$47.63
$141.51
bear $47.63
base $94.17
bull $141.51
margin of safety $38.00
market price* $83.89
LCI Industries (Lippert) makes the components that go into recreational vehicles and, increasingly, into cargo and utility trailers, trucks, boats and manufactured homes: chassis, axles, slide-outs, leveling systems, windows, doors, awnings, furniture, appliances and towing hardware. It also sells replacement and upgrade parts through an aftermarket arm. 2025 sales were $4.12 billion, up 10 percent: $3.19 billion to vehicle and trailer makers (travel trailers and fifth-wheels $1.71 billion, motorhomes $0.24 billion, other industries $1.25 billion) and $0.93 billion, or 23 percent, in the aftermarket. Two customers carry a lot of weight: Berkshire Hathaway's Forest River and Clayton Homes (18 percent of 2025 sales) and Thor Industries (15 percent). Some Furrion-branded electronics are made by suppliers principally located in China. What the business earns. We measure the cash left for owners as operating cash flow, less swings in working capital (receivables, inventory, payables), less stock compensation, less the capital spending needed just to keep plants running. Working capital is stripped out because it distorts this company badly: the working-capital build at the 2021 peak absorbed $543 million of cash, and working it off in 2023 released $303 million. Per diluted share, this measure was $5.49 (2016), $4.86, $4.64, $6.60, $8.33, $13.66 (2021), $15.91 (2022), $5.64 (2023), $8.87 (2024) and $11.64 (2025). Because lenders are dealt with separately below, we then add cash interest back, giving business cash flow per share of $6.96 (2019), $9.00, $14.27, $16.89, $7.21 (2023), $10.11 (2024) and $13.10 (2025). Purchases of businesses are not in capital spending ($112.7 million in 2025, $20.0 million in 2024, $25.9 million in 2023); we credit no earnings from future acquisitions, so none are charged. The $19.7 million 2025 gain on a real-estate sale is not in these figures. Mid-cycle level. We use the median of 2019 through 2025, $10.11 per share, because RV demand cycles hard and these seven years hold a soft 2019, the pandemic surge, the 2021-22 peak, the 2023 destocking and the recovery. 2016-2018 are left out: sales were then 41 to 60 percent of today's. The level sits below 2025's $13.10 on purpose, since 2025 is above the middle of the cycle. Growth check: this measure per share rose 31 percent in 2025 ($8.87 to $11.64); the base case assumes zero growth from the mid-cycle level, below that trailing rate, so no reason for acceleration is needed. The step down from 2025 is a return to mid-cycle, not a forecast of decline. The latest quarters do not change the level: first-half 2026 sales were $2.06 billion, 4 percent below the first half of 2025, with the second quarter down 12.5 percent ($969 million against $1,107 million), yet first-half net income rose to $130.1 million from $107.1 million and our measure of owner earnings was roughly $163 million against roughly $160 million. The filings available do not explain the second-quarter sales drop, so we treat it as unresolved and a reason for caution rather than a reason to move the level. Growth we left out. Content per travel trailer rose 11 percent to $5,670 in 2025, but the company attributes this mainly to price increases tied to tariffs, a richer fifth-wheel mix and share gains, and tariffs and freight cost the OEM segment $75.8 million of operating profit versus 2024. OEM segment margin rose to 5.8 percent from 3.7 percent. Price pass-through, margin recovery, share gains, adjacent-industry expansion, future acquisitions and any refunds of tariffs the Supreme Court ruled unlawful on February 20, 2026 (amounts and timing uncertain) are not secured, so none is credited. Debt. At June 30, 2026 borrowings were $852.6 million against $216.5 million of cash, net debt of $636 million, or $26.08 per share on 24.4 million diluted shares. They consist mainly of $460 million of 3.0 percent convertible notes due March 1, 2030 (convertible at about $116.62 a share), a term loan of $400 million originally, due March 2032, and a $600 million revolving facility due March 2030 (earlier, by 91 days before the notes mature, if the notes are still outstanding), of which $595.2 million was available at year-end 2025. Borrowings fell about $93 million in the first half of 2026, consistent with retiring the $92 million of 2026 convertible notes; there were no buybacks or acquisitions in that period. The credit agreement carries a net leverage limit and a minimum coverage requirement; the company was in compliance at year-end 2025 and the limits were not stated in the passages we reviewed. We make no cost-of-debt adjustment: the low coupon on the convertibles is paid for with the conversion right, and the term loan floats at market spreads. Leases and pensions are left out because they already run through operating cash flow. The cases. Each is one continuous story, with debt subtracted from the business value.
Base: $10.11 per share a year, flat for 15 years, then fading in a straight line to nothing by year 30. The evidence is ten consecutive years of positive owner earnings (never below $4.64 per share) through a dip in 2019 sales and the 2023 collapse. Nothing we can name secures earnings beyond that. Business worth about $120 per share, owes about $26, leaving about $94.
Bear: a repeat of 2023 starts now and lasts three years, which is the deepest downturn in the filings (industry towable shipments fell 39 percent, Lippert sales fell 27 percent, and business cash flow per share fell 57 percent from $16.89 to $7.21). We hold $7.21 for three years, then only 75 percent of the mid-cycle level ($7.58) for nine years, reflecting thin OEM margins, the 33 percent of sales tied to two customers and tariff costs, and the story fades to nothing by year 20. Business worth about $74, owes about $26, leaving about $48. Trough cash flow of roughly $176 million a year would still cover cash interest (running near $40 million a year) about 4.4 times; the 2030 maturities arrive just as the trough ends and we assume they are refinanced on similar terms because cash flow stays well above interest, but the leverage covenant is the point of stress (net debt would be 3.6 times trough cash flow).
Bull: the business holds the $13.10 it actually earned in 2025, also the 2021-2025 median, for 20 years, fading to nothing by year 35. Business worth about $172, owes about $26, leaving about $146; the convertible notes would convert above $116.62 and dilute that by about $4, leaving about $141.50. Our earlier estimates were built on a different basis (they left working-capital swings in), so they are not comparable. Margin-of-safety price. We are reasonably sure of the mid-cycle level, less sure of how long it lasts. The year-by-year record ranges from $4.87 to $16.89 of business cash flow per share, so the level is a median of a wide range. The worst plausible outcomes include a longer and deeper RV downturn than 2023, one of the two big customers shifting volume away, or a covenant breach that forces dividend cuts or issuing shares at weak prices; the business has long-dated maturities, a largely undrawn revolver at year-end 2025 and positive cash flow in every year of the record, so it should survive these, but shareholders would bear the damage. Were we wrong about the things most likely to be wrong: if the true normal level were only the 2023 trough level of $7.21, shares would be worth about $60; if it were half the mid-cycle level, about $34; if the base level lasted only ten years and then ended, about $48. Over the holding period, the company pays a dividend (quarterly since 2016) running at roughly $4.58 per share a year, about a third of first-half owner earnings, though a trough could cut it. The price assumes a three-to-five-year holding period. The margin-of-safety price is $38: the dividend alone would then be about 12 percent a year; on our arithmetic, holding debt flat, from $38 over five years the base case implies about 25 percent a year and the bear case about 9 percent a year if the dividend is maintained, and in the harshest scenario above (half the mid-cycle level, about $34) the loss would be about 10 percent of the $38 price before dividends.