LCII LCI Industries

2018 Full Year Sales Grow 15% to a Record $2.5 Billion

Full Year 2018 Highlights

• Net sales of $2.5 billion, an increase of 15% year-over-year
• Net income of $148.6 million, an increase of 12% year-over-year
• GAAP diluted EPS of $5.83, including a one-time non-cash charge related to U.S. tax reform
• Adjusted diluted EPS for the year of $5.86, excluding a one-time non-cash charge related to U.S. tax reform of $612,000 ($0.03 per diluted share)
• Content per travel trailer and fifth-wheel increased $187 year-over-year, or 6%, to $3,450 for the twelve months ended December 31, 2018
• Content per motorhome increased $272 year-over-year, or 12%, to $2,491 for the twelve months ended December 31, 2018
• Adjacent industries OEM sales grew to $614.6 million for the year, up 49% year-over-year
• Aftermarket sales grew to $233.2 million for the year, up 36% year-over-year
• International sales grew to $104.1 million in 2018, up 125% year-over-year
• Returned $88.0 million to shareholders through $59.3 million of dividends and $28.7 million in share repurchases

Fourth Quarter 2018 Highlights

• Net sales of $536.6 million in the fourth quarter, a decrease of 2% year-over-year
• Net income of $20.2 million or $0.80 per GAAP diluted share in the fourth quarter, including a one-time non-cash charge related to U.S. tax reform
• Adjusted diluted EPS for the quarter of $0.82, excluding a one-time non-cash charge related to U.S. tax reform of $612,000 ($0.02 per diluted share)
• Quarterly dividend of $0.60 per share paid totaling $15.1 million
• Stock repurchase program authorized for up to $150 million of common stock

LCI Industries (NYSE: LCII) (“LCI”, or the “Company”), through its wholly-owned subsidiary, Lippert Components, Inc., supplies domestically and internationally, a broad array of engineered components for the leading original equipment manufacturers (“OEMs”) in the recreation and industrial product markets, and the related aftermarkets of those industries, today reported full year and fourth quarter 2018 results.

“We delivered another record year with net sales reaching nearly $2.5 billion, a year-over-year increase of 15 percent. Our strategy to diversify our business through adjacent markets, the aftermarket, and internationally is clearly paying off. We saw strong growth in each of these markets, as well as a substantial increase in content per vehicle in our RV OEM segment supporting our outperformance of the industry,” said LCI Industries’ Chief Executive Officer, Jason Lippert. “While we are confident in our ability to further execute on our strategy going forward, we are cognizant of the challenges that our business and industry have faced over the last twelve months. As such, we have taken a number of actions to enhance our business in a short-term lower volume environment, including price increases to offset tariffs and higher commodity pricing and scaling back capital expenditures to boost return on investment and cash flows. As we look to 2019, we are confident we will continue to deliver solid financial and operating performance, as our entire team remains laser-focused on growth, penetrating new markets, and driving more value to our customers through unmatched innovation.”

Full Year 2018 Results

Consolidated net sales for the full year 2018 were $2,475.8 million, an increase of 15 percent over the prior year net sales of $2,147.8 million. Net income for the full year 2018 was $148.6 million, or $5.83 per diluted share, compared to net income of $132.9 million, or $5.24 per diluted share, in 2017. Net income for 2018 and 2017 included one-time non-cash charges of $612,000 ($0.03 per diluted share) and $13.2 million ($0.52 per diluted share), respectively, related to the impact of the Tax Cuts and Jobs Act (the "TCJA"). Excluding the impact of the TCJA, adjusted net income was $149.2 million, or $5.86 per diluted share, for the full year 2018, compared to $146.1 million, or $5.76 per diluted share, for the full year 2017, as referenced in the "Supplementary Information Non-GAAP Measures" section.

The increase in year-over-year net sales reflects growth across the Company’s segments, as well as the addition of acquisitions completed by the Company over the twelve months ended December 31, 2018. Net sales from acquisitions completed by the Company over the twelve months ended December 31, 2018, contributed $231.4 million in 2018.

