LCII 10-K & 10-Q changes, risk factors and insider trading
Lci Industries · NYSE · Motor Vehicle Parts & Accessories · CIK 763744 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Largest changes
Other state laws contain additional disclosure obligations for businesses that collect personal information about residents and afford those individuals additional rights relating to their personal information that may affect our ability to use personal information or share it with our business partners. For example, California has laws that give California residents certain privacy rights in the collection and disclosure of their personal information and requires businesses to make certain disclosures and take certain other acts in furtherance of those rights, andsee in full comparisonhas recently created a new agency,the California Privacy ProtectionAgency,Agency is authorized to implement and enforce California’s privacy laws, which could result in increased privacy and information security regulatory actions. Other U.S. states have passed, or have proposed, consumer privacy laws. These laws may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business.
“These laws may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business.”see in full comparison
“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. …”see in full comparison
“Further increasing uncertainty related to trade policies, 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"), and U.S. Customs and Border Protection halted collections of IEEPA tariffs on February 24, 2026. However, the decision creates uncertainty related to various aspects of the tariffs previously collected under the IEEPA, including whether, and if so, how, companies may be able to recover any portion of IEEPA tariffs previously paid. …”see in full comparison
Cyber-attacks, such as those involving the deployment of malware, are increasing in frequency, sophistication, and intensity and have become increasingly difficult to detect. Further, artificial intelligence technologies may be used for certain cybersecurity attacks, and may increase their frequency and intensity, resulting in heightened risks of security breaches and incidents. Despite our ongoing efforts to manage cybersecurity risks, we cannot assure you that they will be effective or will work as designed. If we fail to maintain or protect our information systems and data integrity effectively, we could: lose existing customers; have difficulty attracting new customers; suffer outages or disruptions in our operations or supply chains; have difficulty preventing, detecting, and controlling fraud; have disputes with customers and suppliers; have regulatory sanctions or penalties imposed; incur increased operating expenses; incur expenses or lose revenues as a result of a data privacy breach; or suffer other adverse consequences.see in full comparison
The RV, recreational boat, and other markets where we sell many of our products or where our products are used, have been characterized by cycles of growth and contraction in consumer demand, often because the purchase of such products is viewed as a consumer discretionary purchase. A number of factors have in the past, and could continue to, negatively impact consumer demand, production levels, shipments, sales, and operating results, including credit availability, consumer confidence, employment rates, prevailing interest rates, inflation, fuel prices, and other economic conditions affecting consumer demand and discretionary consumer spending, such as occurred during 2025, as well as demographic and political changes.see in full comparisonFor example, during 2024, we experienced lower marine, utility trailer, and motorhome OEM volumes resulting from, in part, the negative impacts of inflation and elevated interest rates on consumers' discretionary spending. The declines in these industry volumes compared to 2023 had an adverse impact on our results.Further, consumer purchases of discretionary items historically tend to decline during recessionary periods when disposable income is lower or during other periods of economic instability or uncertainty, which may lead to declines in sales and slow our long-term growth expectations.
Full comparison: every changed paragraph (28)
The RV, recreational boat, and other markets where we sell many of our products or where our products are used, have been characterized by cycles of growth and contraction in consumer demand, often because the purchase of such products is viewed as a consumer discretionary purchase. A number of factors have in the past, and could continue to, negatively impact consumer demand, production levels, shipments, sales, and operating results, including credit availability, consumer confidence, employment rates, prevailing interest rates, inflation, fuel prices, and other economic conditions affecting consumer demand and discretionary consumer spending, such as occurred during 2025, as well as demographic and political changes. For example, during 2024, we experienced lower marine, utility trailer, and motorhome OEM volumes resulting from, in part, the negative impacts of inflation and elevated interest rates on consumers' discretionary spending. The declines in these industry volumes compared to 2023 had an adverse impact on our results. Further, consumer purchases of discretionary items historically tend to decline during recessionary periods when disposable income is lower or during other periods of economic instability or uncertainty, which may lead to declines in sales and slow our long-term growth expectations.
Changing conditions and uncertainty over global tariffs, or the financial impact of tariffs and resulting consequences, have negatively affected, and may continue to 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 resulted in higher material costs for us in 2025, which could continue or worsen, and pricing actions we have taken, or in the future may take, in light of material cost increases could negatively impact demand for our products, any of which could have a material adverse effect on our business, financial condition, results of operations and cash flow.
Further increasing uncertainty related to trade policies, 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"), and U.S. Customs and Border Protection halted collections of IEEPA tariffs on February 24, 2026. However, the decision creates uncertainty related to various aspects of the tariffs previously collected under the IEEPA, including whether, and if so, how, companies may be able to recover any portion of IEEPA tariffs previously paid. Further, not all tariffs announced throughout 2025 were impacted by this U.S. Supreme Court decision since many tariffs were imposed under other legal authorities that remain in effect and new tariffs may continue to be implemented through these other legal authorities. Additionally, in response to the U.S. Supreme Court ruling, the U.S. presidential administration imposed a new worldwide tariff effective for 150 days from February 24, 2026. The imposition of these new, worldwide tariffs, as well as the potential for further tariff actions by the U.S. presidential administration or others, represents a significant source of uncertainty and could have a material adverse effect on our business, financial condition, and results of operations.
In addition, political tensions and uncertainty as a result of rapidly changing 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.
Retail dealers of RVs and other products which use our components generally finance their purchases of inventory with financing known as floor-plan financing provided by lending institutions. A dealer's ability to obtain financing is significantly affected by the number of lending institutions offering floor-plan financing, and by an institution’s lending limits, which are beyond our control. Reduction in the availability of floor-plan financing, or an increase in the cost of such financing, particularly as a result of recent higher interest rates, have in the past caused, and would in the future again likely cause, many dealers to reduce inventories, which would result in reduced production by OEMs, and consequently result in reduced demand for our products. Moreover, dealers which are unable to obtain adequate financing could cease operations. Their remaining inventories would likely be sold at discounts, disrupting the market. Such sales have historically caused a decline in orders for new inventory, which reduced demand for our products, and which could reoccur in the future.
A tight labor market has, and could in the future, result in difficulty obtaining skilled labor, and available capacity may initiallyresult notin beincreased utilizedlabor efficiently.and production costs.
Epidemic outbreaks, terrorist acts, political events, and politicalcivil eventsunrest could disrupt our business and result in lower sales and otherwise adversely affect our financial performance.
External events, such as epidemic outbreaks, terrorist attacks, or disruptive political eventsevents, or civil unrest could adversely affect our business and result in lower sales. In the event that one of our manufacturing or distribution facilities was affected by any such event, we could be forced to shift production to one of our other facilities, which we may not be able to do effectively or at all, or to cease operations. Although we maintain insurance for damage to our property and disruption of our business from casualties, such insurance may not be sufficient to cover all of our potential losses. Any disruption in our manufacturing capacity could have an adverse impact on our ability to produce sufficient inventory of our products or may require us to incur additional expenses in order to produce sufficient inventory, and therefore, may adversely affect our net sales and operating results. Any disruption or delay at our manufacturing or distribution facilities or customer care centers could impair our ability to meet the demands of our customers, and our customers may cancel orders with us or purchase products from our competitors, which could adversely affect our business and operating results.
Our ability to expand our market share for our products that are used as components for RVs is limited. We have made investments in an effort to expand the sale of our products in adjacent industries, such as boats, buses, trucks, and trains, where we may have less familiarity with OEM or consumer preferences and could encounter difficulties in attracting customers due to a reduced level of familiarity with our brands. We have also made investments to expand the sale of our products in the aftermarket of our industries and to international markets and export sales of our products. These investments involve significant resources, put a strain on our administrative, operational, and financial capabilities and carry a risk of failure. Limited operating experience or limited brand recognition in new markets may limit our business expansion strategy. Lack of demand for our products in these markets or competitive pressures requiring us to lower prices for our products could adversely impact our business growth in these markets and our results of operations.
