LCI Industries Q4 2025 Earnings Call - Content-led market share gains and consolidations drove margin expansion

Lucy, Call Coordinator, LCI Industries: Hello, everyone, and thank you for joining us today for the LCI Industries Fourth Quarter 2025 Earnings Call. My name is Lucy, and I’ll be coordinating your call today. Before we begin, I would like to remind you that certain statements made on today’s conference call regarding LCI Industries and its operations may be considered forward-looking statements under the securities laws and involve a number of risks and uncertainties. As a result, the company cautions you that there are a number of factors, many of which are beyond the company’s control, which could cause actual results and events to differ materially from those described in the forward-looking statements. These factors are discussed in the company’s earnings release, Form 10-K, and in other filings with the SEC.

The company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date of the forward-looking statements are made, except as required by law. In addition, during today’s conference call, management will refer to certain non-GAAP or adjusted financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are available in the company’s earnings release and investor presentation, which have been posted on the Investor Relations section of the company’s website and are also available on Form 8-K filed this morning with the SEC. On the call from management today are Jason Lippert, President and Chief Executive Officer, Lillian Etzkorn, Chief Financial Officer, and Kip Emenhiser, VP of Finance and Treasurer.

Later in the call, we will conduct a question and answer session, at which point you can register to ask a question by pressing star one, and you may withdraw from the question queue by pressing star two. With that, it is my pleasure to turn the call over to Jason Lippert.

Jason Lippert, President and Chief Executive Officer, LCI Industries: Thank you, and welcome everyone to our Q4 2025 earnings call. We are pleased with the company’s strong results as our team continues to execute effectively, delivering a 15% year-over-year top-line growth, along with further margin expansion in the fourth quarter. By leveraging our diverse competitive strengths, we capitalize on opportunities across our RV, aftermarket, transportation, marine, and housing end markets. At the same time, our relentless focus on our operational efficiencies drove enhanced profitability, with fourth quarter operating margin more than doubling, expanding 180 basis points compared to Q4 of the prior year. Starting with our OEM segment, net sales increased 18% to $737 million in the fourth quarter. RV OEM revenue rose 17%, driven by market share gains, increased sales of newer products, and a favorable mix shift toward higher content units.

Our other OEM end markets, transportation, marine, and housing, delivered 21% year-over-year net sales growth to $297 million, or 8% on an organic basis. This growth was primarily driven by market share gains and content growth in North American utility trailer, bus, and marine OEM customers. Bus-related content contributed $31 million of year-over-year growth in the quarter, reflecting the recent acquisitions of Freedman Seating and Trans/Air, for which integration efforts and synergies are ahead of plan. Looking ahead, we expect to expand market share across all four of our OEM markets. As we move into 2026, we expect RV wholesale shipments to range between 335,000 and 350,000 units, while we expect the boat industry to remain flat to up low single digits.

Despite a potential flatter industry backdrop, we have multiple growth strategies in place that we believe will drive OEM expansion in excess of overall end market volumes. Central to this strategy is our relentless focus on innovation. Since 2020, new products and market share gains have driven a 67% increase in total content. These innovations include these slide-out designs, Chill Cube air conditioners, advanced window designs, anti-lock braking systems, Touring Coil suspensions, bed lift and bed tilt mechanisms, larger and more robust Fifth Wheel chassis, electric biminis, and our new ladder system for boats, among others. In many of these categories, we offer either the leading product or, in fact, the only product available, further expanding our addressable market, margins, and long-term growth opportunities.

In the fourth quarter, our total content per unit increased 11% year-over-year, reaching $5,670 and representing our largest year-over-year content growth in the past 5 years. To highlight our innovation momentum, our 5 most recently launched products are now generating an annualized revenue run rate of approximately $225 million. For example, our air conditioner unit shipments increased from 50,000 units in 2023 to more than 200,000 units last year, partially driven by strong consumer adoption of our Chill Cube air conditioner platform. In addition, following the launch of our patented Sun Deck in 2025, we are scheduled to build over 4,500 of these patio systems this year, contributing over $4,000 in revenue per unit.

These examples underscore our ability to create and scale high-value, innovative content with the entire RV customer base quickly. At a high level, LCI’s competitive moat, built on our scale, technology, deep industry expertise, and people, positions us to consistently outgrow the market. Our broad product portfolio, structurally efficient operating model, and strong customer relationships enable us to rapidly scale new product launches and seamlessly integrate acquired companies. Our competitive advantage is reinforced by highly differentiated, sophisticated manufacturing technologies that enable us to produce complex, mission-critical components through flexible and increasingly automated processes. Equally as important, our people are the best in the industry, leading in innovation, cultivating deep customer partnerships, and sustaining the collaborative culture that is foundational to our long-term success....

The same competitive mode that drives our OEM business also provides significant advantages in the aftermarket, where we grew net sales 8% year-over-year in the fourth quarter to $196 million. This continued success is directly driven by the strength of our OEM sales platform, which expands content with key customers. When one of our OEM components requires repair or replacement in the field, it almost always must be replaced with our proprietary parts or fully integrated assemblies, creating natural, durable, and high-margin aftermarket revenue streams. Taking a step back, we have come a long way. Just 12 years ago, we had virtually no presence in the RV aftermarket.

