LCI Industries: Form 10-Q for the period ended Sep 30, 2025

This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company's Condensed Consolidated Financial Statements and Notes thereto included in Item 1 of Part I of this report, as well as the Company's Annual Report on Form 10-K for the year ended December 31, 2024.

LCI Industries ("LCII" and collectively with its subsidiaries, the "Company," the "Registrant," "we," "us," or "our"), through its wholly-owned subsidiary, Lippert Components, Inc. and its subsidiaries (collectively, "Lippert Components," "LCI," or "Lippert"), is 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.

Our diverse portfolio of innovative and high-quality products includes:

• Chassis & Suspension Solutions: Steel chassis, axles, anti-lock braking systems ("ABS"), suspension systems, and stabilizer/leveling systems (manual, electric, and hydraulic)
• Outdoor Living Systems: Awnings, slide-out mechanisms, and accessories
• Windows, Doors & Steps: Vinyl, aluminum, and frameless windows; entry, luggage, patio, and ramp doors; and electric and manual entry steps
• Interior & Appliance Solutions: Thermoformed bath and kitchen products, furniture, mattresses, tankless water heaters, air conditioners, appliances, electronic components, televisions, and sound systems
• Towing & Truck Accessories: Hitches, pin boxes, grill guards, towing electrical, and towing and truck accessories

At September 30, 2025, we operated over 100 manufacturing and distribution facilities located throughout North America and Europe, supporting key industries such as recreational vehicles ("RVs"), marine products, utility trailers, transportation, and residential and commercial construction industries. Our core manufacturing competencies include:

We operate in two primary segments: OEM and Aftermarket. Together, these segments leverage our manufacturing competencies, leadership expertise, customer relationships, and market insights to drive efficiencies and innovation that enable us to maintain a leadership position in the RV market while continuing to expand in adjacent industries and aftermarket channels. Intersegment sales are insignificant. See Note 12 of the Notes to Condensed Consolidated Financial Statements for further information regarding our segments.

OEM Segment: Our OEM Segment services leading OEMs in recreation, transportation, and housing markets. Our strategically located manufacturing and distribution facilities across North America and Europe provide efficient service to OEMs. Key markets served by our OEM Segment include RVs and Adjacent Industries.

Aftermarket Segment: Our Aftermarket Segment enhances the product lifecycle for the recreation and transportation markets by offering discretionary accessories, replacement parts, and upgrades. This approach drives additional revenue, deepens customer engagement, and leverages our OEM expertise. Products are sold through retail dealers, wholesale distributors, and service centers, as well as direct-to-consumer sales through online platforms.

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.

Most industries where we sell products, or where our products are used, historically have been seasonal and are generally at the highest levels when the weather is moderate. Accordingly, our sales and profits have generally been the highest in the second quarter and lowest in the fourth quarter. However, because of fluctuations in dealer inventories, the impact of international, national, and regional economic conditions, consumer confidence on retail sales of RVs and other products for which we sell our components, the timing of dealer orders, and the impact of severe weather conditions on the timing of industry-wide shipments from time to time, current and future seasonal industry trends have been, and may in the future be, different than in prior years. Additionally, many of the optional upgrades and non-critical replacement parts for RVs are purchased outside the normal product selling season, thereby causing certain Aftermarket Segment sales to be counter-seasonal.

Negative conditions in the general economy in the United States or abroad, including conditions resulting from financial and credit market fluctuations, elevated inflation and interest rates, changes in economic policy, trade uncertainty, including changes in tariffs, sanctions, international treaties, and other trade restrictions, geopolitical tensions, armed conflicts, natural disasters, or global public health crises, have negatively impacted, and could continue to negatively impact, the Company’s business, liquidity, financial condition, and results of operations.

We were able to fully mitigate the impact of tariffs in the third quarter of 2025 through a combination of materials sourcing strategies and targeted sales price increases.

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.

According to the Recreation Vehicle Industry Association ("RVIA"), industry-wide wholesale shipments from the United States of travel trailer and fifth-wheel RVs, our primary RV market, increased 4 percent to 233,500 units in the first nine months of 2025, compared to the same period in 2024. Retail demand for travel trailer and fifth-wheel RVs of 252,200 units in the first nine months of 2025 was consistent with retail demand of 252,300 units in the same period in 2024. 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").

