 per diluted share , in 2024. Consolidated operating profit during 2025 was $279.9 million compared to $218.2 million in 2024. Operating profit margin was 6.8% in 2025 compared to 5.8% in 2024. Net cash flows provided by operating activities were $331.0 million in 2025, compared to $370.3 million in 2024.

Business Outlook & Financial Sufficiency

The company estimates the 2026 effective income tax rate will be approximately 25 to 27% . Depreciation and amortization is expected to be approximately $115 to $125 million in 2026. Non-cash stock-based compensation expense is expected to be approximately $24 to $27 million in 2026. Capital expenditures (excluding any potential business combinations) are estimated to be $60 to $80 million in 2026.

The company continues to focus on developing products tailored for international recreation and transportation markets. The company estimates the addressable market for annual net sales of its products outside of North America to be over $2 billion . The company participates in the largest caravan and marine shows in Europe and has received positive feedback on its products. The international business development team works with customers and prospects in Europe and other international markets, with the goal of identifying long-term growth opportunities.

The company is actively gaining share in critical markets through ongoing investment in innovation and operational excellence. The company's strategy emphasizes profitable growth through innovation, high product quality, and enhanced customer experience. By driving organic expansion and diversifying revenue streams, the company seeks to maintain market leadership in the North American RV market while advancing its position in the aftermarkets and adjacent industries. The company is also investing in product diversification and customer partnerships to pursue opportunities in adjacent industries.

The company underpins its strategy with disciplined cost management, streamlining operations, and enhancing efficiency. During the past three years, the company consolidated certain facilities to reduce overhead and enhance margin stability. Investments in automation and efficiency further enhance the company's competitive position. The company's tariff mitigation strategy of diversifying its supply chain, with help from vendors and other sourcing strategies, enabled it to minimize the impact of pricing to customers as well as support profitability in 2025.

The company believes it has adequate capacity to meet projected demand. Capital expenditures for 2025 were $53 million , which included normal replacement expenditures along with approximately $17 million in capacity investments for operational improvements and approximately $1 million in automation investments. The company estimates 2026 capital expenditures (excluding any potential business combinations) of $60 to $80 million , including investments in automation and lean projects. As of December 31, 2025, the company had $222.6 million in cash and cash equivalents and $595.2 million of availability under its revolving credit facility.

In May 2025, the company's Board of Directors authorized a new stock repurchase program (the "2025 Share Repurchase Program") for the purchase of up to $300.0 million of the company's common stock over a three-year period ending on May 15, 2028. As of December 31, 2025, there was $200.0 million remaining for the repurchase of shares under the 2025 Share Repurchase Program. The company has paid regular quarterly dividends since 2016. Future dividend policy will be determined by the Board of Directors in light of prevailing financial needs, earnings, and other relevant factors, including any limitations in debt agreements.

The company faces headwinds from changing conditions and uncertainty over global tariffs, which have increased costs of sourcing goods and resulted in additional risks to the supply chain. The U.S. government has imposed significant tariffs impacting a wide variety of goods, and in response, some countries have announced or imposed tariffs on goods made in the U.S. These actions resulted in higher material costs for the company in 2025, which could continue or worsen. On February 20, 2026, the U.S. Supreme Court ruled against the U.S. presidential administration's use of tariffs under the International Emergency Economic Powers Act ("IEEPA"), creating uncertainty related to various aspects of tariffs previously collected under the IEEPA. The imposition of new, worldwide tariffs, as well as the potential for further tariff actions, represents a significant source of uncertainty.

The company faces constraints from elevated interest rates and inflation, which continued to pressure consumer discretionary spending, dampening demand. Reductions in the availability of wholesale financing (floor-plan financing) for retail dealers, or an increase in the cost of such financing, particularly as a result of higher interest rates, have in the past caused and would again likely cause many dealers to reduce inventories, resulting in reduced production by OEMs and reduced demand for the company's products. Conditions in the credit market could limit the ability of consumers to obtain retail financing for RVs and other products, resulting in reduced demand for the company's products.

