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What changed in LCI INDUSTRIES's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of LCI INDUSTRIES's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+222 added−245 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in LCI INDUSTRIES's 2023 10-K

222 paragraphs added · 245 removed · 185 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

57 edited+14 added−12 removed31 unchanged
Biggest changeHall Executive Vice President and Chief Financial Officer Andrew J. Namenye Executive Vice President, Chief Legal Officer, and Corporate Secretary Ryan R. Smith Group President – North America Jamie M. Schnur Group President – Aftermarket Nick C. Fletcher Executive Vice President and Chief Human Resources Officer Officers are elected annually by the Board of Directors.
Biggest changeInformation About our Executive Officers The following table sets forth our executive officers as of December 31, 2023: Name Position Jason D. Lippert President and Chief Executive Officer Lillian D. Etzkorn Executive Vice President and Chief Financial Officer Andrew J. Namenye Executive Vice President, Chief Legal Officer, and Corporate Secretary Ryan R. Smith Group President – North America Jamie M.
Our equal employment opportunity policy governs all employment decisions, including recruitment, hiring, job assignment, compensation, training, promotion, discipline, transfer, leave-of-absence, access to benefits, layoff, recall, termination and other personnel matters. Health and Safety We maintain a work environment designed to provide a safe and healthy workplace for all team members.
Our equal employment opportunity policy governs all employment decisions, including recruitment, hiring, 8 job assignment, compensation, training, promotion, discipline, transfer, leave-of-absence, access to benefits, layoff, recall, termination and other personnel matters. Health and Safety We maintain a work environment designed to provide a safe and healthy workplace for all team members.
"Management's Discussion and Analysis of Financial Condition and Results of Operations." 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.
"Management's Discussion and Analysis of Financial Condition and Results of Operations." Aftermarket Segment Many of our OEM Segment products are also sold through various aftermarket channels of the recreation and transportation 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.
At Lippert, we believe that business can and should be a force for good in our world, and we strive to manifest that vision every day in how we lead our organization. Our mission is to make lives better by developing meaningful relationships with our customers, co-workers, and community.
At Lippert, we believe that business can and should be a force for good in our world, and we strive to manifest that vision every day in how we lead our organization. Our mission is to make lives better by developing meaningful relationships 7 with our customers, co-workers, and community.
We compete with several other component suppliers on a regional and national basis with respect to a broad array of components for both towable and motorized RVs. Our operations compete on the basis of product quality and reliability, product innovation, price, customer service, and customer satisfaction.
We compete with several other component suppliers on a regional and national basis with respect to a broad array of components for both towable and motorized RVs. Our operations compete on the basis of product quality and reliability, product innovation, price, customer service, and customer 4 satisfaction.
"Management's Discussion and Analysis of Financial Condition and Results of Operations." 5 Sales and Marketing Our sales activities are related to developing new customer relationships and maintaining existing customer relationships, primarily through the quality and reliability of our products, innovation, price, customer service, and customer satisfaction.
"Management's Discussion and Analysis of Financial Condition and Results of Operations." Sales and Marketing Our sales activities are related to developing new customer relationships and maintaining existing customer relationships, primarily through the quality and reliability of our products, innovation, price, customer service, and customer satisfaction.
Summary LCI Industries ("LCII" and collectively with its subsidiaries, the "Company," the "Registrant," "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 boats; buses; trailers used to haul boats, livestock, equipment, and other cargo; trucks; trains; manufactured homes; and modular housing.
Summary LCI Industries ("LCII" and collectively with its subsidiaries, the "Company," the "Registrant," "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, transportation products, and housing markets, consisting primarily of recreational vehicles ("RVs") and adjacent industries, including boats; buses; trailers used to haul boats, livestock, equipment, and other cargo; trucks; trains; manufactured homes; and modular housing.
We focus our efforts on eliminating exposures and reducing recordable incidents, lost workdays, and life changing events. We track and record multiple leading indicators through our Facility Safety Score ("FSS") that are preventative, proactive, and predictive to measure individual business unit performance. For 2022, our North American operations produced a FSS of 9.30 on our 10-point scale.
We focus our efforts on eliminating exposures and reducing recordable incidents, lost workdays, and life changing events. We track and record multiple leading indicators through our Facility Safety Score ("FSS") that are preventative, proactive, and predictive to measure individual business unit performance. For both 2023 and 2022, our North American operations produced a FSS of 9.30 on our 10-point scale.
OEM Segment Through our wholly-owned subsidiaries, we manufacture and distribute a broad array of engineered components for the leading OEMs in the recreation and transportation product markets, consisting primarily of RVs and adjacent industries, including boats; buses; trailers used to haul boats, livestock, equipment, and other cargo; trucks; trains; manufactured homes; and modular housing.
OEM Segment Through our wholly-owned subsidiaries, we manufacture and distribute a broad array of engineered components for the leading OEMs in the recreation, transportation products, and housing markets, consisting primarily of RVs and adjacent industries, including boats; buses; trailers used to haul boats, livestock, equipment, and other cargo; trucks; trains; manufactured homes; and modular housing.
EMENHISER (age 49) joined the Company in January 2017 and has been Treasurer since March 2022, Vice President of Finance since September 2019 and our principal accounting officer since March 2017. Prior to joining the Company, he held various roles including Senior Vice President of Finance, Chief Accounting Officer, and Vice President and Corporate Controller at Press Ganey Associates, Inc.
EMENHISER (age 50) joined the Company in January 2017 and has been Treasurer since March 2022, Vice President of Finance since September 2019 and our principal accounting officer since March 2017. Prior to joining the Company, he held various roles including Senior Vice President of Finance, Chief Accounting Officer, and Vice President and Corporate Controller at Press Ganey Associates, Inc.
CURT is a leading manufacturer and distributor of branded towing products and truck accessories and sells products to the automotive and truck aftermarket, as well as the RV, marine, and trailer markets, all of which require towing products, which we believe compliments the OEM markets we serve.
CURT is a leading manufacturer and distributor of branded towing products and truck accessories and sells products to the automotive and truck aftermarket, as well as the RV, marine, and trailer markets, all of which require towing products, which we believe complements the OEM markets we serve.
We have two reportable segments: the original equipment manufacturers segment (the "OEM Segment") and the aftermarket segment (the "Aftermarket Segment"). We are focused on profitable growth and margin stability in our industries, both organic and through acquisitions.
We have two reportable segments: the original equipment manufacturers segment (the "OEM Segment") and the aftermarket segment (the "Aftermarket Segment"). We are focused on profitable growth in our industries, both organic and through acquisitions.
We also offer team members benefits such as life, disability, and health (medical, dental, and vision) insurance, a 401(k) plan with a company match, paid time off, tuition reimbursement, military leave, parental bonding leave, and holiday pay. In 2021, we launched a new well-being initiative to provide team members with resources to improve their physical and emotional health.
We also offer team members benefits such as life, disability, and health (medical, dental, and vision) insurance, a 401(k) plan with a company match, paid time off, tuition reimbursement, military leave, parental bonding leave, and holiday pay. We also provide a well-being initiative to provide team members with resources to improve their physical and emotional health.
"Everyone Matters" is the overarching descriptor of our cultural strategy; this fundamental appreciation of the men and women who make up our organization guides our business. Culture and Leadership Development Our Culture and Leadership Development Team focuses on leadership development, personal and professional development, training, and corporate and community impact.
"Everyone Matters" is the overarching descriptor of our cultural strategy; this fundamental appreciation of the team members who make up our organization guides our business. Culture and Leadership Development Our Culture and Leadership Development Team focuses on leadership development, personal and professional development, training, and corporate and community impact.
The Team also supports our team member engagement survey twice a year to measure and evaluate engagement drivers and helps build specific action plans in response to the survey results to continually improve our culture and team member engagement. We believe our future success depends on our continued ability to attract, retain, and motivate qualified team members.
The Team also supports our team member engagement surveys to measure and evaluate engagement drivers and helps build specific action plans in response to the survey results to continually improve our culture and team member engagement. We believe our future success depends on our continued ability to attract, retain, and motivate qualified team members.
Although definitive information is not readily available, we believe we are a leading supplier for towable RVs for the following principal RV products: ● windows, ● furniture, ● doors, ● leveling systems, ● chassis, ● awnings, ● slide-out mechanisms, ● electronics, and ● axles, ● appliances.
Although definitive information is not readily available, we believe we are a leading supplier for towable RVs for the following principal RV products: ● windows, ● furniture, ● doors, ● leveling systems, ● chassis, ● awnings, ● slide-out mechanisms, ● anti-lock braking systems ("ABS"), and ● axles, ● electronics, and appliances.
We have several supply agreements or other arrangements with certain of our customers that provide for prices of various products to be fixed for periods generally not in excess of eighteen months; however, in certain cases we have the right to renegotiate the prices on sixty-days' notice. We have agreements with certain customers that index their pricing to select commodities.
We have several supply agreements or other arrangements with certain of our customers that provide for prices of various products to be fixed for periods generally not in excess of eighteen months; however, in certain cases we have the right to renegotiate the prices on sixty-days' notice.
Research and development expenses were approximately $26 million, $17 million, and $13 million in 2022, 2021, and 2020, respectively. Regulatory Matters We are subject to numerous federal, state and local regulations governing the manufacture and sale of our products in the United States. Sales and manufacturing operations outside the United States are subject to similar regulations.
Research and development expenses were approximately $20 million, $26 million, and $17 million in 2023, 2022, and 2021, respectively. 6 Regulatory Matters We are subject to numerous federal, state and local regulations governing the manufacture and sale of our products in the United States. Sales and manufacturing operations outside the United States are subject to similar regulations.
(through its subsidiaries Forest River, Inc. and Clayton Homes, Inc.), a customer of both segments, accounted for 20 percent, 20 percent, and 19 percent of our consolidated net sales for the years ended December 31, 2022, 2021, and 2020, respectively.
(through its subsidiaries Forest River, Inc. and Clayton Homes, Inc.), a customer of both segments, accounted for 15 percent, 20 percent, and 20 percent of our consolidated net sales for the years ended December 31, 2023, 2022, and 2021, respectively.
However, because of fluctuations in dealer inventories, the impact of international, national, and regional economic conditions, consumer confidence on retail sales of RVs and other products for which we sell our components, the timing of dealer orders, and the impact of severe weather conditions on the timing of industry-wide shipments from time to time, current and future seasonal industry trends have been, and may in the future be, different than in prior years, particularly as a result of the COVID-19 pandemic and related impacts.
However, because of fluctuations in dealer inventories, the impact of international, national, and regional economic conditions, consumer confidence on retail sales of RVs and other products for which we sell our components, the timing of dealer orders, and the impact of severe weather conditions on the timing of industry-wide shipments from time to time, current and future seasonal industry trends have been, and may in the future be, different than in prior years.
Capital expenditures for 2022 were $131 million, which included normal replacement expenditures along with over $40 million in automation investments and approximately $30 million in capacity investments for operational improvements. Seasonality 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.
Capital expenditures for 2023 were $62 million, which included normal replacement expenditures along with approximately $12 million in automation investments and approximately $12 million in capacity investments for operational improvements. Seasonality 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.
Customer Concentrations Thor Industries, Inc. ("Thor"), a customer of both segments, accounted for 23 percent, 24 percent, and 22 percent of our consolidated net sales for the years ended December 31, 2022, 2021, and 2020, respectively. Berkshire Hathaway Inc.
("Thor"), a customer of both segments, accounted for 16 percent, 23 percent, and 24 percent of our consolidated net sales for the years ended December 31, 2023, 2022, and 2021, respectively. Berkshire Hathaway Inc.
In 2022, our team members logged over 150,000 volunteer hours, hosting more than 625 events, with 75 percent of our team members taking part (an increase of 20 percent from 2021). Through monetary donations, product donations, and company-wide fundraising events, we donated more than $1.8 million in 2022 to support the needs of our communities.
In 2023, our team members logged over 143,000 volunteer hours, hosting more than 750 events, with 85 percent of our team members taking part (an increase from 75 percent in 2022). Through monetary donations, product donations, and company-wide fundraising events, we donated more than $1.1 million in 2023 to support the needs of our communities.
Our annual marketing and advertising expenditures were $31.4 million, $25.1 million, and $15.6 million, in 2022, 2021, and 2020, respectively, reflecting increased expenditures related to our strategic decision to increase our sales to the aftermarket and adjacent industries, as well as expand into international markets.
Our annual marketing and advertising expenditures were $29.7 million, $31.4 million, and $25.1 million, in 2023, 2022, and 2021, respectively, reflecting, in part, expenditures related to our strategic decision to increase our sales to the aftermarket and adjacent industries, as well as expand into international markets.
We estimate the addressable market for annual net sales of our products outside of North America to be over $1.5 billion. 6 Intellectual Property We hold approximately 680 United States and foreign patents and have approximately 270 patent applications pending that relate to various products we sell.
We estimate the addressable market for annual net sales of our products outside of North America to be over $2.0 billion. Intellectual Property We hold approximately 710 United States and foreign patents and have approximately 210 patent applications pending that relate to various products we sell.
Human Capital As of December 31, 2022, Lippert had approximately 12,900 full-time team members, including 11,100 in North America and 1,800 in Europe. Our U.S. team members are not subject to any collective bargaining agreements, although certain international team members are covered by national labor laws. We believe relations with our team members are good.
Human Capital As of December 31, 2023, Lippert had approximately 11,700 full-time team members, including 10,200 in North America and 1,500 internationally. Our U.S. team members are not subject to any collective bargaining agreements, although certain international team members are covered by national labor laws. We believe relations with our team members are good.
No other customer accounted for more than 10 percent of consolidated net sales in the years ended December 31, 2022, 2021, and 2020. Accounts receivable from Berkshire Hathaway Inc. accounted for 14 percent of consolidated accounts receivable, net at December 31, 2021.