Fourth Quarter 2018 Results

Consolidated net sales for the fourth quarter of 2018 were $536.6 million, a decline of two percent from 2017 fourth quarter net sales of $547.1 million. Net income in the fourth quarter of 2018 was $20.2 million, or $0.80 per diluted share, compared to net income of $17.5 million, or $0.68 per diluted share, in the fourth quarter of 2017. Net income in the fourth quarter of 2018 and 2017 included one-time non-cash charges of $612,000 ($0.02 per diluted share) and $13.2 million ($0.52 per diluted share), respectively, related to the impact of the Tax Cuts and Jobs Act (the "TCJA"). Excluding the impact of the TCJA, adjusted net income was $20.8 million, or $0.82 per diluted share, for the fourth quarter of 2018, compared to $30.7 million, or $1.20 per diluted share, for the fourth quarter of 2017, as referenced in the "Supplementary Information Non-GAAP Measures" section.

The decrease in year-over-year net sales for the fourth quarter of 2018 reflects lower RV wholesale shipments as dealers normalize their inventory levels, offset by continued growth in the Company’s adjacent industries OEM, aftermarket, and international markets. Net sales from acquisitions completed by the Company over the twelve months ended December 31, 2018, contributed $59.2 million in the fourth quarter of 2018.

The Company’s content per travel trailer and fifth-wheel RV for the twelve months ended December 31, 2018, increased $187 to $3,450, compared to the twelve months ended December 31, 2017, of $3,263. The Company’s content per motorhome RV for the twelve months ended December 31, 2018, increased $272 to $2,491, compared to the twelve months ended December 31, 2017, of $2,219. The content increases are a result of organic growth, including new product introductions, as well as acquisitions.

January 2019 Results

January 2019 consolidated net sales are approximately $187 million, down 9% from January 2018. Sales continue to be impacted by reduced production rates by the OEMs in addition to poor weather that impacted multiple shipping days.

Income Taxes

The Company’s effective tax rate was 27 percent and 23 percent for the quarter and year ended December 31, 2018, compared to 60 percent and 38 percent for the quarter and year ended December 31, 2017. During the quarter ended December 31, 2018, the Company finalized its tax accounting for the TCJA and pursuant to SAB 118 and recorded a one-time non-cash charge of $612,000 ($0.02 per diluted share in the fourth quarter and $0.03 per diluted share in 2018) related to adjustments to deferred tax amounts provisionally recorded in the prior year. During the quarter ended December 31, 2017, the Company recorded a one-time non-cash charge of $13.2 million ($0.52 per diluted share in the fourth quarter and $0.52 per diluted share in 2017) related to the enactment of the TCJA which resulted in the re-measurement of certain deferred tax assets using the lower U.S. corporate income tax rate. Excluding these one-time charges, the Company's effective tax rate was 25 percent and 22 percent for the quarter and year ended December 31, 2018, and 30 percent and 31 percent for the quarter and year ended December 31, 2017, as referenced in the "Supplemental Information Non-GAAP Measures" section.

Balance Sheet and Other Items

At December 31, 2018, the Company’s cash and cash equivalents balance was $14.9 million, a decrease of $11.1 from its balance of $26.0 million at the beginning of the year. The Company generated cash flow from operations of $156.6 million and invested $119.8 million in capital expenditures for the twelve months ended December 31, 2018. Other cash outflows included $184.8 million for acquisitions and $59.3 million for dividend payments to shareholders, and were funded primarily by net borrowings of $240.1 million on the Company’s line of credit for the twelve months ended December 31, 2018. The Company’s outstanding debt was $293.5 million at December 31, 2018.

As previously announced, the Company initiated a stock repurchase program in the fourth quarter of 2018. The Company repurchased 0.4 million of its common shares for $28.7 million, with $121.3 million remaining in the current share repurchase authorization.

Conference Call & Webcast

LCI will provide an online, real-time webcast of its fourth quarter and year-end 2018 earnings conference call on the Company’s website, www.lci1.com/investors, on Thursday, February 7, 2019, at 11:00 a.m. Eastern time.

A replay of the call will be available for two weeks by dialing (855) 859-2056 and referencing access code 2388808. A replay of the webcast will also be available on LCI’s website until the next quarterly conference call.