Limited operating experience or limited brand recognition in new markets may limit our business expansion strategy. Lack of demand for our products in these markets or competitive pressures requiring us to lower prices for our products could adversely impact our business growth in these markets and our results of operations.
We are dependent on the knowledge, experience, and skill of our leadership team. The loss of the services of one or more key managers or the failure to attract or retain qualified managerial, technical, sales and marketing, operations and customer care staff could impair our ability to conduct and manage our business and execute our business strategy, which would have an adverse effect on our business, financial condition and results of operations. Further, any leadership transitions can be inherently difficult to manage, may result in operational inefficiencies, and impact our ability to retain and hire other key members of management.
In addition, our information technology systems may be vulnerable to damage, interruption or unauthorized access from circumstances beyond our control, including fire, natural disasters, security breaches, telecommunications failures, computer viruses, hackers, phishing attempts, cyber-attacks, ransomware and other malware, payment fraud, and other manipulation or improper use of our systems. Any such events could result in legal claims or proceedings, liability or penalties under privacy laws, disruption in operations, and damage to our reputation, which could adversely affect our business. Further, as we haveupgrade beenand implementingstandardize a newour enterprise resource planning ("ERP") system, the full implementation of which is expected to take several years; however, there may be other challenges and risks as we upgrade and standardize our ERP system on a company-wide basis.basis, we continue to improve, upgrade, and integrate acquired businesses into our ERP system, which can lead to disruptions in our business operations, increase security risks, cause integration delays, and heighten other risks.
Cyber-attacks, such as those involving the deployment of malware, are increasing in frequency, sophistication, and intensity and have become increasingly difficult to detect. Further, artificial intelligence technologies may be used for certain cybersecurity attacks, and may increase their frequency and intensity, resulting in heightened risks of security breaches and incidents. Despite our ongoing efforts to manage cybersecurity risks, we cannot assure you that they will be effective or will work as designed. If we fail to maintain or protect our information systems and data integrity effectively, we could: lose existing customers; have difficulty attracting new customers; suffer outages or disruptions in our operations or supply chains; have difficulty preventing, detecting, and controlling fraud; have disputes with customers and suppliers; have regulatory sanctions or penalties imposed; incur increased operating expenses; incur expenses or lose revenues as a result of a data privacy breach; or suffer other adverse consequences.
Further, foreign, federal, state, and local regulatory and legislative bodies have adopted or proposed various legislative and regulatory measures relating to climate change, regulating greenhouse gas emissions, and energy policies. Such measures could impose significant costs on us and our suppliers and customers, including increased cost of materials and natural resources, sources and supply of energy, capital equipment, environmental monitoring and reporting, or other costs to comply with such regulations. Climate change regulation combined with public sentiment could result in reduced demand for products that use our components, higher fuel prices, or carbon taxes, all of which could materially adversely affect our business. Due to uncertainty in the regulatory and legislative processes, as well as the scope of such requirements and initiatives, we cannot currently determine the effect such legislation and regulation may have on our business, results of operationsoperations, and financial condition.
We rely on certain trademarks, patents and other intellectual property rights, including contractual rights with third parties. Our success depends, in part, on our ability to protect our intellectual property against dilution, infringement, and competitive pressure by defending our intellectual property rights. We rely on intellectual property laws of the U.S., European Union, Canada, and other countries, as well as contractual and other legal rights, for the protection of our property rights. However, we cannot assure that these measures will be successful in any given instance, or that third parties will not infringe upon our intellectual property rights. We may be forced to take steps to protect our rights, including through litigation, which could result in a significant expenditure of funds and a diversion of resources. The inability to protect our intellectual property rights could result in competitors manufacturing and marketing similar products which could adversely affect our market share and results of operations. Competitors may challenge, invalidate, or avoid the application of our existing or future intellectual property rights that we receive or license.
However, we cannot assure that these measures will be successful in any given instance, or that third parties will not infringe upon our intellectual property rights. We may be forced to take steps to protect our rights, including through litigation, which could result in a significant expenditure of funds and a diversion of resources. The inability to protect our intellectual property rights could result in competitors manufacturing and marketing similar products which could adversely affect our market share and results of operations. Competitors may challenge, invalidate, or avoid the application of our existing or future intellectual property rights that we receive or license.
Other state laws contain additional disclosure obligations for businesses that collect personal information about residents and afford those individuals additional rights relating to their personal information that may affect our ability to use personal information or share it with our business partners. For example, California has laws that give California residents certain privacy rights in the collection and disclosure of their personal information and requires businesses to make certain disclosures and take certain other acts in furtherance of those rights, and has recently created a new agency, the California Privacy Protection Agency,Agency is authorized to implement and enforce California’s privacy laws, which could result in increased privacy and information security regulatory actions. Other U.S. states have passed, or have proposed, consumer privacy laws. These laws may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business.
These laws may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business.
Additionally, because we accept debit and credit cards for payment, we are subject to the Payment Card Industry Data Security Standard (the "PCI Standard"), issued by the Payment Card Industry Security Standards Council. The PCI Standard contains compliance guidelines with regard to our security surrounding the physical and electronic storage, processing, and transmission of cardholder data. Complying with the PCI Standard and implementing related procedures, technology, and information security measures requires significant resources and ongoing attention. Costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology such as those necessary to maintain compliance with the PCI Standard or with maintenance or adequate support of existing systems could also disrupt or reduce the efficiency of our operations. Any material interruptions or failures in our payment-related systems could have an adverse effect on our business, financial conditioncondition, and results of operations.
In addition to the costs associated with the contractual warranty coverage provided on our products, we also occasionally incur costs as a result of additional service actions not covered by our warranties, including product recalls and customer satisfaction actions. Although we estimate and reserve for the cost of these service actions, there can be no assurance that expense levels will remain at current levels, or that such reserves will continue to be adequate.
Some of the products we sell may expose us to product liability claims relating to personal injury, death, or property damage, and may require product recalls or other actions. Although we maintain liability and product recall insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all. In addition, even if a product liability claim is not successful or is not fully pursued, the negative publicity surrounding a product recall or any assertion that our products caused property damage or personal injury could damage our brand identity and our reputation with existing and potential consumers and have an adverse effect on our business, financial conditioncondition, and results of operations.
Financing for our investments has been provided through a combination of currently available cash and cash equivalents, term loans, our 1.125 percent convertible senior notes due 2026 (the "2026 Convertible Notes"), our 3.000 percent convertible senior notes due 2030 (the "2030 Convertible Notes" and collectively with the 2026 Convertible Notes, the "Convertible Notes"), and use of our revolving credit facility. The incurrence of indebtedness may cause us to become more leveraged, which could (1) require us to dedicate a greater portion of our cash flow to the payment of debt service, (2) make us more vulnerable to a downturn in the economy, (3) limit our ability to obtain additional financing, or (4) negatively affect our outlook by one or more of our lenders.
Our debt agreements contain various covenants, restrictions, and events of default. Among other things, these provisions require us to maintain certain financial ratios, including a maximum net leverage ratio and a minimum debt serviceinterest coverage ratio, and impose certain limits on our ability to incur indebtedness, create liens, and make investments or acquisitions. Breaches of these covenants could result in defaults under the instruments governing the applicable indebtedness, which may permit the lenders under these debt agreements to exercise remedies. These defaults could have an adverse material impact on our business, results of operationsoperations, and financial condition.