No other customer accounted for more than 10 percent of consolidated net sales in the years ended December 31, 2023, 2022, and 2021. No customer accounted for more than 10 percent of consolidated accounts receivable, net at December 31, 2023 and 2022.
While diversity is essential in our business practice, inclusion and belonging are very important as well. Diversity reflects the differences we have in our workforce, inclusion is 8 defined as how we as team members include others, and belonging is how we feel as members of our LCI family.
While diversity is essential in our business practice, inclusion and belonging are very important as well. Diversity reflects the differences we have in our workforce, inclusion is defined as how we as team members include others, and belonging is how we feel as members of our LCI family. We are committed to fostering an environment where all three are expected.
In 2022, the OEM Segment represented 83 percent of our consolidated net sales and 87 percent of consolidated segment operating profit. Approximately 61 percent of our OEM Segment net sales in 2022 were from products to manufacturers of travel trailer and fifth-wheel RVs.
In 2023, the OEM Segment represented 77 percent of our consolidated net sales and 14 percent of consolidated segment operating profit. Approximately 47 percent of our OEM Segment net sales in 2023 were from products to manufacturers of travel trailer and fifth-wheel RVs.
Previously, he served as Senior Vice President of Sales and Operations of the Company beginning in August of 2018. Mr. Smith has over 16 years of experience with the Company and has served in a wide range of leadership positions with Lippert Components. 9 JAMIE M. SCHNUR (age 51) became Group President – Aftermarket of the Company in May 2020.
Smith has over 16 years of experience with the Company and has served in a wide range of leadership positions with Lippert Components. 9 JAMIE M. SCHNUR (age 52) became Group President – Aftermarket of the Company in May 2020. Previously, he served as Chief Administrative Officer of the Company beginning in May 2013. Mr.
"Properties." Our OEM Segment products are sold primarily to major manufacturers of RVs such as Thor Industries, Inc. (symbol: THO), Forest River, Inc. (a Berkshire Hathaway company, symbol: BRKA), Winnebago Industries, Inc.
"Properties." Our OEM Segment products are sold primarily to major manufacturers of RVs such as Thor Industries, Inc. (symbol: THO), Forest River, Inc. (a Berkshire Hathaway company, symbol: BRKA), Winnebago Industries, Inc. (symbol: WGO) and other RV OEMs, and to manufacturers in other adjacent industries such as Brunswick Corporation (symbol: BC), Polaris Inc.
If our operating sites, or adjacent sites owned by third parties, are affected by releases of hazardous materials, we may incur expenditures for future investigation and remediation of these sites, including in conjunction with voluntary remediation programs or third-party claims. 7 In addition, we could be affected by future laws or regulations imposed in response to concerns over climate change, the timing and impact of which are difficult to assess.
If our operating sites, or adjacent sites owned by third parties, are affected by releases of hazardous materials, we may incur expenditures for future investigation and remediation of these sites, including in conjunction with voluntary remediation programs or third-party claims.
International Over the past several years, we have been gradually investing in our international business, primarily in Europe. International and export sales represented approximately eight percent of consolidated net sales in each of 2022, 2021, and 2020. We continue to focus on developing products tailored for international recreation and transportation markets.
International and export sales represented approximately 11 percent of consolidated net sales in 2023 and eight percent in each of 2022 and 2021. We continue to focus on developing products tailored for international recreation and transportation markets. We participate in the largest caravan shows in Europe and have been receiving positive feedback on our products.
Sales and Profits Consolidated net sales for the year ended December 31, 2022 were $5.2 billion, an increase of 16 percent from the consolidated net sales for the year ended December 31, 2021 of $4.5 billion.
Sales and Profits Consolidated net sales for the year ended December 31, 2023 were $3.8 billion, a decrease of 27 percent from the consolidated net sales for the year ended December 31, 2022 of $5.2 billion.
Our retention percentage for team members in North America for the year ended December 31, 2022 was 57 percent, a decline from the prior year retention of 60 percent. Our retention goal for 2023 is 70 percent, and a newly designed Culture Index will focus on tracking leading indicators related to retention for each division in the Company.
Our retention percentage for team members in North America for the year ended December 31, 2023 was 71 percent, an improvement over the prior year retention of 57 percent. Our Culture Index focuses on tracking leading indicators related to retention for each division in the Company.
We participate in the largest caravan shows in Europe and have been receiving positive feedback on our products. Recently, some of the product innovations we developed for European markets have been gaining popularity in the United States as well.
Recently, some of the product innovations we developed for European markets have been gaining popularity in the United States as well.
These proactive and preventative measures guide our strategy year-over-year toward our goal of eliminating all life changing events and reducing workplace injuries. We continue to maintain lagging indicators as part of our FSS, and, in 2022, saw a decrease of our Total Recordable Incident Rate ("TRIR") of nearly 10% while experiencing significant year-over-year business growth.
These proactive and preventative measures guide our strategy year-over-year toward our goal of eliminating all life changing events and reducing workplace injuries. We continue to maintain lagging indicators as part of our FSS, and our Total Recordable Incident Rate ("TRIR") in North America trended negatively, with an increase from 3.72 in 2022 to 4.29 in 2023.
LIPPERT (age 50) became Chief Executive Officer of the Company effective May 10, 2013, and has been Chief Executive Officer of Lippert Components since February 2003. Effective May 23, 2019, Mr. Lippert also became President of the Company. Mr. Lippert has over 28 years of experience with the Company and has served in a wide range of leadership positions.
Effective May 23, 2019, Mr. Lippert also became President of the Company. Mr. Lippert has over 28 years of experience with the Company and has served in a wide range of leadership positions. LILLIAN D. ETZKORN (age 55) joined the Company in April 2023 and serves as Executive Vice President and Chief Financial Officer of the Company.
OEM Segment net sales to adjacent industries increased 25 percent to $1.4 billion in 2022 from $1.1 billion in 2021, and was 31 percent and 30 percent of total OEM Segment net sales in 2022 and 2021, respectively. Within adjacent industries, North American marine OEM net sales totaled $492.7 million in 2022, an increase of $108.2 million compared to 2021.
OEM Segment net sales to adjacent industries decreased six percent to $1.3 billion in 2023 from $1.4 billion in 2022 and was 44 percent and 31 percent of total OEM Segment net sales in 2023 and 2022, respectively. Within adjacent industries, North American marine OEM net sales totaled $352.2 million in 2023, a decrease of $140.4 million compared to 2022.
For most products, we have the ability to fill excess demand by shifting production to other facilities, usually at an increased cost.
Capacity At December 31, 2023, we operated over 110 manufacturing and distribution facilities across North America and Europe. For most products, we have the ability to fill excess demand by shifting production to other facilities, usually at an increased cost.
To highlight one particularly powerful program, 2,911 hours of one-on-one Dream Achiever sessions helped team members set and accomplish educational, financial, and health-related goals. Community Involvement We strive to create meaningful change and inspire a culture of giving by building positive relationships and aligning Company resources with our team members' time and talents to support the needs of our communities.
Community Involvement We strive to create meaningful change and inspire a culture of giving by building positive relationships and aligning Company resources with our team members' time and talents to support the needs of our communities.
We target the same international product markets that we supply to in the United States, including RV, adjacent industries such as marine, cargo trailers, and high-speed trains, and the related aftermarkets.
We target the same international product markets that we supply to in the United States, including RV, adjacent industries such as marine, cargo trailers, and high-speed trains, and the related aftermarkets. Our largest domestic customer, Thor, has a presence in the European caravan market, which provides additional business opportunities for us in Europe.
Prior to joining the Company, he held roles in senior level positions at Thor Industries, Inc. and All American Group, Inc. (f/k/a Coachmen Industries), and practiced law at Barnes & Thornburg LLP. RYAN R. SMITH (age 39) became Group President – North America of the Company in May 2020.
(f/k/a Coachmen Industries), and practiced law at Barnes & Thornburg LLP. RYAN R. SMITH (age 40) became Group President – North America of the Company in May 2020. Previously, he served as Senior Vice President of Sales and Operations of the Company beginning in August of 2018. Mr.
Both the OEM Segment and the Aftermarket Segment typically ship products on average within one to two weeks of receipt of orders from their customers and, as a result, neither segment has any significant backlog. Capacity At December 31, 2022, we operated over 130 manufacturing and distribution facilities across North America and Europe.
We have agreements with certain customers that index their pricing to select 5 commodities. Both the OEM Segment and the Aftermarket Segment typically ship products on average within one to two weeks of receipt of orders from their customers and, as a result, neither segment has any significant backlog.
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.
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. Aftermarket Segment net sales decreased one percent from $891.3 million in 2022 to $881.1 million in 2023.
Prior to joining the Company, he spent more than 16 years in public accounting. Mr. Hall is a Certified Public Accountant. ANDREW J. NAMENYE (age 42) joined the Company in September 2017 and has been Chief Legal Officer and Corporate Secretary since November 2017. Effective March 12, 2020, Mr. Namenye also became an Executive Vice President of the Company.
NAMENYE (age 43) joined the Company in September 2017 and has been Chief Legal Officer and Corporate Secretary since November 2017. Effective March 12, 2020, Mr. Namenye also became an Executive Vice President of the Company. Prior to joining the Company, he held roles in senior level positions at Thor Industries, Inc. and All American Group, Inc.
Aftermarket Segment net sales increased eight percent from $829.1 million in 2021 to $891.3 million in 2022. Sales from products of CURT Acquisition Holdings, Inc. (with its subsidiaries "CURT"), which we acquired in December 2019, accounted for approximately half of our Aftermarket Segment net sales in each of 2021 and 2022.
Sales from products of CURT Manufacturing LLC ("CURT"), which we acquired in December 2019, accounted for approximately half of our Aftermarket Segment net sales in each of 2022 and 2023.
We believe we are currently operating in compliance, in all material respects, with applicable laws and regulations and have made reports and submitted information as required.
In addition, we could be affected by future laws or regulations imposed in response to concerns over climate change, the timing and impact of which are difficult to assess. We believe we are currently operating in compliance, in all material respects, with applicable laws and regulations and have made reports and submitted information as required.
In order to support this growth, over the past several years we have expanded our geographic market and product lines, and integrated manufacturing, distribution, and administrative functions. At December 31, 2022, we operated over 130 manufacturing and distribution facilities located throughout North America and Europe, and reported consolidated net sales of $5.2 billion for the year ended December 31, 2022.
In 2023, we consolidated certain of our facilities in order to streamline operations and reduce overhead costs. At December 31, 2023, we operated over 110 manufacturing and distribution facilities located throughout North America and Europe, and reported consolidated net sales of $3.8 billion for the year ended December 31, 2023.
(symbol: WGO) and other RV OEMs, and to manufacturers in other adjacent industries such as Brunswick Corporation (symbol: BC), Polaris Inc. 4 (symbol: PII), Blue Bird Corporation (symbol: BLBD), Skyline Champion Corporation (symbol: SKY) and Cavco Industries, Inc. (symbol: CVCO).
(symbol: PII), Blue Bird Corporation (symbol: BLBD), Skyline Champion Corporation (symbol: SKY) and Cavco Industries, Inc. (symbol: CVCO).
Additionally, many of the optional upgrades and non-critical replacements for RVs are purchased outside the normal product selling season, 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 the continuing impact of market and supply chain disruptions.
Additionally, many of the optional upgrades and non-critical replacement parts for RVs are purchased outside the normal product selling season, thereby causing certain Aftermarket Segment sales to be counter-seasonal. International Over the past several years, we have been gradually investing in our international business, primarily in Europe.
There are no family relationships between or among any of the executive officers or directors of the Company. Additional information with respect to the Company's directors is included in the Company's Proxy Statement for the Annual Meeting of Stockholders to be held on May 18, 2023. JASON D.
Additional information with respect to the Company's directors is included in the Company's Proxy Statement for the Annual Meeting of Stockholders to be held on May 16, 2024. JASON D. LIPPERT (age 51) became Chief Executive Officer of the Company effective May 10, 2013, and has been Chief Executive Officer of Lippert Components since February 2003.
Many of the optional upgrades and non-critical replacements for RVs are purchased outside the normal product selling season, 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 the continuing impact of market and supply chain disruptions.
Many of the optional upgrades and non-critical replacement parts for RVs are purchased outside the normal product selling season, thereby causing certain Aftermarket Segment sales to be counter-seasonal. According to Go RVing, estimated RV ownership in the United States as of 2021 increased to a record-high 11.2 million households.
Net income for 2022 was $395.0 million, or $15.48 per diluted share, compared to net income of $287.7 million, or $11.32 per diluted share, in 2021. 3 In Part II, Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations," we describe in detail the change in our net sales and operating profits during 2022.
Net income for 2023 was $64.2 million, or $2.52 per diluted share, compared to net income of $395.0 million, or $15.48 per diluted share, in 2022. In Part II, Item 7.
During the twelve months ended December 31, 2022, the Company completed two other acquisitions for an aggregate of $5.0 million of cash purchase consideration. Net sales for the companies acquired in these acquisitions were approximately $16 million for the twelve months preceding the acquisitions.
Net sales for the companies acquired in these acquisitions were approximately $15 million for the twelve months preceding the acquisitions.
Previously, he served as Chief Administrative Officer of the Company beginning in May 2013. Mr. Schnur has over 26 years of experience with the Company and has served in a wide range of leadership positions with Lippert Components. NICK C. FLETCHER (age 62) joined the Company in February 2013 as Vice President of Human Resources.
Schnur has over 26 years of experience with the Company and has served in a wide range of leadership positions with Lippert Components. EILEEN S. PRUITT (age 46) joined the Company in April 2019 as Director of Legal Affairs. In September 2019, she became Director of Litigation and Human Resources, and in November 2021, she became Deputy CHRO & Sr.
