LCI INDUSTRIES (LCII) FY 2024 MD&A

Item 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Consolidated Financial Statements and Notes thereto included in Part II, Item 8 of this Report.

This Management's Discussion and Analysis of Financial Condition and Results of Operations generally discusses 2024 and 2023 items and year-over-year comparisons between 2024 and 2023. A detailed discussion of 2022 items and year-over-year comparisons between 2023 and 2022 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, 2023, filed with the SEC on February 23, 2024.

We are a global leader in supplying engineered components to the outdoor recreation, transportation, and building products industries. In addition to serving original equipment manufacturers ("OEMs"), we also cater to aftermarket needs, selling through retail dealers, wholesale distributors, and service centers, as well as directly to consumers online.

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Sales and Profit - OEM and Aftermarket Segments

We have two reportable segments, the OEM Segment and the Aftermarket Segment. At December 31, 2024, we operated over 110 manufacturing and distribution facilities located throughout North America and Europe. Net sales and operating profit were as follows for the years ended December 31:

1 Corporate expenses are allocated between the segments based upon net sales.

Operating profit margins in 2024 were impacted by a number of factors, as further described below under “Results of Operations – Year Ended December 31, 2024 Compared to Year Ended December 31, 2023.”

Reportable Segments: Our two reportable segments consist of the OEM Segment and the Aftermarket Segment. Our OEM Segment drives innovation and manufacturing expertise, serving leading OEMs in recreation, transportation, and housing markets. Our Aftermarket Segment enhances the product lifecycle for the recreation and transportation markets by offering discretionary accessories, replacement parts, and upgrades. This approach drives recurring revenue, deepens customer engagement, and leverages our OEM expertise.

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.

Aftermarket Segment: Supplies many of our 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. The Aftermarket Segment also includes biminis, covers, buoys, and fenders to the marine

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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.

See Part I, Item 1, "Business - Reportable Segments" for more detail on our reportable segments.

Diversification Strategy: Over the past several years, we have diversified our portfolio beyond the RV OEM market into marine, building products, transportation, international, and aftermarket sectors. Leveraging our manufacturing competencies in other industries can accelerate profitable growth and help to mitigate seasonal and cyclical market risk. For example, within our Aftermarket Segment, many of the optional upgrades and non-critical replacement parts for RVs are purchased outside the normal product selling season, thereby causing certain sales within this segment to be counter-seasonal.

Approximately 57 percent and 61 percent of net sales for the years ended December 31, 2024 and 2023, respectively, were generated outside of the North American RV OEM market, providing a balanced foundation for continued growth.

Industry Background

OEM Segment - North American Recreational Vehicle Industry: RVs are designed as temporary living quarters for recreational, camping, travel, or seasonal use. They can be either motorized, such as motorhomes, or towable, including travel trailers, fifth-wheel trailers, folding camping trailers, and truck campers. The RV industry generally follows a predictable annual sales cycle that starts after the annual fall "Open House" in Elkhart, Indiana:

•October - March: Dealers build inventory, leading wholesale shipments to historically outpace retail sales.

•April - September: Retail sales typically exceed wholesale shipments, driven by spring and summer demand.

In 2024, Recreation Vehicle Industry Association ("RVIA") data shows U.S. wholesale shipments of travel trailers and fifth-wheel RVs, the Company's primary market, increased 13 percent to 291,600 units compared with 2023. Retail demand decreased 6 percent to 307,000 units compared with 2023, reflecting a partial stabilization from the sharp declines of prior years. However, inflation and elevated interest rates continued to pressure consumer discretionary spending, dampening demand. Retail registration data is often revised upward in subsequent months due to reporting delays.

While we track our OEM Segment RV sales against wholesale shipment statistics, the health of the RV industry is ultimately determined by retail demand. The table below highlights trends in wholesale shipments, retail sales, and dealer inventory adjustments for travel trailers and fifth-wheel RVs, as reported by Statistical Surveys, Inc. ("Statistical Surveys").