Our financial condition, results of operations and cash flows could be significantly affected by changes in interest rates and actions taken by the Federal Reserve. Borrowings under our credit agreement currently bear interest at variable rates based on either an Alternate Base Rate or at term Secured Overnight Financing Rate ("SOFR") plus, in each case, an applicable margin. Any increase in the interest we pay and a corresponding increase in our costs of capital could have a material adverse impact on our financial condition, results of operationsoperations, or cash flows.
The conversion of some or all of the Convertible Notes may dilute the ownership interests of our stockholders. Upon conversion of the Convertible Notes, we have the option to pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock in respect of the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the notes being converted. IfWhile we electhave elected to settle in cash the remainder, if any, of our conversion obligation in excess of the aggregate principal amount of the 2026 Convertible Notes, we may elect to settle any such remainder with respect to our 2030 Convertible Notes being converted in shares of our common stock or a combination of cash and shares of our common stock, and any sales in the public market of our common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock. In addition, the existence of the 2030 Convertible Notes may encourage short selling by market participants because the conversion of the 2030 Convertible Notes could be used to satisfy short positions, or anticipated conversion of the 2030 Convertible Notes into shares of our common stock could depress the price of our common stock.
Certain provisions in the Indentureindentures governing the Convertible Notes may delay or prevent an otherwise beneficial takeover attempt of us.
Certain provisions in the Indentureindentures governing the Convertible Notes may make it more difficult or expensive for a third party to acquire us. For example, thethese Indentureindentures will require us, subject to certain exceptions, to repurchase the Convertible Notes for cash upon the occurrence of a fundamental change and, in certain circumstances, to increase the conversion rate for a holder that converts its Convertible Notes in connection with a make-whole fundamental change. A takeover of us may trigger the requirement that we repurchase the Convertible Notes and/or increase the conversion rate, which could make it more costly for a potential acquirer to engage in such a takeover. Such additional costs may have the effect of delaying or preventing a takeover of us that would otherwise be beneficial to investors.
Management's Discussion & Analysis (MD&A)
New heading “Loss on Extinguishment of Debt”
New heading “Gain on Sale of Real Estate”
Largest changes
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,see in full comparisonasincludingwelltariffsasforbymaterialsinflationarysourcedpressures.internationally.PricesThe 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 2025 compared to 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 increased during 2025, and are expected to remain elevated in 2026. However, prices of these commodities have historically beenvolatile,volatile andovertherethecanpastbefewnomonths prices have continued to fluctuate. Overall, we experienced reduced pricesassurances ofthesefuturecommodities 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.prices. Please see "Results of Operations" above for additional information regarding the impact of raw materialcostscosts, including related to tariffs, on our results of operations for the year ended December 31,2024.2025.
“•Interest expense, net in 2025 was $35.7 million compared to $28.9 million in 2024. …”see in full comparison
“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. …”see in full comparison
“•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.”see in full comparison
Oursee in full comparisondecreaseincrease in net sales to OEMs in Adjacent Industries during20242025 was primarily due tolowersales from acquired businesses and higher sales to North Americanmarine andutility trailerOEMs, 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.OEMs.
Full comparison: every changed paragraph (77)
We are a global leader in supplying engineered components to the outdoor recreation, transportation, marine, and building productshousing 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 directlydirect-to-consumer tosales consumersthrough online.online platforms.
We have two reportable segments, the OEM Segment and the Aftermarket Segment. At December 31, 2024,2025, we operated over 110100 manufacturing and distribution facilities located throughout North America and Europe. Net sales and operating profit were as follows for the years ended December 31:
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,the RV, transportation, marine, and housing markets. Our Aftermarket Segment enhances the product lifecycle for the recreationRV, transportation, marine, and transportationautomotive 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;the buses;transportation trailers(buses, usedtrailers, toconstruction, haultrains, and power sports), marine (pontoon boats, livestock,power equipmentboats, fishing boats, sailboats, and otheryachts), cargo;and trucks;housing trains; (manufactured homes; and modular housing.homes, park models, commercial offices, restroom trailers, and residential housing) markets.
Aftermarket Segment: Supplies many of our engineered components to the related aftermarket channels of the recreationRV, transportation, marine, and transportationautomotive markets, primarily tothrough retail dealers, wholesale distributors, and service centers, as well as directdirect-to-consumer tosales retailthrough customersonline via the Internet.platforms. The Aftermarket Segment also includes biminis, covers, buoys, and 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: Over the past several years, we have diversified our portfolio beyond the RV OEM market into transportation, marine, building products, transportation, international,housing, and aftermarket sectors. We have also diversified geographically through our international operations. 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.
In 2024,2025, Recreation Vehicle Industry Association ("RVIA") data shows U.S. wholesale shipments of travel trailers and fifth-wheel RVs, the Company's primary market, increased 132 percent to 291,600298,200 units compared with 2023.2024. Retail demand decreased 61 percent to 307,000305,300 units compared with 2023,2024, reflecting a partial stabilization from the sharp declines ofin 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.
Motorhomes, another key RV category, experienced a significant 243 percent declineincrease in wholesale shipments to 34,90036,000 units in 2024,2025, while retail demand fell 126 percent, according to RVIA data.
OEM Segment - Adjacent Industries: LCI'sOur expertise in RV components extends to adjacent industries, including boats,transportation, buses, trailers, trucks, trains, manufactured homes,marine, 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 industriesmarkets and the annual retail units sold of each include:
•Enclosed trailers: According to Statistical Surveys, approximately 191,900201,700 units were sold in 2024,2025, downcompared fromto 200,800199,100 in 20232024 and 213,800206,800 in 2022.2023.
•Boats: Statistical Surveys also reported approximately 245,800230,400 units were sold in 2024,2025, compared to 269,100250,200 in 20232024 and 270,900273,700 in 2022.2023. Pontoon boats, a subset of this market, sold 53,60048,300 units in 2024,2025, compared to 61,30054,300 in 20232024 and 62,70062,300 in 2022.2023.
•School buses. According to School Bus Fleet, salesapproximately decreased41,000 units were sold in 2025, compared to 40,300 units in 2024,2024 down fromand 41,200 in 2023 and 40,600 in 2022.2023.
•Manufactured housing. According to the Institute for Building Technology and Safety, wholesale shipments totaledwere 102,600approximately 102,700 units in 2024,2025, upcompared fromto 103,300 in 2024 and 89,200 in 2023 but down from 112,900 in 2022.2023.
Aftermarket Segment: Our Aftermarket Segment enhances the product lifecycle for the recreationRV, transportation, marine, and transportationautomotive 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 sales through online platforms. These products support recreation and transportation markets, addressing both routine maintenance needs and customer-driven enhancements.
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%half of Aftermarket Segment net sales in both 20242025 and 2023,2024, selling 1,061,000907,000 hitches in 2024,2025, updown from 910,0001,061,000 in 2023.2024.
•Consolidated net sales for 20242025 were $3.7$4.1 billion, 110 percent lowerhigher than consolidated net sales for 20232024 of $3.8$3.7 billion. The decreaseincrease was primarily driven by decreasedsales industryfrom productionacquired levelsbusinesses induring the year, sales price increases due to higher material costs, and higher North American marineRV sales driven by an increased mix of higher content fifth-wheel units, market share gains, and utility trailer markets and the European RV market, mostly offset by a 73 percent increase in total North American RV wholesale shipments and sales from acquisitions.shipments. Net sales from acquisitions completed in 20232024 and 20242025 contributed approximately $21.4$124.5 million in 2024.2025.