The increase in year-over-year net sales was primarily driven by price realization, market share growth, acquisitions, and an increase in net sales to OEMs in adjacent industries, partially offset by a decrease in wholesale RV OEM shipments. Net sales from acquisitions completed in 2022 and 2021 contributed approximately $219.0 million to net sales in 2022.
The decrease was primarily driven by a nearly 39 percent decrease in total North American RV wholesale shipments, decreased selling prices which are indexed to select commodities, and lower North American marine production levels, partially offset by acquisitions. Net sales from acquisitions completed in 2022 and 2023 contributed approximately $73.6 million in 2023.
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Recent Developments COVID-19 Pandemic The coronavirus ("COVID-19") pandemic and related impacts have caused significant uncertainty and disruption in the global economy and financial markets. We continue to monitor the impact of COVID-19 on all aspects of our business. For risks relating to the COVID-19 pandemic, see Item 1A.
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In order to support this growth, over the past several years we have expanded our geographic market and product lines, executed on our diversification strategy with aftermarkets and adjacent industries, and integrated manufacturing, distribution, and administrative functions. We are also focused on margin stability in our industries.
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"Risk Factors" in Part I of this Report and for details on the impact of COVID-19 on the Company, see the section under the heading "COVID-19 Pandemic and Recent Events" in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II of this Report.
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"Management’s Discussion and Analysis of Financial Condition and Results of Operations," we describe in detail the change in our net sales and operating profits during 2023. 3 Customer Concentrations Thor Industries, Inc.
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No other customer accounted for more than 10 percent of consolidated accounts receivable, net at December 31, 2022 and 2021. International sales and export sales represented approximately eight percent of consolidated net sales in each of 2022, 2021, and 2020.
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International sales and export sales represented approximately 11 percent, eight percent, and eight percent of our consolidated net sales for the years ended December 31, 2023, 2022, and 2021, respectively. Acquisitions Acquisitions have been a driver of growth for our Company historically and continue to be a focus of management as part of our balanced capital allocation strategy.
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Acquisitions During 2022, we completed four acquisitions: In November 2022, the Company acquired substantially all of the business assets of Way Interglobal Network LLC ("Way"), a distributor of innovative appliances and electronics to OEMs in the RV industry.
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We typically look for acquisition targets with strong leadership, innovative products, niche markets, consistency with our core manufacturing disciplines, and favorable competitive landscapes, and we look to take advantage of potential synergies such as our purchasing power and cross-selling opportunities. During 2023, we completed two acquisitions for an aggregate of $25.8 million of cash purchase consideration.
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The purchase price was $54.8 million, which includes a holdback payment of $2.0 million due on the first anniversary of the acquisition in November 2023. Net sales for Way were approximately $185 million for the twelve months preceding the acquisition.
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One particularly powerful metric is the number of "dreams and goals achieved" by team members throughout the Company, with over 8,000 accomplished in 2023, ranging from establishing a healthy mindset to budgeting, saving, exercise goals, improved sleep or nutrition, and community involvement.
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In March 2022, the Company acquired substantially all of the business assets of Girard Systems and Girard Products LLC (collectively "Girard"), a manufacturer and distributor of proprietary awnings and tankless water heaters for OEMs and aftermarket customers in the RV, specialty vehicle, and related industries. The total fair value of consideration was approximately $70.7 million.
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In early 2022, we launched the "Lippert Life" portal, a comprehensive resource to support total well-being. Over 65 percent of our team members used the portal to access health coaches, webinars, wellness challenges, and other tools. We also identified Wellness Ambassadors in each location to help drive our wellness initiative.
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The Company paid $50.0 million in cash consideration at closing, with fixed deferred consideration of $20.0 million paid in July 2022 and $0.7 million paid to true up net working capital in September 2022. Net sales for Girard were approximately $57 million for the twelve months preceding the acquisition.
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In 2023, engagement in our wellness program improved from 53 percent in 2022 to 67 percent. Our holistic program focuses on prevention and education and includes health coaching, biometric screenings, heart scans, and quarterly challenges. We launched a tobacco cessation campaign to support team members on their journey to quit using nicotine products.
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Our largest domestic customer, Thor, established a presence in the European caravan market through their 2019 acquisition of Erwin Hymer Group, which has provided additional business opportunities for us in Europe.
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We also added walking paths in each location to encourage daily walking and our teams tracked millions of steps during the step challenge.
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We are committed to fostering an environment where all three are expected.
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The ratio was driven higher in 2023 by the lower number of hours worked across the organization. We remain focused on leadership, engagement of team members, aggressive incident investigation with root cause analysis, and focused corrective actions.
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We attribute our improvement to leadership, engagement of team members, aggressive incident investigation with root cause analysis, and focused corrective actions. Information About our Executive Officers The following table sets forth our executive officers as of December 31, 2022: Name Position Jason D. Lippert President and Chief Executive Officer Brian M.
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In 2023, our FSS Playbook was updated to include enterprise-wide safety audits/inspections, and FSS objectives were created to take further steps toward reducing injuries across the Company.
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BRIAN M. HALL (age 47) joined the Company in March 2013, served as Corporate Controller from June 2013 until January 2017, and has served as Chief Financial Officer of the Company since November 2016. Effective March 12, 2020, Mr. Hall also became an Executive Vice President of the Company.
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The following employee health and safety ("EHS") objectives helped guide our safety performance in 2023: (a) improve operational ownership of workplace EHS, (b) improve enterprise-wide compliance with EHS rules and requirements at the site level, (c) enhance knowledge of sustainable manufacturing mindset, and (d) improve education of workforce for relevant EHS standards and requirements.
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Since January 2015, he has been Chief Human Resources Officer. Effective March 12, 2020, Mr. Fletcher also became an Executive Vice President of the Company. Prior to joining the Company, Mr. Fletcher provided consulting services and held roles in senior level positions at American Commercial Lines, Continental Tire, Wabash National, Siemens and TRW. Other Officers KIP A.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

49 edited+6 added−19 removed121 unchanged
Biggest changeConducting business outside of the United States is subject to various risks, many of which are beyond our control, including: • adverse political and economic conditions; • trade protection measures, including tariffs, trade restrictions, trade agreements, and taxation; • difficulties in managing or overseeing foreign operations and agents; • differences in regulatory environments, including complex data privacy and labor relations laws, as well as differences in labor practices and market practices; • cultural and linguistic differences; • foreign currency fluctuations; 15 • limitations on the repatriation of funds because of foreign exchange controls; • different liability standards; • potentially longer payment cycles; • different credit risks; • different technology risks; • the uncertainty surrounding the implementation and effects of Brexit, as well as political and governmental leadership changes in the U.K. and certain E.U. countries; • political, social and economic instability and uncertainty, including sovereign debt issues; and • intellectual property laws of countries which do not protect our rights in our intellectual property to the same extent as the laws of the United States.
Biggest changeThirteen of our acquisitions since 2016 are headquartered in Europe or have international operations and customers, including our acquisition of Furrion that involves operations and locations in Hong Kong and China. 14 Conducting business outside of the United States is subject to various risks, many of which are beyond our control, including: • adverse political and economic conditions; • trade protection measures, including tariffs, trade restrictions, trade agreements, and taxation; • difficulties in managing or overseeing foreign operations and agents; • differences in regulatory environments, including complex data privacy, environmental, social and governance ("ESG"), and labor relations laws, as well as differences in labor practices and market practices; • cultural and linguistic differences; • foreign currency fluctuations; • limitations on the repatriation of funds because of foreign exchange controls; • different liability standards; • potentially longer payment cycles; • different credit risks; • different technology risks; • political, social, and economic instability and uncertainty, including sovereign debt issues; and • intellectual property laws of countries which do not protect our rights in our intellectual property to the same extent as the laws of the United States.
These factors include: • the perceived prospects of our business and our industries as a whole; • differences between our actual financial and operating results and those expected by investors and analysts; • changes in analysts' recommendations or projections; • changes affecting the availability of financing in the wholesale and consumer lending markets; • actions or announcements by competitors; • changes in laws and regulations affecting our business; • the gain or loss of significant customers; • significant sales of shares by a principal stockholder; • activity under our stock repurchase program; • changes in key personnel; • actions taken by stockholders that may be contrary to our Board of Directors' recommendations; and • changes in general economic or market conditions.
These factors include: • the perceived prospects of our business and our industries as a whole; • differences between our actual financial and operating results and those expected by investors and analysts; • changes in analysts' recommendations or projections; • changes affecting the availability of financing in the wholesale and consumer lending markets; • actions or announcements by competitors; • changes in laws and regulations affecting our business; • the gain or loss of significant customers; • significant sales of shares by a principal stockholder; • activity under our stock repurchase program; 20 • changes in key personnel; • actions taken by stockholders that may be contrary to our Board of Directors' recommendations; and • changes in general economic or market conditions.
Such acquisitions, joint ventures and other business transactions involve potential risks, including: • the failure to successfully integrate personnel, departments and systems, including IT and accounting systems, technologies, books and records, and procedures; • the need for additional investments post-acquisition that could be greater than anticipated; • the assumption of liabilities of the acquired businesses that could be greater than anticipated; • incorrect estimates made in the accounting for acquisitions, incurrence of non-recurring charges, and write-off of significant amounts of goodwill or other assets that could adversely affect our operating results; • unforeseen difficulties related to entering geographic regions or industries in which we do not have prior experience; and • the potential loss of key employees or existing customers or adverse effects on existing business relationships with suppliers and customers.
Such acquisitions, joint ventures and other business transactions involve potential risks, including: • the failure to successfully integrate personnel, departments and systems, including IT and accounting systems, technologies, books and records, and procedures; • the need for additional investments post-closing that could be greater than anticipated; • the assumption of liabilities of the acquired businesses that could be greater than anticipated; • incorrect estimates made in the accounting for acquisitions, incurrence of non-recurring charges, and write-off of significant amounts of goodwill or other assets that could adversely affect our operating results; • unforeseen difficulties related to entering geographic regions or industries in which we do not have prior experience; and • the potential loss of key employees or existing customers or adverse effects on existing business relationships with suppliers and customers.
Moreover, dealers which are unable to obtain adequate financing could cease operations. Their remaining inventories would likely be sold at discounts, disrupting the market. Such sales have historically caused a decline in orders for new inventory, which reduced demand for our products, and which could reoccur in the future.
Moreover, dealers which are unable to obtain adequate financing could cease operations. Their remaining 10 inventories would likely be sold at discounts, disrupting the market. Such sales have historically caused a decline in orders for new inventory, which reduced demand for our products, and which could reoccur in the future.
If raw materials or components that are used in manufacturing our products or for which we act as a distributor, particularly those which we import, become unavailable, or if the supply of 12 these raw materials and components is interrupted or delayed, our manufacturing and distribution operations could be adversely affected, which could adversely impact our financial condition and operating results.
If raw materials or components that are used in manufacturing our products or for which we act as a distributor, particularly those which we import, become unavailable, or if the supply of these raw materials and components is interrupted or delayed, our manufacturing and distribution operations could be adversely affected, which could adversely impact our financial condition and operating results.
If we fail to maintain or protect our information systems and data integrity effectively, we could: lose existing customers; have difficulty attracting new customers; suffer outages or disruptions in our operations or supply chains; have difficulty preventing, detecting, and controlling fraud; have disputes with customers and suppliers; have regulatory sanctions or penalties imposed; incur increased operating expenses; incur expenses or lose revenues as a result of a data privacy breach; or suffer other adverse consequences. 16 Legal, Regulatory and Compliance Risks Our business is subject to numerous international, federal, state and local regulations, and increased costs of compliance, failure in our compliance efforts, or events beyond our control could result in damages, expenses, or liabilities that could adversely impact our financial condition and operating results .
If we fail to maintain or protect our information systems and data integrity effectively, we could: lose existing customers; have difficulty attracting new customers; suffer outages or disruptions in our operations or supply chains; have difficulty preventing, detecting, and controlling fraud; have disputes with customers and suppliers; have regulatory sanctions or penalties imposed; incur increased operating expenses; incur expenses or lose revenues as a result of a data privacy breach; or suffer other adverse consequences. 15 Legal, Regulatory and Compliance Risks Our business is subject to numerous international, federal, state and local regulations, and increased costs of compliance, failure in our compliance efforts, or events beyond our control could result in damages, expenses, or liabilities that could adversely impact our financial condition and operating results .
Although our board of directors has authorized a stock repurchase program, the program does not require us to repurchase any specific dollar amount or to acquire any specific number of shares. We cannot guarantee that the program will 21 be fully consummated or that it will enhance long-term stockholder value.
Although our board of directors has authorized a stock repurchase program, the program does not require us to repurchase any specific dollar amount or to acquire any specific number of shares. We cannot guarantee that the program will be fully consummated or that it will enhance long-term stockholder value.
As we operate globally, these natural disasters can have a significant negative impact on our supply chain channels. 14 We have entered new markets in an effort to enhance our growth potential, and uncertainties with respect to these new markets could impact our operating results .
As we operate globally, these natural disasters can have a significant negative impact on our supply chain channels. We have entered new markets in an effort to enhance our growth potential, and uncertainties with respect to these new markets could impact our operating results .
The program could also affect the trading price of our stock and increase volatility, and any announcement of a termination or change of this program may result in a decrease in the trading price of our stock. In addition, any purchases made under this program would diminish our cash reserves. Our stock price may be volatile .
The program could also affect the trading price of our stock and increase volatility, and any announcement of a termination or change of this program may result in a decrease in the trading price of our stock. In addition, purchases made under this program diminish our cash reserves. Our stock price may be volatile .
If such conditions become extreme, we may not be able to increase production to timely 13 satisfy demand, and may incur higher labor and production costs, which could adversely impact our operating results and financial condition.
