LCI INDUSTRIES MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

This Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the Company's Condensed
Consolidated Financial Statements and Notes thereto included in Item 1 of Part 1
of this report, as well as the Company's Annual Report on Form 10-K for the year
ended December 31, 2021.

LCI Industries ("LCII" and collectively with its subsidiaries, the "Company,"
"we," "us," or "our"), 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. We also supply engineered
components to the related aftermarkets of these industries, primarily by selling
to retail dealers, wholesale distributors, and service centers.

We have two reportable segments, the OEM Segment and the Aftermarket Segment.
Intersegment sales are insignificant. At March 31, 2022, we operated over 120
manufacturing and distribution facilities located throughout North America and
Europe. See Note 14 of the Notes to Condensed Consolidated Financial Statements
for further information regarding our segments.

Our OEM Segment manufactures or distributes a broad array of engineered
components for the leading OEMs of RVs and adjacent industries, including buses;
trailers used to haul boats, livestock, equipment and other cargo; trucks;
boats; trains; manufactured homes; and modular housing. Approximately 65 percent
of our OEM Segment net sales for the twelve months ended March 31, 2022 were of
components for travel trailer and fifth-wheel RVs, including:

? Steel chassis and related components              ? Electric and manual entry steps
? Axles and suspension solutions                    ? Awnings and awning 

accessories

? Slide-out mechanisms and solutions                ? Electronic components

? Thermoformed bath, kitchen, and other products ? Appliances
? Vinyl, aluminum, and frameless windows

            ? Air conditioners

? Manual, electric, and hydraulic stabilizer and ? Televisions and sound systems

   leveling systems
? Entry, luggage, patio, and ramp doors             ? Other accessories

? Furniture and mattresses


The Aftermarket Segment supplies many of these engineered components to the
related aftermarket channels of the recreation and transportation product
markets, primarily to retail dealers, wholesale distributors, and service
centers, as well as direct to retail customers via the Internet. The Aftermarket
Segment also includes biminis, covers, buoys, fenders to the marine industry,
towing products, truck accessories, appliances, air conditioners, sound systems,
and the sale of replacement glass and awnings to fulfill insurance claims.

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

COVID-19 AND RUSSIAUKRAINE WAR UPDATE

The ongoing COVID-19 pandemic has caused significant uncertainty and disruption
in the global economy and financial markets since early 2020. With RV retail
demand at record levels throughout 2021, the industry faced challenges with
supply chain constraints, rising material and freight costs, and increases in
direct labor costs due to higher production volumes
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                                 LCI INDUSTRIES
                ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
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                                  (Continued)
and a tightened labor market, especially in Northern Indiana. These trends have
continued through the first quarter of 2022, and, with regard to supply chain
constraints and freight costs, have also been impacted by the conflict between
Russia and Ukraine (the "Russia-Ukraine War"). To address these challenges, we
have continued to strategically manage working capital, including carrying
elevated levels of certain inventory items to avoid future shortages. We
continue to focus on our culture and leadership development programs to focus on
team member retention. We continue to closely monitor the impact of COVID-19 and
the Russia-Ukraine War on all aspects of our business. The extent to which
COVID-19 and/or the Russia-Ukraine War may impact our liquidity, financial
condition, and results of operations in the future remains uncertain.

INDUSTRY BACKGROUND

OEM Segment

North American Recreational Vehicle Industry

An RV is a vehicle designed as temporary living quarters for recreational,
camping, travel or seasonal use. RVs may be motorized (motorhomes) or towable
(travel trailers, fifth-wheel travel trailers, folding camping trailers, and
truck campers).

The annual sales cycle for the RV industry generally starts in October after the
"Open House" in Elkhart, Indiana where many of the largest RV OEMs display
product to RV retail dealers and ends after the conclusion of the summer selling
season in September in the following calendar year. Between October and March,
industry-wide wholesale shipments of travel trailer and fifth-wheel RVs have
historically exceeded retail sales as dealers build inventories to support
anticipated sales. Between April and September, the spring and summer selling
seasons, retail sales of travel trailer and fifth-wheel RVs have historically
exceeded industry-wide wholesale shipments. Due to the COVID-19 pandemic, the
2021 and 2020 Open Houses were canceled. The seasonality of the RV industry has
been, and will likely continue to be, impacted by the COVID-19 pandemic, and the
timing of a return to historical seasonality is not possible to predict at this
time.