Over the past decade, we have organically built our RV aftermarket organization to approximately 400 team members, with a singular focus on delivering the best customer experience across more than 2 million annual interactions with dealers and RV consumers who acquire our parts and services. The primary catalyst for growth in our aftermarket engine is simple: We have embedded more than $20 billion of replaceable content into the RVs through our OEM partners over the last decade. These RVs eventually all come into the aftermarket service and repair cycle. At the moment, approximately 1.5 million RVs are entering the repair and replacement cycle in the next one to three years, each one requiring our parts and service solutions. Our components reach nearly every RV consumer because our parts are literally on almost every RV on the road.

Because we manufacture a broad portfolio of mission-critical products, dealers and consumers rely on us for service and replacement across virtually every major RV system, from slide outs and leveling systems to doors and awnings, chassis and suspension systems, windows and appliances, mattresses and furniture, and much more. This breadth positions LCI as a trusted partner throughout the entire RV ownership lifecycle, supporting every customer channel, from dealers and distributors to OEMs, direct-to-consumer, and leading e-commerce platforms. We have a uniquely strong right to win in the aftermarket, something that no other supplier can credibly match. To further accelerate service-related aftermarket growth and strengthen dealer relationships, we continue to invest in our service infrastructure.

In 2025, dealer service personnel completed approximately 50,000 of our technical training courses, and our online technical resources generated nearly 2 million visits, as dealers and consumers increasingly rely on our service videos to resolve issues in the field. These efforts are driving higher quality service outcomes and stronger dealer partnerships, reinforcing Lippert as the go-to partner in RV aftercare. In addition, we expanded our service footprint in 2025 with the opening of three new service facilities and the doubling of our mobile technician workforce. These investments have already resulted in a double-digit increase in service completions, improving speed, convenience, and customer satisfaction, while allowing us to schedule and complete significantly more service projects than a year ago.

Our goal is to simply reach more consumers seeking a better service experience, including faster turnaround, higher quality care, and the opportunity to upgrade their RVs with our newest and most talked about products. This year, we are partnering with dealers to launch the Lippert Upgrade Experience, a new program that enables our dealers to offer upgrades such as TCS, ABS, and other advanced systems not currently offered by dealers. Several of the largest dealers in the country have already expressed strong interest in rolling this program out later this year. Turning to our auto aftermarket business, there have been several important developments worth highlighting. As many of you are aware, First Brands, which owns our largest competitor in the hitch and towing space, has experienced significant operational challenges as a result of a complex bankruptcy process.

As a result, both automotive OEMs and aftermarket customers are actively seeking new, stable, long-term partners. Against that backdrop, we are already seeing meaningful opportunities emerge, and we are in the process of capturing substantial incremental business as a result. Although it is still early, we currently estimate the potential opportunity here at approximately $50 million annually. We expect to share more of these developments as things progress. We have the existing capacity to support this incremental volume without the need for new facilities or additional shifts in most cases, allowing us to efficiently absorb this anticipated growth. We are also continuing to strengthen our auto aftermarket infrastructure. We recently transitioned into a state-of-the-art 600,000 sq ft distribution center in South Bend, Indiana, consolidating operations from a couple of smaller, less efficient distribution facilities.

In addition, we are preparing to open a new manufacturing facility in Seguin, Texas, later this year, which will serve as the home for our Ranch Hand truck accessory business, a brand that has seen growing consumer awareness and demand, including increased visibility through popular shows like Yellowstone and Landman. Turning to our profitability initiatives, we delivered a full year operating margin of 6.8%, an improvement of 100 basis points year over year, driven by cost improvements, market share gains, and enhanced operating efficiencies. Given the challenging environment that persisted in 2025, we are pleased with the result we delivered and are excited about the goals for 2026 that position us well for continued progress.

We believe these strategies can drive an additional 70-120 basis points of operating margin improvement over the last year, while also providing a clear and disciplined path toward our objective of achieving double-digit operating margins. These gains will be supported by continued market share growth and improving product mix and further reductions in overhead and G&A, where we made meaningful progress in 2025. To build on last year’s progress in 2026, we plan to complete 8-10 facility consolidations on top of the 5 we executed last year. We also continue to evaluate the divestiture of select lower-margin businesses while accelerating automation, operational efficiencies, and fixed cost reductions throughout the year. I’ll wrap up my remarks with an update on our balance sheet and capital allocation strategy.

Despite a challenging operating environment last year, we have made significant progress in strengthening our financial profile. Since 2023, we’ve increased ROIC from 5.3% to 13.5% as of December 2025, reflecting improved returns and disciplined capital deployment. We ended 2025 with a net debt to adjusted EBITDA ratio of 1.8 times, supported by strong cash generation. Earlier in the year, we also completed a successful refinancing that both extended and staggered our debt maturities, further enhancing our financial flexibility. Liquidity remains robust, with over $200 million in cash and equivalents, along with full availability under our revolving credit facility of $595 million. As we enter 2026, we will remain disciplined in our capital allocation, with a continued focus on investing in the business to support innovation and ongoing product development.

Our M&A pipeline remains active, and smaller tuck-in acquisitions continue to be a core competency for LCI Industries, completing 77 strategic acquisitions since 2001. We will continue to evaluate opportunities within our existing markets and expect to remain active on the M&A front, building on the success we have achieved in 2025 with successful acquisitions like Freedman and Trans Air. Returning capital to shareholders also remains a priority as we continue to pay an attractive dividend, currently yielding about 3%. During 2025, we returned $243 million to shareholders, including $114 million in dividends and $129 million through share repurchases. In closing, our entire team is energized by the opportunities ahead, and we are confident in our strategy to leverage our many strengths to drive continued growth, margin expansion, and shareholder value creation.

