10-Q 1 lcii-20210930.htm 10-Q lcii-20210930
FALSE2021Q3000076374412/3120.006036900007637442021-01-012021-09-30xbrli:shares00007637442021-10-29iso4217:USD00007637442021-07-012021-09-3000007637442020-07-012020-09-3000007637442020-01-012020-09-300000763744us-gaap:RetainedEarningsMember2020-07-012020-09-30iso4217:USDxbrli:shares00007637442021-09-3000007637442020-12-3100007637442019-12-3100007637442020-09-300000763744us-gaap:CommonStockMember2019-12-310000763744us-gaap:AdditionalPaidInCapitalMember2019-12-310000763744us-gaap:RetainedEarningsMember2019-12-310000763744us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310000763744us-gaap:TreasuryStockMember2019-12-310000763744us-gaap:RetainedEarningsMember2020-01-012020-03-3100007637442020-01-012020-03-310000763744us-gaap:CommonStockMember2020-01-012020-03-310000763744us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310000763744us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310000763744us-gaap:CommonStockMember2020-03-310000763744us-gaap:AdditionalPaidInCapitalMember2020-03-310000763744us-gaap:RetainedEarningsMember2020-03-310000763744us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-310000763744us-gaap:TreasuryStockMember2020-03-3100007637442020-03-310000763744us-gaap:RetainedEarningsMember2020-04-012020-06-3000007637442020-04-012020-06-300000763744us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300000763744us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300000763744us-gaap:CommonStockMember2020-06-300000763744us-gaap:AdditionalPaidInCapitalMember2020-06-300000763744us-gaap:RetainedEarningsMember2020-06-300000763744us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300000763744us-gaap:TreasuryStockMember2020-06-3000007637442020-06-300000763744us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300000763744us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300000763744us-gaap:CommonStockMember2020-09-300000763744us-gaap:AdditionalPaidInCapitalMember2020-09-300000763744us-gaap:RetainedEarningsMember2020-09-300000763744us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300000763744us-gaap:TreasuryStockMember2020-09-300000763744us-gaap:CommonStockMember2020-12-310000763744us-gaap:AdditionalPaidInCapitalMember2020-12-310000763744us-gaap:RetainedEarningsMember2020-12-310000763744us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000763744us-gaap:TreasuryStockMember2020-12-310000763744us-gaap:RetainedEarningsMember2021-01-012021-03-3100007637442021-01-012021-03-310000763744us-gaap:CommonStockMember2021-01-012021-03-310000763744us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310000763744us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310000763744us-gaap:CommonStockMember2021-03-310000763744us-gaap:AdditionalPaidInCapitalMember2021-03-310000763744us-gaap:RetainedEarningsMember2021-03-310000763744us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-310000763744us-gaap:TreasuryStockMember2021-03-3100007637442021-03-310000763744us-gaap:RetainedEarningsMember2021-04-012021-06-3000007637442021-04-012021-06-300000763744us-gaap:CommonStockMember2021-04-012021-06-300000763744us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-300000763744us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300000763744us-gaap:CommonStockMember2021-06-300000763744us-gaap:AdditionalPaidInCapitalMember2021-06-300000763744us-gaap:RetainedEarningsMember2021-06-300000763744us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-300000763744us-gaap:TreasuryStockMember2021-06-3000007637442021-06-300000763744us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-300000763744us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300000763744us-gaap:RetainedEarningsMember2021-07-012021-09-300000763744us-gaap:CommonStockMember2021-09-300000763744us-gaap:AdditionalPaidInCapitalMember2021-09-300000763744us-gaap:RetainedEarningsMember2021-09-300000763744us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300000763744us-gaap:TreasuryStockMember2021-09-30xbrli:pure0000763744us-gaap:ManufacturingFacilityMember2021-09-300000763744us-gaap:ConvertibleDebtMember2021-05-130000763744us-gaap:ConvertibleDebtMember2021-09-3000007637442021-05-130000763744us-gaap:WarrantMember2021-07-012021-09-300000763744us-gaap:WarrantMember2021-01-012021-09-300000763744us-gaap:ConvertibleDebtSecuritiesMember2021-01-012021-09-300000763744lcii:StampedePresentationProductsIncDbaExertisExertisMemberus-gaap:SubsequentEventMember2021-10-012021-10-310000763744lcii:FurrionMember2021-09-300000763744lcii:FurrionMember2021-09-012021-09-300000763744lcii:FurrionMember2021-07-012021-09-300000763744lcii:FurrionMember2021-01-012021-09-300000763744lcii:SchaudtGmbHElektrotechnikApparatebauSchaudtMember2021-04-300000763744lcii:SchaudtGmbHElektrotechnikApparatebauSchaudtMember2021-04-012021-04-300000763744us-gaap:CustomerRelationshipsMemberlcii:SchaudtGmbHElektrotechnikApparatebauSchaudtMember2021-04-300000763744us-gaap:OtherIntangibleAssetsMemberlcii:SchaudtGmbHElektrotechnikApparatebauSchaudtMember2021-04-300000763744lcii:KasparRanchHandEquipmentLLCRanchHandMember2021-04-300000763744lcii:KasparRanchHandEquipmentLLCRanchHandMember2021-04-012021-04-300000763744lcii:KasparRanchHandEquipmentLLCRanchHandMemberus-gaap:CustomerRelationshipsMember2021-04-300000763744lcii:KasparRanchHandEquipmentLLCRanchHandMemberus-gaap:OtherIntangibleAssetsMember2021-04-30lcii:businessAcquired0000763744us-gaap:SeriesOfIndividuallyImmaterialBusinessAcquisitionsMember2021-01-012021-09-300000763744us-gaap:SeriesOfIndividuallyImmaterialBusinessAcquisitionsMember2021-09-300000763744lcii:VeadaIndustriesIncMember2020-12-310000763744lcii:VeadaIndustriesIncMember2020-12-012020-12-310000763744lcii:VeadaIndustriesIncMember2021-01-012021-09-300000763744lcii:VeadaIndustriesIncMemberus-gaap:OtherCurrentLiabilitiesMember2021-01-012021-09-300000763744lcii:VeadaIndustriesIncMemberus-gaap:OtherNoncurrentLiabilitiesMember2021-01-012021-09-300000763744lcii:ChallengerDoorLLCMember2020-11-012020-11-300000763744lcii:ChallengerDoorLLCMember2021-01-012021-09-300000763744lcii:ChallengerDoorLLCMemberus-gaap:OtherCurrentLiabilitiesMember2021-01-012021-09-300000763744lcii:ChallengerDoorLLCMemberus-gaap:OtherNoncurrentLiabilitiesMember2021-01-012021-09-300000763744lcii:OEMSegmentMember2020-12-310000763744lcii:AftermarketSegmentMember2020-12-310000763744lcii:OEMSegmentMember2021-01-012021-09-300000763744lcii:AftermarketSegmentMember2021-01-012021-09-300000763744lcii:OEMSegmentMember2021-09-300000763744lcii:AftermarketSegmentMember2021-09-300000763744us-gaap:CustomerRelationshipsMember2021-09-300000763744us-gaap:CustomerRelationshipsMembersrt:MinimumMember2021-01-012021-09-300000763744srt:MaximumMemberus-gaap:CustomerRelationshipsMember2021-01-012021-09-300000763744us-gaap:PatentsMember2021-09-300000763744us-gaap:PatentsMembersrt:MinimumMember2021-01-012021-09-300000763744srt:MaximumMemberus-gaap:PatentsMember2021-01-012021-09-300000763744us-gaap:TradeNamesMember2021-09-300000763744us-gaap:TradeNamesMembersrt:MinimumMember2021-01-012021-09-300000763744srt:MaximumMemberus-gaap:TradeNamesMember2021-01-012021-09-300000763744