About LCI Industries

From over 65 manufacturing and distribution facilities located throughout the United States and in Canada, Ireland, Italy, and the United Kingdom, LCI Industries, through its wholly-owned subsidiary, Lippert Components Inc., supplies, domestically and internationally, a broad array of engineered components for the leading original equipment manufacturers (“OEMs”) in the recreation and industrial product markets, consisting of recreational vehicles (“RVs”) and adjacent industries, including buses; trailers used to haul boats, livestock, equipment, and other cargo; trucks; boats; trains; manufactured homes; and modular housing. The Company also supplies components to the related aftermarkets of these industries primarily by selling to retail dealers, wholesale distributors, and service centers. LCI’s products include steel chassis and related components; axles and suspension solutions; slide-out mechanisms and solutions; thermoformed bath, kitchen, and other products; vinyl, aluminum, and frameless windows; manual, electric, and hydraulic stabilizer and leveling systems; furniture and mattresses; entry, luggage, patio, and ramp doors; electric and manual entry steps; awnings and awning accessories; electronic components; televisions and sound systems; navigation systems; backup cameras; appliances; and other accessories. Additional information about LCI and its products can be found at www.lci1.com.

Forward-Looking Statements

This press release contains certain “forward-looking statements” with respect to our financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive position, growth opportunities, acquisitions, plans and objectives of management, markets for the Company’s common stock and other matters. Statements in this press release that are not historical facts are “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, and involve a number of risks and uncertainties.

Forward-looking statements, including, without limitation, those relating to our future business prospects, net sales, expenses and income (loss), cash flow, and financial condition, whenever they occur in this press release are necessarily estimates reflecting the best judgment of the Company’s senior management at the time such statements were made. There are a number of factors, many of which are beyond the Company’s control, which could cause actual results and events to differ materially from those described in the forward-looking statements. These factors include, in addition to other matters described in this press release, pricing pressures due to domestic and foreign competition, costs and availability of raw materials (particularly steel and aluminum) and other components, seasonality and cyclicality in the industries to which we sell our products, availability of credit for financing the retail and wholesale purchase of products for which we sell our components, inventory levels of retail dealers and manufacturers, availability of transportation for products for which we sell our components, the financial condition of our customers, the financial condition of retail dealers of products for which we sell our components, retention and concentration of significant customers, the costs, pace of and successful integration of acquisitions and other growth initiatives, availability and costs of production facilities and labor, employee benefits, employee retention, realization and impact of expansion plans, efficiency improvements and cost reductions, the disruption of business resulting from natural disasters or other unforeseen events, the successful entry into new markets, the costs of compliance with environmental laws, laws of foreign jurisdictions in which we operate, and increased governmental regulation and oversight, information technology performance and security, the ability to protect intellectual property, warranty and product liability claims or product recalls, interest rates, oil and gasoline prices, the impact of international, national and regional economic conditions and consumer confidence on the retail sale of products for which we sell our components, and other risks and uncertainties discussed more fully under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, and in the Company’s subsequent filings with the Securities and Exchange Commission. The Company disclaims any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law.

    LCI INDUSTRIES OPERATING RESULTS

(unaudited)

  Three Months EndedDecember 31, Twelve Months EndedDecember 31, 2018   2017 2018   2017 (In thousands, except per share amounts)   Net sales $ 536,616 $ 547,137 $ 2,475,807 $ 2,147,770 Cost of sales 433,362 430,344 1,955,463 1,654,656 Gross profit 103,254 116,793 520,344 493,114 Selling, general and administrative expenses 73,727 72,608 321,556 278,833 Operating profit 29,527 44,185 198,788 214,281 Interest expense, net 1,955 275 6,436 1,437 Income before income taxes 27,572 43,910 192,352 212,844 Provision for income taxes 7,393 26,446 43,801 79,960 Net income $ 20,179 $ 17,464 $ 148,551 $ 132,884   Net income per common share: Basic $ 0.80 $ 0.70 $ 5.90 $ 5.31 Diluted $ 0.80 $ 0.68 $ 5.83 $ 5.24   Weighted average common shares outstanding: Basic 25,123 25,094 25,178 25,020 Diluted 25,305 25,505 25,463 25,375   Depreciation and amortization $ 17,787 $ 14,871 $ 67,526 $ 54,727 Capital expenditures $ 27,305 $ 26,879 $ 119,827 $ 87,221     LCI INDUSTRIES SEGMENT RESULTS

(unaudited)

