lcii-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to _________________

Commission File Number: 001-13646

LCI INDUSTRIES

(Exact name of registrant as specified in its charter)


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

3501 County Road 6 East		46514
Elkhart,	Indiana	(Zip Code)
(Address of principal executive offices)

(574) 535-1125

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report) N/A

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	LCII	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock, as of the latest practicable date (April 28, 2023) was 25,298,420 shares of common stock.

LCI INDUSTRIES

TABLE OF CONTENTS


		Page
PART I –	FINANCIAL INFORMATION

	ITEM 1 – FINANCIAL STATEMENTS

	CONDENSED CONSOLIDATED STATEMENTS OF INCOME	4

	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	5

	CONDENSED CONSOLIDATED BALANCE SHEETS	6

	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	7

	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY	8

	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	9

	ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	20

	ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	29

	ITEM 4 – CONTROLS AND PROCEDURES	29

PART II –	OTHER INFORMATION

	ITEM 1 – LEGAL PROCEEDINGS	30

	ITEM 1A – RISK FACTORS	30

	ITEM 6 – EXHIBITS	30

SIGNATURES		31

EXHIBIT 31.1 - SECTION 302 CEO CERTIFICATION

EXHIBIT 31.2 - SECTION 302 CFO CERTIFICATION

EXHIBIT 32.1 - SECTION 906 CEO CERTIFICATION

EXHIBIT 32.2 - SECTION 906 CFO CERTIFICATION

PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

LCI INDUSTRIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended March 31,
	2023		2022
(In thousands, except per share amounts)

Net sales	$	973,310	$	1,644,568
Cost of sales	787,239		1,180,325
Gross profit	186,071		464,243
Selling, general and administrative expenses	166,028		194,542
Operating profit	20,043		269,701
Interest expense, net	10,394		6,252
Income before income taxes	9,649		263,449
Provision for income taxes	2,390		67,268
Net income	$	7,259	$	196,181

Net income per common share:
Basic	$	0.29	$	7.75
Diluted	$	0.29	$	7.71

Weighted average common shares outstanding:
Basic	25,228		25,329
Diluted	25,293		25,461

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

LCI INDUSTRIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
	2023		2022
(In thousands)

Net income	$	7,259	$	196,181
Other comprehensive income (loss):
Net foreign currency translation adjustment	2,000		(2,882)


Total comprehensive income	$	9,259	$	193,299

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

LCI INDUSTRIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


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

ASSETS
Current assets
Cash and cash equivalents	$	23,465		$	47,499

Accounts receivable, net of allowances of $7,645 and $5,904 at March 31, 2023 and December 31, 2022, respectively	340,305			214,262
Inventories, net	909,385			1,029,705

Prepaid expenses and other current assets	91,624			99,310
Total current assets	1,364,779			1,390,776
Fixed assets, net	480,904			482,185
Goodwill	566,178			567,063
Other intangible assets, net	491,415			503,320
Operating lease right-of-use assets	248,575			247,007

Other long-term assets	57,516			56,561
Total assets	$	3,209,367		$	3,246,912

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term indebtedness	$	25,450		$	23,086
Accounts payable, trade	169,883			143,529

Current portion of operating lease obligations	35,516			35,447
Accrued expenses and other current liabilities	205,182			219,238
Total current liabilities	436,031			421,300
Long-term indebtedness	1,055,625			1,095,888
Operating lease obligations	224,451			222,478
Deferred taxes	31,405			30,580
Other long-term liabilities	102,344			95,658
Total liabilities	1,849,856			1,865,904
Stockholders' equity
Common stock, par value $.01 per share	286			285
Paid-in capital	231,294			234,956
Retained earnings	1,201,443			1,221,279
Accumulated other comprehensive income	8,704			6,704
Stockholders' equity before treasury stock	1,441,727			1,463,224
Treasury stock, at cost	(82,216)			(82,216)
Total stockholders' equity	1,359,511			1,381,008
Total liabilities and stockholders' equity	$	3,209,367		$	3,246,912

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

LCI INDUSTRIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three Months Ended March 31,
(In thousands)	2023		2022

Cash flows from operating activities:
Net income	$	7,259	$	196,181
Adjustments to reconcile net income to cash flows provided by operating activities:
Depreciation and amortization	32,499		31,812
Stock-based compensation expense	4,695		6,517

Other non-cash items	877		1,771
Changes in assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net	(123,072)		(240,404)
Inventories, net	131,708		(31,278)
Prepaid expenses and other assets	5,577		20,495
Accounts payable, trade	25,822		57,808
Accrued expenses and other liabilities	(10,689)		92,024
Net cash flows provided by operating activities	74,676		134,926
Cash flows from investing activities:
Capital expenditures	(17,159)		(42,037)
Acquisitions of businesses	(6,250)		(50,089)


Other investing activities	1,960		(219)
Net cash flows used in investing activities	(21,449)		(92,345)
Cash flows from financing activities:
Vesting of stock-based awards, net of shares tendered for payment of taxes	(8,888)		(10,569)
Proceeds from revolving credit facility	165,300		372,400
Repayments under revolving credit facility	(201,385)		(330,600)
Repayments under shelf loan, term loan, and other borrowings	(5,276)		(55,642)




Payment of dividends	(26,563)		(22,870)
Payment of contingent consideration and holdbacks related to acquisitions	—		(2,031)
Other financing activities	(12)		(4)
Net cash flows used in financing activities	(76,824)		(49,316)
Effect of exchange rate changes on cash and cash equivalents	(437)		(712)
Net decrease in cash and cash equivalents	(24,034)		(7,447)
Cash and cash equivalents at beginning of period	47,499		62,896
Cash and cash equivalents cash at end of period	$	23,465	$	55,449
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	9,052	$	3,943
Cash paid during the period for income taxes, net of refunds	$	390	$	192
Purchase of property and equipment in accrued expenses	$	2,304	$	2,400

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

LCI INDUSTRIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)


(In thousands, except shares and per share amounts)	Common Stock		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Stockholders’ Equity
Balance - December 31, 2021	$	284	$	220,459	$	930,795	$	(501)	$	(58,162)	$	1,092,875
Net income	—		—		196,181		—		—		196,181
Issuance of 138,208 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes	1		(10,570)		—		—		—		(10,569)
Stock-based compensation expense	—		6,517		—		—		—		6,517
Other comprehensive loss	—		—		—		(2,882)		—		(2,882)
Cash dividends ($0.90 per share)	—		—		(22,870)		—		—		(22,870)
Dividend equivalents on stock-based awards	—		392		(392)		—		—		—
Balance - March 31, 2022	$	285	$	216,798	$	1,103,714	$	(3,383)	$	(58,162)	$	1,259,252



Balance - December 31, 2022	$	285	$	234,956	$	1,221,279	$	6,704	$	(82,216)	$	1,381,008
Net income	—		—		7,259		—		—		7,259
Issuance of 119,091 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes	1		(8,889)		—		—		—		(8,888)
Stock-based compensation expense	—		4,695		—		—		—		4,695
Other comprehensive gain	—		—		—		2,000		—		2,000
Cash dividends ($1.05 per share)	—		—		(26,563)		—		—		(26,563)
Dividend equivalents on stock-based awards	—		532		(532)		—		—		—
Balance - March 31, 2023	$	286	$	231,294	$	1,201,443	$	8,704	$	(82,216)	$	1,359,511

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

LCI INDUSTRIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

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

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

SEC Form 10-Q filed by LCI Industries