According to the Recreation Vehicle Industry Association ("RVIA"), industry-wide
wholesale shipments from the United States of travel trailer and fifth-wheel RVs
in the first three months of 2022, our primary RV market, increased 16 percent
to 152,200 units, compared to the first three months of 2021, primarily due to
dealers rebuilding inventory levels partially offset by a decrease in retail
demand. Retail demand for travel trailer and fifth-wheel RVs decreased 18
percent in the first three months of 2022 compared to the same period in 2021.
Retail demand is typically revised upward in subsequent months, primarily due to
delayed RV registrations.

While we measure our OEM Segment RV sales against industry-wide wholesale
shipment statistics, the underlying health of the RV industry is determined by
retail demand. A comparison of the number of units and the year-over-year
percentage change in industry-wide wholesale shipments and retail sales of
travel trailers and fifth-wheel RVs, as reported by Statistical Surveys, Inc.,
as well as the resulting estimated change in dealer inventories, for both the
United States and Canada, is as follows:

                                                                                                                                   Estimated
                                                      Wholesale                                  Retail                          Unit Impact on
                                              Units                Change              Units               Change              Dealer Inventories
Quarter ended March 31, 2022                  152,200               16%                93,800              (18)%                     58,400
Quarter ended December 31, 2021               130,400               13%                76,300              (15)%                     54,100
Quarter ended September 30, 2021              136,000               24%               130,800              (18)%                     5,200
Quarter ended June 30, 2021                   133,800               100%              180,400               36%                     (46,600)
Twelve months ended March 31, 2022            552,400               30%               481,300               (3)%                     71,100


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                                  (Continued)
                                                                                                                                   Estimated
                                                      Wholesale                                  Retail                          Unit Impact on
                                              Units                Change              Units               Change              Dealer Inventories
Quarter ended March 31, 2021                  131,200               14%               114,500               52%                      16,700
Quarter ended December 31, 2020               115,200                5%                89,400               40%                      25,800
Quarter ended September 30, 2020              110,100               65%               159,100               35%                     (49,000)
Quarter ended June 30, 2020                    66,800              (24)%              132,500               (5)%                    (65,700)
Twelve months ended March 31, 2021            423,300               20%               495,500               25%                     (72,200)


According to the RVIA, industry-wide wholesale shipments of motorhome RVs in the
first three months of 2022 increased 10 percent to 15,800 units compared to the
first three months of 2021, primarily due to dealers rebuilding inventory levels
and increased retail demand. Retail demand for motorhome RVs increased two
percent year-over-year in the first three months of 2022, compared to a 27
percent year-over-year increase in retail demand in the same period of 2021.

Adjacent Industries

Our portfolio of products used in RVs can also be used in other applications,
including buses; trailers used to haul boats, livestock, equipment and other
cargo; trucks; boats; trains; manufactured homes; and modular housing
(collectively, "Adjacent Industries"). In many cases, OEM customers of the
Adjacent Industries are affiliated with RV OEMs through related subsidiaries. We
believe there are significant opportunities in these Adjacent Industries.

Aftermarket Segment

Many of our OEM Segment products are also sold through various aftermarket
channels of the recreation and transportation product markets, primarily to
retail dealers, wholesale distributors, and service centers, as well as direct
to retail customers via the Internet. This includes discretionary accessories
and replacement service parts. We have teams dedicated to product, technical,
and installation training as well as marketing support for our Aftermarket
Segment customers. We also support multiple call centers to provide responses to
customers for product, delivery, and technical support. This support is designed
for a rapid response to critical repairs, so customer downtime is minimal. The
Aftermarket Segment also includes biminis, covers, buoys, fenders to the marine
industry, towing products, truck accessories, appliances, air conditioners,
televisions, sound systems, and the sale of replacement glass and awnings to
fulfill insurance claims. Many of the optional upgrades and non-critical
replacements for RVs are purchased outside the normal product selling seasons,
thereby causing certain Aftermarket Segment sales to be counter-seasonal, but
this has been, and may in the future be, different as a result of the COVID-19
pandemic and related impacts.

According to Go RVing, estimated RV ownership in the United States as of 2020
had increased to over 11 million households. This vibrant market is a key driver
for aftermarket sales, as we anticipate owners will likely upgrade their units
as well as replace parts and accessories which have been subjected to normal
wear and tear.