If such conditions become extreme, we may not be able to increase production to timely satisfy demand, and may incur higher labor and production costs, which could adversely impact our operating results and financial condition.
For example, the General Data Protection Regulation (the “GDPR”) in the United Kingdom (“U.K.”) and the European Union (“E.U.”) imposes, among other things, strict obligations and restrictions on the collection and use of U.K. and E.U. personal data, a requirement for prompt notice of data breaches in certain circumstances, a requirement for implementation of certain approved safeguards for transfers 18 of personal data to third countries, and possible substantial fines for any violations.
For example, the General Data Protection Regulation (the “GDPR”) in the United Kingdom (“U.K.”) and the European Union (“E.U.”) imposes, among other things, strict obligations and restrictions on the collection and use of U.K. and E.U. personal data, a requirement for prompt notice of data breaches in certain circumstances, a requirement for implementation of certain approved safeguards for transfers 17 of personal data to third countries, and possible substantial fines for any violations.
Any major recalls of our products, voluntary or involuntary, could adversely impact our reputation, net sales, financial condition and operating results. Changes in laws or regulations, including those related to climate change, that impose additional regulatory requirements on us could increase our cost of doing business or restrict our actions, causing our results of operations to be adversely affected.
Any major recalls of our products, voluntary or involuntary, could adversely impact our reputation, net sales, financial condition and operating results. Changes in laws or regulations, including those related to climate change, which impose additional regulatory requirements on us could increase our cost of doing business or restrict our actions, causing our results of operations to be adversely affected.
Reduction in the availability of floor-plan financing, or an increase in the cost of such financing, particularly as a result of recent rising interest rates, have in the past caused, and would in the future again likely cause, many dealers to reduce inventories, which would result in reduced production by OEMs, and consequently result in reduced demand for our products.
Reduction in the availability of floor-plan financing, or an increase in the cost of such financing, particularly as a result of recent higher interest rates, have in the past caused, and would in the future again likely cause, many dealers to reduce inventories, which would result in reduced production by OEMs, and consequently result in reduced demand for our products.
Changes in those estimates or assumptions or lower than anticipated future financial performance may result in the identification of an impaired asset and a non-cash impairment charge, which could be material. Any such charge could adversely affect our operating results and financial condition. 19 We may become more leveraged .
Changes in those estimates or assumptions or lower than anticipated future financial performance may result in the identification of an impaired asset and a non-cash impairment charge, which could be material. Any such charge could adversely affect our operating results and financial condition. 18 We may become more leveraged .
Under certain of these laws, namely the Comprehensive Environmental Response, Compensation, and 17 Liability Act and its state counterparts, liability for investigation and remediation of hazardous substance contamination at currently or formerly owned or operated facilities or at third-party waste disposal sites is joint and several.
Under certain of these laws, namely the Comprehensive Environmental Response, Compensation, and 16 Liability Act and its state counterparts, liability for investigation and remediation of hazardous substance contamination at currently or formerly owned or operated facilities or at third-party waste disposal sites is joint and several.
Because competition and business conditions may limit the amount or timing of increases in raw material costs that can be passed through to our customers in the form of sales price increases, future increases in raw material costs could adversely impact our financial condition and operating results.
Because competition and business conditions may limit the amount or timing of increases in raw material costs that can be passed through to our customers in the form of sales price increases, increases in raw material costs could adversely 11 impact our financial condition and operating results.
Financial, Credit and Liquidity Risks We could incur asset impairment charges for goodwill, intangible assets, or other long-lived assets . A portion of our total assets as of December 31, 2022 was comprised of goodwill, intangible assets, and other long-lived assets. At least annually, we review goodwill and indefinite-lived intangibles for impairment.
Financial, Credit and Liquidity Risks We could incur asset impairment charges for goodwill, intangible assets, or other long-lived assets . A portion of our total assets as of December 31, 2023 was comprised of goodwill, intangible assets, and other long-lived assets. At least annually, we review goodwill and indefinite-lived intangibles for impairment.
However, because of fluctuations in dealer inventories, the impact of international, national, and regional economic conditions and consumer confidence on retail sales of products which include our components, the timing of dealer orders, the impact of severe weather conditions on the timing of industry-wide shipments from time to time, and the impact of the COVID-19 pandemic, current and future seasonal industry trends have been, and may in the future be, different than in prior years.
However, because of fluctuations in dealer inventories, the impact of international, national, and regional economic conditions and consumer confidence on retail sales of products which include our components, the timing of dealer orders, and the impact of severe weather conditions on the timing of industry-wide shipments from time to time, current and future seasonal industry trends have been, and may in the future be, different than in prior years.
We negotiate for the purchase of a significant portion of raw materials and semi-finished components with suppliers that are not located in the United States, and this amount has increased as a result of our acquisition of Furrion. As such, the prices we pay in part are dependent upon the rate of exchange for U.S.
We negotiate for the purchase of a significant portion of raw materials and semi-finished components with suppliers that are not located in the United States, and this amount has increased as a result of our acquisitions of Furrion and Way. As such, the prices we pay in part are dependent upon the rate of exchange for U.S.
Further, as a result of pandemic outbreaks, including the COVID-19 pandemic , businesses can be shut down, supply chains can be interrupted, slowed or rendered inoperable and individuals can become ill, quarantined or otherwise unable to work and/or travel due to health reasons or governmental restrictions, and worldwide economic downturns could occur.
Further, as a result of pandemic outbreaks, businesses can be shut down, supply chains can be interrupted, slowed or rendered inoperable and individuals can become ill, quarantined or otherwise unable to work and/or travel due to health reasons or governmental restrictions, and worldwide economic downturns could occur.
Adverse political conditions, such as the heightened tensions between China and Taiwan, trade embargoes, increased tariffs or import duties, inclement weather, natural disasters, epidemics, public health crises, war, such as the Russia-Ukraine war, terrorism, or labor disputes at various ports or otherwise adversely impacting our suppliers create significant risks for our business, particularly if these conditions or disputes result in work slowdowns, lockouts, strikes, facilities closures, supply chain interruptions, or other disruptions, and could have an adverse impact on our operating results if we are unable to fulfill customer orders or are required to accumulate excess inventory or find alternate sources of supply, if available, at higher costs.
Adverse geopolitical conditions, such as the heightened tensions between China and Taiwan, trade embargoes, increased tariffs or import duties, inclement weather, natural disasters, epidemics, public health crises, war, such as the Russia-Ukraine and Israel-Hamas wars, terrorism, such as the maritime attacks in the Red Sea, or labor disputes at various ports or otherwise adversely impacting our suppliers create significant risks for our business, particularly if these conditions or disputes result in work slowdowns, lockouts, strikes, facilities closures, supply chain interruptions, or other disruptions, and could have an adverse impact on our operating results if we are unable to fulfill customer orders or are required to accumulate excess inventory or find alternate sources of supply, if available, at higher costs.
In 2022, we imported, or purchased from suppliers who imported, approximately 45 percent of our raw materials and components. Consequently, we rely on the free flow of goods through open and operational ports and on a consistent basis for a significant portion of our raw materials and components.
In 2023, we imported, or purchased from suppliers who imported, approximately 30 percent of our raw materials and components. Consequently, we rely on the free flow of goods through open and operational ports and on a consistent basis for a significant portion of our raw materials and components.
Declines in industry-wide wholesale shipments of travel trailer and fifth-wheel RVs could reduce demand for our products and adversely affect our operating results and financial condition. For example, in 2022 we experienced a nearly 18 percent decrease in wholesale RV OEM shipments, which negatively impacted our net sales for the year.
Declines in industry-wide wholesale shipments of travel trailer and fifth-wheel RVs could reduce demand for our products and adversely affect our operating results and financial condition. For example, in 2023 the industry experienced a nearly 37 percent decrease in wholesale RV OEM shipments, which negatively impacted our net sales for the year.
The loss of any key customer, or a significant reduction in purchases by such customers, could have an adverse material impact on our operating results . Two customers of both the OEM Segment and the Aftermarket Segment accounted for 43 percent of our consolidated net sales in 2022.
The loss of any key customer, or a significant reduction in purchases by such customers, could have an adverse material impact on our operating results . Two customers of both the OEM Segment and the Aftermarket Segment accounted for a combined 31 percent of our consolidated net sales in 2023.
Further, as a result of our acquisition of Furrion, the portion of our raw materials and components that are exported from their country of origin has increased, which could heighten the risks set forth in the immediately preceding paragraph, including in particular increased tariffs or import duties.
Further, as a result of our acquisitions of Furrion and Way Interglobal Network LLC ("Way"), the portion of our raw materials and components that are exported from their country of origin has increased, which could heighten the risks set forth in the immediately preceding paragraph, including in particular increased tariffs or import duties.
Steel and aluminum represented approximately 45 percent and 15 percent, respectively, of our raw material costs in 2022. The prices of these, and other key raw materials, have historically been volatile and can fluctuate dramatically with changes in the global demand and supply for such products.
Steel and aluminum represented approximately 30 percent and ten percent, respectively, of our raw material costs in 2023. The prices of these, and other key raw materials, have historically been volatile and can fluctuate dramatically with changes in the global demand and supply for such products.
Additionally, we rely upon information systems in our sales, marketing, human resources, and communication efforts. The failure of our information technology systems to perform as we anticipate could disrupt our business and could result in transaction errors, processing inefficiencies, and the loss of sales and customers, causing our business and results of operations to suffer.
The failure of our information technology systems to perform as we anticipate could disrupt our business and could result in transaction errors, processing inefficiencies, and the loss of sales and customers, causing our business and results of operations to suffer.
Restrictions on the availability of consumer financing and increases in the costs of such financing have in the past limited, and could again limit, particularly due to recent rising interest rates, the ability of consumers to purchase such discretionary products, which would result in reduced production of such products by our customers, and therefore reduced demand for our products. 11 Excess inventories at dealers and manufacturers can cause a decline in the demand for our products .
Restrictions on the availability of consumer financing and increases in the costs of such financing have in the past limited, and could again limit, particularly due to recent elevated interest rates, the ability of consumers to purchase such discretionary products, which would result in reduced production of such products by our customers, and therefore reduced demand for our products.
Integrating acquired operations is a significant challenge and there is no assurance that we will be able to manage the integrations successfully. Integrating operations in countries in which we previously did not have locations or experience operating, such as the offices in Hong Kong and China we obtained in our acquisition of Furrion, could present additional challenges.
Integrating acquired operations is a significant challenge and there is no assurance that we will be able to manage the integrations successfully. Integrating operations in countries in which we previously did not have locations or experience operating could present additional challenges.
Other U.S. states, such as Virginia, Utah, Connecticut, and Colorado, have passed consumer privacy laws that become effective in 2023. We will continue to monitor and assess the impact of these state laws, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business.
Other U.S. states have passed, or have proposed, consumer privacy laws. We will continue to monitor and assess the impact of these state laws, which may impose substantial penalties for violations, impose significant costs for investigations and compliance, allow private class-action litigation and carry significant potential liability for our business.
In 2022, the OEM Segment represented 83 percent of our consolidated net sales, and 87 percent of consolidated segment operating profit. Approximately 61 percent of our OEM Segment net sales in 2022 were from products to manufacturers of travel trailer and fifth-wheel RVs.
In 2023, the OEM Segment represented 77 percent of our consolidated net sales and 14 percent of consolidated segment operating profit. Approximately 47 percent of our OEM Segment net sales in 2023 were from products to manufacturers of travel trailer and fifth-wheel RVs.
Generally, these vehicles use more fuel than automobiles, particularly while towing RVs or other trailers. High prices for gasoline, or anticipation of potential fuel shortages, can affect consumer use and purchase of light trucks and SUVs, which could result in reduced demand for travel trailer and fifth-wheel RVs, and therefore reduced demand for our products.
High prices for gasoline, or anticipation of potential fuel shortages, can affect consumer use and purchase of light trucks and SUVs, which could result in reduced demand for travel trailer and fifth-wheel RVs, and therefore reduced demand for our products.
Failure to successfully integrate acquired operations or to realize the expected benefits of such acquisitions may have an adverse impact on our results of operations and financial condition. As we expand our business internationally, we are subject to new operational and financial risks . We have been gradually growing sales overseas and plan to continue pursuing international opportunities.
Failure to successfully integrate acquired operations or to realize the expected benefits of such acquisitions or other transactions may have an adverse impact on our results of operations and financial condition. As we expand our business internationally, we are subject to new operational and financial risks .
We rely on our information technology systems to effectively manage our business data, inventory, supply chain, order entry and fulfillment, manufacturing, distribution, warranty administration, invoicing, collection of payments, and other business processes. We use information systems to report and support the audit of our operational and financial results.
The efficient operation of our business depends on our information technology systems. We rely on our information technology systems to effectively manage our business data, inventory, supply chain, order entry and fulfillment, manufacturing, distribution, warranty administration, invoicing, collection of payments, remote work, and other business processes.
Dealers and manufacturers could accumulate unsold inventory. High levels of unsold inventory have in the past caused, and would cause, a reduction in orders, which would likely cause a decline in demand for our products. Gasoline shortages, or high prices for gasoline, could lead to reduced demand for our products .
Excess inventories at dealers and manufacturers can cause a decline in the demand for our products . Dealers and manufacturers could accumulate unsold inventory. High levels of unsold inventory have in the past caused, and would cause, a reduction in orders, which would likely cause a decline in demand for our products.
Such outbreaks could result in the operations of our third-party manufacturers and suppliers being disrupted or suspended, or could interfere with our supply chain, which could have an adverse effect on our business.
Such outbreaks could result in the operations of our third-party manufacturers and suppliers being disrupted or suspended, or could interfere with our supply chain, which could have an adverse effect on our business. 13 Natural disasters and unusual weather, including as a result of climate change, could impact our business negatively .