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According to the RVIA, industry-wide wholesale shipments of motorhome RVs in the first nine months of 2025 increased 3 percent to 27,600 units compared to the first nine months of 2024. Retail demand for motorhome RVs in the first nine months of 2025 decreased 7 percent to 29,700 units compared to the same period of 2024. Retail demand has declined from post-pandemic elevated levels, primarily driven by inflation and higher interest rates impacting retail consumer discretionary spending.

OEM Segment - Adjacent Industries: Our 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.

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.

The U.S. RV ownership base, which reached a record 8.1 million households in 2025 according to the RVIA, 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.

RESULTS OF OPERATIONS

Consolidated Highlights

• Consolidated net sales in the third quarter of 2025 were $1,036.5 million, an increase of 13.2 percent, from $915.5 million in the same period of 2024. The increase was primarily due to sales price increases related to material costs, sales from acquired businesses, and higher North American RV sales driven by market share gains and an increased mix of higher content fifth-wheel units. Net sales from acquisitions completed in the twelve months ended September 30, 2025, primarily Freedman Seating and Trans/Air Manufacturing, contributed approximately $41.9 million in the third quarter of 2025.
• Net income for the third quarter of 2025 was $62.5 million, or $2.55 per diluted share, compared to net income of $35.6 million, or $1.39 per diluted share, for the same period of 2024. Net income for the third quarter of 2025 includes the gain on sale of real estate of $19.7 million, from the sale of two facilities as part of our footprint optimization efforts.
• Consolidated operating profit during the third quarter of 2025 was $75.4 million, compared to $53.9 million in the same period of 2024. Operating profit margin was 7.3 percent in the third quarter of 2025 compared to 5.9 percent in the same period of 2024. The increase was primarily due to reduced costs from materials sourcing strategies and leveraging of fixed expenses over higher North American RV sales volumes related to market share gains and increased mix of higher content fifth-wheel units.
• Tariff mitigation strategy of diversifying our supply chain, with help from vendors and other sourcing strategies, enabled us to minimize the impact of pricing to our customers as well as support profitability.
• In the third quarter of 2025, we returned an aggregate of $90.0 million to shareholders, including through share repurchases of $62.2 million and a quarterly dividend of $1.15 per share, aggregating $27.8 million.

OEM Segment - Third Quarter

Net sales of the OEM Segment in the third quarter of 2025 increased by $105.6 million, compared to the same period of 2024. Net sales of components to OEMs were to the following markets for the three months ended September 30:

(In thousands)

According to the RVIA, industry-wide wholesale unit shipments for the three months ended September 30 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 September 30, 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, changes in unit mix and acquisitions. For the twelve months ended September 30, 2025, travel trailer and fifth-wheel RV content increased

5.5 percent year-over year due to market share gains, an increase in RV mix toward higher content fifth-wheel units, and sales price increases related to material costs, partially offset by shipments exceeding units produced.

Our increase in net sales to RV OEMs during the third quarter of 2025 was primarily driven by sales price increases related to materials costs, an increase in RV sales mix toward higher content fifth-wheel units, market share gains and an increase in North American motorhome RV unit shipments, partially offset by volume decreases in the European RV market.

Our increase in net sales to OEMs in Adjacent Industries during the third quarter of 2025 was primarily due to sales from acquired businesses and higher sales to North American utility trailer and marine OEMs.

Operating profit of the OEM Segment was $43.6 million in the third quarter of 2025, an increase of $21.7 million compared to the same period of 2024. The operating profit margin of the OEM Segment increased to 5.5 percent in the third quarter of 2025, compared to 3.2 percent for the same period of 2024, and was positively impacted by:

• Increases in selling prices for targeted products primarily related to increased material costs, which positively impacted operating profit by $32.1 million compared to the same period in 2024.
• Reduced costs from materials sourcing strategies, which increased operating profit by $10.8 million compared to the same period in 2024.
• The impact of fixed costs spread over increased sales, which increased operating profit by $3.8 million related to fixed production overhead costs and $3.6 million related to fixed selling, general, and administrative costs.
• Increases in production labor efficiencies, which positively impacted operating profit by $2.7 million compared to the same period in 2024.

