LCI Industries
02/26/2026 | Press release | Distributed by Public on 02/26/2026 08:52
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Consolidated Financial Statements and Notes thereto included in Part II, Item 8 of this Report.
This Management's Discussion and Analysis of Financial Condition and Results of Operations generally discusses 2025 and 2024 items and year-over-year comparisons between 2025 and 2024. A detailed discussion of 2023 items and year-over-year comparisons between 2024 and 2023 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 21, 2025.
We are a global leader in supplying engineered components to the outdoor recreation, transportation, marine, and housing 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 direct-to-consumer sales through online platforms.
Sales and Profit - OEM and Aftermarket Segments
We have two reportable segments, the OEM Segment and the Aftermarket Segment. At December 31, 2025, we operated over 100 manufacturing facilities located throughout North America and Europe. Net sales and operating profit were as follows for the years ended December 31:
|
Sales and Operating Profit by Segment and in Total (In thousands)
|
2025 | 2024 | |||||||||
| Net sales: | |||||||||||
| OEM Segment: | |||||||||||
| RV OEMs: | |||||||||||
| Travel trailers and fifth-wheels | $ | 1,708,236 | $ | 1,514,578 | |||||||
| Motorhomes | 235,976 | 233,066 | |||||||||
| Adjacent Industries OEMs | 1,245,441 | 1,112,806 | |||||||||
| Total OEM Segment net sales | 3,189,653 | 2,860,450 | |||||||||
| Aftermarket Segment: | |||||||||||
| Total Aftermarket Segment net sales | 932,364 | 880,758 | |||||||||
| Total net sales | $ | 4,122,017 | $ | 3,741,208 | |||||||
|
Operating profit1:
|
|||||||||||
| OEM Segment | $ | 184,120 | $ | 107,081 | |||||||
| Aftermarket Segment | 95,802 | 111,156 | |||||||||
| Total operating profit | $ | 279,922 | $ | 218,237 | |||||||
| Sales and Operating Profit by Segment as a Percent of Total | 2025 | 2024 | |||||||||
| Net sales: | |||||||||||
| OEM Segment | 77% | 76% | |||||||||
| Aftermarket Segment | 23% | 24% | |||||||||
| Total net sales | 100% | 100% | |||||||||
|
Operating profit1:
|
|||||||||||
| OEM Segment | 66% | 49% | |||||||||
| Aftermarket Segment | 34% | 51% | |||||||||
| Total segment operating profit | 100% | 100% | |||||||||
| Operating Profit Margin by Segment | 2025 | 2024 | |||||||||
| OEM Segment | 5.8% | 3.7% | |||||||||
| Aftermarket Segment | 10.3% | 12.6% | |||||||||
Operating profit margins in 2025 were impacted by a number of factors, as further described below under "Results of Operations - Year Ended December 31, 2025 Compared to Year Ended December 31, 2024."
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 the RV, transportation, marine, and housing markets. Our Aftermarket Segment enhances the product lifecycle for the RV, transportation, marine, and automotive 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 the transportation (buses, trailers, construction, trains, and power sports), marine (pontoon boats, power boats, fishing boats, sailboats, and yachts), and housing (manufactured and modular 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 RV, transportation, marine, and automotive markets, primarily through retail dealers, wholesale distributors, and service centers, as well as direct-to-consumer sales through online 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.
See Part I, Item 1, "Business - Reportable Segments" for more detail on our reportable segments.
Diversification Strategy: Over the past several years, we have diversified our portfolio beyond the RV OEM market into transportation, marine, 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.
Approximately 56 percent and 57 percent of net sales for the years ended December 31, 2025 and 2024, respectively, were generated outside of the North American RV OEM market, providing a balanced foundation for continued growth.
Industry Background
OEM Segment - North American Recreational Vehicle Industry: RVs are designed as temporary living quarters for recreational, camping, travel, or seasonal use. They can be either motorized, such as motorhomes, or towable, including travel trailers, fifth-wheel trailers, folding camping trailers, and truck campers. The RV industry generally follows a predictable annual sales cycle that starts after the annual fall "Open House" in Elkhart, Indiana:
•October - March: Dealers build inventory, leading wholesale shipments to historically outpace retail sales.