Conversion of the Convertible Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock. The conversion of some or all of the Convertible Notes may dilute the ownership interests of our stockholders.
The conversion of some or all of the Convertible Notes may dilute the ownership interests of our stockholders.
Each of the factors listed above could negatively affect our ability to pay dividends in accordance with our dividend policy or at all. In addition, our Board of Directors may elect to suspend or alter the current dividend policy at any time.
Each of the factors listed above could negatively affect our ability to pay dividends in accordance with our dividend policy or at all.
Borrowings under our Credit Agreement currently bear interest at variable rates based on either an Alternate Base Rate or an Adjusted LIBOR plus, in each case, an applicable margin. On March 5, 2021, the U.K.
Borrowings under our credit agreement currently bear interest at variable rates based on either an Alternate Base Rate or at term Secured Overnight Financing Rate ("SOFR") plus, in each case, an applicable margin.
The raw materials and components used in the manufacture of Furrion products are provided by a small group of suppliers that are principally located in China. If those raw materials or components become unavailable or their supply is interrupted or delayed, we may not be able to identify alternative sources in a timely or cost-effective manner, or at all.
If those raw materials or components become unavailable or their supply is interrupted or delayed, we may not be able to identify alternative sources in a timely or cost-effective manner, or at all.
We will continue to monitor the situation and address the potential reference rate changes in future debt obligations that we may incur, but the potential effect of the phase-out or replacement of LIBOR on our cost of capital cannot yet be determined and any increase in the interest we pay and a corresponding increase in our costs of capital or otherwise could have a material adverse impact on our financial condition, results of operations or cash flows. 20 Although we currently pay regular quarterly dividends on our common stock, we cannot assure you that we will continue to pay a regular quarterly dividend .
Any increase in the interest we pay and a corresponding increase in our costs of capital could have a material adverse impact on our financial condition, results of operations or cash flows. Although we currently pay regular quarterly dividends on our common stock, we cannot assure you that we will continue to pay a regular quarterly dividend .
Competition for skilled workers may increase the cost of our labor and create employee retention and recruitment challenges, as employees with knowledge and experience have the ability to change employers relatively easily.
In certain geographic regions in which we have a larger concentration of manufacturing facilities, we are experiencing, and could again experience, shortages of qualified employees. Competition for skilled workers may increase the cost of our labor and create employee retention and recruitment challenges, as employees with knowledge and experience have the ability to change employers relatively easily.
Competitive pressures have, from time to time, resulted in a reduction of our profit margins and/or reduction in our market share. Domestic and foreign competitors may lower prices on products which currently compete with our products, or develop product improvements, which could reduce demand for our products or cause us to reduce prices for our products.
Domestic and foreign competitors may lower prices on products which currently compete with our products, or develop product improvements, which could reduce demand for our products or cause us to reduce prices for our products. 12 Sustained increases in these competitive pressures could have an adverse material effect on our results of operations.
Our financial condition, results of operations and cash flows could be significantly affected by changes in interest rates and actions taken by the Federal Reserve or changes in the London Interbank Offered Rate ("LIBOR") or its replacement. Future increases in market interest rates would increase our interest expense.
An increase in interest rates could increase our cost of borrowing and could adversely impact our financial condition, results of operations and cash flows . Our financial condition, results of operations and cash flows could be significantly affected by changes in interest rates and actions taken by the Federal Reserve.
Cyber-attacks, such as those involving the deployment of malware, are increasing in frequency, sophistication, and intensity and have become increasingly difficult to detect.
Cyber-attacks, such as those involving the deployment of malware, are increasing in frequency, sophistication, and intensity and have become increasingly difficult to detect. Despite our ongoing efforts to manage cybersecurity risks, we cannot assure you that they will be effective or will work as designed.
If our information technology systems fail to perform adequately or are breached, our operations could be disrupted, and it could adversely affect our business, reputation and results of operations . The efficient operation of our business depends on our information technology systems.
Further, any leadership transitions can be inherently difficult to manage, may result in operational inefficiencies, and impact our ability to retain and hire other key members of management. If our information technology systems fail to perform adequately or are breached, our operations could be disrupted, and it could adversely affect our business, reputation and results of operations .
Fuel shortages, and substantial increases in the price of fuel, have had an adverse effect on the RV industry as a whole in the past, and could again in the future. Travel trailer and fifth-wheel RVs, components for which represented approximately 61 percent of our OEM Segment net sales in 2022, are usually towed by light trucks or SUVs.
Gasoline shortages, or high prices for gasoline, could lead to reduced demand for our products . Fuel shortages, and substantial increases in the price of fuel, have had an adverse effect on the RV industry as a whole in the past, and could again in the future.
For example, during portions of 2022, we saw a reduction in aftermarket volumes resulting from, in part, the negative impacts of inflation and rising interest rates on consumers' discretionary spending.
For example, during 2023, we experienced lower RV and marine OEM volumes resulting from, in part, the negative impacts of inflation and elevated interest rates on consumers' discretionary spending. The declines in these industry volumes compared to 2022 had an adverse impact on our results, including inventory reserve costs.
Sustained increases in these competitive pressures could have an adverse material effect on our results of operations. In addition, the manufacture by our customers themselves of products supplied by us could reduce demand for our products and adversely affect our operating results and financial condition.
In addition, the manufacture by our customers themselves of products supplied by us could reduce demand for our products and adversely affect our operating results and financial condition. A tight labor market has, and could in the future, result in difficulty obtaining skilled labor, and available capacity may initially not be utilized efficiently .
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Risk Related to the COVID-19 Pandemic The coronavirus (COVID-19) pandemic, or other outbreaks of disease or similar public health threats, and their related impacts, have had, and could have, a material and adverse effect on our business, financial condition, and results of operations, the nature and extent of which are highly uncertain and unpredictable .
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Travel trailer and fifth-wheel RVs, components for which represented approximately 47 percent of our OEM Segment net sales in 2023, are usually towed by light trucks or SUVs. Generally, these vehicles use more fuel than automobiles, particularly while towing RVs or other trailers.
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The COVID-19 pandemic, and any other outbreaks of contagious diseases or other adverse public health developments in the United States or internationally, as well as their related impacts, including on supply chains, labor matters, the global economy and financial markets, has had, and in the future could again have, a material adverse effect on our business, financial condition, and results of operations.
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The raw materials and components used in the manufacture of Furrion Holdings Limited ("Furrion") products are provided by a small group of suppliers that are principally located in China.
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COVID-19 has significantly impacted the global economy and financial markets, and it could continue to negatively impact our business in a number of ways.
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Competitive pressures have, from time to time, resulted in a reduction of our profit margins and/or reduction in our market share.
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These effects include, but are not limited to: • Disruptions or restrictions on our employees' ability to work effectively due to illness, quarantines, travel bans, shelter-in-place orders or other limitations. • Temporary closures of our facilities or the facilities of our customers or suppliers, which could impact our ability to timely meet our customers' orders or negatively impact our supply chain. • Our election to, or a government's requirement that we, allocate manufacturing capacity (for example, pursuant to the U.S.
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We have been gradually growing sales overseas and plan to continue pursuing international opportunities.
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Defense Production Act) in an effort to increase the availability of needed medical and other supplies and products in a way that adversely affects our regular operations and negatively impacts our reputation and customer and supplier relationships. • Resulting cost increases from the effects of a pandemic such as COVID-19 may not be fully recoverable. • The failure of third parties on which we rely, including our suppliers, customers, contractors, commercial banks and other business partners, to meet their respective obligations to the Company, or significant disruptions in their ability to do so, which may be caused by their own financial or operational difficulties. • Significant increases in economic and demand uncertainty have had and could continue to result in disruption and volatility in the global credit and financial markets, which could increase the cost of capital and adversely impact access to capital for both the Company and our customers and suppliers. • Commodity costs have become more volatile due to the COVID-19 pandemic, and that volatility may worsen and/or last for an extended period of time. • Increased cybersecurity and privacy risks and risks related to the reliability of technology to support remote operations. 10 • Disruptions or uncertainties related to the COVID-19 pandemic or other outbreaks of disease or similar public health threats for an extended period of time could result in delays or modifications to our strategic plans and hinder our ability to achieve our strategic goals.
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We use information systems to report and support the audit of our operational and financial results. Additionally, we rely upon information systems in our sales, marketing, human resources, and communication efforts.
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The extent to which the COVID-19 pandemic, or other outbreaks of disease or similar public health threats, materially and adversely impacts our business, financial condition, and results of operations is highly uncertain and will depend on future developments.
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In addition, our Board of Directors may elect to suspend or alter the current dividend policy at any time. 19 Conversion of the Convertible Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock.
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Such developments may include the geographic spread and duration of the virus, the severity of the disease and the actions that may be taken by various governmental authorities and other third parties in response to the outbreak.
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During the fourth quarter, RV OEMs made larger-than-anticipated adjustments to production levels by taking a collective month of production down in order to normalize inventories as retail demand slowed, which had an adverse impact on our results, including severance-related and inventory reserve costs.
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For example, during 2022, steel and aluminum costs increased significantly, which negatively impacted our operating profit.
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A tight labor market has, and could in the future, result in difficulty obtaining skilled labor, and available capacity may initially not be utilized efficiently . In certain geographic regions in which we have a larger concentration of manufacturing facilities, we are experiencing, and could again experience, shortages of qualified employees.
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See also the risk factors " Inadequate or interrupted supply of raw materials or components used to make our products could adversely impact our financial condition and operating results " and " The coronavirus (COVID-19) pandemic, or other outbreaks of disease or similar public health threats, and their related impacts, have had, and could have, a material and adverse effect on our business, financial condition, and results of operations, the nature and extent of which are highly uncertain and unpredictable ." Natural disasters and unusual weather, including as a result of climate change, could impact our business negatively .
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Thirteen of our acquisitions since 2016 are headquartered in Europe or have international operations and customers, including our acquisition of Furrion that involves operations and locations in Hong Kong and China.
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In October 2022, Brian M. Hall, our Chief Financial Officer, notified us of his intention to resign to pursue philanthropic ventures and opportunities as well as to spend more time with his family. Although Mr.
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Hall intends to remain in his role at the Company until June 2023 or the appointment of his successor, if earlier, we may not be able to find a suitable replacement for Mr. Hall in that timeframe. In addition, in December 2022, Nick C.
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Fletcher, our Executive Vice President and Chief Human Resources Officer, notified us of his intention to retire, effective March 2023. Leadership transitions can be inherently difficult to manage, may result in operational inefficiencies, and impact our ability to retain and hire other key members of management.
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We have an information security team that deploys the latest firewalls and constantly monitors and continually updates our security protections to mitigate these risks, but despite these ongoing efforts, we cannot assure you that they will be effective or will work as designed.
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An increase in interest rates, or a phase-out or replacement of LIBOR with a benchmark rate that is higher or more volatile than LIBOR, could increase our cost of borrowing and could adversely impact our financial condition, results of operations and cash flows .
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Financial Conduct Authority (the "FCA") announced that, (a) immediately after December 31, 2021, publication of all seven euro LIBOR settings, the overnight, 1-week, 2-month and 12-month Pound Sterling LIBOR settings and the 1-week and 2-month US dollar LIBOR settings would permanently cease and (b) immediately after June 30, 2023, publication of the overnight, 12-month US dollar LIBOR settings and the 1-month, 3-month and 6-month US Dollar LIBOR settings will cease to be provided or, subject to the FCA's consideration of the case, be provided on a synthetic basis and no longer be representative of the underlying market and economic reality they are intended to measure and that representativeness will not be restored.
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While our Credit Agreement provides a hardwired mechanism for determining an alternative rate of interest when LIBOR is no longer available, any such alternative, successor, or replacement rate may not be similar to, or produce the same value or economic equivalence of, LIBOR or have the same volume or liquidity as did LIBOR prior to its discontinuance or unavailability, which may increase our overall interest expense, and we may determine that it would be advantageous to pursue an amendment to our Credit Agreement to further adjust the alternative rate of interest to be consistent with current market practice.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAt December 31, 2022, our key property holdings are summarized in the following table: Segment Type North America Facilities Europe Facilities Total Facilities Owned Facilities OEM Manufacturing (a) 71 20 91 36 Other (b) 20 5 25 5 Aftermarket Manufacturing (a) 11 — 11 — Other (b) 22 — 22 1 Total 124 25 149 42 (a) Includes multi-activity sites which are predominately manufacturing (b) Includes engineering, administrative, and distribution locations
Biggest changeAt December 31, 2023, our key property holdings are summarized in the following table: Segment Type North America Facilities Europe Facilities Total Facilities Owned Facilities OEM Manufacturing (a) 66 22 88 33 Other (b) 20 3 23 8 Aftermarket Manufacturing (a) 10 — 10 2 Other (b) 19 — 19 3 Total 115 25 140 46 (a) Includes multi-activity sites which are predominately manufacturing (b) Includes engineering, administrative, and distribution locations
We believe that substantially all of our properties are in generally good condition and there is sufficient capacity to meet current and projected manufacturing and distribution requirements. In addition, we maintain administrative facilities used for corporate and administrative functions. Our primary administrative offices are located in Elkhart, Indiana. Total administrative space company-wide aggregates approximately 480,000 square feet.
We believe that substantially all of our properties are in generally good condition and there is sufficient capacity to meet current and projected manufacturing and distribution requirements. In addition, we maintain administrative facilities used for corporate and administrative functions. Our primary administrative offices are located in Elkhart, Indiana. Total administrative space company-wide aggregates approximately 500,000 square feet.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhile these matters could materially affect operating results when resolved in future periods, management believes that, after final disposition, including anticipated insurance recoveries in certain cases, any monetary liability or financial impact to the Company beyond that provided for in the Consolidated Balance Sheet as of December 31, 2022, would not be material to our financial position or annual results of operations. 22
Biggest changeWhile these matters could materially affect operating results when resolved in future periods, management believes that, after final disposition, including anticipated insurance recoveries in certain cases, any monetary liability or financial impact to the Company beyond that provided for in the Consolidated Balance Sheet as of December 31, 2023, would not be material to our financial position or annual results of operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSee Note 13 - Stockholders' Equity of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Form 10-K) for further discussion regarding share repurchases.