Partially offset by:

• Higher material costs related to tariffs and higher steel, aluminum and freight costs, which negatively impacted operating profit by $30.2 million compared to the same period in 2024.

Amortization expense on intangible assets for the OEM Segment was $9.9 million in the third quarter of 2025, compared to $10.0 million in the same period of 2024. Depreciation expense on fixed assets for the OEM Segment was $12.0 million in the third quarter of 2025, compared to $13.3 million in the same period of 2024.

OEM Segment – Year to Date

Net sales of the OEM Segment in the first nine months of 2025 increased by $214.2 million, compared to the same period of 2024. Net sales of components to OEMs were to the following markets for the nine months ended September 30:

(In thousands)

According to the RVIA, industry-wide wholesale unit shipments for the nine months ended September 30 were:

Our increase in net sales to RV OEMs during the first nine months of 2025 was primarily driven by a 4.3 percent increase in North American wholesale shipments, sales price increases related to materials costs, an increase in RV sales mix toward higher content fifth-wheel units and market share gains, partially offset by volume decreases in the European RV market.

Our increase in net sales to OEMs in Adjacent Industries during the first nine months of 2025 was primarily due to sales from acquired businesses and higher sales to North American utility trailer OEMs.

Operating profit of the OEM Segment was $157.2 million in the first nine months of 2025, an increase of $52.0 million compared to the same period of 2024. The operating profit margin of the OEM Segment increased to 6.4 percent in the first nine months of 2025, compared to 4.7 percent for the same period in 2024, and was positively impacted by:

• Increases in selling prices primarily related to increased material costs, which positively impacted operating profit by $40.5 million compared to the same period in 2024.
• Reduced costs from materials sourcing strategies, which increased operating profit by $31.3 million compared to the same period in 2024.
• The impact of fixed costs spread over increased sales, which increased operating profit by $10.1 million related to fixed production overhead costs and $9.0 million related to fixed selling, general, and administrative costs.
• Increases in production labor efficiencies, which positively impacted operating profit by $10.1 million compared to the same period in 2024.

Partially offset by:

• Higher material costs related to tariffs and higher freight costs, which negatively impacted operating profit by $40.5 million compared to the same period in 2024.
• Changes in product sales mix toward lower margin products, which negatively impacted operating profit by $4.4 million compared to the same period in 2024.

Amortization expense on intangible assets for the OEM Segment was $28.7 million in the first nine months of 2025, compared to $30.4 million in the same period of 2024. Depreciation expense on fixed assets for the OEM Segment was $36.5 million in the first nine months of 2025, compared to $41.0 million in the same period of 2024.

Aftermarket Segment - Third Quarter

Net sales of the Aftermarket Segment in the third quarter of 2025 increased by $15.4 million, compared to the same period of 2024. Net sales of components in the Aftermarket Segment were as follows for the three months ended September 30:

(In thousands)

Our net sales of the Aftermarket Segment for the third quarter of 2025 increased compared to the same period in 2024, primarily driven by product innovations, increased demand for our upgrade and service parts as more units enter the upgrade and repair cycle, and the expanding Camping World relationship within the RV aftermarket, partially offset by lower volumes within the automotive aftermarket.

Operating profit of the Aftermarket Segment was $31.9 million in the third quarter of 2025, a decrease of $0.2 million compared to the same period of 2024. The operating profit margin of the Aftermarket Segment was 12.9 percent in the third quarter of 2025, compared to 13.9 percent in the same period in 2024, and was negatively impacted by:

• Higher material costs related to tariffs and higher steel, aluminum and freight costs, which negatively impacted operating profit by $9.5 million compared to the same period in 2024.
• Decreases in automotive aftermarket production volumes in response to lower retail volumes, which led to reduced utilization of fixed production overhead costs, negatively impacting operating profit by $1.4 million compared to the same period in 2024.
• Investments in capacity, distribution and logistics technology to support continued growth in the Aftermarket Segment, which negatively impacted operating profit by $1.3 million compared to the same period of 2024.