us-gaap:TradeNamesMember2021-09-300000763744us-gaap:NoncompeteAgreementsMember2021-09-300000763744us-gaap:NoncompeteAgreementsMembersrt:MinimumMember2021-01-012021-09-300000763744srt:MaximumMemberus-gaap:NoncompeteAgreementsMember2021-01-012021-09-300000763744us-gaap:LicensingAgreementsMember2021-09-300000763744us-gaap:LicensingAgreementsMembersrt:MinimumMember2021-01-012021-09-300000763744us-gaap:LicensingAgreementsMembersrt:MaximumMember2021-01-012021-09-300000763744lcii:PurchasedResearchandDevelopmentMember2021-09-300000763744us-gaap:CustomerRelationshipsMember2020-12-310000763744us-gaap:CustomerRelationshipsMembersrt:MinimumMember2021-01-012021-06-300000763744srt:MaximumMemberus-gaap:CustomerRelationshipsMember2021-01-012021-06-300000763744us-gaap:PatentsMember2020-12-310000763744us-gaap:PatentsMembersrt:MinimumMember2021-01-012021-06-300000763744srt:MaximumMemberus-gaap:PatentsMember2021-01-012021-06-300000763744us-gaap:TradeNamesMember2020-12-310000763744us-gaap:TradeNamesMembersrt:MinimumMember2021-01-012021-06-300000763744srt:MaximumMemberus-gaap:TradeNamesMember2021-01-012021-06-300000763744us-gaap:TradeNamesMember2020-12-310000763744us-gaap:NoncompeteAgreementsMember2020-12-310000763744us-gaap:NoncompeteAgreementsMembersrt:MinimumMember2021-01-012021-06-300000763744srt:MaximumMemberus-gaap:NoncompeteAgreementsMember2021-01-012021-06-300000763744us-gaap:LicensingAgreementsMember2020-12-310000763744us-gaap:LicensingAgreementsMembersrt:MinimumMember2021-01-012021-06-300000763744us-gaap:LicensingAgreementsMembersrt:MaximumMember2021-01-012021-06-300000763744lcii:PurchasedResearchandDevelopmentMember2020-12-310000763744lcii:CURTAcquisitionHoldingsMember2021-01-012021-09-300000763744us-gaap:ConvertibleDebtMember2020-12-310000763744us-gaap:LineOfCreditMember2021-09-300000763744us-gaap:LineOfCreditMember2020-12-310000763744us-gaap:MediumTermNotesMember2021-09-300000763744us-gaap:MediumTermNotesMember2020-12-310000763744lcii:ShelfLoanMember2021-09-300000763744lcii:ShelfLoanMember2020-12-310000763744lcii:OtherDebtMember2021-09-300000763744lcii:OtherDebtMember2020-12-310000763744lcii:JpmorganChaseBankAndWellsFargoBankMemberus-gaap:LineOfCreditMember2016-04-270000763744lcii:JPMorganChaseBankN.A.WellsFargoBankN.A.BankofAmericaN.A.and1stSourceBankMemberus-gaap:LineOfCreditMember2018-12-140000763744lcii:JpmorganChaseBankAndWellsFargoBankMemberus-gaap:LineOfCreditMember2018-12-140000763744lcii:JpmorganChaseBankAndWellsFargoBankMemberus-gaap:LineOfCreditMember2021-09-30iso4217:EUR0000763744us-gaap:MediumTermNotesMember2019-12-190000763744us-gaap:MediumTermNotesMemberus-gaap:DebtInstrumentRedemptionPeriodOneMember2019-12-190000763744us-gaap:MediumTermNotesMemberus-gaap:DebtInstrumentRedemptionPeriodTwoMember2019-12-190000763744lcii:JPMorganChaseBankN.A.WellsFargoBankN.A.BankofAmericaN.A.and1stSourceBankMemberus-gaap:LineOfCreditMember2019-12-190000763744lcii:JPMorganChaseBankN.A.WellsFargoBankN.A.BankofAmericaN.A.and1stSourceBankMemberus-gaap:LineOfCreditMemberus-gaap:FederalFundsEffectiveSwapRateMember2018-12-142018-12-140000763744us-gaap:LondonInterbankOfferedRateLIBORMemberlcii:JpmorganChaseBankAndWellsFargoBankMemberus-gaap:LineOfCreditMember2021-01-012021-09-300000763744lcii:JPMorganChaseBankN.A.WellsFargoBankN.A.BankofAmericaN.A.and1stSourceBankMemberlcii:OptionOneMemberus-gaap:LondonInterbankOfferedRateLIBORMembersrt:MinimumMemberus-gaap:LineOfCreditMember2016-04-272016-04-270000763744srt:MaximumMemberlcii:JPMorganChaseBankN.A.WellsFargoBankN.A.BankofAmericaN.A.and1stSourceBankMemberlcii:OptionOneMemberus-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:LineOfCreditMember2018-12-142018-12-140000763744lcii:JPMorganChaseBankN.A.WellsFargoBankN.A.BankofAmericaN.A.and1stSourceBankMemberlcii:OptionOneMemberus-gaap:LondonInterbankOfferedRateLIBORMemberus-gaap:LineOfCreditMember2021-01-012021-09-300000763744lcii:JPMorganChaseBankN.A.WellsFargoBankN.A.BankofAmericaN.A.and1stSourceBankMemberus-gaap:LondonInterbankOfferedRateLIBORMemberlcii:OptionTwoMembersrt:MinimumMemberus-gaap:LineOfCreditMember2018-12-142018-12-140000763744srt:MaximumMemberlcii:JPMorganChaseBankN.A.WellsFargoBankN.A.BankofAmericaN.A.and1stSourceBankMemberus-gaap:LondonInterbankOfferedRateLIBORMemberlcii:OptionTwoMemberus-gaap:LineOfCreditMember2018-12-142018-12-140000763744us-gaap:LondonInterbankOfferedRateLIBORMemberlcii:OptionTwoMemberlcii:JpmorganChaseBankAndWellsFargoBankMemberus-gaap:LineOfCreditMember2021-01-012021-09-300000763744us-gaap:LineOfCreditMemberlcii:PrudentialInvestmentManagementIncMember2014-02-240000763744us-gaap:LineOfCreditMemberlcii:PrudentialInvestmentManagementIncMember2015-03-200000763744us-gaap:LineOfCreditMemberlcii:PrudentialInvestmentManagementIncMember2015-03-202015-03-200000763744us-gaap:LineOfCreditMemberlcii:PrudentialInvestmentManagementIncMember2019-03-290000763744us-gaap:LineOfCreditMemberlcii:PrudentialInvestmentManagementIncMember2019-03-292019-03-290000763744us-gaap:LineOfCreditMemberlcii:PrudentialInvestmentManagementIncMember2019-11-110000763744us-gaap:ConvertibleDebtMember2021-05-132021-05-13lcii:tradingDay0000763744us-gaap:DebtInstrumentRedemptionPeriodOneMemberus-gaap:ConvertibleDebtMember2021-05-132021-05-130000763744us-gaap:DebtInstrumentRedemptionPeriodTwoMemberus-gaap:ConvertibleDebtMember2021-05-132021-05-130000763744us-gaap:FairValueInputsLevel1Member2021-09-300000763744us-gaap:MediumTermNotesMemberus-gaap:DebtInstrumentRedemptionPeriodOneMember2019-12-192019-12-190000763744lcii:WeightedAverageCostOfCapitalMember2021-09-300000763744us-gaap:CommonStockMember2020-04-012020-06-300000763744us-gaap:CommonStockMember2020-07-012020-09-3000007637442020-10-012020-12-310000763744us-gaap:CommonStockMember2020-10-012020-12-3100007637442020-01-012020-12-310000763744us-gaap:CommonStockMember2020-01-012020-12-310000763744us-gaap:CommonStockMember2021-07-012021-09-300000763744us-gaap:CommonStockMember2021-01-012021-09-300000763744lcii:DeferredAndRestrictedStockUnitMember2021-01-012021-09-300000763744lcii:DeferredAndRestrictedStockUnitMember2020-12-310000763744lcii:DeferredAndRestrictedStockUnitMember2021-09-300000763744us-gaap:StockCompensationPlanMember2021-01-012021-09-300000763744us-gaap:StockCompensationPlanMember2020-12-310000763744us-gaap:StockCompensationPlanMember2021-09-3000007637442021-05-132021-05-130000763744us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-09-300000763744us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-09-300000763744us-gaap:FairValueInputsLevel1Member2020-12-310000763744us-gaap:FairValueInputsLevel2Member2020-12-310000763744us-gaap:FairValueInputsLevel3Member2020-12-310000763744us-gaap:FairValueInputsLevel2Member2021-09-300000763744us-gaap:FairValueInputsLevel3Member2021-09-30lcii:segment0000763744lcii:OEMSegmentMemberus-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMember2021-01-012021-09-300000763744lcii:OEMSegmentMemberus-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMember2020-01-012020-09-300000763744lcii:TravelTrailerAndFifthWheelsMemberus-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMember2021-01-012021-09-300000763744us