Biggest changeDividends and Share Repurchases See Note 13 - Stockholders' Equity of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Form 10-K) for further discussion regarding dividends and share repurchases. There were no share repurchases in the year ended December 31, 2023. In 2016, we initiated the payment of regular quarterly dividends.
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES. Market and Stockholders As of February 17, 2023, there were 213 holders of the Company's common stock, in addition to beneficial owners of shares held in broker and nominee names. Our common stock trades on the New York Stock Exchange under the symbol "LCII".
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES. Market and Stockholders As of February 16, 2024, there were 206 holders of the Company's common stock, in addition to beneficial owners of shares held in broker and nominee names. Our common stock trades on the New York Stock Exchange under the symbol "LCII".
The table and related information required for the Equity Compensation Plan is incorporated by reference from the information contained under the caption "Equity Compensation Plan Information" in our 2023 Proxy Statement. Dividends In 2016, we initiated the payment of regular quarterly dividends.
The table and related information required for the Equity Compensation Plan is incorporated by reference from the information contained under the caption "Equity Compensation Plan Information" in our 2024 Proxy Statement.
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See Note 13 - Stockholders' Equity of the Notes to Consolidated Financial Statements (Part II, Item 8 of this Form 10-K) for further discussion regarding dividends.
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Issuer Purchases of Equity Securities Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet be Purchased under the Plans or Programs (in millions) October 2022 — — — $ 200.0 November 2022 240,195 94.93 240,195 $ 177.2 December 2022 13,295 94.14 253,490 $ 175.9 Total 253,490 94.89 (1) On May 19, 2022, we announced that our Board of Directors authorized a stock repurchase program for up to $200.0 million of our common stock over a three-year period ending on May 19, 2025.
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The timing of stock repurchases and the number of shares will depend upon the market conditions and other factors. Share repurchases, if any, will be made in the open market and in privately negotiated transactions in accordance with applicable securities laws.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

70 edited+17 added−26 removed21 unchanged
Biggest changeRaw material costs are subject to continued fluctuation and are being offset, in part, by contractual selling prices that are indexed to select commodities. • The increase in selling, general and administrative costs of $75.6 million in 2022 was primarily driven by increases in personnel costs of $25.0 million, incremental costs from recent acquisitions of $21.9 million, 28 increases in information systems costs of $12.0 million, incremental amortization of intangible assets from acquired businesses of $11.1 million, and increases in transportation costs of $9.3 million, due to higher volumes and rising freight costs in 2022 compared to 2021. • The effective tax rate of 24.8 percent for the full-year 2022 was higher than the prior year, primarily due to discrete tax adjustments as discussed below under "Provision for Income Taxes." • In 2022, we returned $126.8 million to shareholders through $102.7 million of dividends and $24.1 million in share repurchases.
Biggest changeRaw material costs are subject to continued fluctuation and impact certain contractual selling prices which are indexed to select commodities. • The decrease in selling, general and administrative costs of $67.5 million in 2023 was primarily driven by personnel costs reductions of $41.5 million, discretionary spend reductions of $22.3 million, and a decrease in transportation costs of $17.5 million, due to lower volumes in 2023 compared to 2022, partially offset by incremental costs from recent acquisitions of $7.6 million. • The effective tax rate of 22.7 percent for the full-year 2023 was lower than the prior year, primarily due to tax adjustments as discussed below under "Income Taxes." • Interest expense in 2023 was $40.4 million compared to $27.6 million in 2022.
The Aftermarket Segment also includes biminis, covers, buoys, 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.
The Aftermarket Segment also includes biminis, covers, buoys, 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.
We anticipate making minimum required contributions of approximately $0.7 million to our Dutch pension plans in 2023 following curtailment of the plans at the end of 2022. We also expect to make matching contributions to our defined contribution 401(k) profit sharing plan in 2023 at a level similar to 2022; however, these contributions are discretionary and subject to change.
We anticipate making minimum required contributions of approximately $0.7 million to our Dutch pension plans in 2024 following curtailment of the plans at the end of 2022. We also expect to make matching contributions to our defined contribution 401(k) profit sharing plan in 2024 at a level similar to 2023; however, these contributions are discretionary and subject to change.
While our significant accounting policies are more fully described in Note 2 of the Notes to 33 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.
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.
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.
Aftermarket Segment Many of our OEM Segment products are also sold through various aftermarket channels of the recreation and transportation 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.
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 26 season in September in the following calendar year.
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.
We also supply engineered components to the related aftermarkets of these industries, primarily by selling to retail dealers, wholesale distributors, and service centers, as well as direct to retail customers via the Internet. We have two reportable segments, the OEM Segment and the Aftermarket Segment.
We also supply engineered components to the related aftermarkets of these industries, primarily by selling to retail dealers, wholesale distributors, and service centers, as well as direct to retail customers via the Internet. 23 We have two reportable segments, the OEM Segment and the Aftermarket Segment.
The Company, through its wholly-owned subsidiary, LCI, supplies, domestically and internationally, a broad array of engineered components for the leading OEMs in the recreation and transportation product markets, consisting primarily of RVs and adjacent industries including boats; buses; trailers used to haul boats, livestock, equipment and other cargo; trucks; trains; manufactured homes; and modular housing.
The Company, through its wholly-owned subsidiary, LCI, supplies, domestically and internationally, a broad array of highly engineered components for the leading OEMs in the recreation and transportation markets, consisting primarily of RVs and adjacent industries including boats; buses; trailers used to haul boats, livestock, equipment and other cargo; trucks; trains; manufactured homes; and modular housing.
Interest payments on our indebtedness are calculated using the outstanding balances and interest rates in effect on December 31, 2022. 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, 2022.
Interest payments on our indebtedness are calculated using the outstanding balances and interest rates in effect on December 31, 2023. 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, 2023.
A detailed discussion of 2020 items and year-over-year comparisons between 2021 and 2020 that are not included in this Annual Report on Form 10-K can be found in 24 "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, 2021, filed with the SEC on February 25, 2022.
A detailed discussion of 2021 items and year-over-year comparisons between 2022 and 2021 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, 2022, filed with the SEC on February 24, 2023.
Approximately 61 percent of our OEM Segment net sales for the year ended December 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 leveling systems ● Televisions and sound systems ● Entry, luggage, patio, and ramp doors ● Tankless water heaters ● Furniture and mattresses ● Other accessories 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.
Approximately 47 percent of our OEM Segment net sales for the year ended December 31, 2023 were of components for travel trailer and fifth-wheel RVs, including: ● Steel chassis and related components ● Electric and manual entry steps ● Axles, ABS, 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 leveling systems ● Televisions and sound systems ● Entry, luggage, patio, and ramp doors ● Tankless water heaters ● Furniture and mattresses ● Other accessories The Aftermarket Segment supplies many of these engineered components to the related aftermarket channels of the recreation and transportation markets, primarily to retail dealers, wholesale distributors, and service centers, as well as direct to retail customers via the Internet.
Cash Flows from Financing Activities Cash flows used in financing activities in 2022 were primarily comprised of: • $105.3 million in net payments under our revolving credit facility; • payments of quarterly dividends of $102.7 million; • $73.0 million in repayments under our shelf loan, term loan, and other borrowings; • $60.2 million in payments of contingent consideration and holdbacks related to acquisitions; • $24.1 million in repurchases of common stock; and • cash outflows of $11.0 million related to vesting of stock-based awards, net of shares tendered for payment of taxes.
Cash flows used in financing activities of $374.9 million in 2022 were primarily comprised of $105.3 million in net repayments under our revolving credit facility, payments of quarterly dividends of $102.7 million, $73.0 million in repayments under our shelf loan, Term Loan, and other borrowings, $60.2 million related to payment of contingent consideration and 30 holdbacks related to acquisitions, $24.1 million in repurchases of common stock, and cash outflows of $11.0 million related to vesting of stock-based awards, net of shares tendered for payment of taxes.
Capital expenditures and acquisitions in 2023 are expected to be funded primarily from cash generated from operations, as well as periodic borrowings under our revolving credit facility.
Capital expenditures and acquisitions in 2024 are expected to be funded primarily from cash generated from operations, as well as periodic borrowings under our revolving credit facility.
Please see "Results of Operations" above for additional information regarding the impact of raw material costs on our results of operations for the year ended December 31, 2022.
Please see "Results of Operations" above for additional information regarding the impact of raw material costs on our results of operations for the year ended December 31, 2023.
This Management's Discussion and Analysis of Financial Condition and Results of Operations generally discusses 2022 and 2021 items and year-over-year comparisons between 2022 and 2021.
This Management's Discussion and Analysis of Financial Condition and Results of Operations generally discusses 2023 and 2022 items and year-over-year comparisons between 2023 and 2022.
We estimate 2023 capital expenditures of $80 to $100 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 2022 capital expenditures and acquisitions were funded by cash generated from operations and borrowings under our Credit Agreement.
We estimate 2024 capital expenditures of $55 to $75 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 2023 capital expenditures and acquisitions were funded by cash generated from operations and borrowings under our Credit Agreement.
However, there are many factors that can impact this relationship, especially in the short term. Depreciation and amortization was $129.2 million and $112.3 million in 2022 and 2021, respectively, and is expected to be approximately $130 to $140 million in 2023.
However, there are many factors that can impact this relationship, especially in the short term. Depreciation and amortization was $131.8 million and $129.2 million in 2023 and 2022, respectively, and is expected to be approximately $130 to $140 million in 2024.
Net sales and operating profit by segment, as a percent of the total, were as follows for the years ended December 31: 2022 2021 Net sales: OEM Segment 83% 81% Aftermarket Segment 17% 19% Total net sales 100% 100% Operating Profit: OEM Segment 87% 76% Aftermarket Segment 13% 24% Total segment operating profit 100% 100% Operating profit margin by segment was as follows for the years ended December 31: 2022 2021 OEM Segment 11.1% 8.4% Aftermarket Segment 8.3% 11.3% Operating profit margins for the Aftermarket Segment in 2022 were negatively impacted by a number of factors, as further described below under “Results of Operations – Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 – Aftermarket Segment.” 25 Our OEM Segment manufactures and distributes a broad array of engineered components for the leading OEMs of RVs and adjacent industries, including boats; buses; trailers used to haul boats, livestock, equipment and other cargo; trucks; trains; manufactured homes; and modular housing.
Net sales and operating profit by segment, as a percent of the total, were as follows for the years ended December 31: 2023 2022 Net sales: OEM Segment 77% 83% Aftermarket Segment 23% 17% Total net sales 100% 100% Operating Profit: OEM Segment 14% 87% Aftermarket Segment 86% 13% Total segment operating profit 100% 100% Operating profit margin by segment was as follows for the years ended December 31: 2023 2022 OEM Segment 0.6% 11.1% Aftermarket Segment 12.0% 8.3% Operating profit margins in 2023 were impacted by a number of factors, as further described below under “Results of Operations – Year Ended December 31, 2023 Compared to Year Ended December 31, 2022.” Our OEM Segment manufactures and distributes a broad array of engineered components for the leading OEMs of RVs and adjacent industries, including boats; buses; trailers used to haul boats, livestock, equipment and other cargo; trucks; 24 trains; manufactured homes; and modular housing.
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.
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.
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: 2022 2021 Change Travel trailer and fifth-wheel RV $ 6,090 $ 4,197 45% Motorhome $ 4,099 $ 2,857 43% Our average product content per type of RV excludes international sales and sales to the Aftermarket Segment and Adjacent Industries.
Our average product content per type of RV, calculated based upon our net sales of components to domestic RV 27 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: 2023 2022 Change Travel trailer and fifth-wheel RV $ 5,058 $ 6,090 (17)% Motorhome $ 3,506 $ 4,099 (14)% Our average product content per type of RV excludes international sales and sales to the Aftermarket Segment and Adjacent Industries.
At December 31, 2022, we operated over 130 manufacturing and distribution facilities located throughout North America and Europe.
At December 31, 2023, we operated over 110 manufacturing and distribution facilities located throughout North America and Europe.
According to the RVIA, industry-wide wholesale shipments from the United States of travel trailer and fifth-wheel RVs, the Company's primary RV market, decreased 21 percent to 421,700 units in 2022, compared to 2021, primarily due to decreased retail demand. Retail demand for travel trailer and fifth-wheel RVs decreased 23 percent in 2022 compared to 2021.
According to the RVIA, industry-wide wholesale shipments from the United States of travel trailer and fifth-wheel RVs, the Company's primary RV market, decreased 39 percent to 259,100 units in 2023, compared to 2022, primarily due to decreased retail demand. Retail demand for travel trailer and fifth-wheel RVs decreased 17 percent in 2023 compared to 2022.
Traditional power boats include bass, deck, jet, pontoon, ski-wake, and other boats. Included in this total, Statistical Surveys reported approximately 62,100, 66,000, and 69,000 pontoon boats were sold in 2022, 2021, and 2020, respectively. • School buses.
Traditional power boats include bass, deck, jet, pontoon, ski-wake, and other boats. Included in this total, Statistical Surveys reported approximately 62,300, 62,300, and 67,800 pontoon boats were sold in 2023, 2022, and 2021, respectively. • School buses.