I’ve had the privilege of leading this company for more than 25 years, and I’ve never been more excited about the opportunities in front of us than I am today. We have a tested, focused, and highly capable team ready to execute on the plan, and I’m incredibly proud of the accomplishments of our more than 12,000 men and women at LCI, whose perseverance and commitment continue to be the driving force behind our success. Because of their efforts, we enter 2026 in one of the most competitive positions in our company’s 70-year history. With that, I’ll turn it over to Lillian, who will walk you through our financial results in more detail.

Lillian Etzkorn, Chief Financial Officer, LCI Industries: Thank you, Jason. We ended the year on a strong note with the fourth quarter results that included double-digit top-line growth and meaningful margin expansion. These results cap a year of progress in which the hardworking men and women of LCI executed our strategic initiatives, demonstrating the potential of the LCI platform, and we enter 2026 well positioned to generate even stronger results in the new year. For the fourth quarter, consolidated net sales were $933 million, up 16% year over year. OEM net sales grew an even stronger 18%, which included 17% growth for RVs, primarily driven by sales price increases due to higher material costs, a favorable mix shift towards higher content Fifth Wheel units, and LCI’s ongoing market share gains.

We also generated 21% top-line growth across our other OEM end markets, with transportation and marine expanding year-over-year, partially offset by a modest decline in housing. Primary drivers included sales from acquired businesses and higher sales to North American utility trailer OEMs. Our content per towable RV unit increased 11% over the prior year to $5,670, and content per motorized unit was up 7% to $3,993. Towable RV organic content grew significantly, up 3% year-over-year, driven by the continued success of our recent product launches. Content levels also benefited from the continued strength of higher content of fifth wheel units. We also expanded motorhome RV content per unit by 7% to nearly $4,000.

Turning to aftermarket, our net sales expanded 8% versus the prior year quarter to $196 million, primarily driven by product innovations and increased demand for our upgrade and service parts as more units enter the upgrade and repair cycle to which Jason referred. Our consolidated operating profit during the fourth quarter was $35 million, reflecting 180 basis point margin expansion to 3.8%. Our margin growth benefited from our continued focus on driving operating efficiencies and cost reductions, along with the increased North American RV sales volume related to an increased sales mix of higher content fifth wheel units and market share gains. Partially offsetting this progress was $3.9 million of restructuring costs related to the closure of our glass operations in Ireland.

Breaking down further our margin performance, our fourth quarter OEM-related operating profit margin was up significantly to 3.7% versus 0.3% in the same period the prior year. This operating profit expansion was driven by the increased selling prices for targeted products, primarily related to increased material costs, as well as reduced costs from our material sourcing strategies and better fixed cost absorption. For aftermarket, our operating profit margin was 4.3% in the fourth quarter as compared to 7.9% a year earlier. This operating profit margin change was primarily driven by higher material costs related to tariffs and higher steel, aluminum, and freight costs, increases in sales mix towards lower margin products, and investments in capacity, distribution, and logistics technology to support the growth of the aftermarket segment.

The margin was positively impacted by increases in selling prices for targeted products, primarily related to increased material costs and reduced costs for material sourcing strategies. Turning to adjusted EBITDA, we generated robust annual growth of approximately 53% to $70 million, reflecting a 7.5% margin or 180 basis points above the 5.7% margin in the fourth quarter of 2024. Our GAAP net income came in at $19 million or $0.77 per diluted share, more than doubling over the prior year quarter’s $0.37. On an adjusted basis, excluding restructuring costs, net of tax effect, net income of $22 million equated to $0.89 per diluted share, which also more than doubled.

Turning to the balance sheet, we continue to operate from a position of strength, ending the year with cash and cash equivalents of $223 million, which was up from $166 million to start the year. The increase benefited from cash provided by operating activities of $331 million, and also reflects $147 million of investment-related cash outlay, which included $53 million in capital expenditures and $113 million worth of acquisitions during the year. As of December thirty-first, we had outstanding net debt of $723 million, reflecting a net debt to EBITDA ratio of 1.8x, which is within our targeted range.

In terms of our balanced approach to capital allocation, in addition to strategic investment in the business and the pursuit of select accretive acquisition opportunities, we continue to execute on the $300 million share repurchase program announced last year. During the fourth quarter, we returned $28 million to shareholders through our quarterly dividend of $1.15 per share. For the full year, we repurchased $129 million worth of shares and paid $114 million in dividends, as the return of capital to shareholders remains a key component of our commitment to creating long-term shareholder value. Turning to our outlook, as Jason mentioned, we expect to see industry RV wholesale shipments of 335,000-350,000 in 2026, and we look to the marine industry to be flat to up low single digits.

For the transportation market, we expect the market to be flat, but we will have the benefit of increased sales from the acquisitions of Freedman Seating and Trans Air, which we completed in 2025. We also expect that the housing industry growth will be in the low single digits, aided by our growth of residential window products. For the aftermarket, we are estimating mid-single-digit growth, supported by the significant numbers of RVs entering the repair and replacement cycle in the next few years. Lippert should also see lift in automotive aftermarket sales as the result of a key competitor’s bankruptcy. I would also like to note that we have started the year strong, with January net sales of approximately $343 million, up 4% from prior year.