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMemberlcii:AftermarketSegmentMember2021-01-012021-09-300000763744us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMemberlcii:AftermarketSegmentMember2020-01-012020-09-300000763744lcii:TravelTrailerAndFifthWheelsMembercountry:US2021-07-012021-09-300000763744lcii:TravelTrailerAndFifthWheelsMemberlcii:InternationalMember2021-07-012021-09-300000763744lcii:TravelTrailerAndFifthWheelsMember2021-07-012021-09-300000763744lcii:TravelTrailerAndFifthWheelsMembercountry:US2020-07-012020-09-300000763744lcii:TravelTrailerAndFifthWheelsMemberlcii:InternationalMember2020-07-012020-09-300000763744lcii:TravelTrailerAndFifthWheelsMember2020-07-012020-09-300000763744country:USlcii:MotorhomesMember2021-07-012021-09-300000763744lcii:InternationalMemberlcii:MotorhomesMember2021-07-012021-09-300000763744lcii:MotorhomesMember2021-07-012021-09-300000763744country:USlcii:MotorhomesMember2020-07-012020-09-300000763744lcii:InternationalMemberlcii:MotorhomesMember2020-07-012020-09-300000763744lcii:MotorhomesMember2020-07-012020-09-300000763744country:USlcii:OEMsAdjacentIndustriesMember2021-07-012021-09-300000763744lcii:OEMsAdjacentIndustriesMemberlcii:InternationalMember2021-07-012021-09-300000763744lcii:OEMsAdjacentIndustriesMember2021-07-012021-09-300000763744country:USlcii:OEMsAdjacentIndustriesMember2020-07-012020-09-300000763744lcii:OEMsAdjacentIndustriesMemberlcii:InternationalMember2020-07-012020-09-300000763744lcii:OEMsAdjacentIndustriesMember2020-07-012020-09-300000763744lcii:OEMSegmentMembercountry:US2021-07-012021-09-300000763744lcii:OEMSegmentMemberlcii:InternationalMember2021-07-012021-09-300000763744lcii:OEMSegmentMember2021-07-012021-09-300000763744lcii:OEMSegmentMembercountry:US2020-07-012020-09-300000763744lcii:OEMSegmentMemberlcii:InternationalMember2020-07-012020-09-300000763744lcii:OEMSegmentMember2020-07-012020-09-300000763744country:USlcii:AftermarketSegmentMember2021-07-012021-09-300000763744lcii:InternationalMemberlcii:AftermarketSegmentMember2021-07-012021-09-300000763744lcii:AftermarketSegmentMember2021-07-012021-09-300000763744country:USlcii:AftermarketSegmentMember2020-07-012020-09-300000763744lcii:InternationalMemberlcii:AftermarketSegmentMember2020-07-012020-09-300000763744lcii:AftermarketSegmentMember2020-07-012020-09-300000763744country:US2021-07-012021-09-300000763744lcii:InternationalMember2021-07-012021-09-300000763744country:US2020-07-012020-09-300000763744lcii:InternationalMember2020-07-012020-09-300000763744lcii:TravelTrailerAndFifthWheelsMembercountry:US2021-01-012021-09-300000763744lcii:TravelTrailerAndFifthWheelsMemberlcii:InternationalMember2021-01-012021-09-300000763744lcii:TravelTrailerAndFifthWheelsMember2021-01-012021-09-300000763744lcii:TravelTrailerAndFifthWheelsMembercountry:US2020-01-012020-09-300000763744lcii:TravelTrailerAndFifthWheelsMemberlcii:InternationalMember2020-01-012020-09-300000763744lcii:TravelTrailerAndFifthWheelsMember2020-01-012020-09-300000763744country:USlcii:MotorhomesMember2021-01-012021-09-300000763744lcii:InternationalMemberlcii:MotorhomesMember2021-01-012021-09-300000763744lcii:MotorhomesMember2021-01-012021-09-300000763744country:USlcii:MotorhomesMember2020-01-012020-09-300000763744lcii:InternationalMemberlcii:MotorhomesMember2020-01-012020-09-300000763744lcii:MotorhomesMember2020-01-012020-09-300000763744country:USlcii:OEMsAdjacentIndustriesMember2021-01-012021-09-300000763744lcii:OEMsAdjacentIndustriesMemberlcii:InternationalMember2021-01-012021-09-300000763744lcii:OEMsAdjacentIndustriesMember2021-01-012021-09-300000763744country:USlcii:OEMsAdjacentIndustriesMember2020-01-012020-09-300000763744lcii:OEMsAdjacentIndustriesMemberlcii:InternationalMember2020-01-012020-09-300000763744lcii:OEMsAdjacentIndustriesMember2020-01-012020-09-300000763744lcii:OEMSegmentMembercountry:US2021-01-012021-09-300000763744lcii:OEMSegmentMemberlcii:InternationalMember2021-01-012021-09-300000763744lcii:OEMSegmentMembercountry:US2020-01-012020-09-300000763744lcii:OEMSegmentMemberlcii:InternationalMember2020-01-012020-09-300000763744lcii:OEMSegmentMember2020-01-012020-09-300000763744country:USlcii:AftermarketSegmentMember2021-01-012021-09-300000763744lcii:InternationalMemberlcii:AftermarketSegmentMember2021-01-012021-09-300000763744country:USlcii:AftermarketSegmentMember2020-01-012020-09-300000763744lcii:InternationalMemberlcii:AftermarketSegmentMember2020-01-012020-09-300000763744lcii:AftermarketSegmentMember2020-01-012020-09-300000763744country:US2021-01-012021-09-300000763744lcii:InternationalMember2021-01-012021-09-300000763744country:US2020-01-012020-09-300000763744lcii:InternationalMember2020-01-012020-09-300000763744lcii:OEMSegmentMemberus-gaap:OperatingSegmentsMember2021-07-012021-09-300000763744lcii:OEMSegmentMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300000763744lcii:OEMSegmentMemberus-gaap:OperatingSegmentsMember2021-01-012021-09-300000763744lcii:OEMSegmentMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300000763744lcii:AftermarketSegmentMemberus-gaap:OperatingSegmentsMember2021-07-012021-09-300000763744lcii:AftermarketSegmentMemberus-gaap:OperatingSegmentsMember2020-07-012020-09-300000763744lcii:AftermarketSegmentMemberus-gaap:OperatingSegmentsMember2021-01-012021-09-300000763744lcii:AftermarketSegmentMemberus-gaap:OperatingSegmentsMember2020-01-012020-09-300000763744lcii:OEMSegmentMemberlcii:ChassisChassisPartsandSlideoutMechanismsMember2021-07-012021-09-300000763744lcii:OEMSegmentMemberlcii:ChassisChassisPartsandSlideoutMechanismsMember2020-07-012020-09-300000763744lcii:OEMSegmentMemberlcii:ChassisChassisPartsandSlideoutMechanismsMember2021-01-012021-09-300000763744lcii:OEMSegmentMemberlcii:ChassisChassisPartsandSlideoutMechanismsMember2020-01-012020-09-300000763744lcii:OEMSegmentMemberlcii:WindowsandDoorsMember2021-07-012021-09-300000763744lcii:OEMSegmentMemberlcii:WindowsandDoorsMember2020-07-012020-09-300000763744lcii:OEMSegmentMemberlcii:WindowsandDoorsMember2021-01-012021-09-300000763744lcii:OEMSegmentMemberlcii:WindowsandDoorsMember2020-01-012020-09-300000763744lcii:OEMSegmentMemberlcii:FurnitureandMattressesMember2021-07-012021-09-300000763744lcii:OEMSegmentMemberlcii:FurnitureandMattressesMember2020-07-012020-09-300000763744lcii:OEMSegmentMemberlcii:FurnitureandMattressesMember2021-01-012021-09-300000763744lcii:OEMSegmentMemberlcii:FurnitureandMattressesMember2020-01-012020-09-300000763744lcii:AxlesandSuspensionSolutionsMemberlcii:OEMSegmentMember2021-07-012021-09-300000763744lcii:AxlesandSuspensionSolutionsMemberlcii:OEMSegmentMember2020-07-012020-09-300000763744lcii:AxlesandSuspensionSolutionsMemberlcii:OEMSegmentMember2021-01-012021-09-300000763744lcii:AxlesandSuspensionSolutionsMemberlcii:OEMSegmentMember2020-01-012020-09-300000763744lcii:OEMSegmentMemberlcii:OtherProductsMember2021-07-012021-09-300000763744lcii:OEMSegmentMemberlcii:OtherProductsMember2020-07-012020-09-300000763744lcii:OEMSegmentMemberlcii:OtherProductsMember2021-01-012021-09-300000763744lcii:OEMSegmentMemberlcii:OtherProductsMember2020-01-012020-09-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: September 30, 2021