Motorhomes, another key RV category, experienced a significant 24 percent decline in wholesale shipments to 34,900 units in 2024, while retail demand fell 12 percent, according to RVIA data.

OEM Segment - Adjacent Industries: LCI's expertise in RV components extends to adjacent industries, including boats, buses, trailers, trucks, trains, manufactured homes, and modular housing. These adjacent industries offer significant growth opportunities, including by helping us leverage our established relationships with OEMs that often operate in multiple sectors. While the potential content per unit we may supply to adjacent industries varies across these markets, and is different than RVs, they represent meaningful diversification opportunities. Key adjacent industries and the annual retail units sold of each include:

•Enclosed trailers: According to Statistical Surveys, approximately 191,900 units were sold in 2024, down from 200,800 in 2023 and 213,800 in 2022.

•Boats: Statistical Surveys also reported approximately 245,800 units were sold in 2024, compared to 269,100 in 2023 and 270,900 in 2022. Pontoon boats, a subset of this market, sold 53,600 units in 2024, compared to 61,300 in 2023 and 62,700 in 2022.

•School buses. According to School Bus Fleet, sales decreased to 40,300 units in 2024, down from 41,200 in 2023 and 40,600 in 2022.

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•Manufactured housing. According to the Institute for Building Technology and Safety, wholesale shipments totaled 102,600 units in 2024, up from 89,200 in 2023 but down from 112,900 in 2022.

Aftermarket Segment: Our Aftermarket Segment enhances the product lifecycle for the recreation and transportation markets by offering discretionary accessories, replacement parts, and upgrades through various channels, including retail dealers, wholesale distributors, and service centers, as well as direct-to-consumer platforms. These products support recreation and transportation markets, addressing both routine maintenance needs and customer-driven enhancements.

We also provide comprehensive customer support through multiple customer care centers, offering rapid responses to inquiries related to technical support, product delivery, and critical repair, designed to minimize consumer downtime. Dedicated teams deliver product, technical, and installation training, as well as marketing assistance, to enhance customer engagement and satisfaction.

Aftermarket offerings span a diverse product portfolio, including:

•Marine Products: Biminis, covers, buoys, and fenders.

•Recreation and Transportation Accessories: Towing products, truck accessories, replacement glass, and awnings.

•Core Systems: Appliances, air conditioners, televisions, sound systems, and tankless water heaters.

Aftermarket sales are influenced by seasonal trends, with many non-critical upgrades and replacement parts purchased outside peak selling periods, creating certain counter-seasonal demand.

Market Dynamics: The U.S. RV ownership base, which reached a record 8.1 million households in 2025 (Go RVing), drives robust demand for aftermarket products. Owners seek to enhance and maintain their units, replacing components that experience normal wear and tear. This vibrant and growing market represents a key driver of our Aftermarket Segment’s performance.

Strategic Expansion: We have strategically expanded our Aftermarket Segment through acquisitions that strengthen our product portfolio and market reach, including Curt Manufacturing LLC and Kaspar Ranch Hand Equipment, LLC.

CURT Manufacturing LLC: Acquired in 2019, CURT is a leading manufacturer of towing products and truck accessories, complementing our OEM markets. CURT contributed approximately 50% of Aftermarket Segment net sales in both 2024 and 2023, selling 1,061,000 hitches in 2024, up from 910,000 in 2023.

Kaspar Ranch Hand Equipment, LLC: Acquired in 2021, Ranch Hand broadened our offerings with custom bumpers, grill guards, and steps for the automotive aftermarket, reinforcing our position in complementary markets.

RESULTS OF OPERATIONS

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Consolidated Summary

•Consolidated net sales for 2024 were $3.7 billion, 1 percent lower than consolidated net sales for 2023 of $3.8 billion. The decrease was primarily driven by decreased industry production levels in the North American marine and utility trailer markets and the European RV market, mostly offset by a 7 percent increase in total North American RV wholesale shipments and sales from acquisitions. Net sales from acquisitions completed in 2023 and 2024 contributed approximately $21.4 million in 2024.