RESULTS OF OPERATIONS

Consolidated Highlights

•Consolidated net sales in the first quarter of 2022 were $1.6 billion, 64
percent higher than consolidated net sales for the same period of 2021 of $1.0
billion. The increase was primarily driven by record wholesale shipments, price
increases, and Aftermarket Segment sales growth. Net sales from acquisitions
completed in 2021 and the first three months of 2022, primarily Furrion Holdings
Limited ("Furrion"), contributed approximately $79.0 million in the first
quarter of 2022.
•Net income for the first quarter of 2022 was $196.2 million, or $7.71 per
diluted share, compared to net income of $74.1 million, or $2.93 per diluted
share, for the same period of 2021.
•Consolidated operating profit during the first quarter of 2022 was $269.7
million compared to $101.4 million in the same period of 2021. Operating profit
margin was 16.4 percent in the first quarter of 2022 compared to 10.1 percent in
the same period of 2021. The increase was primarily a result of increased
selling prices which are
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                ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
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                                  (Continued)
indexed to select commodities, pricing changes to targeted products, and
leveraging fixed costs over higher sales volumes, partially offset by increased
raw material and freight costs.
•The cost of aluminum and steel used in certain of our manufactured components
increased in the first quarter of 2022 compared to the same period of 2021. Raw
material costs are subject to continued fluctuation and are being offset by
contractual selling prices which are indexed to select commodities.
•The $54.2 million increase in selling, general and administrative costs in the
first quarter of 2022 was primarily driven by increases in personnel costs of
$20.3 million, increases in transportation costs of $13.1 million due to higher
volumes and rising freight costs, incremental costs from recent acquisitions of
$7.7 million, and incremental amortization of intangible assets from acquired
businesses of $4.1 million.
•The effective tax rate of 25.5 percent for the three months ended
March 31, 2022 was higher than the comparable prior year period of 24.9 percent,
primarily due to a decrease in the excess tax benefit related to the vesting of
equity-based compensation awards and the cash surrender value of life insurance,
as discussed below under "Income Taxes."
•In March 2022, we paid a quarterly dividend of $0.90 per share, aggregating to
$22.9 million.

OEM Segment - First Quarter

Net sales of the OEM Segment in the first quarter of 2022 increased $580.3
million
, compared to the same period of 2021. Net sales of components to the
following OEMs markets for the three months ended March 31 were:
(In thousands)

                          2022            2021         Change
RV OEMs:
Travel trailers and fifth-wheels    $   953,226      $ 503,016         90  %
Motorhomes                               87,254         62,593         39  %
Adjacent Industries OEMs                356,102        250,641         42  %
Total OEM Segment net sales         $ 1,396,582      $ 816,250         71  %


According to the RVIA, industry-wide wholesale unit shipments for the three
months ended March 31 were:

                                        2022          2021        Change

Travel trailer and fifth-wheel RVs 152,200 131,200 16 %
Motorhomes

                             15,800        14,300         10  %



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
March 31, divided by the industry-wide wholesale shipments of the different
product mix of RVs for the same period, was:
Content per:                          2022         2021        Change

Travel trailer and fifth-wheel RV $ 4,854 $ 3,476 40 %
Motorhome

                           $ 3,144      $ 2,525         25  %



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.

Our increase in net sales to RV OEMs of travel trailers, fifth-wheel, and
motorhome components during the first quarter of 2022 was driven by content
gains and price increases, market share gains, wholesale production growth, and
acquisitions during the first quarter of 2022.

Our increase in net sales to OEMs in Adjacent Industries during the first
quarter of 2022 was driven by content gains and price increases, market share
gains, and wholesale production growth.

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                                 LCI INDUSTRIES
                ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                  (Continued)
Operating profit of the OEM Segment was $245.4 million in the first quarter of
2022, an increase of $166.1 million compared to the same period of 2021. The
operating profit margin of the OEM Segment in the first quarter of 2022
increased to 17.6 percent compared to 9.7 percent for the same period of 2021
and was positively impacted by:

•Selling prices contractually tied to indices of select commodities increased,
resulting in an increase in operating profit of $142.0 million compared to the
same period of 2021.

•Pricing changes to targeted products, resulting in an increase in operating
profit of $71.6 million compared to the same period of 2021.

•Leveraging of fixed costs over a larger sales base, which increased operating
profit by $15.4 million related to fixed selling, general, and administrative
costs and $6.6 million related to fixed overhead costs.

Partially offset by:

•Increases in material commodity pricing, which negatively impacted operating
profit by $114.4 million, primarily related to increased steel and aluminum
costs.

•Sales mix increase of lower margin products from the acquisition of Furrion,
which negatively impacted operating profit by $5.1 million.