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

For the transition period from _________________ to _________________

Commission File Number: 001-13646
lcii-20210930_g1.jpg
LCI INDUSTRIES
(Exact name of registrant as specified in its charter)
Delaware13-3250533
(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification Number)
3501 County Road 6 East46514
Elkhart,Indiana(Zip Code)
(Address of principal executive offices)
(574) 535-1125
(Registrant’s telephone number, including area code)

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

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $.01 par valueLCIINew York Stock Exchange

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

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

1


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

Large accelerated filer                            Accelerated filer
Non-accelerated filer                         Smaller reporting company
Emerging growth company

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

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

The number of shares outstanding of the registrant’s common stock, as of the latest practicable date (October 29, 2021) was 25,272,517 shares of common stock.

2




LCI INDUSTRIES

TABLE OF CONTENTS
Page
PART I  
  
 
  
 
  
 
 
  
 
  
 
  
 
  
 
  
 
  
PART II
  
 
  
 
  
 
  
 
EXHIBIT 31.1 - SECTION 302 CEO CERTIFICATION
  
EXHIBIT 31.2 - SECTION 302 CFO CERTIFICATION 
  
EXHIBIT 32.1 - SECTION 906 CEO CERTIFICATION 
  
EXHIBIT 32.2 - SECTION 906 CFO CERTIFICATION 

3




PART I – FINANCIAL INFORMATION
ITEM 1 – FINANCIAL STATEMENTS

LCI INDUSTRIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 Three Months Ended 
September 30,
Nine Months Ended 
September 30,
 2021202020212020
(In thousands, except per share amounts)    
Net sales$1,165,309 $827,729 $3,259,287 $2,013,164 
Cost of sales913,728 606,290 2,508,318 1,504,378 
Gross profit251,581 221,439 750,969 508,786 
Selling, general and administrative expenses162,557 127,006 466,532 349,305 
Operating profit89,024 94,433 284,437 159,481 
Interest expense, net4,667 1,948 10,844 10,843 
Income before income taxes84,357 92,485 273,593 148,638 
Provision for income taxes20,956 24,138 68,183 38,891 
Net income$63,401 $68,347 $205,410 $109,747 
Net income per common share:    
Basic$2.51 $2.72 $8.14 $4.37 
Diluted$2.49 $2.70 $8.10 $4.35 
Weighted average common shares outstanding:    
Basic25,286 25,162 25,247 25,125 
Diluted25,417 25,313 25,371 25,220 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
4


LCI INDUSTRIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 Three Months Ended 
September 30,
Nine Months Ended 
September 30,
 2021202020212020
(In thousands)    
Net income$63,401 $68,347 $205,410 $109,747 
Other comprehensive income (loss):
Net foreign currency translation adjustment(1,793)3,399 (3,875)(102)
Actuarial gain on pension plans  933 6,299 
Unrealized gain on fair value of derivative instruments   1,642 
Total comprehensive income$61,608 $71,746 $202,468 $117,586 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
5