•Net income for 2024 was $142.9 million, or $5.60 per diluted share, compared to net income of $64.2 million, or $2.52 per diluted share, for 2023.

•Consolidated operating profit during 2024 was $218.2 million compared to $123.4 million in 2023. Operating profit margin was 5.8 percent in 2024 compared to 3.3 percent in 2023. The increase was primarily due to decreases in material, freight, and warranty costs.

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•The cost of steel and aluminum consumed in certain of our manufactured components decreased in 2024 compared to 2023. Raw material costs are subject to continued fluctuation and impact certain contractual selling prices which are indexed to select commodities.

•The effective tax rate of 24.5 percent for 2024 was higher than the prior year, primarily due to tax adjustments as discussed below under "Income Taxes."

•Interest expense, net in 2024 was $28.9 million compared to $40.4 million in 2023. The decrease was primarily due to net repayments of indebtedness of $89.2 million in 2024 and interest income of $5.1 million earned on cash and cash equivalent balances in 2024.

•In 2024, we paid quarterly dividends aggregating $4.30 per share, or $109.5 million.

OEM Segment

Net sales of the OEM Segment in 2024 decreased 1 percent, or $43.3 million, compared to 2023. Net sales of components to OEMs were to the following markets for the years ended December 31:

According to the RVIA, industry-wide wholesale shipments for the years ended December 31 were:

The trend in our average product content per RV produced is an indicator of our overall market share of components for new RVs. Our average product content per type of RV, calculated based upon our net sales of components to domestic RV OEMs for the different types of RVs produced for the twelve months ended December 31, divided by the industry-wide wholesale shipments of the different product mix of RVs for the same period, was:

Our average product content per type of RV excludes international sales and sales to the Aftermarket Segment and Adjacent Industries. Content per RV is impacted by changes in selling prices for our products, market share gains, and acquisitions. The increase in travel trailer and fifth-wheel content in 2024 compared to 2023 was driven primarily by market share gains and alignment in wholesale unit production and shipments, compared to wholesale unit shipments outpacing production as a result of inventory de-stocking efforts in 2023, partially offset by an increasing shift in unit mix towards lower content single axle travel trailers and pricing decreases indexed to commodity and freight indices.

Our increase in net sales to RV OEMs during 2024 was driven by a 13 percent increase in wholesale shipments of travel trailers and fifth wheel units and market share gains, partially offset by a 24 percent decrease in motorhome wholesale shipments and a shift in unit mix towards lower content single axle travel trailers.

Our decrease in net sales to OEMs in Adjacent Industries during 2024 was primarily due to lower sales to North American marine and utility trailer OEMs, driven by current dealer inventory levels, inflation, and elevated interest rates impacting retail consumers. North American marine OEM sales totaled $245.6 million, down 30% from 2023.

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Operating profit of the OEM Segment was $107.1 million in 2024, an increase of $89.7 million compared to 2023. The operating profit margin of the OEM Segment increased to 3.7 percent in 2024 compared to 0.6 percent in 2023, and was positively impacted by:

•Decreases in material costs, which positively impacted operating profit by $97.8 million compared to 2023, primarily related to lower in-bound freight costs, decreased steel prices, and material sourcing strategies.

•A decrease in warranty costs, primarily due to product quality initiatives that resulted in reduced warranty claim payments, which increased operating profit by $28.0 million compared to 2023.

Partially offset by:

•Sales mix increase of lower margin products, which negatively impacted operating profit by $12.1 million compared to 2023.

•Decreases in selling prices, which negatively impacted operating profit by $9.0 million related to prices contractually tied to indices of select commodities and $2.0 million related to targeted products.