•April - September: Retail sales typically exceed wholesale shipments, driven by spring and summer demand.
In 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 2 percent to 298,200 units compared with 2024. Retail demand decreased 1 percent to 305,300 units compared with 2024, reflecting a stabilization from the declines in 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.
While we track our OEM Segment RV sales against wholesale shipment statistics, the health of the RV industry is ultimately determined by retail demand. The table below highlights trends in wholesale shipments, retail sales, and dealer inventory adjustments for travel trailers and fifth-wheel RVs, as reported by Statistical Surveys, Inc. ("Statistical Surveys").
| Wholesale | Retail |
Estimated Unit
Impact on
Dealer Inventories
|
|||||||||||||||||||||||||||
| Units | Change | Units | Change | ||||||||||||||||||||||||||
| Year ended December 31, 2025 | 298,200 | 2% | 305,300 | (1)% | (7,100) | ||||||||||||||||||||||||
| Year ended December 31, 2024 | 291,600 | 13% | 307,700 | (6)% | (16,100) | ||||||||||||||||||||||||
| Year ended December 31, 2023 | 259,100 | (39)% | 327,000 | (16)% | (67,900) | ||||||||||||||||||||||||
Motorhomes, another key RV category, experienced a 3 percent increase in wholesale shipments to 36,000 units in 2025, while retail demand fell 6 percent, according to RVIA data.
OEM Segment - Adjacent Industries: Our expertise in RV components extends to adjacent industries, including transportation, marine, and 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 markets and the annual retail units sold of each include:
•Enclosed trailers: According to Statistical Surveys, approximately 201,700 units were sold in 2025, compared to 199,100 in 2024 and 206,800 in 2023.
•Boats: Statistical Surveys reported approximately 230,400 units were sold in 2025, compared to 250,200 in 2024 and 273,700 in 2023. Pontoon boats, a subset of this market, sold 48,300 units in 2025, compared to 54,300 in 2024 and 62,300 in 2023.
•School buses. According to School Bus Fleet, approximately 41,000 units were sold in 2025, compared to 40,300 in 2024 and 41,200 in 2023.
•Manufactured housing. According to the Institute for Building Technology and Safety, wholesale shipments were approximately 102,700 units in 2025, compared to 103,300 in 2024 and 89,200 in 2023.
Aftermarket Segment:Our Aftermarket Segment enhances the product lifecycle for the RV, transportation, marine, and automotive 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.
We also provide comprehensive customer support through multiple customer care centers, offering rapid responses to inquiries related to technical support, product delivery, and critical repair, designed to minimize consumer downtime. Dedicated teams deliver product, technical, and installation training, as well as marketing assistance, to enhance customer engagement and satisfaction.
Aftermarket offerings span a diverse product portfolio, including:
•Marine Products:Biminis, covers, buoys, and fenders.
•Recreation and Transportation Accessories:Towing products, truck accessories, replacement glass, and awnings.
•Core Systems:Appliances, air conditioners, televisions, sound systems, and tankless water heaters.
Aftermarket sales are influenced by seasonal trends, with many non-critical upgrades and replacement parts purchased outside peak selling periods, creating certain counter-seasonal demand.
Market Dynamics:The U.S. RV ownership base, which reached a record 8.1 million households in 2025 (Go RVing), drives robust demand for aftermarket products. Owners seek to enhance and maintain their units, replacing components that experience normal wear and tear. This vibrant and growing market represents a key driver of our Aftermarket Segment's performance.
Strategic Expansion:We have strategically expanded our Aftermarket Segment through acquisitions that strengthen our product portfolio and market reach, including Curt Manufacturing LLC and Kaspar Ranch Hand Equipment, LLC.
CURT Manufacturing LLC: Acquired in 2019, CURT is a leading manufacturer of towing products and truck accessories, complementing our OEM markets. CURT contributed approximately half of Aftermarket Segment net sales in both 2025 and 2024, selling 907,000 hitches in 2025, down from 1,061,000 in 2024.
Kaspar Ranch Hand Equipment, LLC: Acquired in 2021, Ranch Hand broadened our offerings with custom bumpers, grill guards, and steps for the automotive aftermarket, reinforcing our position in complementary markets.