LCI INDUSTRIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
 September 30,December 31,
 20212020
(In thousands, except per share amount)  
ASSETS  
Current assets  
Cash and cash equivalents$72,615 $51,821 
Accounts receivable, net of allowances of $7,454 and $5,642 at September 30, 2021 and December 31, 2020, respectively
394,766 268,625 
Inventories, net790,651 493,899 
Prepaid expenses and other current assets102,434 55,456 
Total current assets1,360,466 869,801 
Fixed assets, net421,053 387,218 
Goodwill568,885 454,728 
Other intangible assets, net518,300 420,885 
Operating lease right-of-use assets164,142 104,179 
Other assets55,339 61,220 
Total assets$3,088,185 $2,298,031 
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities  
Current maturities of long-term indebtedness$74,311 $17,831 
Accounts payable, trade297,347 184,931 
Current portion of operating lease obligations28,751 25,432 
Accrued expenses and other current liabilities283,722 188,200 
Total current liabilities684,131 416,394 
Long-term indebtedness1,012,078 720,418 
Operating lease obligations143,839 82,707 
Deferred taxes56,309 53,833 
Other long-term liabilities160,688 116,353 
Total liabilities2,057,045 1,389,705 
Stockholders’ equity
Common stock, par value $.01 per share
284 282 
Paid-in capital213,271 227,407 
Retained earnings871,600 731,710 
Accumulated other comprehensive income4,147 7,089 
Stockholders’ equity before treasury stock1,089,302 966,488 
Treasury stock, at cost(58,162)(58,162)
Total stockholders’ equity1,031,140 908,326 
Total liabilities and stockholders’ equity$3,088,185 $2,298,031 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
6


LCI INDUSTRIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Nine Months Ended 
September 30,
 20212020
(In thousands)  
Cash flows from operating activities:  
Net income$205,410 $109,747 
Adjustments to reconcile net income to cash flows provided by operating activities:  
Depreciation and amortization80,211 73,366 
Stock-based compensation expense20,295 13,646 
Other non-cash items5,418 1,818 
Changes in assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net(140,768)(103,209)
Inventories, net(253,031)24,423 
Prepaid expenses and other assets(28,274)(29,489)
Accounts payable, trade97,071 68,379 
Accrued expenses and other liabilities25,961 53,806 
Net cash flows provided by operating activities12,293 212,487 
Cash flows from investing activities:  
Capital expenditures(73,872)(28,663)
Acquisitions of businesses, net of cash acquired(154,544)(94,909)
Other investing activities11,544 3,972 
Net cash flows used in investing activities(216,872)(119,600)
Cash flows from financing activities:  
Vesting of stock-based awards, net of shares tendered for payment of taxes(8,258)(4,807)
Proceeds from revolving credit facility832,493 285,827 
Repayments under revolving credit facility(912,547)(273,130)
Repayments under term loan and other borrowings(13,375)(15,385)
Proceeds from issuance of convertible notes460,000  
Purchases of convertible note hedge contracts(100,142) 
Proceeds from issuance of warrants concurrent with note hedge contracts48,484  
Payment of debt issuance costs(11,955) 
Payment of dividends(64,425)(51,535)
Payment of contingent consideration and holdbacks related to acquisitions(8,061)(9)
Other financing activities1,972 (167)
Net cash flows provided by (used in) financing activities224,186 (59,206)
Effect of exchange rate changes on cash and cash equivalents 1,187 (853)
Net increase in cash and cash equivalents20,794 32,828 
Cash and cash equivalents at beginning of period51,821 35,359 
Cash and cash equivalents cash at end of period$72,615 $68,187 
Supplemental disclosure of cash flow information:  
Cash paid during the period for interest$9,127 $12,743 
Cash paid during the period for income taxes, net of refunds$75,822 $16,457 
Purchase of property and equipment in accrued expenses$4,036 $2,588 

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
7


LCI INDUSTRIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)

(In thousands, except shares and per share amounts)Common
Stock
Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive Income (Loss)Treasury
Stock
Total
Stockholders’
Equity
Balance - December 31, 2019$281 $212,485 $644,945 $1,123 $(58,162)$800,672 
Net income— — 28,214 — — 28,214 
Issuance of 87,833 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes
1 (4,518)— — — (4,517)
Stock-based compensation expense— 3,295 — — — 3,295 
Other comprehensive loss— — — (3,540)— (3,540)
Cash dividends ($0.65 per share)
— — (16,321)— — (16,321)
Dividend equivalents on stock-based awards— 297 (297)— —  
Balance - March 31, 2020282 211,559 656,541 (2,417)(58,162)807,803 
Net income— — 13,186 — — 13,186 
Issuance of 16,251 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes
— (99)— — — (99)
Stock-based compensation expense— 4,109 — — — 4,109 
Other comprehensive income— — — 7,980 — 7,980 
Cash dividends ($0.65 per share)
— — (16,349)— — (16,349)
Dividend equivalents on stock-based awards— 295 (295)— —  
Balance - June 30, 2020282 215,864 653,083 5,563 (58,162)816,630 
Net income— — 68,347 — — 68,347 
Issuance of 3,998 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes
— (191)— — — (191)
Stock-based compensation expense— 6,242 — — — 6,242 
Other comprehensive income— — 3,399 — 3,399 
Cash dividends ($0.75 per share)
— (18,865)— — (18,865)
Dividend equivalents on stock-based awards— 342 (342)— —  
Balance - September 30, 2020$282 $222,257 $702,223 $8,962 $(58,162)$875,562 


The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
8


LCI INDUSTRIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)

(In thousands, except shares and per share amounts)Common
Stock
Paid-in
Capital
Retained
Earnings
Accumulated Other Comprehensive Income (Loss)Treasury
Stock
Total
Stockholders’
Equity
Balance - December 31, 2020$282 $227,407 $731,710 $7,089 $(58,162)$908,326 
Net income— — 74,120 — — 74,120 
Issuance of 97,086 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes
1 (7,768)— — — (7,767)
Stock-based compensation expense— 7,436 — — — 7,436 
Other comprehensive loss— — — (3,589)— (3,589)
Cash dividends ($0.75 per share)
— — (18,939)— — (18,939)
Dividend equivalents on stock-based awards— 325 (325)— —  
Balance - March 31, 2021283 227,400 786,566 3,500 (58,162)959,587 
Net income— — 67,889 — — 67,889 
Issuance of 16,324 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes
1 (159)— — — (158)
Stock-based compensation expense— 6,423 — — — 6,423 
Purchase of convertible note hedge contracts, net of tax— (75,750)— — — (75,750)
Issuance of warrants— 48,484 — — — 48,484 
Other comprehensive income— — — 2,440 — 2,440 
Cash dividends ($0.90 per share)
— — (22,739)— — (22,739)
Dividend equivalents on stock-based awards— 388 (388)— —  
Balance - June 30, 2021284 206,786 831,328 5,940 (58,162)986,176 
Net income— — 63,401 — — 63,401 
Issuance of 3,385 shares of common stock pursuant to stock-based awards, net of shares tendered for payment of taxes
— (333)— — — (333)
Stock-based compensation expense— 6,436 — — — 6,436 
Other comprehensive loss— — — (1,793)— (1,793)
Cash dividends ($0.90 per share)
— — (22,747)— — (22,747)
Dividend equivalents on stock-based awards— 382 (382)— —  
Balance - September 30, 2021$284 $213,271 $871,600 $4,147 $(58,162)$1,031,140 


The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.
9




LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.    BASIS OF PRESENTATION

The Condensed Consolidated Financial Statements include the accounts of LCI Industries and its wholly-owned subsidiaries ("LCII" and collectively with its subsidiaries, the "Company," "we," "us," or "our"). LCII has no unconsolidated subsidiaries. LCII, through its wholly-owned subsidiary, Lippert Components, Inc. and its subsidiaries (collectively, "Lippert Components," "LCI," or "Lippert"), supplies, domestically and internationally, a broad array of engineered components for the leading original equipment manufacturers ("OEMs") in the recreation and transportation product markets, consisting primarily of recreational vehicles ("RVs") and adjacent industries including buses; trailers used to haul boats, livestock, equipment, and other cargo; trucks; boats; trains; manufactured homes; and modular housing. The Company also supplies engineered components to the related aftermarkets of these industries, primarily by selling to retail dealers, wholesale distributors, and service centers. At September 30, 2021, the Company operated over 100 manufacturing and distribution facilities located throughout North America, Europe, and Asia.