Amortization expense on intangible assets for the OEM Segment was $39.8 million in 2024, compared to $41.6 million in 2023. Depreciation expense on fixed assets for the OEM Segment was $53.5 million in 2024, compared to $58.4 million in 2023.

Aftermarket Segment

Net sales of the Aftermarket Segment in 2024 were consistent with 2023. Net sales of components in the Aftermarket Segment were as follows for the years ended December 31:

Our net sales to the Aftermarket Segment included lower volumes within the RV and marine aftermarkets, mostly offset by market share gains within the automotive aftermarket.

Operating profit of the Aftermarket Segment was $111.2 million in 2024, an increase of $5.1 million compared to 2023. The operating profit margin of the Aftermarket Segment was 12.6 percent in 2024, compared to 12.0 percent in 2023, and was positively impacted by:

•Decreases in material costs, which positively impacted operating profit by $16.8 million compared to 2023, primarily related to decreased steel prices, lower in-bound freight costs, product mix, and material sourcing strategies.

•Pricing changes to targeted products, resulting in an increase in operating profit of $5.1 million compared to 2023.

Partially offset by:

•Increases in production labor costs due to product mix, which negatively impacted operating profit by $10.2 million compared to 2023.

•Increased production facility costs resulting from investments to expand capacity in the automotive aftermarket over the past year, which reduced operating profit by $6.4 million.

Amortization expense on intangible assets for the Aftermarket Segment was $15.5 million in 2024, consistent with 2023. Depreciation expense on fixed assets for the Aftermarket Segment was $16.9 million in 2024, compared to $16.3 million in 2023.

Interest Expense

Interest expense, net was $28.9 million in 2024, compared to $40.4 million in 2023. The decrease in net interest expense was primarily due to net repayments on our revolving credit facility, principal payments on the Term Loan (as defined in Note 9 of the Notes to Consolidated Financial Statements), and $5.1 million of interest income earned on investments in money market mutual funds, partially offset by higher global interest rates early in 2024 on our adjustable rate Term Loan and revolving credit facility. We prepaid $35.0 million of principal on the Term Loan during 2024. These prepayments were applied to pay in full the scheduled principal amortization payments due through March 31, 2026. See Note 9 of the Notes to Consolidated Financial Statements for a description of our credit facilities.

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Income Taxes

The effective income tax rate for 2024 was 24.5 percent compared to 22.7 percent in 2023. The higher effective tax rate for 2024 was primarily due to increases in non-deductible executive compensation expenses and increases in the state effective tax rate. We estimate the 2025 effective income tax rate will 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. 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 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.

As of December 31, 2024, we had $165.8 million in cash and cash equivalents, and $452.5 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 also have the ability to request an increase to the revolving and/or incremental term loan facilities by up to an additional $400.0 million in the aggregate upon approval of the lenders providing any such increase and the satisfaction of certain other conditions. See Note 9 of the Notes to Consolidated Financial Statements for a description of our credit facilities.

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

The Consolidated Statements of Cash Flows reflect the following for the years ended December 31:

Discussion - Year Ended December 31, 2024 Compared to Year Ended December 31, 2023

Cash Flows from Operations

Net cash flows provided by operating activities were $370.3 million in 2024, compared to $527.2 million in 2023. The decrease in net cash flows provided by operating activities was primarily due to the decrease in inventory in 2023 of $235.3 million driven by decreasing commodity costs and initiatives to reduce inventory levels, compared to the decrease in inventories in 2024 of $46.3 million. The decrease in net cash flows provided by operating activities was partially offset by the $78.7 million increase in net income in 2024 compared to 2023.

Over the long term, based on our historical collection and payment patterns, as well as inventory turnover, and also giving consideration to emerging trends and changes to the sales mix, we expect working capital to increase or decrease equivalent to approximately 10 to 15 percent of the increase or decrease, respectively, in net sales. However, there are many factors that can impact this relationship, especially in the short term.