Management Sentiments & Priorities

Management's message emphasizes a strategy of profitable growth through innovation, high product quality, and enhanced customer experience. The company is focused on maintaining market leadership in the North American RV market while advancing its position in aftermarkets and adjacent industries. Management highlights that the company holds leading market shares across key product categories and is actively gaining share in critical markets through ongoing investment in innovation and operational excellence. The company's strategy is underpinned by disciplined cost management, streamlining operations, and enhancing efficiency. Management also notes that the company's tariff mitigation strategy of diversifying its supply chain enabled it to minimize the impact of pricing to customers and support profitability in 2025. The company estimates the 2026 effective income tax rate will be approximately 25 to 27% . Depreciation and amortization is expected to be approximately $115 to $125 million in 2026. Non-cash stock-based compensation expense is expected to be approximately $24 to $27 million in 2026. Capital expenditures (excluding any potential business combinations) are estimated to be $60 to $80 million in 2026.

Financial Details

Consolidated net sales for 2025 were $4,122,017,000 compared to $3,741,208,000 in 2024. Net income for 2025 was $188,250,000 compared to $142,867,000 in 2024. Diluted earnings per share were $7.57 in 2025 versus $5.60 in 2024. Operating profit was $279,922,000 in 2025 compared to $218,237,000 in 2024. Gross profit was $980,295,000 in 2025 versus $879,715,000 in 2024. Interest expense, net was $35,710,000 in 2025 compared to $28,899,000 in 2024. The company recorded a loss on extinguishment of debt of $8,859,000 in 2025, consisting of $6.2 million in connection with the repurchase of a portion of the 2026 Convertible Notes, $1.9 million related to the repayment of the previous term loan, and $0.8 million related to the repricing amendment for the Term Loans. The company recorded a gain on sale of real estate of $19,716,000 in 2025. Net cash flows provided by operating activities were $330,976,000 in 2025 compared to $370,284,000 in 2024. The OEM Segment operating profit was $184,120,000 in 2025 compared to $107,081,000 in 2024. The Aftermarket Segment operating profit was $95,802,000 in 2025 compared to $111,156,000 in 2024.

Risk Factors

A significant percentage of sales are concentrated in the RV industry, with the OEM Segment representing 77% of consolidated net sales and approximately 54% of OEM Segment net sales from products to manufacturers of travel trailer and fifth-wheel RVs in 2025. Declines in industry-wide wholesale shipments could reduce demand. The loss of either of the two largest customers, Berkshire Hathaway Inc. and Thor Industries, Inc., which together accounted for 33% of consolidated net sales in 2025, would have an adverse material impact. The company imports, or purchases from suppliers who import, approximately 36% of its raw materials and components, exposing it to tariff and supply chain risks. Steel and aluminum represented approximately 30% and 10% , respectively, of raw material costs in 2025, and their prices are volatile. The company had $397.0 million of borrowings outstanding on its variable rate term loan at December 31, 2025, exposing it to interest rate risk; a 100 basis point increase would reduce future cash flows by approximately $4.0 million per annum.