RESULTS OF OPERATIONS
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Consolidated Summary
•Consolidated net sales for 2025 were $4.1 billion, 10 percent higher than consolidated net sales for 2024 of $3.7 billion. The increase was primarily driven by sales from acquired businesses during the year, sales price increases due to higher material costs, and higher North American RV sales driven by an increased mix of higher content fifth-wheel units, market share gains, and a 3 percent increase in total North American RV wholesale shipments. Net sales from acquisitions completed in 2024 and 2025 contributed approximately $124.5 million in 2025.
•Net income for 2025 was $188.3 million, or $7.57 per diluted share, compared to net income of $142.9 million, or $5.60 per diluted share, for 2024.
•Consolidated operating profit during 2025 was $279.9 million compared to $218.2 million in 2024. Operating profit margin was 6.8 percent in 2025 compared to 5.8 percent in 2024. The increase was primarily due to reduced costs from materials sourcing strategies and leveraging of fixed expenses over higher North American RV sales
volumes driven by an increased mix of higher content fifth-wheel units, market share gains, and a 3 percent increase in total North American RV 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 effective tax rate of 26.2 percent for 2025 was higher than the prior year, primarily due to increases in the state effective tax rate 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.
•In 2025, we returned an aggregate of $242.6 million to shareholders, including through share repurchases of $128.6 million and quarterly dividends aggregating $4.60 per share, or $114.0 million.
OEM Segment
Net sales of the OEM Segment in 2025 increased 12 percent, or $329.2 million, compared to 2024. Net sales of components to OEMs were to the following markets for the years ended December 31:
| (In thousands) | 2025 | 2024 | Change | ||||||||||||||
| RV OEMs: | |||||||||||||||||
| Travel trailers and fifth-wheels | $ | 1,708,236 | $ | 1,514,578 | 13% | ||||||||||||
| Motorhomes | 235,976 | 233,066 | 1% | ||||||||||||||
| Adjacent Industries OEMs | 1,245,441 | 1,112,806 | 12% | ||||||||||||||
| Total OEM Segment net sales | $ | 3,189,653 | $ | 2,860,450 | 12% | ||||||||||||
According to the RVIA, industry-wide wholesale shipments for the years ended December 31 were:
| 2025 | 2024 | Change | |||||||||||||||
| Travel trailer and fifth-wheel RVs | 298,200 | 291,600 | 2% | ||||||||||||||
| Motorhomes | 36,000 | 34,900 | 3% | ||||||||||||||
The trend in our average product content per RV produced is an indicator of our overall market share of components for new RVs. Our average product content per type of RV, calculated based upon our net sales of components to domestic RV OEMs for the different types of RVs produced for the twelve months ended December 31, divided by the industry-wide wholesale shipments of the different product mix of RVs for the same period, was:
| Content per: | 2025 | 2024 | Change | ||||||||||||||
| Travel trailer and fifth-wheel RV | $ | 5,670 | $ | 5,097 | 11% | ||||||||||||
| Motorhome | $ | 3,993 | $ | 3,742 | 7% | ||||||||||||
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 2025 compared to 2024 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 gains, partially offset by wholesale unit shipments outpacing units 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 OEMs in Adjacent Industries during 2025 was primarily due to sales from acquired businesses and higher sales to North American utility trailer OEMs.
Operating profit of the OEM Segment was $184.1 million in 2025, an increase of $77.0 million compared to 2024. The operating profit margin of the OEM Segment increased to 5.8 percent in 2025 compared to 3.7 percent in 2024, and was positively impacted by:
•Increases in selling prices primarily related to increased material costs, which positively impacted operating profit by $80.9 million compared to 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.
Partially offset by:
•Higher material costs related to tariffs and higher freight costs, which negatively impacted operating profit by $75.8 million compared to 2024.
•Changes in product sales mix toward lower margin products, which negatively impacted operating profit by $4.3 million compared to 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.
Amortization expense on intangible assets for the OEM Segment was $38.7 million in 2025, compared to $39.8 million in 2024. Depreciation expense on fixed assets for the OEM Segment was $48.3 million in 2025, compared to $53.5 million in 2024.