With this backdrop, we expect consolidated 2026 revenue of $4.2 billion-$4.3 billion, an operating margin in the range of 7.5%-8%, an adjusted diluted EPS of $8.25-$9.25. Helping to drive the bottom line results, we plan to consolidate 8-10 facilities during the year on top of the 5 that we completed in 2025, while also continuing to focus on additional efficiency initiatives. In addition, we expect our continued penetration of newer end markets to support margin expansion, and we will also continue to seek divestiture opportunities related to lower-margin, non-core products. For capital allocation in the new year, we expect $60 million-$80 million of capital expenditures, mainly for business investment and innovation.

We also look to return additional capital to shareholders through both our dividends and opportunistic share repurchases while maintaining our target leverage ratio of 1.5-2x net debt to EBITDA. In summary, while we ended 2025 on a strong note, we’re even more excited about the opportunities ahead for LCI and are determined to create additional long-term shareholder value through adherence to our strategic initiatives, with a focus on diversified growth opportunities and disciplined cost management. Now, operator, if you could please open the lines, we’d be happy to take questions.

Lucy, Call Coordinator, LCI Industries: Thank you, Lillian. To ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. The first question today comes from Brett Jordan of Jefferies. Your line is now open. Please go ahead.

Patrick Buckley, Analyst, Jefferies: Hey, good morning, guys. This is Patrick Buckley in for Brett. Thanks for taking our questions. Focusing on the 2026 outlook, you know, I guess how sensitive is that range to potential rate cuts? Do three or four rate cuts drive the high end or potentially higher? Or I guess what other metrics, you know, drive that range there?

Jason Lippert, President and Chief Executive Officer, LCI Industries: I would just say, you know, we’re not factoring the rate cuts into the, into the range. I think it’s kind of steady state as we are right now. Certainly, if we get some rate cuts, that would be helpful. I mean, a lot of our growth that we’re planning on the top line is going to be predicated on market share gains and some of the other things we’ve talked about in the call. So is that helpful?

Analyst, Analyst: Yeah. Yeah, thank you. And I guess staying on the 2026 guide here, can you help us bridge the difference between 2026 and what maybe a potential quote-unquote normal run rate looks like, I guess between the COVID highs and the post-COVID lows? You know, where do you expect to settle in during a more normal cycle?

Jason Lippert, President and Chief Executive Officer, LCI Industries: Yeah, I think, you know, when you look at the past cycles, I mean, it’s, as I say to a lot of people, you know, we went up to such a monster high that when we came down to, you know, half of the 600, down to 300, you know, things broke into a lot of pieces. So I think we’re going to be picking those pieces up for a while. It’s been three years. I think it’s going to be, you know, a slow coming out of the cycle.

So, you know, obviously, if you look at our forecast for 2026 with units, you know, at a midpoint of, you know, 345 or 344, whatever the midpoint is of our range, it’s, you know, we feel like we’re coming out slow and, you know, we’ll pick up more momentum next year as we get through more of this. But I think, you know, we would say that the midpoint is probably 375-415, somewhere in that range in terms of what is more normalized for the near term. But, you know, as we’ve said on past calls over the years, and we feel like this is a 500,000+ industry, but we got to get healthy before we get back to that.

Analyst, Analyst: Great. That’s all for us. Thanks, guys.

Jason Lippert, President and Chief Executive Officer, LCI Industries: Thanks.

Lucy, Call Coordinator, LCI Industries: Thank you. The next question comes from Scott Stember of ROTH Capital. Your line is now open. Please go ahead.

Scott Stember, Analyst, ROTH Capital: Good morning, and thanks for taking my questions as well.

Jason Lippert, President and Chief Executive Officer, LCI Industries: Thanks, Scott.

Scott Stember, Analyst, ROTH Capital: Jason, I just wanted to, you know, early in the year, we’re hearing of, you know, trade-up activity, mix shift towards higher price units, and obviously, we’re seeing that in your results already. What are you hearing through your various touch points, at retail? Just trying to get a sense if that narrative is continuing as we enter the selling season.

Jason Lippert, President and Chief Executive Officer, LCI Industries: Yeah. Yeah, I think, you know, there’s a lot going on out there on the retail side of things. I would say that there, you know, I’ve been and sat with and talked to a handful of the larger dealers lately. The larger dealers seem to be doing decent, but I think that there’s a lot of small and mid-sized dealers that are struggling. I think everybody’s struggling on the margin side. But I think, you know, everybody’s being very disciplined. We had some weather. You know, I’d heard that Camping World had, as well as some other stores had, you know, 45-60 stores that were down for a couple of days because of weather.

So, you know, we have that kind of thing going on this time of year, but I think the big guys are doing okay. Some of the smaller guys and mid-sized guys are struggling. And I think that’s what, you know, gets us to our forecast of 335-350. It just feels like things are moving slowly, and hopefully, we get some stronger retail numbers as we get into the selling season this year.

Scott Stember, Analyst, ROTH Capital: Got it. And then, looking at the aftermarket, you called out the RV side, I guess, doing better, and that was... If you look at the profit for aftermarket as well, it looked like it was a little bit lower. Maybe just talk about on the aftermarket RV versus the automotive side, and maybe talk about different brands, you know-

Jason Lippert, President and Chief Executive Officer, LCI Industries: Yeah, I think that, you know, some of- Oh, go ahead.

Scott Stember, Analyst, ROTH Capital: I’m sorry. Go ahead.

Jason Lippert, President and Chief Executive Officer, LCI Industries: Finish up.