•Consolidated operating profit during 20242025 was $218.2$279.9 million compared to $123.4$218.2 million in 2023.2024. Operating profit margin was 6.8 percent in 2025 compared to 5.8 percent in 2024 compared to 3.3 percent in 2023.2024. The increase was primarily due to decreasesreduced costs from materials sourcing strategies and leveraging of fixed expenses over higher North American RV sales volumes driven by an increased mix of higher content fifth-wheel units, market share gains, and a 3 percent increase in material,total freight,North andAmerican warrantyRV costs.wholesale shipments.
•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.
•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 24.526.2 percent for 20242025 was higher than the prior year, primarily due to increases in the state effective tax adjustmentsrate as discussed below under "Income Taxes."
•Interest expense, net in 2025 was $35.7 million compared to $28.9 million in 2024. The increase was primarily due to interest on the 2030 Convertible Notes (as defined in Note 3 of the Notes to Consolidated Financial Statements) and higher interest rates on our adjustable rate Term Loans (as defined in Note 9 to the Notes to Consolidated Financial Statements), partially offset by reduced borrowings outstanding on the revolving credit facility and interest income of $7.3 million earned on investments in money market mutual funds for the year ended December 31, 2025, compared to $5.1 million in the same period of 2024.
•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 2024,2025, we paidreturned an aggregate of $242.6 million to shareholders, including through share repurchases of $128.6 million and quarterly dividends aggregating $4.30$4.60 per share, or $109.5$114.0 million.
Net sales of the OEM Segment in 20242025 decreasedincreased 112 percent, or $43.3$329.2 million, compared to 2023.2024. Net sales of components to OEMs were to the following markets for the years ended December 31:
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 RV content in 20242025 compared to 20232024 was driven primarily by sales price increases related to tariffs, an increase in RV sales mix toward higher content fifth-wheel units, and market share gainsgains, andpartially alignmentoffset in wholesale unit production and shipments, compared toby wholesale unit shipments outpacing productionunits 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.produced.
Our increase in net sales to RV OEMs during 2025 was driven by sales price increases related to tariffs, an increase in RV sales mix toward higher content fifth-wheel units, market share gains and a 3 percent increase in total North American RV wholesale shipments, partially offset by volume decreases in the European RV market.
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 decreaseincrease in net sales to OEMs in Adjacent Industries during 20242025 was primarily due to lowersales from acquired businesses and higher 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.OEMs.
•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 decreaseIncreases in warrantyselling prices primarily related to increased material costs, primarily due to product quality initiatives that resulted in reduced warranty claim payments, which increasedpositively impacted operating profit by $28.0$80.9 million compared to 2023.2024.
•Reduced costs from materials sourcing strategies, which increased operating profit by $44.5 million compared to 2024.
•The impact of fixed costs spread over increased sales, which increased operating profit by $14.6 million related to fixed production overhead costs and $13.1 million related to fixed selling, general, and administrative costs.
•Increases in production labor efficiencies, which positively impacted operating profit by $8.8 million compared to 2024.
•SalesHigher mixmaterial increasecosts ofrelated lowerto margintariffs products,and higher freight costs, which negatively impacted operating profit by $12.1$75.8 million compared to 2023.2024.
•DecreasesChanges in sellingproduct prices,sales mix toward lower margin products, which negatively impacted operating profit by $9.0$4.3 million relatedcompared to prices contractually tied to indices of select commodities and $2.0 million related to targeted products.2024.
•Restructuring costs associated with the closure of the Company's glass operations in Ireland, which negatively impacted operating profit by $3.9 million compared to 2024.
Net sales of the Aftermarket Segment in 20242025 wereincreased consistent6 withpercent, 2023.or $51.6 million, compared to 2024. Net sales of components in the Aftermarket Segment were as follows for the years ended December 31:
OurThe increase in net sales toof the Aftermarket Segment includedwas primarily driven by product innovations, the expanding Camping World relationship within the RV aftermarket, and sales from acquired businesses, partially offset by 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$95.8 million in 2024,2025, ana increasedecrease of $5.1$15.4 million compared to 2023.2024. The operating profit margin of the Aftermarket Segment was 10.3 percent in 2025, compared to 12.6 percent in 2024, compared to 12.0 percent in 2023, and was positivelynegatively 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.
•PricingHigher changesmaterial costs related to targetedtariffs products,and resultinghigher infreight ancosts, increasewhich incollectively negatively impacted operating profit ofby $5.1$22.7 million compared to 2023.2024.
•Increases in sales mix toward lower margin products, which negatively impacted operating profit by $12.4 million compared to 2024.
•Investments in capacity, distribution and logistics technology to support continued growth in the Aftermarket Segment, which negatively impacted operating profit by $8.7 million compared to 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 $3.9 million compared to 2024.
•Increases in advertising, customer promotions, and rebates, which negatively impacted operating profit by $3.0 million compared to 2024.
•Increases in productionselling laborprices costsfor duetargeted products primarily related to productincreased mix,material costs, which negativelypositively impacted operating profit by $10.2$21.8 million compared to 2023.2024.
•Reduced costs from materials sourcing strategies, which increased operating profit by $13.5 million compared to 2024.
•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.
Interest expense, net was $35.7 million in 2025, compared to $28.9 million in 2024, compared to $40.4 million in 2023.2024. The decrease in net interest expenseincrease was primarily due to netinterest repaymentson the 2030 Convertible Notes and higher outstanding principal and interest rates on our adjustable rate Term Loans, partially offset by reduced borrowings outstanding on the revolving credit facility, principalthe paymentspartial onpayoff of the Term2026 LoanConvertible Notes (as defined in Note 93 of the Notes to Consolidated Financial Statements), and $5.1interest millionincome of interest$7.3 incomemillion earned on investments in money market mutual funds,funds partiallyfor offsetthe byyear higherended globalDecember interest31, rates2025, earlycompared to $5.1 million 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.
Loss on Extinguishment of Debt
In 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 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 year ended December 31, 2025.
The effective income tax rate for 20242025 was 24.526.2 percent compared to 22.724.5 percent in 2023.2024. The higher effective tax rate for 20242025 was primarily due to increases in non-deductible executive compensation expenses and increases in the state effective tax rate. We estimate the 20252026 effective income tax rate will be approximately 2425 to 2627 percent.
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 December 31, 2024,2025, we had $165.8$222.6 million in cash and cash equivalents,equivalents and $452.5$595.2 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.
Net cash flows provided by operating activities were $331.0 million in 2025, compared to $370.3 million in 2024, compared to $527.2 million in 2023.2024. The decrease in net cash flows provided by operating activities was primarily due to the increase in inventories in 2025 of $35.0 million driven by higher inventory levels to support increased sales volume and higher material costs compared to the decrease in inventory in 20232024 of $235.3$46.3 million driven by decreasinglower commodity costs and initiatives to reduce inventory levels, compared to the decrease in inventories in 2024 of $46.3 million.levels. The decrease in net cash flows provided by operating activities was partially offset by the $78.7$45.4 million increase in net income in 20242025 compared to 2023.2024.
Cash flows used in investing activities of $147.1 million in 2025 were primarily comprised of $112.7 million for business acquisitions and $52.6 million for capital expenditures. 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.a business.