•Additional amortization related to intangible assets from acquisitions
completed in 2021, which reduced operating profit by $3.5 million.

Amortization expense on intangible assets for the OEM Segment was $10.1 million
in the first quarter of 2022, compared to $6.5 million in the same period in
2021. Depreciation expense on fixed assets for the OEM Segment was $14.5 million
in the first quarter of 2022, compared to $12.2 million in the same period of
2021.


Aftermarket Segment – First Quarter

Net sales of the Aftermarket Segment in the first quarter of 2022 increased 35
percent, or $64.0 million, compared to the same period of 2021. Net sales of
components in the Aftermarket Segment were as follows for the three months ended
March 31:
(In thousands)                            2022           2021         

Change

Total Aftermarket Segment net sales $ 247,986 $ 184,008 35 %



Our net sales to the Aftermarket Segment increased during the first quarter of
2022, primarily due to increased consumer demand in the outdoor recreational and
transportation market and our distributor customers rebuilding their inventory
levels.

Operating profit of the Aftermarket Segment was $24.3 million in the first
quarter of 2022, an increase of $2.2 million compared to the same period of
2021. The operating profit margin of the Aftermarket Segment was 9.8 percent in
the first quarter of 2022, compared to 12.0 percent in the same period in 2021,
and was negatively impacted by:

•Increases in material commodity pricing, which negatively impacted operating
profit by $18.5 million, primarily related to increased steel and aluminum
costs.

•Increases in transportation costs, primarily for third party freight, which
reduced operating profit by $4.3 million.

•Sales mix increase of lower margin products from the acquisition of Ranch Hand,
which negatively impacted operating profit by $1.2 million.

•Increases in direct labor costs due to higher production volumes and a tight
labor market, which reduced operating profit by $0.9 million.

•Investments in marketing and administrative wages of $4.5 million.

•Increases in production facilities and equipment costs in order to meet growing
sales demands, which negatively impacted operating profit by $0.7 million.

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                                 LCI INDUSTRIES
                ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
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                                  (Continued)

Partially offset by:

•Pricing changes to targeted products, resulting in an increase in operating
profit of $20.6 million compared to the same period of 2021.

•Sales mix increase of higher margin products from the acquisition of Furrion,
which positively impacted operating profit by $3.1 million.

•Leveraging of fixed costs over a larger sales base, which increased operating
profit by $1.7 million related to fixed selling, general, and administrative
costs and $0.9 million related to fixed overhead costs.

Amortization expense on intangible assets for the Aftermarket Segment was $3.7
million in the first quarter of 2022, compared to $2.9 million in the same
period of 2021. Depreciation expense on fixed assets for the Aftermarket Segment
was $3.5 million in the first quarter of 2022, compared to $3.0 million in the
same period of 2021.

Income Taxes

The effective tax rates for the three months ended March 31, 2022 and 2021 were
25.5 percent and 24.9 percent, respectively. The effective tax rate for the
three months ended March 31, 2022 differed from the Federal statutory rate
primarily due to state taxes, foreign taxes, and non-deductible expenses,
partially offset by the recognition of excess tax benefits as a component of the
provision for income taxes, and Federal and Indiana research and development
credits. The increase in the effective tax rate for the three months ended
March 31, 2022 as compared to the same period in 2021 was primarily due to a
decrease in the excess tax benefit related to the vesting of equity-based
compensation awards and the cash surrender value of life insurance.

LIQUIDITY AND CAPITAL RESOURCES

Cash Flows

As of March 31, 2022, we had $55.4 million in cash and cash equivalents, and
$129.8 million of availability under our revolving credit facility under the
Credit Agreement. We paid off the full outstanding $50.0 million balance of our
Shelf-Loan Facility in March 2022. See Note 9 of the Notes to Condensed
Consolidated Financial Statements for a description of our credit facilities.

We maintain a level of 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. With elevated
demand continuing into the first three months of 2022, the industry has faced
challenges with supply chain constraints, rising material costs, and a tightened
labor market, especially in northern Indiana. To address these challenges, we
have strategically managed working capital, including intentionally building up
levels of certain inventory items to avoid future shortages, and have expanded
our production capacity. As we build inventory levels and invest in additional
production capacity, we also closely monitor our liquidity. In the event
additional needs for cash arise, or if we refinance our existing debt, we may
raise additional funds from a combination of sources, including the potential
issuance of debt or equity securities. Additional financing might not be
available on terms favorable to us, or at all.

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

The Condensed Consolidated Statements of Cash Flows reflect the following for
the three months ended March 31:

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