Partially offset by:

• Increases in selling prices for targeted products primarily related to increased material costs, which positively impacted operating profit by $8.9 million compared to the same period in 2024.
• Reduced costs from materials sourcing strategies, which increased operating profit by $1.8 million compared to the same period in 2024.

Amortization expense on intangible assets for the Aftermarket Segment was $3.9 million in the third quarter of 2025, consistent with the same period of 2024. Depreciation expense on fixed assets for the Aftermarket Segment was $4.7 million in the third quarter of 2025, compared to $4.1 million in the same period of 2024.

Aftermarket Segment – Year to Date

Net sales of the Aftermarket Segment in the first nine months of 2025 increased by $37.0 million, compared to the same period of 2024. Net sales of components in the Aftermarket Segment were as follows for the nine months ended September 30:

(In thousands)

Net sales of the Aftermarket Segment increased during the first nine months of 2025, primarily driven by product innovations and the expanding Camping World relationship within the RV aftermarket, partially offset by lower volumes within the automotive aftermarket.

Operating profit of the Aftermarket Segment was $87.3 million in the first nine months of 2025, a decrease of $9.5 million compared to the same period of 2024. The operating profit margin of the Aftermarket Segment was 11.9 percent in the first nine months of 2025, compared to 13.9 percent in the same period in 2024, and was negatively impacted by:

• Higher material costs related to tariffs and higher freight costs which negatively impacted operating profit by $14.2 million compared to the same period in 2024.
• Increases in sales mix toward lower margin products, which negatively impacted operating profit by $6.5 million compared to the same period in 2024.
• Investments in capacity, distribution and logistics technology to support continued growth in the Aftermarket Segment, which negatively impacted operating profit by $3.2 million compared to the same period of 2024.
• Decreases in automotive aftermarket production volumes in response to lower retail volumes, which led to reduced utilization of fixed production overhead costs, negatively impacting operating profit by $2.9 million compared to the same period in 2024.
• Increases in customer promotions and rebates, which negatively impacted operating profit by $1.1 million compared to the same period in 2024.

Partially offset by:

• Increases in selling prices for targeted products primarily related to increased material costs, which positively impacted operating profit by $10.4 million compared to the same period in 2024.
• Reduced costs from materials sourcing strategies, which increased operating profit by $6.2 million compared to the same period in 2024.

Amortization expense on intangible assets for the Aftermarket Segment was $11.5 million in the first nine months of 2025, compared to $11.7 million in the same period of 2024. Depreciation expense on fixed assets for the Aftermarket Segment was $13.7 million in the first nine months of 2025, compared to $12.9 million in the same period of 2024.

Interest Expense

Interest expense, net was $26.0 million for the nine months ended September 30, 2025, compared to $23.8 million in the same period of 2024. The increase in net interest expense was primarily due to interest on the 2030 Convertible Notes and higher interest rates on our adjustable rate debt, including the Term Loans (as defined in Note 8 of the Notes to Condensed Consolidated Financial Statements) and revolving credit facility. The increase was partially offset by reduced borrowings outstanding on the revolving credit facility and interest income of $5.3 million earned on investments in money market mutual funds for the nine months ended September 30, 2025, compared to $2.8 million in the same period of 2024.

In September 2025, we amended the Credit Agreement (as defined in Note 8 of the Notes to Condensed Consolidated Financial Statements) to reprice the Term Loans, resulting in a quarter point reduction in the applicable margin on our Term Loan borrowings. On a go-foward basis, this reduction in effective interest rates is expected to save approximately $1.0 million in cash interest expense annually based on the outstanding Term Loan principal amount at September 30, 2025.

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

Loss on Extinguishment of Debt

In the nine months ended September 30, 2025, we recorded an $8.9 million loss on extinguishment of debt, consisting of $6.2 million in connection with the repurchase of a portion of our 2026 Convertible Notes, $1.9 million related to the repayment of our previous term loan, and $0.8 million related to the repricing amendment for our Term Loans.

Gain on Sale of Real Estate

As part of our footprint optimization efforts, we sold two owned real estate locations during the third quarter of 2025 for combined net cash proceeds of $22.7 million. The sales resulted in a total net gain on the sale of real estate of $19.7 million for the three and nine months ended September 30, 2025.