Cash flows used in financing activities of $125.5 million in 2025 were primarily comprised of the following:
•payments of $368.9 million for the repurchase of a portion of our 2026 Convertible Notes,
What changed in the latest 10-Q
Risk Factors
New heading “Risks Relating to the Mergers with Patrick”
Largest changes
“Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into acquisition or merger agreements. Even if the lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on our and Patrick’s respective liquidity and financial condition. …”see in full comparison
“Shareholder litigation could prevent or delay the closing of the Mergers or otherwise negatively affect our business and operations.”see in full comparison
“At the time the First Merger is completed, each issued and outstanding share of our common stock (other than certain shares held by us, Patrick or any of our respective subsidiaries) will be converted into the right to receive 1.2440 shares of Patrick common stock. …”see in full comparison
“The success of the Mergers will depend in part on the combined company’s ability to retain the talent and dedication of key employees currently employed by us and Patrick. It is possible that these employees may decide not to remain with us or Patrick, as applicable, while the Mergers are pending or with the combined company after the Mergers are consummated. …”see in full comparison
“In the Merger Agreement, we and Patrick have agreed, subject to certain exceptions, not to directly or indirectly solicit competing acquisition proposals or to enter into discussions concerning, or provide confidential information in connection with, any unsolicited alternative acquisition proposals. In addition, upon termination of the Merger Agreement under certain circumstances specified therein, we or Patrick would be required to pay the other party a termination fee equal to $94.2 million. …”see in full comparison
Full comparison: every changed paragraph (29)
ThereOther than the risk factors set forth below, 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 26, 2026.
Risks Relating to the Mergers with Patrick
We have identified certain additional risk factors in connection with the Merger Agreement and the Mergers. These risks and the other risks associated with the Mergers will be more fully discussed in the joint proxy statement/prospectus that will be included in the registration statement on Form S-4 that Patrick intends to file with the SEC in connection with the Mergers.
The Mergers are subject to conditions, including certain conditions that are beyond our and Patrick’s control and may not be satisfied at all or on a timely basis. Failure to complete the Mergers could have material and adverse effects on us.
Completion of the Mergers is subject to a number of conditions set forth in the Merger Agreement. Some of the conditions, such as approval by our stockholders and by Patrick stockholders and certain regulatory approvals, are beyond our and Patrick’s control, which make the completion and timing of the completion of the Mergers uncertain. In addition, the Merger Agreement contains certain termination rights for both us and Patrick, which if exercised, will also result in the Mergers not being consummated. Furthermore, the governmental authorities from which the regulatory approvals are required may impose conditions on the completion of the Mergers or require changes to the terms of the Merger Agreement.
If the Mergers are not completed for any reason, our ongoing business may be adversely affected and, without realizing any of the benefits of having completed the Mergers, we would be subject to a number of risks, including the following:
•we may experience negative reactions from the financial markets, including negative effects on our stock price;
•we may experience negative reactions from our customers and vendors;
•we will have incurred substantial expenses and will be required to pay certain costs relating to the Mergers, including legal, accounting and other fees, whether or not the Mergers are completed; and
•our management team will have devoted substantial time and resources to matters relating to the Mergers, and would otherwise have devoted such time and resources to other opportunities that may have been beneficial to us, which could cause us to lag competitor advances.
In addition, if the Merger Agreement is terminated and we seek another merger or business combination, our stock price could decline, which could make it more difficult to find a party willing to offer equivalent or more attractive consideration than the consideration Patrick has agreed to provide in the Mergers.
We will be subject to business uncertainties and contractual restrictions while the Mergers are pending.
Uncertainty about the effect of the Mergers on our employees and customers may have an adverse effect on us. These uncertainties may impair our ability to attract, retain, and motivate key personnel until the Mergers are completed and could cause customers and others that deal with us to seek to change existing business relationships with us. In addition, subject to certain exceptions, we have agreed to operate our business in the ordinary course in all material respects and to refrain from taking certain actions that may adversely affect our ability to consummate the transactions contemplated by the Merger Agreement on a timely basis without the consent of Patrick. These restrictions may prevent us from pursuing attractive business opportunities that may arise prior to the completion of the Mergers. Employee retention may be particularly challenging during the pendency of the Mergers, as employees may experience uncertainty about their roles with the combined company following the Mergers.
The Merger Agreement limits our and Patrick’s abilities to pursue alternatives to the Mergers and could discourage a potential competing acquiror or other strategic transaction partner from making a favorable alternative transaction proposal.
In the Merger Agreement, we and Patrick have agreed, subject to certain exceptions, not to directly or indirectly solicit competing acquisition proposals or to enter into discussions concerning, or provide confidential information in connection with, any unsolicited alternative acquisition proposals. In addition, upon termination of the Merger Agreement under certain circumstances specified therein, we or Patrick would be required to pay the other party a termination fee equal to $94.2 million. These provisions could discourage a potential acquirer or other strategic transaction partner that might have an interest in acquiring all or a significant portion of our company from considering or pursuing an alternative transaction with us or proposing such a transaction. These provisions might also result in a potential acquirer or other strategic transaction partner proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances.
Shareholder litigation could prevent or delay the closing of the Mergers or otherwise negatively affect our business and operations.
Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into acquisition or merger agreements. Even if the lawsuits are without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on our and Patrick’s respective liquidity and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Mergers, that injunction may delay or prevent the Mergers from being completed, which may adversely affect our and Patrick’s businesses, financial positions and results of operations, as described above under “The Mergers are subject to conditions, including certain conditions that are beyond our and Patrick’s control and may not be satisfied at all or on a timely basis. Failure to complete the Mergers could have material and adverse effects on us.”
We have incurred and are expected to incur substantial costs related to the Mergers.
We have incurred and expect to incur a number of non-recurring costs associated with the Mergers. These costs include, or will include, legal, financial advisory, accounting, consulting and other advisory fees, retention, severance and employee benefit-related costs, public company filings fees and other regulatory fees, financial printing and other printing costs. Some of these costs are payable by us regardless of whether or not the Mergers are completed.
Because the market price of Patrick common stock may fluctuate, our stockholders cannot be certain of the precise value of the consideration they may receive in the Mergers.
At the time the First Merger is completed, each issued and outstanding share of our common stock (other than certain shares held by us, Patrick or any of our respective subsidiaries) will be converted into the right to receive 1.2440 shares of Patrick common stock. Because such exchange ratio is fixed (subject to adjustments in accordance with the terms of the Merger Agreement), it will not change between now and the time the First Merger is completed, regardless of whether the market price of our common stock or Patrick common stock changes, and the value of the consideration our stockholders will receive in the Mergers will depend on the market price of Patrick common stock at the time the First Merger is completed. This market value may be less or more than the value used to determine the exchange ratio stated in the Merger Agreement. The market price of our common stock and Patrick common stock have fluctuated since the date of the announcement of the parties’ entry into the Merger Agreement and will continue to fluctuate as a result of a variety of factors, including general market and economic conditions, changes in our and Patrick’s businesses, operations and prospects, and regulatory considerations. Many of these factors are outside of our and Patrick’s control. Because the market prices of our common stock and Patrick common stock will fluctuate prior to the consummation of the Mergers, our stockholders will not know, or be able to determine, the market value of shares of Patrick common stock that they will receive in the Mergers as compared to the market value of our common stock immediately prior to the Mergers.
The Merger Agreement between us and Patrick may be terminated in accordance with its terms and the Mergers may not be completed.
The Merger Agreement is subject to a number of conditions which must be fulfilled in order to complete the Mergers. Those conditions include, among other things: (i) adoption of the Merger Agreement by our stockholders, (ii) approval by Patrick stockholders of (a) the issuance of shares of Patrick common stock in connection with the First Merger and (b) an amendment to the articles of incorporation of Patrick to, among other things, increase the number of authorized shares set forth therein and (iii) receipt of required regulatory approvals. These conditions to the closing may not be fulfilled in a timely manner or at all, and, accordingly, the Mergers may not be completed. In addition, the parties can mutually decide to terminate the Merger Agreement at any time, before or after the requisite stockholder approvals, or we or Patrick may elect to terminate the Merger Agreement in certain other circumstances.
Combining us and Patrick may be more difficult, costly or time-consuming than expected, and the combined company may fail to realize the anticipated benefits of the Mergers.