Aftermarket Segment
Net sales of the Aftermarket Segment in 2025 increased 6 percent, or $51.6 million, compared to 2024. Net sales of components in the Aftermarket Segment were as follows for the years ended December 31:
| (In thousands) | 2025 | 2024 | Change | ||||||||||||||
| Total Aftermarket Segment net sales | $ | 932,364 | $ | 880,758 | 6% | ||||||||||||
The increase in net sales of the Aftermarket Segment was 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 automotive aftermarket.
Operating profit of the Aftermarket Segment was $95.8 million in 2025, a decrease of $15.4 million compared to 2024. The operating profit margin of the Aftermarket Segment was 10.3 percent in 2025, compared to 12.6 percent in 2024, and was negatively impacted by:
•Higher material costs related to tariffs and higher freight costs, which collectively negatively impacted operating profit by $22.7 million compared to 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.
Partially offset by:
•Increases in selling prices for targeted products primarily related to increased material costs, which positively impacted operating profit by $21.8 million compared to 2024.
•Reduced costs from materials sourcing strategies, which increased operating profit by $13.5 million compared to 2024.
Amortization expense on intangible assets for the Aftermarket Segment was $15.5 million in 2025, consistent with 2024. Depreciation expense on fixed assets for the Aftermarket Segment was $18.7 million in 2025, compared to $16.9 million in 2024.
Interest Expense
Interest expense, net was $35.7 million in 2025, compared to $28.9 million in 2024. The increase was primarily due to interest on 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, the partial payoff of the 2026 Convertible Notes (as defined in Note 3 of the Notes to Consolidated Financial Statements), 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 2024. 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.
Income Taxes
The effective income tax rate for 2025 was 26.2 percent compared to 24.5 percent in 2024. The higher effective tax rate for 2025 was primarily due to increases in the state effective tax rate. We estimate the 2026 effective income tax rate will be approximately 25 to 27 percent.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
We maintain a level of cash and liquidity sufficient to allow us to meet our cash needs in the short term. Over the long term, we manage our cash and capital structure to maximize shareholder return, maintain our financial condition, and maintain flexibility for our future strategic investments. We continuously assess our capital requirements, working capital needs, debt and leverage levels, debt and lease maturity schedules, capital expenditure requirements, dividends, future investments or acquisitions, and potential share repurchases. We believe our operating cash flows, credit facilities, as well as any potential future borrowings, will be sufficient to fund our future payments and long-term initiatives.
As of December 31, 2025, we had $222.6 million in cash and cash equivalents and $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 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.
We believe the availability under the revolving credit facility under the Credit Agreement, along with our cash flows from operations, are adequate to finance our anticipated cash requirements for the next twelve months.
The Consolidated Statements of Cash Flows reflect the following for the years ended December 31:
| (In thousands) | 2025 | 2024 | ||||||||||||
| Net cash flows provided by operating activities | $ | 330,976 | $ | 370,284 | ||||||||||
| Net cash flows used in investing activities | (147,067) | (61,098) | ||||||||||||
| Net cash flows used in financing activities | (125,491) | (208,221) | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (1,559) | (1,366) | ||||||||||||
| Net increase in cash and cash equivalents | $ | 56,859 | $ | 99,599 | ||||||||||
Discussion - Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Cash Flows from Operations
Net cash flows provided by operating activities were $331.0 million in 2025, compared to $370.3 million in 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 2024 of $46.3 million driven by lower commodity costs and initiatives to reduce inventory levels. The decrease in net cash flows provided by operating activities was partially offset by the $45.4 million increase in net income in 2025 compared to 2024.
Over the long term, based on our historical collection and payment patterns, as well as inventory turnover, and also giving consideration to emerging trends and changes to the sales mix, we expect working capital to increase or decrease equivalent to approximately 10 to 15 percent of the increase or decrease, respectively, in net sales. However, there are many factors that can impact this relationship, especially in the short term.
Depreciation and amortization was $121.2 million and $125.7 million in 2025 and 2024, respectively, and is expected to be approximately $115 to $125 million in 2026. Non-cash stock-based compensation expense was $22.7 million and $18.7 million in 2025 and 2024, respectively, and is expected to be approximately $24 to $27 million in 2026.
Cash Flows from Investing Activities
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 the acquisition of a business.