  Three Months EndedDecember 31, Twelve Months EndedDecember 31, 2018   2017 2018   2017 (In thousands) Net sales: OEM Segment: RV OEMs: Travel trailers and fifth-wheels $ 297,479 $ 360,518 $ 1,440,730 $ 1,405,983 Motorhomes 42,067 44,530 187,297 159,417 Adjacent industries OEMs 145,995 100,850 614,589 411,223 Total OEM Segment net sales 485,541 505,898 2,242,616 1,976,623 Aftermarket Segment: Total Aftermarket Segment net sales 51,075 41,239 233,191 171,147 Total net sales $ 536,616 $ 547,137 $ 2,475,807 $ 2,147,770   Operating profit: OEM Segment $ 23,040 $ 38,409 $ 167,459 $ 190,276 Aftermarket Segment 6,487 5,776 31,329 24,005 Total operating profit $ 29,527 $ 44,185 $ 198,788 $ 214,281   LCI INDUSTRIES BALANCE SHEET INFORMATION

(unaudited)

  December 31, 2018   2017 (In thousands)   ASSETS Current assets Cash and cash equivalents $ 14,928 $ 26,049 Accounts receivable, net of allowances of $1,895 and $1,536 at December 31, 2018 and 2017, respectively 121,812 82,157 Inventories, net 340,615 274,748 Prepaid expenses and other current assets 49,296 34,125 Total current assets 526,651 417,079 Fixed assets, net 322,876 228,950 Goodwill 180,168 124,183 Other intangible assets, net 176,342 130,132 Deferred taxes 10,948 24,156 Other assets 26,908 21,358 Total assets $ 1,243,893 $ 945,858   LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable, trade $ 78,354 $ 79,164 Accrued expenses and other current liabilities 99,228 102,849 Total current liabilities 177,582 182,013 Long-term indebtedness 293,528 49,924 Other long-term liabilities 66,528 61,176 Total liabilities 537,638 293,113 Total stockholders’ equity 706,255 652,745 Total liabilities and stockholders’ equity $ 1,243,893 $ 945,858   LCI INDUSTRIES SUMMARY OF CASH FLOWS

(unaudited)

  Twelve Months EndedDecember 31, 2018   2017 (In thousands) Cash flows from operating activities: Net income $ 148,551 $ 132,884 Adjustments to reconcile net income to cash flows provided by operating activities: Depreciation and amortization 67,526 54,727 Stock-based compensation expense 14,065 20,036 Deferred taxes 13,874 6,808 Other non-cash items (13) 4,371 Changes in assets and liabilities, net of acquisitions of businesses: Accounts receivable, net (11,352) (12,601) Inventories, net (34,730) (78,698) Prepaid expenses and other assets (17,691) (10,898) Accounts payable, trade (17,335) 20,727 Accrued expenses and other liabilities (6,287) 15,346 Net cash flows provided by operating activities 156,608 152,702 Cash flows from investing activities: Capital expenditures (119,827) (87,221) Acquisitions of businesses, net of cash acquired (184,792) (60,588) Proceeds from note receivable 2,000 1,500 Other investing activities (176) 434 Net cash flows used in investing activities (302,795) (145,875) Cash flows from financing activities: Exercise of stock-based awards, net of shares tendered for payment of taxes (16,097) (10,531) Proceeds from line of credit borrowings 1,387,013 28,130 Repayments under line of credit borrowings (1,146,953) (28,130) Proceeds from other borrowings 4,509 — Payment of dividends (59,270) (51,057) Payment of contingent consideration related to acquisitions (3,068) (5,301) Repurchases of common stock (28,695) — Other financing activities (2,373) (59) Net cash flows provided by (used in) financing activities 135,066 (66,948) Net (decrease) increase in cash and cash equivalents (11,121) (60,121) Cash and cash equivalents at beginning of period 26,049 86,170 Cash and cash equivalents at end of period $ 14,928 $ 26,049     LCI INDUSTRIES SUPPLEMENTARY INFORMATION

(unaudited)

  Three Months Ended Twelve Months Ended December 31, December 31, 2018   2017 2018   2017 Industry Data(1) (in thousands of units): Industry Wholesale Production: Travel trailer and fifth-wheel RVs 90.3 108.2 415.0 429.5 Motorhome RVs 12.1 15.3 57.6 62.6 Industry Retail Sales: Travel trailer and fifth-wheel RVs 63.1

(2)

68.1 416.4

(2)

401.0 Impact on dealer inventories 27.2

(2)

40.1 (1.4)

(2)

28.5 Motorhome RVs 9.0

(2)

10.1 51.7

(2)