The success of the Mergers will depend, in part, on the ability to realize the anticipated synergies from combining the businesses of us and Patrick. To realize the anticipated synergies from the Mergers, we and Patrick must successfully integrate and combine businesses in a manner that permits those synergies to be realized without adversely affecting current revenues and future growth. If we and Patrick are not able to successfully achieve these objectives, the anticipated benefits of the Mergers may not be realized fully or at all or may take longer to realize than expected. In addition, the synergies of the Mergers could be less than anticipated, and integration may result in additional and unforeseen expenses.
An inability to realize the full extent of the anticipated benefits of the Mergers, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, levels of expenses and operating results of the combined company following the completion of the Mergers, which may adversely affect the value of the common stock of the combined company following the completion of the Mergers.
We and Patrick have operated and, until the completion of the Mergers, must continue to operate, independently. It is possible that the integration process could result in the loss of key employees or the disruption of each company’s ongoing businesses. Integration efforts between the companies may also divert management attention and resources. These integration matters could have an adverse effect on us during this transition period and for an undetermined period after completion of the Mergers on the combined company.
The combined company may be unable to retain our and/or Patrick personnel successfully after the Mergers are completed.
The success of the Mergers will depend in part on the combined company’s ability to retain the talent and dedication of key employees currently employed by us and Patrick. It is possible that these employees may decide not to remain with us or Patrick, as applicable, while the Mergers are pending or with the combined company after the Mergers are consummated. If we and Patrick are unable to retain key employees, including management, who are critical to the successful integration and future operations of the companies, we and Patrick could face disruptions in operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional recruitment costs. In addition, following the Mergers, if key employees terminate their employment, the combined company’s business activities may be adversely affected, and management’s attention may be diverted from successfully hiring suitable replacements, all of which may cause the combined company’s business to suffer. We and Patrick also may not be able to locate or retain suitable replacements for any key employees who leave either company.
Management's Discussion & Analysis (MD&A)
New heading “DEVELOPMENTS IN 2026”
New heading “OEM Segment – Year to Date”
New heading “Aftermarket Segment - Second Quarter”
New heading “Aftermarket Segment – Year to Date”
New heading “ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF”
New heading “Gain on Sale of Real Estate”
New heading “ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF”
New heading “ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF”
Removed heading “Aftermarket Segment - First Quarter”
Largest changes
see in full comparisonForward-lookingITEMstatements,2including,–withoutMANAGEMENT’Slimitation,DISCUSSIONthoseANDrelatingANALYSISto 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, armedOF conflicts, or natural disasters on the global economy and on the Company's customers, suppliers, team members, business and cash flows, (4) pricing pressures due to domestic and foreign competition, (5) seasonality and cyclicality in the industries to which we sell our products, (6) availability of credit for financing the retail and wholesale purchase of products for which we sell our components, (7) inventory levels of retail dealers and manufacturers, availability of transportation for products for which we sell our components, (8) the financial condition of our customers, (9) the financial condition of retail dealers of products for which we sell our components, (10) retention and concentration of significant customers, (11) the costs, pace of, and successful integration of acquisitions and other growth initiatives, (12) availability and costs of production facilities and labor, team member benefits, team member retention, realization and impact of expansion plans, (13) efficiency improvements and cost reductions, (14) the disruption of business resulting from natural disasters or other unforeseen events, (15) the successful entry into new markets, (16) 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, (17) information technology performance and security, (18) the ability to protect intellectual property, (19) warranty and product liability claims or product recalls, (20) 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, (21) risks related to the pending Mergers, including (a) the risk that the cost savings and any revenue synergies from the Mergers may not be fully realized or may take longer than anticipated to be realized, (b) disruption to each party’s business as a result of the announcement and pendency of the Mergers, (c) the risk that the integration of each party’s operations will be materially delayed or will be more costly or difficult than expected or that the parties are otherwise unable to successfully integrate as a result of unexpected factors or events, (d) the failure to obtain the necessary approvals by the stockholders of the Company or Patrick, (e) the ability by each of the Company and Patrick to obtain required governmental approvals of the Mergers on the timeline expected, or at all, and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the Mergers, (f) reputational risk and the reaction of each party’s customers, suppliers, employees or other business partners to the Mergers, (g) the failure of the closing conditions in the Merger Agreement to be satisfied, or any unexpected delay in closing the Mergers or the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, (h) the possibility that the Mergers may be more expensive to complete than anticipated, including as a result of unexpected factors or events, (i) risks related to management and oversight of the expanded business and operations of the combined company due to the increased size and complexity, (j) the possibility of increased scrutiny by, and/or additional regulatory requirements of, governmental authorities as a result of the Mergers or the size, scope and complexity of the combined company’s business operations, and (k) the outcome of any legal or regulatory proceedings that may be currently pending or later instituted against the Company, Patrick or the combined company before or after the Mergers, and (22) 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 31,2025,2025 and in this Quarterly Report on Form 10-Q, 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.
“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, industry trends, and the Mergers, 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. …”see in full comparison
“Following the U.S. Supreme Court’s ruling on the IEEPA Tariffs, in February 2026, the U.S. government imposed a 10 percent global tariff on most imported products for a 150-day period, which were subsequently invalidated by the CIT but remained in effect pending appeal. In July 2026, the U.S. …”see in full comparison
“Tariff Updates: In February 2026, the U.S. Supreme Court ruled that certain tariffs imposed under the International Emergency Economic Powers Act ("IEEPA Tariffs") were not lawful. In March 2026, the Court of International Trade (“CIT”) ordered U.S. Customs and Border Protection (“CBP”) to begin the refund process for importers subject to IEEPA Tariffs, and in April 2026, CBP established an online portal through which importers may submit refund requests. …”see in full comparison
Full comparison: every changed paragraph (135)
•Leveling, Stabilization, and Slide-outs: Stabilizer/leveling systems (manual, electric, and hydraulic), and slide-out solutions At MarchJune 31,30, 2026, we operated over 100 manufacturing facilities located throughout North America and Europe, supporting key industries such as recreational vehicles ("RVs"), transportation, marine, and housing. Our core manufacturing competencies include:
DEVELOPMENTS IN 2026
Agreement and Plan of Merger: On June 30, 2026, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with Patrick Industries, Inc. ("Patrick"), Planet First Merger Sub Inc. (a direct wholly-owned subsidiary of Patrick), and Planet Second Merger Sub LLC (a direct wholly-owned subsidiary of Patrick). Pursuant to the Merger Agreement, and subject to the satisfaction or waiver of certain closing conditions, Planet First Merger Sub Inc. will merge with and into the Company (the "First Merger"), with the Company surviving as a wholly-owned subsidiary of Patrick, and immediately following the First Merger, and as part of the same overall transaction as the First Merger, the Company will merge with and into Planet Second Merger Sub LLC (the "Second Merger" and, together with the First Merger, the "Mergers"), with Planet Second Merger Sub LLC surviving as a wholly-owned subsidiary of Patrick. The Merger Agreement was unanimously approved by the boards of directors of the Company and Patrick. The Mergers are subject to certain closing conditions, including the approval by the stockholders of each company and the receipt of required regulatory approvals, and are currently expected to close in the first half of 2027.
Additional information regarding the Merger Agreement and the proposed Mergers is included in Note 13 of the Notes to Condensed Consolidated Financial Statements and in the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission (the "SEC") on June 30, 2026.
Leadership Transition: On June 3, 2026, Jason D. Lippert retired as Chief Executive Officer of LCI Industries and resigned as a member of the Board of Directors of the Company (the “Board”). Also on June 3, 2026, Tracy D. Graham, the Chair of the Board, resigned as a member of the Board, including all committees thereof. In connection with Mr. Lippert’s retirement as Chief Executive Officer of the Company, the Board appointed Board member John A. Sirpilla to serve as Interim Chief Executive Officer, effective as of June 3, 2026. In connection with Mr. Graham’s resignation from the Board, the Board appointed Virginia L. Henkels, a current member of the Board, to serve as Chair of the Board, effective as of June 3, 2026.