Our capital expenditures are primarily for replacement and growth. Over the long term, based on our historical capital expenditures, the replacement portion has averaged approximately one to two percent of net sales, while the growth portion has averaged approximately two to three percent of net sales. However, there are many factors that can impact the actual spending compared to these historical averages. We estimate 2026 capital expenditures (excluding any potential business combinations) of $60 to $80 million, including investments in automation and lean projects, which we expect to fund with cash flows from operations or periodic borrowings under the revolving credit facility as needed.
The 2025 capital expenditures and acquisitions were funded by cash generated from operations and borrowings under our Credit Agreement. Capital expenditures and acquisitions in 2026 are expected to be funded primarily from cash generated from operations, as well as periodic borrowings under our revolving credit facility.
Cash Flows from Financing Activities
Cash flows used in financing activities of $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,
•$303.0 million in repayments under our revolving credit facility, Term Loan, and other borrowings,
•payments for the repurchase of common stock of $128.6 million,
•payments of quarterly dividends of $114.0 million,
•payments of $67.6 million for the purchase of convertible note hedge contracts, and
•cash outflows of $5.3 million related to vesting of stock-based awards, net of shares tendered for payment of taxes,
Partially offset by:
•net proceeds from the issuance of our 2030 Convertible Notes of $448.5 million,
•proceeds from Term Loan borrowings of $391.0 million, and
•proceeds from the issuance of warrants of $27.6 million.
Cash flows used in financing activities of $208.2 million in 2024 were primarily comprised of payments of quarterly dividends of $109.5 million, $52.5 million in net repayments under our revolving credit facility, $36.7 million in repayments under our Term Loan and other borrowings, and cash outflows of $9.2 million related to vesting of stock-based awards, net of shares tendered for payment of taxes.
The Credit Agreement includes both financial and non-financial covenants. The covenants dictate that we shall not permit our net leverage ratio to exceed certain limits, shall maintain a minimum debt service coverage ratio, and must meet certain other financial requirements. At December 31, 2025, we were in compliance with all applicable financial covenants and expect to remain in compliance for the next twelve months.
We have paid regular quarterly dividends since 2016. Future dividend policy with respect to our common stock will be determined by our Board of Directors in light of our prevailing financial needs, earnings, and other relevant factors, including any limitations in our debt agreements, such as maintenance of certain financial ratios.
In May 2022, our Board of Directors authorized a stock repurchase program (the "2022 Share Repurchase Program") for the purchase of up to $200.0 million of our common stock over a three-year period, which ended on May 19, 2025. Under this stock repurchase program, we purchased 308,898 shares at a weighted average price of $91.47 per share, totaling $28.4 million including excise tax during March 2025, using approximately $28.3 million of the net proceeds from the offering of the 2030 Convertible Notes. Following such repurchase, no additional shares were purchased under the 2022 Share Repurchase Program prior to its expiration on May 19, 2025. No shares were repurchased during the year ended December 31, 2024.
In May 2025, our Board of Directors authorized a new stock repurchase program (the "2025 Share Repurchase Program") for the purchase of up to $300.0 million of our common stock over a three-year period ending on May 15, 2028. On June 11, 2025, we entered into a Rule 10b5-1 trading plan under the 2025 Share Repurchase Program for the period between June 13, 2025 and August 1, 2025 to repurchase up to $100.0 million of our common stock excluding excise tax, subject to certain parameters. Under this 10b5-1 trading plan, we purchased 1,057,667 shares at a weighted average price of $94.55 per share totaling $101.0 million, including excise tax during the year ended December 31, 2025. As of December 31, 2025, there was $200.0 million remaining for the repurchase of shares under the 2025 Share Repurchase Program.
See Note 13 of the Notes to Consolidated Financial Statements for additional information related to our dividend and share repurchase programs.