Scott Stember, Analyst, ROTH Capital: Go ahead. Yeah, go ahead. Sorry.

Jason Lippert, President and Chief Executive Officer, LCI Industries: I was just gonna say that, you know, some of the headwinds on the, the aftermarket side related to the pricing on the auto aftermarket side. So, you know, we have pricing cycles. That’s typically January and April. So when you look at fourth quarter, some of our numbers on the, on the profitability side were held up a little bit there, but all those, you know, all those increases due to, you know, the tariffs and all the other related inflation that we had last year will come, you know, in the next couple of quarters. But all in all, like we said, our aftermarket side of our business is doing well. We’ve got new products, new market share. We’re continuing to gain steam on the RV side.

Then, as we said, we’ve got some really big opportunities on the automotive aftermarket side with the bankruptcy announcement of First Brands and what they’re going through. A lot of pieces to pick up there for us.

Scott Stember, Analyst, ROTH Capital: Got it. And then, just last question on guidance, cadence. Anything we should know about modeling down to the bottom line for the first quarter?

Lillian Etzkorn, Chief Financial Officer, LCI Industries: Yeah. So, Scott, as you think about the first quarter, I think January is pretty indicative of what we’re thinking that we’re gonna see from a year-over-year perspective. So, you know, we started off with an improvement over last year, but it is only 4%. I think we’re expecting that that’s gonna trend fairly consistently as we look at the quarter. And when we think about the margin cadence going through the year, we’re not gonna start at, you know, the 7.5%-8% per operating margin. We’ll step into that as we go through the year. Is that helpful?

Scott Stember, Analyst, ROTH Capital: Gotcha. Yeah, very helpful. Thank you so much.

Lucy, Call Coordinator, LCI Industries: Thank you. The next question comes from Daniel Moore of CJS Securities. Your line is now open. Please go ahead.

Analyst, Analyst: Thank you. Good morning, Jason. Morning, Lillian.

Jason Lippert, President and Chief Executive Officer, LCI Industries: Morning.

Analyst, Analyst: Maybe go back to the first question a little bit. Guidance, you know, kind of low to mid-single-digit growth for 2026. Just talk about puts and takes, one, you know, kind of price versus volume, two, expectations for content gains.

Speaker 9: ... Then, you know, how much revenue are you contemplating being kind of coming out of the bucket, either de-emphasized or discontinued, either from consolidating facilities or kind of shedding low-margin business?

Lillian Etzkorn, Chief Financial Officer, LCI Industries: Yeah. Good morning, Dan. Definitely a lot of puts and takes as we’re looking at, you know, that potential range going into this year. You know, from an organic growth perspective, you know, we’ve talked before around that 3% organic growth. I’d expect that we continue to see that as we move through 2026. Probably less so from a pricing perspective and more so from that market share expansion. I think we shared previously in the third quarter call that we’re looking at maybe $75 million of potential divestitures of that lower margin product, so that could be one of the, the takes from the growth. And then, you know, modest expansion across the markets, you know, flat to modest expansion as we highlighted in the prepared remarks.

So definitely puts and takes, but feeling good as we’re starting the year.

Jason Lippert, President and Chief Executive Officer, LCI Industries: I would just add that, you know, our expectation of continued, continued content growth. Obviously, we had a nice content growth year this past year, but, you know, I’d look at... You know, last year was a tough market. We, you know, we grew $380 million in that market, some through M&A and, and through organic growth and market share gains. You know, we, we expanded our margin during that time. We consolidated facilities, to the tune of five facilities, which helped, and we’ve got that momentum carrying on into this year, you know, with another eight-10 facilities. Well, we, we again expect a little bit of growth--flat to a little bit of growth in all of our markets, maybe a little bit more in aftermarket, given some of the things going on there.

But I think when you look at, you know, the growth that we had last year, significant growth in a really tough market, and we’re continuing that this year with even some more, more ability to improve our cost structure. I think it’s a really, really good position we’re entering 2026 in.

Speaker 9: Really helpful. Maybe just following up on the last question. Looking at Q1, you know, the full year guide implies 70-120 basis points of operating margin expansion. I think last year was around 7%, or 7.8%, if I’m not mistaken, the adjusted operating income. You know, just how are we thinking about kind of year-over-year growth, as far as, you know, op margin for the first quarter, given weather and some of the other issues?

Lillian Etzkorn, Chief Financial Officer, LCI Industries: Yeah, I’d say probably less of a year-over-year growth from an operating margin perspective, more as we get into the latter part of the year to get us to that 7.5%-8% margin. Yeah. So, I mean, I think first quarter is gonna look very similar to the operating margins that you saw in the first couple quarters of last year.

Speaker 9: Very helpful. And then, just going back to, you know, kind of the aftermarket opportunity. You, you talked about, you know, 1.5 million units coming into the age of repair in the next 1-3 years.

Jason Lippert, President and Chief Executive Officer, LCI Industries: Mm-hmm.

Speaker 9: How do we think about kind of that aftermarket business? You gave color for this year. How do you think about that ramping, you know, as over the next two to three years, and what are your kind of near-term and longer-term operating margin goals in that business? Thanks again for the color.

Jason Lippert, President and Chief Executive Officer, LCI Industries: Yeah, I think when it comes to those units coming into the repair and replacement cycle, again, a lot of those parts on those units that come in to repair and replacement are proprietary. They need to use our parts. So, you know, all we know is we’re getting closer and closer to when those units start to really flow into the dealers for service. So, you know, we’ve seen a little bit of that over the last couple of years, but we expect it to grow. Like I said, there’s a lot of units out there that will need to come back into the repair and replacement cycle.