Tariff Updates: In February 2026, the U.S. Supreme Court ruled that certain tariffs imposed under the International Emergency Economic Powers Act ("IEEPA Tariffs") were not lawful. In March 2026, the Court of International Trade (“CIT”) ordered U.S. Customs and Border Protection (“CBP”) to begin the refund process for importers subject to IEEPA Tariffs, and in April 2026, CBP established an online portal through which importers may submit refund requests. We expect to receive $119.3 million in tariff refunds, which represents the amount of IEEPA Tariffs the Company determined it paid while such tariffs were in effect from February 2025 through February 2026, and we received $94.9 million of IEEPA Tariff refunds during the three months ended June 30, 2026. We expect to pass through approximately $88.8 million of the IEEPA Tariff refunds received to certain customers. The ultimate amount and timing of any remaining refunds and related payments to customers remain subject to uncertainty, including the outcome of the U.S. government's appeal of the CIT order. See Note 2 of the Notes to Condensed Consolidated Financial Statements for the details of our accounting for IEEPA Tariff refunds, as well
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF as uncertainties related to the IEEPA Tariff refunds, and the Results of Operations discussion below for the impact of IEEPA Tariff refunds and pass-throughs on our operations by segment.
Following the U.S. Supreme Court’s ruling on the IEEPA Tariffs, in February 2026, the U.S. government imposed a 10 percent global tariff on most imported products for a 150-day period, which were subsequently invalidated by the CIT but remained in effect pending appeal. In July 2026, the U.S. government announced a new forced labor tariffs framework of 10 percent or 12.5 percent, which became effective when the temporary tariffs expired, that covers imports from 60 countries, with exemptions for, among others, products already subject to tariffs under Section 232 of the Trade Expansion Act of 1962 (such as steel and aluminum) and certain inputs used in U.S. manufacturing. Section 232 tariffs also continued to evolve, with modifications implemented in April and June 2026. Changes in U.S. trade policies, including the imposition of new or increased tariffs, may increase the cost of certain products, components, and materials we source, which could adversely affect our margins, results of operations, cash flows, and financial condition. The impact of current and potential tariff actions remains uncertain and may vary across our product portfolio. In addition, future governmental actions, regulatory interpretations, supplier responses, changes in sourcing, and other market conditions could affect the extent of any impact. While we continue to evaluate opportunities to mitigate these risks, there can be no assurance that such efforts will be successful or that additional tariffs or related cost increases will not have a material adverse effect on our business.
In the first threesix months of 2026 compared to the same period in 2025, Recreation Vehicle Industry Association ("RVIA") data shows United States wholesale shipments of travel trailer and fifth-wheel RVs, the Company's primary market, decreased 1517 percent to 73,400138,900 units. Retail demand for travel trailer and fifth-wheel RVs decreased 1715 percent to 52,200139,000 units in the first threesix months of 2026 compared to the same period in 2025. Retail registration data is often revised upward in subsequent months due to reporting delays.
In the first threesix months of 2026 compared to the same period in 2025, RVIA data showed wholesale shipments of motorhome RVs increased 1510 percent to 10,70020,500 units. Retail demand for motorhome RVs decreased 2410 percent to 6,80017,700 units in the first threesix months of 2026 compared to the same period of 2025. RetailThe decrease in retail demand has declined from post-pandemic elevated levels,been primarily driven by inflation and higher interest rates impacting retail consumer discretionary spending.
•Consolidated net sales in the first quarter of 2026 were $1.1 billion, an increase of 4.3 percent, from $1.0 billion in the same period of 2025. The increase was primarily due to sales price increases to cover higher material costs, sales from acquired businesses, North American RV sales driven by recent innovations, and an increased mix of higher content fifth-wheel units, partially offset by lower North American RV wholesale shipments. Net sales from acquisitions completed in the twelve months ended March 31, 2026 contributed approximately $46.8 million in the first quarter of 2026.
•NetConsolidated incomenet forsales in the firstsecond quarter of 2026 waswere $62.9$968.7 million, ora $2.53 per diluted share, compared to net incomedecrease of $49.412.5 million,percent, orfrom $1.94$1,107.3 permillion diluted share, forin the same period of 2025.
◦Net sales in the second quarter of 2026 were reduced by $88.8 million due to IEEPA Tariff refunds expected to be passed through to customers.
◦In addition to the IEEPA Tariff refund pass-through, the decrease in net sales was primarily due to lower North American RV wholesale shipments, partially offset by sales price increases for targeted products and to cover higher material costs, sales from acquired businesses, growth in the automotive aftermarket, and content gains in North American RV sales driven by recent product innovations. Net sales from acquisitions completed in the twelve months ended June 30, 2026 contributed approximately $16.7 million in the second quarter of 2026.
•Consolidated cost of sales in the second quarter of 2026 was $667.5 million, a decrease of 20.3 percent, from $837.2 million in the same period of 2025; however, cost of sales for the second quarter of 2026 included a reduction of $104.8 million, which is the amount of the total expected recovery of IEEPA Tariff refunds.
•Consolidated operating profit during the firstsecond quarter of 2026 was $95.2$96.0 million, compared to $81.3$87.8 million in the same period of 2025. Operating profit margin was 8.79.9 percent in the firstsecond quarter of 2026 compared to 7.87.9 percent in the same period of 2025. The increase was primarily due to reduced costs as a result of materials sourcing strategies and the benefits of other cost improvement actions, such as the footprint optimizations.
◦Operating profit in the second quarter of 2026 was $16.0 million higher due to the net benefit of the IEEPA Tariff refunds expected to be received that were previously expensed as cost of sales, partially offset by the related pass-through of IEEPA Tariffs refunds to customers.
◦In addition to the favorable net impact of the IEEPA Tariff refunds, the increase in operating profit margin was primarily due to cost improvement actions, including materials sourcing strategies, partially offset by merger-related expenses and investments in capacity and distribution to support the Aftermarket Segment.
•Net income for the second quarter of 2026 was $67.1 million, or $2.75 per diluted share, compared to net income of $57.6 million, or $2.29 per diluted share, for the same period of 2025.
•In the firstsecond quarter of 2026, we paid a quarterly dividend of $1.15 per share,share was paid, aggregating to $27.9$28.0 million.
•In the second quarter of 2026, the remaining balance of the 2026 Convertible Notes was paid off at maturity with cash of $92.0 million.
OEM Segment - FirstSecond Quarter
Net sales of the OEM Segment in the firstsecond quarter of 2026 increaseddecreased by $29.3$164.8 million, compared to the same period of 2025. Net sales of components to OEMs were to the following markets for the three months ended MarchJune 3130:
According to the RVIA, industry-wide wholesale shipments for the three months ended MarchJune 3130 were:
The trend in our average product content per RV produced is an indicator of our continued engagement with our RV OEM customers. 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 March 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, product innovations, changes in unit mix, and acquisitions. For the twelve months ended March 31, 2026, travel trailer and fifth-wheel RV content increased 12.8 percent year-over year due to sales price increases to cover higher material costs, an increase in RV mix toward higher content fifth-wheel units, and recent innovations, partially offset by shipments exceeding units produced.
Our decrease in net sales to RV OEMs during the first quarter of 2026 was primarily due to a decrease in North American travel trailer and fifth-wheel shipments, partially offset by sales price increases to cover higher material costs, an increase in RV sales mix toward higher content fifth-wheel units, an increase in North American motorhome RV unit shipments, and recent innovations.