Income Taxes

The effective tax rate for the nine months ended September 30, 2025 and 2024 was 26.1 percent and 25.2 percent, respectively. The effective tax rate for the nine months ended September 30, 2025 differed from the Federal statutory rate primarily due to state taxes, foreign taxes, and non-deductible expenses, partially offset by Federal and Indiana research and development credits. The increase in the effective tax rate for the nine months ended September 30, 2025 as compared to the same period in 2024 was primarily due to discrete tax expenses related to tax deficiencies on stock-based compensation.

On July 4, 2025, the "One Big Beautiful Bill Act" (the "Act") was enacted in the U.S. The Act includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. While we expect certain provisions of the Act to change the timing of cash tax payments in the current year and future periods, we do not expect the legislation to have a material impact on our consolidated financial statements.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

We maintain a level of cash and 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 September 30, 2025, we had $199.7 million in cash and cash equivalents, and $595.2 million of availability under our revolving credit facility under the Credit Agreement. We also have the ability to request an increase to the revolving and/or incremental term loan facilities by up to an additional $371.0 million in the aggregate upon approval of the lenders providing any such increase and the satisfaction of certain other conditions. See Note 8 of the Notes to Condensed Consolidated Financial Statements for a description of our credit facilities.

We believe the availability under the revolving credit facility under the Credit Agreement, along with our cash flows from operations, are adequate to finance our anticipated cash requirements for the next twelve months.

The Condensed Consolidated Statements of Cash Flows reflect the following for the nine months ended September 30:

(In thousands)

Cash Flows from Operating Activities

Net cash flows provided by operating activities were $252.1 million in the first nine months of 2025, compared to $263.7 million in the first nine months of 2024. The decrease in net cash flows provided by operating activities was primarily due to the net change in assets and liabilities, net of acquired businesses, as it used $39.2 million more cash in the first nine months of 2025 compared to the same period in 2024, partially offset by an increase in net income of $36.2 million. The primary use of cash in net assets was the increase of $145.8 million in accounts receivable due to seasonally higher sales in the first nine months of 2025.

Depreciation and amortization was $90.4 million in the first nine months of 2025, and is expected to be approximately $115 to $125 million for the full year 2025. Non-cash stock-based compensation expense in the first nine months of 2025 was $16.9 million. Non-cash stock-based compensation expense is expected to be approximately $21 to $24 million for the full year 2025.

Cash Flows from Investing Activities

Cash flows used in investing activities of $121.6 million in the first nine months of 2025 were primarily comprised of $103.0 million for the acquisitions of businesses and $38.1 million for capital expenditures, partially offset by proceeds from the sale of real estate of $22.7 million. Cash flows used in investing activities of $50.6 million in the first nine months of 2024 were primarily comprised of $31.4 million for capital expenditures and $20.0 million for the acquisition of a business.

Our capital expenditures are primarily for replacement and growth. Over the long term, based on our historical capital expenditures, the replacement portion has averaged approximately one to two percent of net sales, while the growth portion has averaged approximately two to three percent of net sales. However, there are many factors that can impact the actual spending compared to these historical averages. We estimate full year 2025 capital expenditures of $45 to $55 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.

Capital expenditures and acquisitions of businesses in the first nine months of 2025 were funded by cash on hand and borrowings under our revolving credit facility. Capital expenditures and any acquisitions in the remainder of fiscal year 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 $96.2 million in the first nine months of 2025 were primarily comprised of the following:

• payments of $368.9 million for the repurchase of a portion of our 2026 Convertible Notes,
• debt repayments of $301.8 million under our revolving credit facility, Term Loans, and other borrowings,
• payments for the repurchase of common stock of $128.6 million,
• payments of quarterly dividends of $86.2 million,
• payments of $67.6 million for the purchase of convertible note hedge contracts, and
• cash outflows of $5.2 million related to vesting of stock-based awards, net of shares tendered for payment of taxes,

Partially offset by:

• net proceeds from the issuance of our 2030 Convertible Notes of $448.5 million,
• proceeds from Term Loan borrowings of $391.0 million, and
• proceeds from the issuance of warrants of $27.6 million.