Future Cash Requirements
The following table summarizes our material estimated future cash requirements under our contractual obligations for indebtedness and operating leases at December 31, 2025, in total and disaggregated into current (payable in 2026) and long-term (payable after 2026) obligations.
| (In thousands) | Total | Current | Long-Term | |||||||||||||||||
|
Total indebtedness (a)
|
$ | 960,320 | $ | 4,468 | $ | 955,852 | ||||||||||||||
|
Interest on indebtedness (a)
|
219,031 | 40,784 | 178,247 | |||||||||||||||||
|
Operating leases(b)
|
380,959 | 62,286 | 318,673 | |||||||||||||||||
| Total | $ | 1,560,310 | $ | 107,538 | $ | 1,452,772 | ||||||||||||||
a.See Note 9 of the Notes to Consolidated Financial Statements for additional information regarding the maturities of debt principal. Interest payments on our indebtedness are calculated using the outstanding balances and interest rates in effect on December 31, 2025.
b.See Note 11 of the Notes to Consolidated Financial Statements for additional information regarding the maturity of our lease obligations under operating leases. Our finance leases were not material at December 31, 2025.
Retirement and Other Benefit Plans
We consider various factors when making funding decisions, such as regulatory requirements, actuarially determined minimum contribution requirements, and contributions required to avoid benefit restrictions for defined benefit pension plans. For the year ended December 31, 2025, we made discretionary matching contributions of $12.5 million to our defined contribution 401(k) profit sharing plan. We expect to make matching contributions to our defined contribution 401(k) profit sharing plan in 2026 at a level similar to 2025; however, these contributions are discretionary and subject to change. See Note 8 of the Notes to Consolidated Financial Statements for further information related to our retirement and other benefit plans.
CORPORATE GOVERNANCE
We are in compliance with the corporate governance requirements of the SEC and the New York Stock Exchange. Our governance documents, committee charters, and key practices have been posted to the "Investors" section of our website (www.lci1.com) and are updated periodically. The website also contains, or provides direct links to, all SEC filings, press releases and investor presentations. We have also established a Whistleblower Policy, which includes a toll-free hotline (800-461-9330) to report complaints about our accounting, internal controls, auditing matters or other concerns. The Whistleblower Policy and procedure for complaints can be found on our website (www.lci1.com).
CONTINGENCIES
Additional information required by this item is included under Item 3 of Part I of this Annual Report on Form 10-K.
CRITICAL ACCOUNTING ESTIMATES
Our Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which requires certain estimates and assumptions to be made that affect the amounts and disclosures reported in those financial statements and the related accompanying notes. Actual results could differ from these estimates and assumptions. While our significant accounting policies are more fully described in Note 2 of the Notes to Consolidated Financial Statements, the following discussion addresses our most critical accounting estimates, which are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition and results of operations. Management has discussed the development and selection of its critical accounting estimates with the Audit Committee of the Company's Board of Directors, and the Audit Committee has reviewed the disclosure presented below relating to the critical accounting estimates.
Warranty
We provide warranty terms based upon the type of product sold. We use historical warranty costs, claim lag, sales, and current trends of repair costs as assumptions and inputs into our model to estimate future warranty claims and the associated warranty accrual. The accounting for warranty accruals requires us to make assumptions and judgments, and to the extent actual results differ from original estimates, adjustments to recorded accruals may be required. For further information on our warranty accrual, including a roll-forward of changes in the accrual, see Note 7 of the Notes to Consolidated Financial Statements.
Fair Value of Intangible Assets of Acquired Businesses
We value the intangible assets associated with the acquisitions of businesses on the respective acquisition dates. Depending upon the type of intangible asset acquired, we use different valuation techniques in determining the fair value. Those techniques include comparable market prices, long-term sales, profitability and cash flow forecasts, assumptions regarding future industry-specific economic and market conditions and a market participant's weighted average cost of capital, as well as other techniques as circumstances require. By their nature, these assumptions require judgment, and if management had chosen different assumptions, the fair value of intangible assets of acquired businesses would have been different. For further information on acquired intangible assets, see Note 4 of the Notes to Consolidated Financial Statements.
New Accounting Pronouncements
Information required by this item is included in Note 2 of the Notes to Consolidated Financial Statements.
RAW MATERIALS INFLATION
The prices of key raw materials, consisting primarily of steel and aluminum, and components used by us which are made from these raw materials, are influenced by demand and other factors specific to these commodities, including tariffs for materials sourced internationally. The prices for steel consumed in certain of our manufactured components were lower and the prices for aluminum consumed in certain of our manufactured components were higher during 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 been volatile and there can be no assurances of future prices. Please see "Results of Operations" above for additional information regarding the impact of raw material costs, including related to tariffs, on our results of operations for the year ended December 31, 2025.
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