Most industries where the Company sells products or where its products are used historically have been seasonal and are generally at the highest levels when the weather is moderate. Accordingly, the Company’s sales and profits have generally been the highest in the second quarter and lowest in the fourth quarter. However, because of fluctuations in dealer inventories, the impact of international, national, and regional economic conditions, consumer confidence on retail sales of RVs, and other products for which the Company sells its components, the timing of dealer orders, and the impact of severe weather conditions on the timing of industry-wide shipments from time to time, current and future seasonal industry trends may be different than in prior years, particularly as a result of the coronavirus ("COVID-19") pandemic and related impacts. Additionally, sales of certain engineered components to the aftermarket channels of these industries tend to be counter-seasonal, but may be different in the remainder of 2021 and future years as a result of the COVID-19 pandemic and related impacts.

The Company is not aware of any significant events, except as disclosed in the Notes to Condensed Consolidated Financial Statements, which occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on the Condensed Consolidated Financial Statements.

In the opinion of management, the information furnished in this Form 10-Q reflects all adjustments necessary for a fair statement of the financial position and results of operations for the interim periods presented. The Condensed Consolidated Financial Statements have been prepared in accordance with the instructions to Form 10-Q, and therefore do not include some information necessary to conform to annual reporting requirements. Results for interim periods should not be considered indicative of results for the full year.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, net sales and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to product returns, sales and purchase rebates, accounts receivable, inventories, goodwill and other intangible assets, net assets of acquired businesses, income taxes, warranty and product recall obligations, self-insurance obligations, operating lease right-of-use assets and obligations, asset retirement obligations, long-lived assets, pension and post-retirement benefits, stock-based compensation, segment allocations, contingent consideration, environmental liabilities, contingencies, and litigation. The Company bases its estimates on historical experience, other available information, and various other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities not readily apparent from other resources. Actual results and events could differ significantly from management estimates.

COVID-19 Update

The COVID-19 pandemic has caused significant uncertainty and disruption in the global economy and financial markets. The COVID-19 pandemic had an adverse effect on the Company's financial results during the first half of 2020 due to
10

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
government-mandated plant shutdowns. The Company took a variety of actions during 2020 to help mitigate the adverse impacts, including temporary cost savings measures and delays and reductions in capital expenditures. Activity in most of the end markets the Company serves sequentially improved as 2020 progressed, and this trend has continued through the first nine months of 2021, especially in the RV and marine OEM markets and the Company's Aftermarket Segment. Management continues to closely monitor the impact of COVID-19 on all aspects of the business. The extent to which COVID-19 may impact the Company's liquidity, financial condition, and results of operations in the future remains uncertain.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Condensed Consolidated Financial Statements presented herein have been prepared by the Company in accordance with the accounting policies described in its December 31, 2020 Annual Report on Form 10-K and should be read in conjunction with the Notes to Consolidated Financial Statements which appear in that report. All significant intercompany balances and transactions have been eliminated.

The Company's accounting policies related to the convertible note hedge and warrant transactions, including the related earnings per share considerations, are disclosed in Note 3 and Note 12 of the Notes to Condensed Consolidated Financial Statements.

Recently adopted accounting pronouncement

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06"). This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. ASU 2020-06 also amends the diluted earnings per share calculation for convertible instruments by requiring the use of the if-converted method. The Company has chosen to early adopt ASU 2020-06 in 2021. This ASU had no retrospective changes but impacted how the convertible debt the Company issued in May 2021 was both recognized and disclosed.

3.    EARNINGS PER SHARE

The following reconciliation details the denominator used in the computation of basic and diluted earnings per share for the periods indicated:
 Three Months Ended 
September 30,
Nine Months Ended 
September 30,
(In thousands)2021202020212020
Weighted average shares outstanding for basic earnings per share
25,286 25,162 25,247 25,125 
Common stock equivalents pertaining to stock-based awards
131 151 124 95 
Weighted average shares outstanding for diluted earnings per share
25,417 25,313 25,371 25,220 
Equity instruments excluded from diluted net earnings per share calculation as the effect would have been antidilutive140 119 142 113 
For the Company's 1.125 percent convertible senior notes due 2026 (the "Convertible Notes") issued in May 2021, the dilutive effect is calculated using the if-converted method in accordance with ASU 2020-06. The Company is required, pursuant to the indenture governing the Convertible Notes, dated May 13, 2021, by and between the Company and U.S. Bank National Association, as trustee (the "Indenture"), to settle the principal amount of the Convertible Notes in cash and may elect to settle the remaining conversion obligation (i.e., the stock price in excess of the conversion price) in cash, shares of the Company's common stock, or a combination thereof. Under the if-converted method, we include the number of shares required to satisfy the conversion obligation, assuming all the Convertible Notes are converted. The average closing price of the Company's common stock for the three and nine months ended September 30, 2021 is used as the basis for determining the dilutive effect on earnings per share. The average price of the Company's common stock for each of the three and nine months ended September 30, 2021 was less than the conversion price of $165.65, and, therefore, all associated shares were antidilutive.
11

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

In conjunction with the issuance of the Convertible Notes, the Company, in privately negotiated transactions with certain commercial banks ("the Counterparties") sold warrants to purchase 2.8 million shares of the Company's common stock (the "Warrants"). The Warrants have a strike price of $259.84 per share, subject to customary anti-dilution adjustments. For calculating the dilutive effect of the Warrants, the Company uses the treasury stock method. With this method, the Company assumes exercise of the Warrants at the beginning of the period, or at time of issuance if later, and issuance of common shares upon exercise. Proceeds from the exercise of the Warrants are assumed to be used to repurchase shares of the Company's common stock at the average market price during the period. The incremental shares, representing the number of shares assumed to be received upon the exercise of the Warrants less the number of shares repurchased, are included in diluted shares. For periods where the Warrants' strike price of $259.84 per share is greater than the average share price of the Company's common stock for the period, the Warrants would be antidilutive. For each of the three and nine months ended September 30, 2021, the average share price was below the Warrant strike price, and therefore 2.8 million shares were considered antidilutive.

In connection with the issuance of the Convertible Notes, the Company entered into privately negotiated call option contracts on the Company's common stock (the "Convertible Note Hedge Transactions") with the Counterparties. The Company paid an aggregate amount of $100.1 million to the Counterparties pursuant to the Convertible Note Hedge Transactions. The Convertible Note Hedge Transactions cover, subject to anti-dilution adjustments substantially similar to those in the Convertible Notes, approximately 2.8 million shares of the Company's common stock, the same number of shares initially underlying the Convertible Notes, at a strike price of approximately $165.65, subject to customary anti-dilution adjustments. The Convertible Note Hedge Transactions will expire upon the maturity of the Convertible Notes, subject to earlier exercise or termination. Exercise of the Convertible Note Hedge Transactions would reduce the number of shares of the Company's common stock outstanding, and therefore would be antidilutive.