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: Wholesale Retail Estimated Unit Impact on Dealer Inventories Units Change Units Change Year ended December 31, 2022 421,700 (21)% 387,300 (23)% 34,400 Year ended December 31, 2021 531,400 40% 502,700 10% 28,700 Year ended December 31, 2020 380,100 9% 456,100 15% (76,000) According to the RVIA, industry-wide wholesale shipments of motorhome RVs in 2022 increased four percent to 58,400 units compared to 2021.
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 25 Statistical Surveys, Inc., as well as the resulting estimated change in dealer inventories, for both the United States and Canada, is as follows: Wholesale Retail Estimated Unit Impact on Dealer Inventories Units Change Units Change Year ended December 31, 2023 259,100 (39)% 324,800 (17)% (65,700) Year ended December 31, 2022 421,700 (21)% 389,700 (22)% 32,000 Year ended December 31, 2021 531,300 40% 502,700 10% 28,600 According to the RVIA, industry-wide wholesale shipments of motorhome RVs in 2023 decreased 21 percent to 45,900 units compared to 2022.
Non-cash stock-based compensation expense was $23.7 million and $27.2 million in 2022 and 2021, respectively, and is expected to be approximately $25 to $30 million in 2023. 31 Cash Flows from Investing Activities Cash flows used in investing activities of $241.8 million in 2022 were primarily comprised of $130.6 million for capital expenditures and $108.5 million for the acquisition of businesses.
Non-cash stock-based compensation expense was $18.2 million and $23.7 million in 2023 and 2022, respectively, and is expected to be approximately $20 to $25 million in 2024. Cash Flows from Investing Activities Cash flows used in investing activities of $83.7 million in 2023 were primarily comprised of $62.2 million for capital expenditures and $25.9 million for the acquisition of businesses.
The following are key target markets for Adjacent Industries component sales: • Enclosed trailers. According to Statistical Surveys, approximately 188,700, 234,600, and 233,300 enclosed trailers were sold in 2022, 2021, and 2020, respectively. • Traditional power boats. Statistical Surveys also reported approximately 188,300, 211,400, and 233,800 traditional power boats were sold in 2022, 2021, and 2020, respectively.
The following are key target markets for Adjacent Industries component sales: • Enclosed trailers. According to Statistical Surveys, approximately 184,300, 198,700, and 239,700 enclosed trailers were sold in 2023, 2022, and 2021, respectively. • Traditional power boats. Statistical Surveys also reported approximately 178,900, 185,400, and 216,900 traditional power boats were sold in 2023, 2022, and 2021, respectively.
Operating profit margin was 10.6 percent in 2022 compared to 8.9 percent in 2021.
Operating profit margin was 3.3 percent in 2023 compared to 10.6 percent in 2022.
Net sales of components to OEMs were to the following markets for the years ended December 31: (In thousands) 2022 2021 Change RV OEMs: Travel trailers and fifth-wheels $ 2,617,585 $ 2,295,612 14% Motorhomes 339,097 258,995 31% Adjacent Industries OEMs 1,359,188 1,089,005 25% Total OEM Segment net sales $ 4,315,870 $ 3,643,612 18% According to the RVIA, industry-wide wholesale shipments for the years ended December 31 were: 2022 2021 Change Travel trailer and fifth-wheel RVs 421,700 531,400 (21)% Motorhomes 58,400 56,200 4% The trend in our average product content per RV produced is an indicator of our overall market share of components for new RVs.
Net sales of components to OEMs were to the following markets for the years ended December 31: (In thousands) 2023 2022 Change RV OEMs: Travel trailers and fifth-wheels $ 1,358,853 $ 2,617,585 (48)% Motorhomes 269,356 339,097 (21)% Adjacent Industries OEMs 1,275,533 1,359,188 (6)% Total OEM Segment net sales $ 2,903,742 $ 4,315,870 (33)% According to the RVIA, industry-wide wholesale shipments for the years ended December 31 were: 2023 2022 Change Travel trailer and fifth-wheel RVs 259,100 421,700 (39)% Motorhomes 45,900 58,400 (21)% The trend in our average product content per RV produced is an indicator of our overall market share of components for new RVs.
Amortization expense on intangible assets for the OEM Segment was $41.3 million in 2022, compared to $32.9 million in 2021. Depreciation expense on fixed assets for the OEM Segment was $58.2 million in 2022, compared to $50.8 million in 2021. Aftermarket Segment Net sales of the Aftermarket Segment in 2022 increased 8 percent, or $62.2 million, compared to 2021.
Amortization expense on intangible assets for the OEM Segment was $41.6 million in 2023, compared to $41.3 million in 2022. Depreciation expense on fixed assets for the OEM Segment was $58.4 million in 2023, compared to $58.2 million in 2022. Aftermarket Segment Net sales of the Aftermarket Segment in 2023 decreased 1 percent, or $10.2 million, compared to 2022.
Retail demand has declined from recent elevated levels, partially driven by elevated fuel prices and rising interest rates impacting retail consumers. Retail demand is typically revised upward in subsequent months, primarily due to delayed RV registrations.
Retail demand has declined from elevated post-pandemic levels, primarily driven by inflation and higher interest rates impacting retail consumers' discretionary spending. Retail demand is typically revised upward in subsequent months, primarily due to delayed RV registrations.
In December 2019, we acquired CURT, a leading manufacturer and distributor of branded towing products and truck accessories for the aftermarket. Our CURT products are sold to the automotive and truck aftermarket, as well as the RV, marine, and trailer markets, all of which require towing products, which we believe compliments the OEM markets we serve.
Our CURT products are sold to the automotive and truck aftermarket, as well as the RV, marine, and trailer markets, all of which require towing products, which we believe complements the OEM markets we serve.
We experienced elevated prices of these commodities in 2022, and we expect commodity prices to remain elevated in 2023. Prices of these commodities have historically been volatile, and over the past few months prices have continued to fluctuate.
Prices of these commodities have historically been volatile, and over the past few months prices have continued to fluctuate. Overall, we experienced reduced prices of these commodities in 2023, and at this time, we expect commodity prices to be generally stable in 2024.
Under this stock repurchase program, we purchased 253,490 shares at a weighted average price of $94.89 per share, totaling $24.1 million, during the year ended December 31, 2022. No shares were repurchased during the year ended December 31, 2021.
Under this stock repurchase program, we purchased 253,490 shares at a weighted average price of $94.89 per share, totaling $24.1 million, during the year ended December 31, 2022. No shares were repurchased during the year ended December 31, 2023. See Note 13 of the Notes to Consolidated Financial Statements for additional information related to our dividend and share repurchase programs.
Net sales and operating profit were as follows for the years ended December 31: (In thousands) 2022 2021 Net sales: OEM Segment: RV OEMs: Travel trailers and fifth-wheels $ 2,617,585 $ 2,295,612 Motorhomes 339,097 258,995 Adjacent Industries OEMs 1,359,188 1,089,005 Total OEM Segment net sales 4,315,870 3,643,612 Aftermarket Segment: Total Aftermarket Segment net sales 891,273 829,085 Total net sales $ 5,207,143 $ 4,472,697 Operating profit: OEM Segment $ 479,150 $ 304,676 Aftermarket Segment 73,878 93,734 Total operating profit $ 553,028 $ 398,410 Corporate expenses are allocated between the segments based upon net sales.
Net sales and operating profit were as follows for the years ended December 31: (In thousands) 2023 2022 Net sales: OEM Segment: RV OEMs: Travel trailers and fifth-wheels $ 1,358,853 $ 2,617,585 Motorhomes 269,356 339,097 Adjacent Industries OEMs 1,275,533 1,359,188 Total OEM Segment net sales 2,903,742 4,315,870 Aftermarket Segment: Total Aftermarket Segment net sales 881,066 891,273 Total net sales $ 3,784,808 $ 5,207,143 Operating profit: OEM Segment $ 17,361 $ 479,150 Aftermarket Segment 106,067 73,878 Total operating profit $ 123,428 $ 553,028 Corporate expenses are allocated between the segments based upon net sales.
See Note 13 of the Notes to Consolidated Financial Statements for additional information related to our dividend and share repurchase programs. 32 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, 2022, in total and disaggregated into current (payable in 2023) and long-term (payable after 2023) obligations.
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, 2023, in total and disaggregated into current (payable in 2024) and long-term (payable after 2024) obligations.
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.
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, 2023, we made discretionary matching contributions of $12.1 million to our defined contribution 401(k) profit sharing plan.
Net sales from acquisitions completed in 2021 and 2022, primarily Furrion and Girard, contributed approximately $219.0 million in 2022. • Net income for 2022 increased 37.3 percent to $395.0 million, or $15.48 per diluted share, compared to net income of $287.7 million, or $11.32 per diluted share, for 2021. • Consolidated operating profit during 2022 was $553.0 million compared to $398.4 million in 2021.
Net sales from acquisitions completed in 2022 and 2023 contributed approximately $73.6 million in 2023. • Net income for 2023 was $64.2 million, or $2.52 per diluted share, compared to net income of $395.0 million, or $15.48 per diluted share, for 2022. • Consolidated operating profit during 2023 was $123.4 million compared to $553.0 million in 2022.
Sales from CURT products accounted for approximately half of our Aftermarket Segment net sales in each of 2022 and 2021. CURT sold 0.9 million hitches in 2022 and 1.2 million in 2021.
Sales from CURT products accounted for approximately half of our Aftermarket Segment net sales in each of 2023 and 2022. 26 CURT sold 910,000 hitches in 2023 compared to 860,000 in 2022.
The increase was also assisted by a $110.7 million increase in net income, adjusted for depreciation and amortization, stock-based compensation expense, deferred taxes, and other non-cash items.
The decrease in net cash flows provided by operating activities was primarily due to a decrease in net income adjusted for depreciation and amortization, stock-based compensation expense, deferred taxes, and other non-cash items of $318.1 million.
Retail demand for motorhome RVs decreased 13 percent in 2022, compared to a four percent increase in retail demand in 2021. Retail demand has declined from recent elevated levels, partially driven by elevated fuel prices and rising interest rates impacting retail consumers.
Retail demand for motorhome RVs decreased eight percent in 2023, compared to a 13 percent decrease in retail demand in 2022. Retail demand has declined from post-pandemic elevated levels, partially driven by inflation and higher interest rates impacting retail consumers' discretionary spending.
Additionally, with the acquisition of Kasper Ranch Hand Equipment, LLC in April 2021, we continued to expand our product offering to include custom bumpers, grill guards, and steps for the automotive aftermarket. We currently expect to see a slight increase in aftermarket volume in 2023 as distribution stocking levels return to normal and the new vehicle chip shortage ameliorates.
Additionally, with the acquisition of Kaspar Ranch Hand Equipment, LLC in April 2021, we continued to expand our product offering to include custom bumpers, grill guards, and steps for the automotive aftermarket.
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.
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. In December 2019, we acquired CURT, a leading manufacturer and distributor of branded towing products and truck accessories for the aftermarket.
OEM Segment Net sales of the OEM Segment in 2022 increased 18 percent, or $0.7 billion, compared to 2021.
OEM Segment Net sales of the OEM Segment in 2023 decreased 33 percent, or $1.4 billion, compared to 2022.
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 the Company’s accounting, internal controls, auditing matters or other concerns. The Whistleblower Policy and procedure for complaints can be found on our website ( www.lci1.com ).
We have also established a Whistleblower Policy, which includes a toll-free hotline (800-461-9330) to report complaints about the Company’s accounting, internal controls, auditing matters or other concerns.
CONTINGENCIES Additional information required by this item is included under Item 3 of Part I of this Annual Report on Form 10-K.
The Whistleblower Policy and procedure for complaints can be found on our website ( www.lci1.com ). 31 CONTINGENCIES Additional information required by this item is included under Item 3 of Part I of this Annual Report on Form 10-K.
The Consolidated Statements of Cash Flows reflect the following for the years ended December 31: (In thousands) 2022 2021 Net cash flows provided by (used in) operating activities $ 602,514 $ (111,573) Net cash flows used in investing activities (241,790) (281,218) Net cash flows (used in) provided by financing activities (374,871) 404,563 Effect of exchange rate changes on cash and cash equivalents (1,250) (697) Net (decrease) increase in cash and cash equivalents $ (15,397) $ 11,075 Discussion - Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Cash Flows from Operations Net cash flows provided by operating activities were $602.5 million in 2022, compared to cash used in operating activities of $111.6 million in 2021.
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. 29 The Consolidated Statements of Cash Flows reflect the following for the years ended December 31: (In thousands) 2023 2022 Net cash flows provided by operating activities $ 527,229 $ 602,514 Net cash flows used in investing activities (83,748) (241,790) Net cash flows used in financing activities (426,184) (374,871) Effect of exchange rate changes on cash and cash equivalents 1,361 (1,250) Net increase (decrease) in cash and cash equivalents $ 18,658 $ (15,397) Discussion - Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Cash Flows from Operations Net cash flows provided by operating activities were $527.2 million in 2023, compared to $602.5 million in 2022.
Diversification Strategy We are executing a strategic initiative to diversify the markets we serve away from the historical concentration within the North American RV OEM industry. Approximately 46 percent of net sales for the year ended December 31, 2022 were generated outside of the North American RV OEM market compared to 47 percent in 2021.
Approximately 61 percent of net sales for the year ended December 31, 2023 were generated outside of the North American RV OEM market compared to 46 percent in 2022, demonstrating positive results from our diversification strategy in 2023.
See Note 4 of the Notes to Consolidated Financial Statements for further information related to these holdback payments. CORPORATE GOVERNANCE We are in compliance with the corporate governance requirements of the SEC and the New York Stock Exchange. Our governance documents and committee charters and key practices have been posted to our website ( www.lci1.com ) and are updated periodically.
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.
Operating profit of the Aftermarket Segment was $73.9 million in 2022, a decrease of $19.9 million compared to 2021.