And again, on the aftermarket side, for automotive, we just have a lot of opportunity on just share gains through, you know, the First Brands issue, lots of hitch and towing electrical business that’s just gonna be sitting out there, out for bid, and, and we’re, you know, we’re the likely candidate there for that business. Just because there’s really, there’s really only been 2 strong players in that market over the last decade, and it’s a, it’s a high barrier to entry business. I mean, you’ve got to have, you know, significant engineering and design built up to cover automobiles and, and trucks that, that go back 30 years to for fit and finish on the, the hitch and, and towing aspects.

Then obviously, when we get to a situation like this, we’ve got a little bit more margin, opportunity, and control than what we would have, what we would if there were, you know, more players. So, I think our aftermarket margins will stay pretty steady. You know, Lily, I don’t know if you have any other color there.

Lillian Etzkorn, Chief Financial Officer, LCI Industries: Yeah. The only other thing I would add to that, Dan, is keep in mind we have been doing investment into the aftermarket business, really to support this future expansion. So the margins have been pressured from that, and in the near term, you’re gonna still see some of that pressure as we’re investing in the facility in Texas, as we’re continuing to support the investment into the distribution aspects for aftermarket. But I think, you know, longer term, you know, clearly we expect, you know, nice, solid returns with the aftermarket business. Just a little bit of near-term continued headwinds.

Speaker 9: Perfect. I’ll circle back for any follow-ups. Thanks.

Lillian Etzkorn, Chief Financial Officer, LCI Industries: Thank you.

Lucy, Call Coordinator, LCI Industries: The next question comes from Joe Altobello of Raymond James. Your line is now open. Please go ahead.

Joe Altobello, Analyst, Raymond James: ... Thanks. Hey, guys. Good morning. I guess first question for you, Jason, you know, your, your industry outlook for wholesale shipments on the RV side is a little bit softer than what we talked about in late October. I’m just curious what you’ve seen over the last, you know, three and a half months or so that, that makes you a little bit less sanguine on the industry this year.

Jason Lippert, President and Chief Executive Officer, LCI Industries: Yeah, like I said, I think there’s just still a lot of pieces to pick up. There’s still a lot of. Probably the biggest answer to your question there is just there’s a lot of mid and small-sized dealers still out there. A lot of those dealers are going through, you know, the question of: Do they wanna stick around? Do they wanna sell to somebody bigger? I think the bigger guys have put the brakes on a little bit on, in terms of acquisition of some of these smaller dealerships. So it just feels like there’s a little bit of a logjam up there until some of that gets sorted out. But, you know, we’re taking a conservative approach. I mean, again, we feel that the industry can be a lot better.

Some of it is we just need some of the macro factors to, you know, come back and improve a little bit. But all in all, you know, we’re certainly coming off the bottom. We dropped to 300, went to 315, to 335, to 342 this year. So, you know, we’re already seeing, you know, the beginning portion of coming off the cycle. It’s just a matter of how quickly it’s gonna ramp up, and that depends on retail and, you know, the overall dealer environment out there.

Joe Altobello, Analyst, Raymond James: Got it. Helpful. Maybe just in terms of the first quarter outlook, I think you mentioned, you know, similar to what you saw in January, call it +4%. It’s obviously a slowdown from 4Q +16%. Is that just a tougher compare, or are you seeing other dynamics playing out here early in the first quarter?

Jason Lippert, President and Chief Executive Officer, LCI Industries: I think it’s just a lot of dealer and OEM discipline at this point in time. I mean, they’re, they’re being as good as I’ve ever seen in terms of just, you know, pumping the brakes and making sure that we’re not getting ahead of ourselves and putting inventory out there that’s just gonna sit. So, you know, dealers and OEMs are, are ordering and building the right inventory, I feel, better than I’ve ever seen. And I think they’re just waiting for, you know, waiting for the retail numbers to pop up. Shows have been good, traffic has been decent. There’s, there’s no signs out there, that would point otherwise, that, that it would be going the other way. So we do think it’s, you know, we should be, you know, up a little bit this year.

But those are some of the early indicators.

Joe Altobello, Analyst, Raymond James: Got it. Okay. Thank you.

Jason Lippert, President and Chief Executive Officer, LCI Industries: Yep.

Lucy, Call Coordinator, LCI Industries: Thank you. The next question comes from Tristan Thomas-Martin of BMO. Your line is now open. Please go ahead.

Tristan Thomas-Martin, Analyst, BMO: Hey, good morning.

Jason Lippert, President and Chief Executive Officer, LCI Industries: Morning.

Tristan Thomas-Martin, Analyst, BMO: Where was I? Well, I wanna follow up on Joe’s questions. So up a little bit at retail for the RV industry year-over-year, is that right?

Jason Lippert, President and Chief Executive Officer, LCI Industries: I think retail and wholesale pretty stay pretty aligned this year. We’d love to see retail up again. I think some of it’s just gonna depend on, you know, how the macro factors play out over the next months, you know?

Tristan Thomas-Martin, Analyst, BMO: Okay. Um-

Jason Lippert, President and Chief Executive Officer, LCI Industries: Tariff, tariff, you know, the tariff environment not being here this year will help significantly, you know, because pricing is a little bit more consistent. We can rely upon, at the moment, where we’re at with things, so...