References

  1. [1] Item 1, Business — Customer Concentrations
  2. [2] Item 1, Business — Customer Concentrations
  3. [3] Item 7, MD&A — Sales and Operating Profit by Segment
  4. [4] Item 7, MD&A — Sales and Operating Profit by Segment
  5. [5] Item 7, MD&A — Sales and Operating Profit by Segment
  6. [6] Item 7, MD&A — Sales and Operating Profit by Segment
  7. [7] Item 7, MD&A — Sales and Operating Profit by Segment
  8. [8] Item 7, MD&A — Sales and Operating Profit by Segment
  9. [9] Item 7, MD&A — Sales and Operating Profit by Segment
  10. [10] Item 7, MD&A — Sales and Operating Profit by Segment
  11. [11] Item 7, MD&A — Aftermarket Segment
  12. [12] Item 7, MD&A — Aftermarket Segment
  13. [13] Item 7, MD&A — Aftermarket Segment
  14. [14] Item 1, Business — Acquisitions
  15. [15] Item 1, Business — Acquisitions
  16. [16] Item 8, Note 4 — Acquisitions, Goodwill and Other Intangible Assets
  17. [17] Item 8, Note 4 — Acquisitions, Goodwill and Other Intangible Assets
  18. [18] Item 8, Note 9 — Long-Term Indebtedness
  19. [19] Item 8, Note 9 — Long-Term Indebtedness
  20. [20] Item 7, MD&A — Consolidated Summary
  21. [21] Item 7, MD&A — Consolidated Summary
  22. [22] Item 7, MD&A — Consolidated Summary
  23. [23] Item 7, MD&A — Consolidated Summary
  24. [24] Item 7, MD&A — Gain on Sale of Real Estate
  25. [25] Item 7, MD&A — Gain on Sale of Real Estate
  26. [26] Item 7, MD&A — Consolidated Summary
  27. [27] Item 7, MD&A — Consolidated Summary
  28. [28] Item 7, MD&A — Consolidated Summary
  29. [29] Item 7, MD&A — Consolidated Summary
  30. [30] Item 7, MD&A — Consolidated Summary
  31. [31] Item 7, MD&A — Consolidated Summary
  32. [32] Item 7, MD&A — Consolidated Summary
  33. [33] Item 7, MD&A — Consolidated Summary
  34. [34] Item 7, MD&A — Consolidated Summary
  35. [35] Item 7, MD&A — Consolidated Summary
  36. [36] Item 7, MD&A — Consolidated Summary
  37. [37] Item 7, MD&A — Cash Flows
  38. [38] Item 7, MD&A — Cash Flows
  39. [39] Item 7, MD&A — Income Taxes
  40. [40] Item 7, MD&A — Cash Flows from Operations
  41. [41] Item 7, MD&A — Cash Flows from Operations
  42. [42] Item 7, MD&A — Cash Flows from Investing Activities
  43. [43] Item 1, Business — International
  44. [44] Item 1, Business — Capacity
  45. [45] Item 1, Business — Capacity
  46. [46] Item 1, Business — Capacity
  47. [47] Item 7, MD&A — Cash Flows from Investing Activities
  48. [48] Item 7, MD&A — Liquidity and Capital Resources
  49. [49] Item 7, MD&A — Liquidity and Capital Resources
  50. [50] Item 8, Note 13 — Stockholders' Equity
  51. [51] Item 8, Note 13 — Stockholders' Equity
  52. [52] Item 1A, Risk Factors — Risks Related to our Business, Operations and Strategy
  53. [53] Item 1A, Risk Factors — Risks Related to our Business, Operations and Strategy
  54. [54] Item 1A, Risk Factors — Risks Related to our Business, Operations and Strategy
  55. [55] Item 1A, Risk Factors — Risks Related to our Business, Operations and Strategy
  56. [56] Item 1A, Risk Factors — Risks Related to our Business, Operations and Strategy
  57. [57] Item 1A, Risk Factors — Risks Related to our Business, Operations and Strategy
  58. [58] Item 7A, Quantitative and Qualitative Disclosures About Market Risk
  59. [59] Item 7A, Quantitative and Qualitative Disclosures About Market Risk
  60. [60] Item 7, MD&A — Income Taxes
  61. [61] Item 7, MD&A — Cash Flows from Operations
  62. [62] Item 7, MD&A — Cash Flows from Operations
  63. [63] Item 7, MD&A — Cash Flows from Investing Activities
  64. [64] Item 8, Consolidated Statements of Income
  65. [65] Item 8, Consolidated Statements of Income
  66. [66] Item 8, Consolidated Statements of Income
  67. [67] Item 8, Consolidated Statements of Income
  68. [68] Item 8, Consolidated Statements of Income
  69. [69] Item 8, Consolidated Statements of Income
  70. [70] Item 8, Consolidated Statements of Income
  71. [71] Item 8, Consolidated Statements of Income
  72. [72] Item 8, Consolidated Statements of Income
  73. [73] Item 8, Consolidated Statements of Income
  74. [74] Item 8, Consolidated Statements of Income
  75. [75] Item 8, Consolidated Statements of Income
  76. [76] Item 8, Consolidated Statements of Income
  77. [77] Item 7, MD&A — Loss on Extinguishment of Debt
  78. [78] Item 7, MD&A — Loss on Extinguishment of Debt
  79. [79] Item 7, MD&A — Loss on Extinguishment of Debt
  80. [80] Item 8, Consolidated Statements of Income
  81. [81] Item 8, Consolidated Statements of Cash Flows
  82. [82] Item 8, Consolidated Statements of Cash Flows
  83. [83] Item 7, MD&A — Sales and Operating Profit by Segment
  84. [84] Item 7, MD&A — Sales and Operating Profit by Segment
  85. [85] Item 7, MD&A — Sales and Operating Profit by Segment
  86. [86] Item 7, MD&A — Sales and Operating Profit by Segment

Analysis on 11/6/2026