Cash flows used in financing activities of $117.2 million in the first nine months of 2024 were primarily comprised of payments of quarterly dividends of $80.2 million, net debt repayments of $27.9 million under our revolving credit facility, Term Loans, and other borrowings, and cash outflows of $9.1 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 we shall not permit our net leverage ratio to exceed certain limits, shall maintain a minimum debt service coverage ratio, and must meet certain other financial requirements. At September 30, 2025, we were in compliance with all financial covenants.

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 (the "2022 Share Repurchase Program") for the purchase of up to $200.0 million of our common stock over a three-year period, which ended on May 19, 2025. Under this stock repurchase program, we purchased 308,898 shares at a weighted average price of $91.47 per share, totaling $28.4 million including excise tax during March 2025, using approximately $28.3 million of the net proceeds from the offering of the 2030 Convertible Notes. Following such repurchase, no additional shares were purchased under the 2022 Share Repurchase Program prior to its expiration on May 19, 2025. No shares were repurchased during the nine months ended September 30, 2024.

In May 2025, our Board of Directors authorized a new stock repurchase program (the "2025 Share Repurchase Program") for the purchase of up to $300.0 million of our common stock over a three-year period ending on May 15, 2028. On June 11, 2025, we entered into a Rule 10b5-1 trading plan under the 2025 Share Repurchase Program for the period between June 13, 2025 and August 1, 2025 to repurchase up to $100.0 million of our common stock excluding excise tax, subject to certain parameters. Under this 10b5-1 trading plan, we purchased 1,057,667 shares at a weighted average price of $94.55 per share totaling $101.0 million, including excise tax during the nine months ended September 30, 2025. As of September 30, 2025, there was $200.0 million remaining for the repurchase of shares under the 2025 Share Repurchase Program.

CORPORATE GOVERNANCE

We are in compliance with the corporate governance requirements of the Securities and Exchange Commission (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 (http://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 (http://www.lci1.com)).

CONTINGENCIES

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

RAW MATERIALS INFLATION

The prices of key raw materials, consisting primarily of steel and aluminum, and components used by us which are made from these raw materials, are influenced by demand and other factors specific to these commodities, including tariffs for materials sourced internationally. The prices for steel consumed in certain of our manufactured components were lower and the prices for aluminum consumed in certain of our manufactured components were higher during the first nine months of 2025 compared to the same period of 2024. While the prices for steel consumed in certain of our manufactured components were lower year-over-year, commodity prices for both steel and aluminum generally have been increasing during the first nine months of 2025, and are expected to remain elevated through the remainder of 2025. However, prices of these commodities have historically been volatile and there can be no assurances of future prices. Please see "Results of Operations" above for additional information regarding the impact of raw material costs on our results of operations for the first nine months of 2025.

NEW ACCOUNTING PRONOUNCEMENTS

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

CRITICAL ACCOUNTING ESTIMATES

Our Condensed 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 amounts and disclosures reported in those financial statements and the related accompanying notes. Actual results could differ from these estimates and assumptions.

For a discussion of our critical accounting estimates, refer to Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no material changes to our critical accounting estimates as described in that Annual Report.