Tristan Thomas-Martin, Analyst, BMO: Okay, and then just kind of on the change to shipment, like, I just wanna summarize to make sure I’m understanding it correctly. So it just sounds like dealers are just continuing to be maybe a little bit more hesitant than you thought to take on new inventory?

Jason Lippert, President and Chief Executive Officer, LCI Industries: I think they’re just being-- I just think they’re being cautious right now. Again, we had some, you know, we had some significant weather. I mean, we always have weather in the north during this time of year, but, you know, the weather was kind of spread out all over the place. Again, you know, some of the numbers I heard from some of the bigger dealers, where they had multiple days of shutdowns and, you know, 50 to 60 stores across the country, some of them... I mean, that’s a, that’s a big-- that’s a-- I mean, nobody can go in and buy RVs when, you know, that many dealerships are shut down. I think that, that, that’s played a little bit of a role. Ultimately, you know, we still feel optimistic that this year can be better than last year.

Tristan Thomas-Martin, Analyst, BMO: Yeah. And then just kind of one more question. Can you maybe remind everybody what the kinda typical RV trade-up cycle is from a consumer standpoint? And then maybe is-- could it be maybe a little bit quicker this time, just because there’s been a lot of really cheap, smaller, kind of low-content RVs that have been sold in the last couple of years? Thanks.

Jason Lippert, President and Chief Executive Officer, LCI Industries: Yeah. Yeah, I think, I think to your, to your point, on the, on the more entry-level stuff, especially the Single-Axle product, you know, you’re gonna see quicker trade cycles than you would on a, you know, a bigger motor, motor home or, or larger Fifth Wheel. You know, we typically say that the trade-in cycle is three to five years, and a lot of that just will depend on the buyer and the type of unit that they have. So, you know, obviously, the industry built a lot of those Single-Axle trailers over the last, you know, five years. So, you know, we, we think that’ll bode well for the, the industry as people start to think about, you know, continuing camping and, you know, a bigger unit.

But we’ve seen some of that improvement already with some of our content gains in the last few months, so...

Tristan Thomas-Martin, Analyst, BMO: Yeah, great. Thank you.

Jason Lippert, President and Chief Executive Officer, LCI Industries: Thanks, Tristan.

Lucy, Call Coordinator, LCI Industries: The next question comes from Brandon Rolet of Loop Capital. Your line is now open. Please go ahead.

Joe Altobello, Analyst, Raymond James: Good morning. Thank you for taking my questions. Just first, on affordability, could you just talk about maybe affordability in the RV industry entering 2026 versus maybe where we were last year, and how that might overall have an impact on the industry’s recovery? I think this is the first year pricing has started to come back up again, but, you know, rate relief really hasn’t been significant, at least on the consumer side. So any comments there, and how that might impact your pricing? Thank you.

Jason Lippert, President and Chief Executive Officer, LCI Industries: ... Yeah, I think, you know, there’s a lot of—there’s always a lot of pricing discussions going on. There’s, I think there’s two big factors that usually weigh into how ASPs are gonna end in any given year, and I think that the OEMs right now are really focused on driving those ASPs down through, you know, a lot of content realignment. So there’s been a lot of that going on since model change to try to stay focused on bringing prices down. The only negative we have right now is just aluminum costs in general are up. So that’s kind of a headwind for the industry, but, you know, it’s at a near the five- or seven-year high there. So but that’ll come back down.

Right now, it’s a little bit of a headwind. There’s a lot of aluminum in a lot of these RVs that are built. But, you know, we’re working with, we’re working with our customers like we always do, on, on good, better, best philosophies. And, you know, maybe a, maybe a good is good enough instead of, instead of them buying a, a best type of product or a better type of product, component for their RV to bring - help bring pricing into, you know, better alignment for the consumer. And then you’ve got, you know, you’ve got the third lever, which is a lot of, you know, OEM discounting and dealers discounting to try to move product and, and keep product moving, so it doesn’t get stale out there.

I think that our industry does a better job than most industries at managing those factors. You look at the boat industry and, you know, they’re kind of strapped by engine prices. Engine prices really haven’t come down much since COVID, and boat prices are really high. And there’s not a lot the boat manufacturers can do because it’s the largest ticket item for components that they buy for the boat. So I think RVs in better shape.

Scott Stember, Analyst, ROTH Capital: Okay, great. Thank you.

Jason Lippert, President and Chief Executive Officer, LCI Industries: Sure.

Lucy, Call Coordinator, LCI Industries: Thank you. The next question comes from Kevin Condon of Baird. Your line is now open. Please go ahead.

Kevin Condon, Analyst, Baird: Hi, good morning, everyone. This is Kevin. I’m for Craig at Baird. Was hoping to understand and unpack the margin guide a bit better. Just thinking the 70-120 basis points of improvement, wondering if you could comment on or rank order some of the largest drivers of that, you know, being operating leverage on the top line growth. Do you expect favorable mix impact? You know, maybe the net incremental impact of tariffs, just how you’re thinking about some of those buckets contributing to that 70-120 basis points increase.

Jason Lippert, President and Chief Executive Officer, LCI Industries: Yeah, well, I’ll start and let Lillian chime in after. But I think, you know, one of the biggest things, and I mentioned it earlier, that we’ve got going for us is just some of the consolidation efforts we have and restructuring we have that we started early last year on. You know, if you look at last year, like I said, we increased $380 million in our top line. You know, through our acquisitions, I think we acquired 1,000 team members. We ended the year 400 team members up over the beginning of last year.