4.    ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

Subsequent Event

Exertis

In October 2021, the Company acquired certain business assets of Stampede Presentation Products, Inc. d/b/a Exertis (“Exertis”), a global distribution company, in exchange for $39.7 million, subject to customary adjustments related to working capital. The acquisition qualifies as a business combination for accounting purposes and will support the recent acquisition of Furrion Holdings Limited ("Furrion") by allowing the Company to provide logistics and warehousing to serve Furrion's North American customer base.

Acquisitions Completed During the Nine Months Ended September 30, 2021

Furrion

In September 2021, the Company acquired 100 percent of the share capital of Furrion, a leading distributor of a large range of appliances and other products to OEMs and aftermarket customers in the RV, specialty vehicle, utility trailer, horse trailer, marine, transit bus, and school bus industries. The total fair value of consideration, net of cash acquired, was approximately $146.7 million. The Company paid $50.5 million in cash consideration at closing, net of cash acquired, with $31.3 million due on each of the first and second anniversaries of the acquisition in September 2022 and September 2023. The deferred acquisition fixed payments are recorded at their respective discounted present values in the Condensed Consolidated Balance Sheet in accrued expenses and other current liabilities and other long-term liabilities at September 30, 2021.

In 2019, the Company and Furrion agreed to terminate an exclusive distribution and supply agreement, and transition all sale and distribution of Furrion products then handled by the Company to Furrion. Effective January 1, 2020, Furrion took responsibility for distributing its products directly to the customer and assumed all responsibilities previously carried out by the Company relating to Furrion products. Upon termination of the agreement, Furrion purchased from the Company all non-obsolete stock and certain obsolete and slow-moving stock of Furrion products at the cost paid by the Company. At the date of the Furrion acquisition in September 2021, the Company had a receivable balance of $35.0 million and Furrion had a corresponding payable balance. In direct connection with the acquisition negotiations, the receivable and payable were
12

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
effectively settled in the acquisition and the receivable balance is included within the approximate $146.7 million of consideration transferred. No gain or loss was recognized in the effective settlement of the receivable.

The purchase price is subject to customary adjustments for cash, working capital, and indebtedness. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date, in both the Company's OEM and Aftermarket Segments. As this acquisition is not considered to have a material impact on the Company's financial statements, pro forma results of operations and other disclosures are not presented.

The Company is in the process of determining the fair value of the assets acquired and liabilities assumed for the opening balance sheet, including net working capital, leases, fixed assets, deferred taxes, uncertain tax positions, and the fair value of intangible assets. The current estimates for intangible assets are based on the Company's historical acquisitions and estimated projections for the acquired company. These estimates will be updated to the valuation when it is finalized within the measurement period (not to exceed 12 months from the acquisition date). The acquisition of this business was preliminarily recorded as of the acquisition date as follows (in thousands):

Cash consideration, net of cash acquired$50,534 
Effective settlement of receivable34,956 
Discounted value of fixed deferred consideration61,191 
Total fair value of consideration given$146,681 
Identifiable intangible assets$95,000 
Other assets acquired and liabilities assumed, net5,811 
Tax liabilities(28,704)
Total fair value of net assets acquired$72,107 
Goodwill (not tax deductible)$74,574 

The Company incurred costs during the three and nine months ended September 30, 2021 related specifically to this acquisition of $0.8 million and $2.1 million, respectively, which are included in selling, general, and administrative expenses in the Condensed Consolidated Statement of Income.

The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in the markets for the acquired products.

Schaudt

In April 2021, the Company acquired 100 percent of the equity interests of Schaudt GmbH Elektrotechnik & Apparatebau ("Schaudt"), a leading supplier of electronic controls and energy management systems for the European caravan industry located in Markdorf, Germany. The purchase price was approximately $29.4 million. The purchase price is subject to customary adjustments for cash, working capital, and indebtedness. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date, primarily in the Company's OEM Segment. The Company is in the process of determining the fair value of the assets acquired and liabilities assumed for the opening balance sheet, including net working capital, fixed assets, and the fair value of intangible assets. As this acquisition is not considered to
13

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
have a material impact on the Company's financial statements, pro forma results of operations and other disclosures are not presented. The acquisition of this business was preliminarily recorded as of the acquisition date as follows (in thousands):

Cash consideration, net of cash acquired$29,383 
Customer relationships$10,000 
Other identifiable intangible assets2,500 
Net tangible assets564 
Total fair value of net assets acquired$13,064 
Goodwill (not tax deductible)$16,319 

The customer relationships intangible asset is being amortized over its estimated useful life of 8 years. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in the markets for the acquired products.

Ranch Hand

In April 2021, the Company acquired 100 percent of the equity interests of Kaspar Ranch Hand Equipment, LLC ("Ranch Hand"), a manufacturer of custom bumpers, grill guards, and steps for the automotive aftermarket headquartered in Shiner, Texas. The purchase price was approximately $56.9 million, plus contingent consideration up to $3.0 million. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date, primarily in the Company's Aftermarket Segment. The Company is in the process of determining the fair value of the assets acquired and liabilities assumed for the opening balance sheet, including the fair value of intangible assets. As this acquisition is not considered to have a material impact on the Company's financial statements, pro forma results of operations and other disclosures are not presented. The acquisition of this business was preliminarily recorded on the acquisition date as follows (in thousands):

Cash consideration, net of cash acquired$56,857 
Contingent consideration3,000 
Total fair value of consideration given$59,857 
Customer relationships$24,200 
Other identifiable intangible assets9,100 
Net tangible assets16,923 
Total fair value of net assets acquired$50,223 
Goodwill (tax deductible)$9,634 

The customer relationships intangible asset is being amortized over its estimated useful life of 13 years. The fair value of this asset was determined using a discounted cash flow model, which is a Level 3 input in the fair value hierarchy. The consideration given was greater than the fair value of the net assets acquired, resulting in goodwill, because the Company anticipates the attainment of synergies and an increase in the markets for the acquired products.

Other Acquisitions in 2021

During the first nine months of 2021, the Company completed two other acquisitions totaling $17.8 million of cash purchase consideration, plus holdback payments of $2.1 million to be paid over the next two years and contingent consideration of up to $2.0 million. Holdback payments of $0.5 million were paid during the nine months ended September 30, 2021. The preliminary purchase price allocations resulted in $8.7 million of goodwill (tax deductible) and $7.8 million of acquired identifiable intangible assets.
14

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The accounting for these acquisitions is incomplete at September 30, 2021. The estimated fair values of assets acquired and liabilities assumed are based on preliminary allocations and will be finalized during the respective measurement periods, which will not exceed 12 months from the respective acquisition dates. As these acquisitions are not considered to have a material impact on the Company's financial statements, pro forma results of operations and other disclosures are not presented.