52.8                         Twelve Months Ended December 31, 2018 2017 LCI Content Per Industry Unit Produced: Travel trailer and fifth-wheel RV $ 3,450 $ 3,263 Motorhome RV $ 2,491 $ 2,219                         December 31, 2018 2017 Balance Sheet Data: Current ratio 3.0 2.3 Total indebtedness to stockholders’ equity 0.4 0.1 Days sales in accounts receivable 27.7 17.8 Inventory turns, based on last twelve months 6.2 7.7                         2019 Estimated Full Year Data: Capital expenditures $ 55 - $ 65 million Depreciation and amortization $ 73 - $ 78 million Stock-based compensation expense $ 16 - $ 18 million Annual tax rate 24% - 26%

(1) Industry wholesale production data for travel trailer and fifth-wheel RVs and motorhome RVs provided by the Recreation Vehicle Industry Association. Industry retail sales data provided by Statistical Surveys, Inc.

(2) December 2018 retail sales data for RVs has not been published yet, therefore 2018 retail data for RVs includes an estimate for December 2018 retail units. Retail sales data will likely be revised upwards in future months as various states report.

  LCI INDUSTRIES SUPPLEMENTARY INFORMATION NON-GAAP MEASURES

(unaudited)

  Three months ended December 31, 2018         Diluted Income before Provision for Effective tax earnings per (In thousands, except per share amounts) income taxes income taxes Net income rate share As reported GAAP $ 27,572 $ 7,393 $ 20,179 27 % $ 0.80 Impact of TCJA — (612) 612 (2) % 0.02 Adjusted non-GAAP (3) $ 27,572 $ 6,781 $ 20,791 25 % $ 0.82   Three months ended December 31, 2017 Diluted Income before Provision for Effective tax earnings per (In thousands, except per share amounts) income taxes income taxes Net income rate share As reported GAAP $ 43,910 $ 26,446 $ 17,464 60 % $ 0.68 Impact of TCJA — (13,209) 13,209 (30) % 0.52 Adjusted non-GAAP (3) $ 43,910 $ 13,237 $ 30,673 30 % $ 1.20   Twelve months ended December 31, 2018 Diluted Income before Provision for Effective tax earnings per (In thousands, except per share amounts) income taxes income taxes Net income rate share As reported GAAP $ 192,352 $ 43,801 $ 148,551 23 % $ 5.83 Impact of TCJA — (612) 612 (1) % 0.03 Adjusted non-GAAP (3) $ 192,352 $ 43,189 $ 149,163 22 % $ 5.86   Twelve months ended December 31, 2017 Diluted Income before Provision for Effective tax earnings per (In thousands, except per share amounts) income taxes income taxes Net income rate share As reported GAAP $ 212,844 $ 79,960 $ 132,884 38 % $ 5.24 Impact of TCJA — (13,209) 13,209 (7) % 0.52 Adjusted non-GAAP (3) $ 212,844 $ 66,751 $ 146,093 31 % $ 5.76

(3) During the fourth quarter of 2018, the Company finalized its tax accounting for the Tax Cuts and Jobs Act (the “TCJA”) and pursuant to SAB 118 recorded a one-time non-cash charge of $612,000 related to adjustments to deferred tax amounts provisionally recorded in the prior year. During the fourth quarter of 2017, the Company recorded a provisional one-time non-cash charge of $13.2 million related to the enactment of the TCJA. The charge resulted from the re-measurement of the Company’s deferred tax assets considering the TCJA’s newly enacted tax rates. This provisional amount was subject to adjustment during the measurement period of up to one year following the December 2017 enactment of the TCJA, as provided by recent SEC guidance. In addition to reporting financial results in accordance with U.S. GAAP, the Company also provides non-GAAP measures that adjust for the impact of enactment of the TCJA. These items represent significant charges that impacted the Company’s financial results. Net income, earnings per diluted share, and the effective tax rate are all measures for which the Company provides the reported GAAP measure and an adjusted measure. The adjusted measures are not in accordance with, nor are they a substitute for, GAAP measures. The Company considers these non-GAAP measures in evaluating and managing the Company’s operations. The Company believes that discussion of results adjusted for these items is meaningful to investors as it provides a useful analysis of ongoing underlying operating trends. The determination of these items may not be comparable to similarly titled measures used by other companies.

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Contact: Brian Hall, CFOPhone: (574) 535-1125E Mail: LCII@lci1.com