Operating profit of the OEM Segment was $17.4 million in 2023, a decrease of $461.8 million compared to 2022.
Partially offset by: • payments of quarterly dividends of $87.2 million; • $22.8 million in payments of contingent consideration and holdbacks related to acquisitions; • $21.5 million in repayments under the term loan and other borrowings; and • cash outflows of $8.3 million related to vesting of stock-based awards, net of shares tendered for payment of taxes.
Cash Flows from Financing Activities Cash flows used in financing activities of $426.2 million in 2023 were primarily comprised of $215.9 million in net repayments under our revolving credit facility, payments of quarterly dividends of $106.3 million, $61.1 million in repayments under our Term Loan and other borrowings, $31.9 million related to payments of contingent consideration and holdbacks related to acquisitions, and cash outflows of $9.6 million related to vesting of stock-based awards, net of shares tendered for payment of taxes.
Cash flows used in investing activities of $281.2 million in 2021 were primarily comprised of $194.1 million for the acquisition of businesses and $98.5 million for capital expenditures. This increase in capital expenditures in 2022 was primarily due to increased investments in growth and automation projects of $30.3 million. Our capital expenditures are primarily for replacement and growth.
Cash flows used in investing activities of $241.8 million in 2022 were primarily comprised of $130.6 million for capital expenditures and $108.5 million for the acquisition of businesses. Our capital expenditures are primarily for replacement and growth.
The increase was primarily a result of increased selling prices which are indexed to select commodities and pricing changes to targeted products, partially offset by increased raw material and freight costs. • The cost of aluminum and steel used in certain of the Company's manufactured components increased in 2022 compared to 2021.
The decrease was primarily due to decreased selling prices which are indexed to select commodities and the impact of fixed costs on reduced sales, partially offset by decreases in material commodity costs. • The cost of steel and aluminum consumed in certain of our manufactured components decreased in 2023 compared to 2022.
According to School Bus Fleet, there were approximately 40,600, 30,600, and 36,000 school buses sold in 2022, 2021, and 2020, respectively. • Manufactured housing.
According to School Bus Fleet, there were approximately 41,200, 40,600, and 30,600 school buses sold in 2023, 2022, and 2021, respectively. • Manufactured housing. According to the Institute for Building Technology and Safety, there were approximately 89.200, 112,900, and 105,800 manufactured home wholesale shipments in 2023, 2022, and 2021, respectively.
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 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.
Amortization expense on intangible assets for the Aftermarket Segment was $15.1 million in 2022, compared to $14.7 million in 2021. Depreciation expense on fixed assets for the Aftermarket Segment was $14.7 million in 2022, compared to $13.9 million in 2021. Provision for Income Taxes The effective income tax rate for 2022 was 24.8 percent compared to 24.7 percent in 2021.
Amortization expense on intangible assets for the Aftermarket Segment was $15.5 million in 2023, compared to $15.1 million in 2022. Depreciation expense on fixed assets for the Aftermarket Segment was $16.3 million in 2023, compared to $14.7 million in 2022. Interest Expense Interest expense, net was $40.4 million in 2023, compared to $27.6 million in 2022.
We estimate the 2023 effective income tax rate to be approximately 24 to 26 percent. LIQUIDITY AND CAPITAL RESOURCES Cash Flows We maintain a level of liquidity sufficient to allow us to meet our cash needs in the short term.
LIQUIDITY AND CAPITAL RESOURCES Cash Flows 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.
Despite these unfavorable trends, warranty claim lag time has continued to decline as we focus on addressing warranty claims promptly, which favorably impacts our warranty reserves. 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.
The increase in warranty claim lag time was driven by units remaining on dealer lots for longer periods due to the slower sales environment. 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.
Many of the optional upgrades and non-critical replacements for RVs are purchased outside the normal product selling season, 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 the continuing impact of market and supply chain disruptions.
Many of the optional upgrades and non-critical replacement parts for RVs are purchased outside the normal product selling season, thereby causing certain Aftermarket Segment sales to be counter-seasonal. According to Go RVing, estimated RV ownership in the United States as of 2021 increased to a record-high 11.2 million households.
The operating profit margin of the OEM Segment increased to 11.1 percent in 2022 compared to 8.4 percent in 2021 and was positively impacted by: • Selling prices contractually tied to indices of select commodities increased, resulting in an increase in operating profit of $282.6 million compared to 2021. • Pricing changes to targeted products, resulting in an increase in operating profit of $198.9 million compared to 2021.
The operating profit margin of the Aftermarket Segment was 12.0 percent in 2023, compared to 8.3 percent in 2022, and was positively impacted by: • Decreases in material commodity costs, which positively impacted operating profit by $34.4 million, primarily related to decreased steel and aluminum costs. • Pricing changes to targeted products, resulting in an increase in operating profit of $6.8 million compared to the same period of 2022.
The effective tax rate of 24.8 percent for the full-year 2022 was higher than the prior year, primarily due to a decrease in the excess tax benefit related to the vesting of equity-based compensation awards, a decrease in the cash surrender value of life insurance, and a discrete tax 30 expense for an acquisition-related tax election, partially offset by a decrease in non-deductible executive compensation expenses.
The lower effective tax rate for 2023 was primarily due to an increase in the cash surrender value of life insurance, a decrease in non-deductible executive compensation expenses, and a decrease in the state effective tax rate. We estimate the 2024 effective income tax rate to be approximately 24 to 26 percent.
We believe the availability under the revolving credit facility under the Credit Agreement (as defined in Note 9 of the Notes to Consolidated Financial Statements), along with our cash flows from operations, are adequate to finance our anticipated cash requirements for the next twelve months.
As of December 31, 2023, we had $66.2 million in cash and cash equivalents, and $245.3 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 expect these gains will be tempered by the impact of inflation and rising interest rates on consumers' discretionary spending. RESULTS OF OPERATIONS Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Consolidated Summary • Consolidated net sales for 2022 were $5.2 billion, 16 percent higher than consolidated net sales for 2021 of $4.5 billion.
RESULTS OF OPERATIONS Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Consolidated Summary • Consolidated net sales for 2023 were $3.8 billion, 27 percent lower than consolidated net sales for 2022 of $5.2 billion.
Net sales of components in the Aftermarket Segment were as follows for the years ended December 31: (In thousands) 2022 2021 Change Total Aftermarket Segment net sales $ 891,273 $ 829,085 8% Our net sales to the Aftermarket Segment increased during 2022 primarily due to net sales from acquisitions completed in 2022 and 2021, which contributed approximately $63.4 million.
Net sales of components in the Aftermarket Segment were as follows for the years ended December 31: (In thousands) 2023 2022 Change Total Aftermarket Segment net sales $ 881,066 $ 891,273 (1)% Our net sales to the Aftermarket Segment decreased during 2023 primarily driven by lower volumes within marine markets and the impacts of inflation and elevated interest rates on consumers' discretionary spending.
(In thousands) Total Current Long-Term Total indebtedness (a) $ 1,128,026 $ 23,406 $ 1,104,620 Interest on indebtedness (a) 84,484 22,481 62,003 Operating leases (b) 341,924 47,469 294,455 Total $ 1,554,434 $ 93,356 $ 1,461,078 a. See Note 9 of the Notes to Consolidated Financial Statements for additional information regarding the maturities of debt principal.
(In thousands) Total Current Long-Term Total indebtedness (a) $ 854,046 $ 589 $ 853,457 Interest on indebtedness (a) 89,717 32,544 57,173 Operating leases (b) 345,718 50,589 295,129 Total $ 1,289,481 $ 83,722 $ 1,205,759 a. See Note 9 of the Notes to Consolidated Financial Statements for additional information regarding the maturities of debt principal.
Content per RV is impacted by market share gains, acquisitions, new product introductions, and changes in selling prices for our products, as well as changes in the types of RVs produced industry-wide.
Content per RV is impacted by changes in selling prices for our products, market share gains, and acquisitions. The declines in content in 2023 compared to 2022 were driven primarily by decreased selling prices contractually tied to indices of select commodities, partially offset by organic and acquisition growth.
The increase was primarily driven by price realization, market share growth, acquisitions, and an increase in net sales to OEMs in Adjacent Industries, partially offset by a nearly 18 percent decrease in wholesale RV OEM shipments.
The decrease was primarily driven by a nearly 37 percent decrease in total North American RV wholesale shipments, decreased selling prices which are indexed to select commodities, and lower North American marine production levels, partially offset by net sales from recent acquisitions.
The extent to which COVID-19, the Russia-Ukraine War, and/or relations between China and Taiwan 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.
While North American RV OEM wholesale shipments declined 37 percent year-over year, due to the effectiveness of our diversification strategy, consolidated net sales were only down 27 percent. 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.
This change was primarily due to changes in net assets and liabilities, net of acquisitions of businesses, which generated $603.4 million more cash than in 2021.
The decrease in net income was partially offset by the net change in assets and liabilities, net of acquired businesses, as it generated $242.8 million more cash than in 2022.
Partially offset by: • Pricing changes to targeted products, resulting in an increase in operating profit of $109.0 million compared to 2021. • Sales mix increase of higher margin products from the acquisition of Furrion, which positively impacted operating profit by $9.4 million.
Partially offset by: • Decreases in material commodity costs, which positively impacted operating profit by $114.7 million, primarily related to decreased steel and aluminum costs. • A decrease in production labor primarily related to reduced overtime and temporary staffing, resulting in an increase in operating profit of $12.6 million compared to 2022. • Pricing changes to targeted products, resulting in an increase in operating profit of $9.5 million compared to 2022.
At December 31, 2022, we were in compliance with all such requirements, and we expect to remain in compliance for the next twelve months. We have paid regular quarterly dividends since 2016.
During 2023, we entered into two amendments to the Credit Agreement that provided for adjustments to certain of the financial covenants for the second, third, and fourth fiscal quarters of 2023. At December 31, 2023, we were in compliance with all applicable financial covenants and expect to remain in compliance for the next twelve months.
Removed
The percentage of net sales generated outside of the North American RV OEM market in 2022 decreased compared to the 2021 percentage due to continued content growth in the North American RV OEM market during 2022, which more than offset our diversification efforts.
Added
Diversification Strategy We are executing a strategic initiative to diversify the markets we serve away from the historical concentration within the North American RV OEM industry.
Removed
COVID-19 Pandemic The COVID-19 pandemic has caused significant uncertainty and disruption in the global economy and financial markets since early 2020.
Added
The increase was primarily due to interest rate increases throughout the year on our variable rate indebtedness, partially offset by net repayments of indebtedness of $277.0 million in 2023. • In 2023, we paid quarterly dividends aggregating $4.20 per share, or $106.3 million.
Removed
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 and a tightened labor market, especially in Northern Indiana.
Added
Our decrease in net sales to RV OEMs during 2023 was driven by a 37 percent reduction in North American wholesale shipments during 2023, primarily driven by dealer inventory levels, inflation, and higher interest rates impacting retail consumers.
Removed
These trends continued through the first nine months 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"), as well as heightened tensions between China and Taiwan.
Added
Our decrease in net sales to OEMs in Adjacent Industries during 2023 was primarily due to lower sales to North American OEMs in the marine and manufactured housing markets, primarily driven by dealer inventory levels, inflation, and elevated interest rates impacting retail consumers.
Removed
To address these challenges, we have continued to strategically manage working capital, including carrying elevated levels of certain inventory items to avoid future shortages. As we adjust inventory levels, we also closely monitor our liquidity, and may need to seek additional financing, though such additional financing may not be available on terms favorable to us, or at all.
Added
The operating profit margin of the OEM Segment decreased to 0.6 percent in 2023 compared to 11.1 percent in 2022 and was negatively impacted by: • Selling prices contractually tied to indices of select commodities decreased, resulting in a decrease in operating profit of $213.7 million compared to 2022. • The impact of fixed costs on reduced sales, which decreased operating profit by $84.7 million related to fixed production overhead costs and $63.8 million related to fixed selling, general, and administrative costs. • Warranty costs decreased operating profit by $29.4 million due to increased warranty claim payments driven by retail dealers seeking service work to offset retail sales which declined in 2023 and higher claim activity associated with certain products. • Incremental costs incurred due to volatile OEM schedules, resulting in a decrease in operating profit of $20.2 million compared to 2022. • Sales mix increase of lower margin products from recent acquisitions and related integration costs, which negatively impacted operating profit by $19.7 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed3 unchanged
Biggest changeAt December 31, 2022, we had $664.1 million of borrowings outstanding on our variable rate revolving credit facility and incremental term loan. Assuming consistent borrowing levels and an increase of 100 basis points in the interest rate for borrowings of a similar nature subsequent to December 31, 2022, future cash flows would be reduced by approximately $6.6 million per annum.
Biggest changeAt December 31, 2023, we had $390.9 million of borrowings outstanding on our variable rate revolving credit facility and incremental term loan. Assuming consistent borrowing levels and an increase of 100 basis points in the interest rate for borrowings of a similar nature subsequent to December 31, 2023, future cash flows would be reduced by approximately $3.9 million per annum.
While these derivative instruments are subject to fluctuations in value, these fluctuations are 34 generally offset by the changes in fair value of the underlying exposures. We had no outstanding derivative instruments on commodities at December 31, 2022 and 2021. We have historically been able to obtain sales price increases to partially offset the majority of raw material cost increases.
While these derivative instruments are subject to fluctuations in value, these fluctuations are generally offset by the changes in fair value of the underlying exposures. We had no outstanding derivative instruments on commodities at December 31, 2023 and 2022. We have historically been able to obtain sales price increases to partially offset the majority of raw material cost increases.
"Management's Discussion and Analysis of Financial Condition and Results of Operations." 35
"Management's Discussion and Analysis of Financial Condition and Results of Operations." 33

Other LCII 10-K year-over-year comparisons