Acquisitions with Measurement Period Adjustments During the Nine Months Ended September 30, 2021

Veada

In December 2020, the Company acquired 100 percent of the outstanding capital stock of Veada Industries, Inc. ("Veada"), a manufacturer and distributor of boat seating and marine accessories based in New Paris, Indiana. The purchase price was $69.0 million, net of cash acquired, which included initial holdback payments of $12.2 million to be paid over the next two years. Holdback payments of $3.9 million were paid; these holdback payment requirements were reduced by $0.5 million during the nine months ended September 30, 2021 due to net working capital true-ups. The remaining holdback payments are recorded in the Condensed Consolidated Balance Sheet in accrued expenses and other current liabilities ($6.0 million) and other long-term liabilities ($1.8 million) at September 30, 2021. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date, primarily in the Company's OEM Segment.

During the nine months ended September 30, 2021, the Company adjusted the preliminary purchase price allocation reported at December 31, 2020 to account for updates to net working capital balances and assumptions and estimates related to the fair value of fixed assets and intangible assets. These measurement period adjustments would not have resulted in a material impact on the prior period results if the adjustments had been recognized as of the acquisition date.

Challenger

In November 2020, the Company acquired substantially all of the business assets of Challenger Door, LLC ("Challenger"), a leading manufacturer and distributor of branded doors for the RV industry and products for specialty and cargo trailers, based in Nappanee, Indiana. The purchase price was $35.0 million, which included holdback payments of up to $4.5 million to be paid over the next two years. These holdback payment requirements were reduced by $1.7 million during the nine months ended September 30, 2021 due to net working capital true-ups. The remaining holdback payments are recorded in the Condensed Consolidated Balance Sheet in accrued expenses and other current liabilities ($1.8 million) and other long-term liabilities ($1.0 million) at September 30, 2021. The results of the acquired business have been included in the Condensed Consolidated Statements of Income since the acquisition date, primarily in the Company’s OEM Segment.

During the nine months ended September 30, 2021, the Company adjusted the preliminary purchase price allocation reported at December 31, 2020 to account for updates to net working capital balances and assumptions and estimates related to the fair value of fixed assets and intangible assets. These measurement period adjustments would not have resulted in a material impact on the prior period results if the adjustments had been recognized as of the acquisition date. The purchase price allocation is subject to adjustment for the fair value of intangible assets as additional information is obtained within the measurement period (not to exceed 12 months from the acquisition date).
15

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Goodwill

Goodwill by reportable segment was as follows:
(In thousands)OEM SegmentAftermarket SegmentTotal
Net balance – December 31, 2020$305,953 $148,775 $454,728 
Acquisitions – 202174,059 35,194 109,253 
Measurement period adjustments9,456 (23)9,433 
Foreign currency translation(4,539)10 (4,529)
Net balance – September 30, 2021
$384,929 $183,956 $568,885 
Goodwill represents the excess of the total consideration given in an acquisition of a business over the fair value of the net tangible and identifiable intangible assets acquired. Goodwill is not amortized, but instead is tested at the reporting unit level for impairment annually in November, or more frequently if certain circumstances indicate a possible impairment may exist.

Other Intangible Assets

Other intangible assets consisted of the following at September 30, 2021:
(In thousands)Gross
Cost
Accumulated
Amortization
Net
Balance
Estimated Useful
Life in Years
Customer relationships$450,736 $118,405 $332,331 6to17
Patents109,195 51,517 57,678 3to20
Trade names (finite life)125,012 16,284 108,728 3to20
Trade names (indefinite life)7,600 — 7,600 Indefinite
Non-compete agreements12,064 4,890 7,174 3to6
Other309 207 102 2to12
Purchased research and development4,687 — 4,687 Indefinite
Other intangible assets$709,603 $191,303 $518,300    

Other intangible assets consisted of the following at December 31, 2020:
(In thousands)Gross
Cost
Accumulated
Amortization
Net
Balance
Estimated Useful
Life in Years
Customer relationships$398,613 $95,443 $303,170 6to17
Patents92,128 47,090 45,038 3to20
Trade names (finite life)69,686 11,272 58,414 3to20
Trade names (indefinite life)7,600 — 7,600 Indefinite
Non-compete agreements6,478 4,617 1,861 3to6
Other309 194 115 2to12
Purchased research and development4,687 — 4,687 Indefinite
Other intangible assets$579,501 $158,616 $420,885    

16

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5.    INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out (FIFO) method) or net realizable value. Cost includes material, labor, and overhead. Inventories consisted of the following at:
 September 30,December 31,
(In thousands)20212020
Raw materials$590,194 $356,921 
Work in process46,646 24,189 
Finished goods153,811 112,789 
Inventories, net$790,651 $493,899 

6.    FIXED ASSETS

Fixed assets consisted of the following at:
 September 30,December 31,
(In thousands)20212020
Fixed assets, at cost$825,415 $750,138 
Less accumulated depreciation and amortization404,362 362,920 
Fixed assets, net$421,053 $387,218 

7.    ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following at:
 September 30,December 31,
(In thousands)20212020
Employee compensation and benefits$95,870 $62,555 
Deferred acquisition payments and contingent consideration*53,637 16,627 
Current portion of accrued warranty30,436 32,451 
Customer rebates7,206 23,670 
Other96,573 52,897 
Accrued expenses and other current liabilities$283,722 $188,200 
* Includes current portion of contingent consideration (Note 11) and deferred consideration and holdback payments related to acquisitions (Note 4).
Estimated costs related to product warranties are accrued at the time products are sold. In estimating its future warranty obligations, the Company considers various factors, including the Company's (i) historical warranty costs, (ii) current trends, (iii) product mix, and (iv) sales. The following table provides a reconciliation of the activity related to the Company's accrued warranty, including both the current and long-term portions, for the nine months ended September 30:
17

LCI INDUSTRIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands)20212020
Balance at beginning of period$47,091 $47,167 
Provision for warranty expense18,798 14,443 
Warranty liability from acquired businesses5,611  
Warranty costs paid(22,054)(16,568)
Balance at end of period49,446 45,042 
Less long-term portion19,010 15,320 
Current portion of accrued warranty at end of period$30,436 $29,722 
Warranty costs paid for the nine months ended September 30, 2021 include $3.0 million of payments related to a specific warranty issue known at the time of acquisition of CURT Acquisition Holdings, Inc. (with its subsidiaries, "CURT") in December 2019. These payments will be reimbursed to the Company by the sellers of CURT under the terms of the stock purchase agreement.

8.    PENSION PLANS

The acquisition of Polyplastic Group B.V. in January 2020 included the assumption of two partially-funded defined benefit pension plans (the "Dutch pension plans") based in the Netherlands. The Dutch pension plans, which are qualified defined benefit pension plans, provide benefits based on years of service and average pay. The benefits earned by the employees are immediately vested. The Company funds the future obligations of the Dutch pension plans by purchasing an insurance contract from a large multi-national insurance company. Each year, the Company makes premium payments to the insurance company (1) to provide for the benefit obligation of the current year of service based on each employee's age, gender, and current salary, and (2) for indexations for both active and post-active participants. The Company determines the fair value of the plan assets with the assistance of an actuary using unobservable inputs (Level 3), which is determined as the present value of the accrued benefits guaranteed by the insurer. The components of net periodic pension cost for the Dutch pension plans were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2021202020212020
Net service cost$(1,084)$(859)$(3,300)$(2,484)
Interest cost(163)(259)(495)(745)
Expected return on plan assets105 161 322 463 
Administrative charges(71)(73)