So when you consider that we grew $400 million, added 1,000 team members, and ended only $400 million from where we started, I think that shows, you know, the power of some of the consolidation efforts that we’re making around G&A and overhead. So that would probably be one of the bigger levers, and obviously, that continues, you know, in just as dramatic a fashion as last year because we’re gonna double, you know, we’re gonna nearly double the amount of consolidations we’re doing this year than we did last year.

Lillian Etzkorn, Chief Financial Officer, LCI Industries: Yeah. Thanks for that, Jason. And, Kevin, building on that, so clearly the consolidations are gonna continue to benefit us. When we think about, you know, kind of the range that we have out there, part of what’s still to be determined, you know, as we go through the calendar, is the timing of those consolidations, of those incremental 8-10. So we have the full year benefit of the 5 that we consolidated last year, which will benefit us throughout the year. And then, as we cadence in the 8-10, which will not all happen, obviously, February first or March first, it’ll cadence over the full year, that will also drive efficiencies for 2026.

Additionally, as we have the incremental revenue coming in, you know, we’ve typically guided and will continue to guide that incremental margins, roughly 25%, are fair assumptions as you’re modeling, so there’s a benefit there. And really, as Jason was saying, we’ll continue to drive overall operating efficiencies. So, you know, as we’re able to get more volume and more units through our manufacturing facilities, you have better efficiencies just in your fixed cost absorption as well. So it really is a multitude of factors there that contribute to us being able to deliver that margin expansion and frankly, continuing us on that progression towards the double-digit margin, which is what we’ve been talking about, reaching. So continued steady progress towards that goal.

Kevin Condon, Analyst, Baird: Understood. Thanks. And then on the, I think in the past, you’ve disclosed a single-axle mix of shipments. Was that a metric that you offered for Q4? And I just wonder your expectations for 2026, if that’s still a tailwind, for the full year outlook.

Lillian Etzkorn, Chief Financial Officer, LCI Industries: Yeah. So for the fourth quarter, we are providing it. It’s in the presentation deck in the very back of the appendix. But the fourth quarter came in at about 21%, so a little bit up from the third quarter. So I think we’re kind of bouncing around that 19%-21%. You know, fifth wheels were definitely still strong-

Kevin Condon, Analyst, Baird: Mm-hmm

Lillian Etzkorn, Chief Financial Officer, LCI Industries: ... as we reported. I think it’s yet to be determined for the full year for 2026, but that 19%-21% feels kind of like an ambient level at this point.

Jason Lippert, President and Chief Executive Officer, LCI Industries: Yeah, yeah, and just to give you a little bit more color, just for January, for example, Single-Axles were a little down over last year, January. Fifth Wheels were up a little bit. So that’s, you know, we’re, we’re seeing that content move the right way for us, and we’ll see how the rest of the year goes. That’s just, you know, just a one-month look, but-

Tristan Thomas-Martin, Analyst, BMO: ... Gotcha. Thanks so much for taking my question.

Jason Lippert, President and Chief Executive Officer, LCI Industries: Yeah, thanks.

Lillian Etzkorn, Chief Financial Officer, LCI Industries: Thank you.

Lucy, Call Coordinator, LCI Industries: As a reminder, to ask a question, please press star followed by one on your telephone keypad now. The next question comes from Mike Albanese of Benchmark. Your line is now open. Please go ahead.

Joe Altobello, Analyst, Raymond James0: Yeah. Hey, good morning, guys. Thanks for taking my question. Just kind of a quick follow-up on really the last question. If you could just comment again on RV, you know, product mix expectations. Obviously, some momentum in the fifth wheels here. I mean, do you see that more as, you know, dealers kind of right-sizing or level-setting inventory? Or, you know, is this more consumer-driven, you know, momentum that, you know, could continue?

Jason Lippert, President and Chief Executive Officer, LCI Industries: Well, I mean, we hope that the mix right-sizes back more toward not just fifth wheels, but, you know, higher content trailers. It’s just healthier for the industry. And again, we’ve put so much of that single axle product into the industry over the last five years that, you know, eventually that part of the market will get saturated, then people will start trading up, and that mix shift will happen, hopefully, a little bit more dramatically. But like I said, all I can tell you is January right now and kind of what we see, you know, in the very, very near term, which, you know, we’ve seen single axles drop a little bit over last year, same period. Fifth wheels increase a little bit over last year, same period in January.

Talk of the shows, the high-end buyer is there and, you know, not as impacted as some of the, you know, entry-level buyers. A little bit more willing to spend money. So, you know, that’s where we’re at right now.

Joe Altobello, Analyst, Raymond James0: Okay. Thanks, guys.

Lucy, Call Coordinator, LCI Industries: Thank you. We have no further questions at this time, so I’d like to hand it back to Jason for closing remarks.

Jason Lippert, President and Chief Executive Officer, LCI Industries: Yeah, again, thanks, everybody, for joining the call. Again, against a really tough backdrop, our performance, we feel, has been very, very strong. We’ve got lots of good things happening this year. Again, even if the industry’s flat to a little bit up, we feel like we’ll perform similar to last year and continue to make some of these consolidation efforts pay off on the bottom line. Thanks for joining the call. We’ll talk to you next quarter. Thanks.

Lucy, Call Coordinator, LCI Industries: This concludes today’s call. Thank you all for joining. You may now disconnect your lines.