FORWARD-LOOKING STATEMENTS

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

Forward-looking statements, including, without limitation, those relating to the Company's production levels, future business prospects, net sales, expenses and income (loss), capital expenditures, tax rate, cash flow, financial condition, liquidity, covenant compliance, retail and wholesale demand, integration of acquisitions, R&D investments, commodity prices, addressable markets, and industry trends, whenever they occur in this Form 10-Q, are necessarily estimates reflecting the best judgment of the Company's senior management at the time such statements were made. There are a number of factors, many of which are beyond the Company’s control, which could cause actual results and events to differ materially from those described in the forward-looking statements. These factors include, in addition to other matters described in this Form 10-Q, the impacts of costs and availability of, and tariffs on, raw materials (particularly steel and aluminum) and other components, future pandemics, geopolitical tensions, armed conflicts, or natural disasters on the global economy and on the Company's customers, suppliers, team members, business and cash flows, pricing pressures due to domestic and foreign competition, seasonality and cyclicality in the industries to which we sell our products, availability of credit for financing the retail and wholesale purchase of products for which we sell our components, inventory levels of retail dealers and manufacturers, availability of transportation for products for which we sell our components, the financial condition of our customers, the financial condition of retail dealers of products for which we sell our components, retention and concentration of significant customers, the costs, pace of, and successful integration of acquisitions and other growth initiatives, availability and costs of production facilities and labor, team member benefits, team member retention, realization and impact of expansion plans, efficiency improvements and cost reductions, the disruption of business resulting from natural disasters or other unforeseen events, the successful entry into new markets, the costs of compliance with environmental laws, laws of foreign jurisdictions in which we operate, other operational and financial risks related to conducting business internationally, and increased governmental regulation and oversight, information technology performance and security, the ability to protect intellectual property, warranty and product liability claims or product recalls, interest rates, oil and gasoline prices, and availability, the impact of international, national and regional economic conditions and consumer confidence on the retail sale of products for which we sell our components, and other risks and uncertainties discussed more fully under the caption "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, and in the Company's subsequent filings with the SEC, including the Company's Quarterly Reports on Form 10-Q. Readers of this report are cautioned not to place undue reliance on these forward-looking statements, since there can be no assurance that these forward-looking statements will prove to be accurate. The Company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law.

DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk related to changes in short-term interest rates on our variable rate debt. Depending on the interest rate option selected as further described in Note 8 of the Notes to Condensed Consolidated Financial Statements, interest is charged based on an indexed rate plus an applicable margin. Assuming a hypothetical increase of 0.25 percent in the indexed interest rate (which approximates a six percent increase of the weighted-average interest rate on our borrowings as of September 30, 2025), our results of operations would not be materially affected.

We are also exposed to changes in the prices of raw materials, specifically steel and aluminum. We have, from time to time, entered into derivative instruments for the purpose of managing a portion of the exposures associated with fluctuations in steel and aluminum prices. While these derivative instruments are subject to fluctuations in value, these fluctuations are generally offset by the changes in fair value of the underlying exposures. We had no outstanding derivative instruments on commodities at September 30, 2025 and December 31, 2024.

We have historically been able to obtain sales price increases to partially offset the majority of raw material cost increases. However, there can be no assurance future cost increases, if any, can be partially or fully passed on to customers, or that the timing of such sales price increases will match raw material cost increases. Our tariff mitigation strategy of diversifying our supply chain, with help from our vendors and other sourcing strategies, enabled us to minimize the impact of pricing to our customers as well as support profitability in the third quarter.

Additional information required by this item is included under the caption "Raw Materials Inflation" in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of this report.

a. Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure, in accordance with the definition of "disclosure controls and procedures" in Rule 13a-15(e) under the Exchange Act. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance of achieving the desired control objectives. Management included in its evaluation the cost-benefit relationship of possible controls and procedures. We continually evaluate our disclosure controls and procedures to determine if changes are appropriate based upon changes in our operations or the business environment in which we operate.

As of the end of the period covered by this Form 10-Q, we performed an evaluation, under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2025.

b. Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2025, which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to the matters discussed in Part I, Item 1A – Risk Factors in our Annual Report on Form 10-K as filed with the SEC on February 21, 2025, except that the following risk factor is added:

Changing conditions and uncertainty over global tariffs, or the financial impact of tariffs and resulting consequences, may negatively affect our business, operating results, and financial condition.

Changes in U.S. domestic and global tariff frameworks have increased our costs of sourcing goods and resulted in additional risks to our supply chain. The U.S. government has imposed significant tariffs impacting a wide variety of goods across multiple countries and indicated that additional tariffs may be imposed in the near future. In response, some countries have announced or imposed tariffs on goods made in the U.S. These actions could negatively impact demand for our products or increase the cost to manufacture our products, which could have a material adverse effect on our business, financial condition, results of operations and cash flow.

Political tensions and uncertainty as a result of trade policies could reduce trade volume, investment, technological exchange, and other economic activities between major international economies, resulting in a material adverse effect on global economic conditions and the stability of global financial markets, which could in turn have a material adverse impact on our business, financial condition, and results of operations.