RV OEMs for the different types of RVs produced for the twelve months ended June 30, divided by the industry-wide wholesale shipments of the different product mix of RVs for the same period, was:
(1) Average product content per RV in 2026 excludes the impact of IEEPA Tariff refunds expected to be passed through to customers.
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, product innovations, changes in unit mix, and acquisitions. For the twelve months ended June 30, 2026, travel trailer and fifth-wheel RV content increased 11.4 percent year-over-year due to sales price increases for targeted products and to cover higher material costs, an increase in RV mix toward higher content fifth-wheel units, and recent product innovations, partially offset by shipments exceeding units produced.
Our decrease in net sales to RV OEMs during the second quarter of 2026 was primarily due to a reduction for IEEPA Tariff refunds expected to be passed through to customers, a decrease in North American travel trailer and fifth-wheel shipments, and an increase in RV sales mix toward lower content single axle travel trailers, partially offset by sales price increases for targeted products and to cover higher material costs, and recent product innovations.
Our increase in net sales to OEMs in Adjacent Industries during the firstsecond quarter of 2026 was primarily due to sales from acquired businesses and higher sales to North American marine OEMs.OEMs, partially offset by a reduction for IEEPA Tariff refunds expected to be passed through to customers.
Operating profit of the OEM Segment was $76.5$44.1 million in the firstsecond quarter of 2026, ana increasedecrease of $14.5$7.6 million compared to the same period of 2025. The operating profit margin of the OEM Segment increased to 9.06.5 percent in the firstsecond quarter of 2026, compared to 7.56.2 percent for the same period of 2025, and was positively impacted by:
•Increases in selling prices for targeted products to cover increased material costs, which positively impacted operating profit by $31.6 million compared to the same period in 2025.
•Cost improvement actions, such as footprint optimizations, increased operating profit by $6.7 million compared to the same period in 2025.
•Reduced costs as a result of materials sourcing strategies, which increased operating profit by $6.4 million compared to the same period in 2025.
•A favorable shiftIncreases in salesselling mix,prices for targeted products and to cover increased material costs, which positively impacted operating profit by $4.3$13.4 million compared to the same period in 2025.
Partially offset by:
•Higher material costs related to tariffs and higher steel and aluminum costs, partially offset by a reduction in in-bound freight costs, which negatively impacted operating profit by $38.4 million compared to the same period in 2025.
•The impact of fixed costs spread over decreased production volumes, which decreased operating profit by $9.3 million related to fixed production overhead costs and $4.2 million related to fixed selling, general, and administrative costs.
Amortization expense on intangible assets for the OEM Segment was $9.4 million in the first quarter of 2026, compared to $9.1 million in the same period of 2025. Depreciation expense on fixed assets for the OEM Segment was $11.3 million in the first quarter of 2026, compared to $12.3 million in the same period of 2025.
Aftermarket Segment - First Quarter
Net sales of the Aftermarket Segment in the first quarter of 2026 increased by $15.7 million, compared to the same period of 2025. Net sales of components in the Aftermarket Segment were as follows for the three months ended March 31:
Our net sales of the Aftermarket Segment for the first quarter of 2026 increased compared to the same period in 2025, primarily driven by price increases to cover higher material costs and acquisitions, partially offset by volume decreases in the automotive and marine aftermarkets.
Operating profit of the Aftermarket Segment was $18.7 million in the first quarter of 2026, a decrease of $0.7 million compared to the same period of 2025. The operating profit margin of the Aftermarket Segment was 7.8 percent in the first quarter of 2026, compared to 8.7 percent in the same period in 2025, and was negatively impacted by:
•Higher material costs related to tariffs and higher steel costs, partially offset by a reduction in in-bound freight costs, which negatively impacted operating profit by $11.2 million compared to the same period in 2025.
•InvestmentsCost inimprovement capacityactions, andincluding distributionmaterials tosourcing support continued growth in the Aftermarket Segment,strategies, which negatively impactedincreased operating profit by $5.6$12.5 million compared to the same period in 2025.
•A favorable shift in component sales mix, which positively impacted operating profit by $10.9 million compared to the same period in 2025.
•A net positive impact of $1.5 million, resulting from a reduction to cost of sales of $86.4 million related to IEEPA Tariff refunds and a reduction to net sales of $84.9 million for IEEPA Tariff refunds expected to be passed through to customers.
•The impact of fixed costs spread over decreased production volumes, which decreased operating profit by $18.7 million related to fixed production overhead costs and $8.8 million related to fixed selling, general and administrative costs compared to the same period in 2025.
•Higher material and freight costs related to tariffs, higher steel and aluminum costs, and rising fuel costs, which negatively impacted operating profit by $23.0 million compared to the same period in 2025.
•Merger-related expenses, which negatively impacted operating profit by $10.9 million compared to the same period in 2025.
Amortization expense on intangible assets for the OEM Segment was $9.2 million in the second quarter of 2026, compared to $9.6 million in the same period of 2025. Depreciation expense on fixed assets for the OEM Segment was $12.3 million in the second quarter of 2026, compared to $12.2 million in the same period of 2025.
OEM Segment – Year to Date
Net sales of the OEM Segment in the first six months of 2026 decreased by $135.5 million, compared to the same period of 2025. Net sales of components to OEMs were to the following markets for the six months ended June 30:
According to the RVIA, industry-wide wholesale unit shipments for the six months ended June 30 were:
Our decrease in net sales to RV OEMs during the first six months of 2026 was primarily driven by a 17.2 percent decrease in North American travel trailer and fifth-wheel shipments, a reduction for IEEPA Tariff refunds expected to be passed through to customers, and an increase in RV sales mix toward lower content single axle travel trailers, partially offset by sales price increases for targeted products and to cover higher material costs, a 9.6 percent increase in North American motorhome shipments, and recent product innovations.
Our increase in net sales to OEMs in Adjacent Industries during the first six months of 2026 was primarily due to sales from acquired businesses and higher sales to North American marine OEMs, partially offset by a reduction for IEEPA Tariff refunds expected to be passed through to customers.
Partially offset by:
•Increases in selling prices for targeted products primarily to cover increased material costs, which positively impacted operating profit by $11.6 million compared to the same period in 2025.
LCII insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-05-12 | Gero James |
Option exercise | 1,761 | $112.42 | $198.0K |
| 2026-05-12 | Gero James |
Option exercise | 11,876 | $112.42 | $1.3M |
| 2026-05-12 | O'sullivan Kieran M |
Option exercise | 1,761 | $112.42 | $198.0K |
| 2026-05-12 | Sirpilla John A. |
Option exercise | 1,761 | $112.42 | $198.0K |
| 2026-05-12 | Myers Linda Kristine |
Option exercise | 1,761 | $112.42 | $198.0K |
| 2026-05-12 | Mains Stephanie K. |
Option exercise | 1,761 | $112.42 | $198.0K |
| 2026-05-12 | Henkels Virginia |
Option exercise | 1,761 | $112.42 | $198.0K |
| 2026-05-12 | Graham Tracy D |
Option exercise | 1,761 | $112.42 | $198.0K |
| 2026-05-12 | Deely Brendan |
Option exercise | 1,761 | $112.42 | $198.0K |
| 2026-04-17 | Etzkorn Lillian |
Shares withheld for tax | 499 | — | — |
| 2026-04-17 | Etzkorn Lillian |
Option exercise | 1,131 | $123.43 | $139.6K |
Well-known investors holding LCII (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Oaktree Capital Management (Howard Marks) | 2026-06-30 | 0 | $9.1M | — | Sold out |
| Oaktree Capital Management (Howard Marks) | 2026-06-30 | 0 | $6.3M | 0.12% | New position |