Depreciation and amortization was $125.7 million and $131.8 million in 2024 and 2023, respectively, and is expected to be approximately $115 to $125 million in 2025. Non-cash stock-based compensation expense was $18.7 million and $18.2 million in 2024 and 2023, respectively, and is expected to be approximately $18 to $23 million in 2025.

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Cash Flows from Investing Activities

Cash flows used in investing activities of $61.1 million in 2024 were primarily comprised of $42.3 million for capital expenditures and $20.0 million for a business acquisition. 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.

Our capital expenditures are primarily for replacement and growth. Over the long term, based on our historical capital expenditures, the replacement portion has averaged approximately one to two percent of net sales, while the growth portion has averaged approximately two to three percent of net sales. However, there are many factors that can impact the actual spending compared to these historical averages. We estimate 2025 capital expenditures (excluding any potential business combinations) of $50 to $70 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 2024 capital expenditures and acquisitions were funded by cash generated from operations and borrowings under our Credit Agreement. Capital expenditures and acquisitions in 2025 are expected to be funded primarily from cash generated from operations, as well as periodic borrowings under our revolving credit facility.

Cash Flows from Financing Activities

Cash flows used in financing activities of $208.2 million in 2024 were primarily comprised of payments of quarterly dividends of $109.5 million, $52.5 million in net repayments under our revolving credit facility, $36.7 million in repayments under our Term Loan and other borrowings, and cash outflows of $9.2 million related to vesting of stock-based awards, net of shares tendered for payment of taxes. Included in the repayments under our Term Loan were $35.0 million of principal prepayments in 2024. These prepayments were applied to pay in full the scheduled principal amortization payments due through March 31, 2026.

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 payment 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.

The Credit Agreement includes both financial and non-financial covenants. The covenants dictate that we shall not permit our net leverage ratio to exceed certain limits, shall maintain a minimum debt service coverage ratio, and must meet certain other financial requirements. At December 31, 2024, we were in compliance with all applicable financial covenants and expect to remain in compliance for the next twelve months.

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. In May 2022, our Board of Directors authorized a stock repurchase program for the purchase of up to $200.0 million of our common stock over a three-year period ending on May 19, 2025. 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 years ended December 31, 2024 and 2023. See Note 13 of the Notes to Consolidated Financial Statements for additional information related to our dividend and share repurchase programs.

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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, 2024, in total and disaggregated into current (payable in 2025) and long-term (payable after 2025) obligations.

a.See Note 9 of the Notes to Consolidated Financial Statements for additional information regarding the maturities of debt principal. Interest payments on our indebtedness are calculated using the outstanding balances and interest rates in effect on December 31, 2024.

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, 2024.

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, 2024, we made discretionary matching contributions of $11.6 million to our defined contribution 401(k) profit sharing plan. We expect to make matching contributions to our defined contribution 401(k) profit sharing plan in 2025 at a level similar to 2024; however, these contributions are discretionary and subject to change. 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. Our governance documents, committee charters, and key practices have been posted to the "Investors" section of our website (www.lci1.com) and are updated periodically. 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 our accounting, internal controls, auditing matters or other concerns. The Whistleblower Policy and procedure for complaints can be found on our website (www.lci1.com).

CONTINGENCIES

Additional information required by this item is included under Item 3 of Part I of this Annual Report on Form 10-K.

CRITICAL ACCOUNTING ESTIMATES

Our Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which requires certain estimates and assumptions to be made that affect the amounts and disclosures reported in those financial statements and the related accompanying notes. Actual results could differ from these estimates and assumptions. 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. Management has discussed the development and selection of its critical accounting estimates with the Audit Committee of the Company’s Board of Directors, and the Audit Committee has reviewed the disclosure presented below relating to the critical accounting estimates.

Warranty

We provide warranty terms based upon the type of product sold. We use historical warranty costs, claim lag, sales, and current trends of repair costs as assumptions and inputs into our model to estimate future warranty claims and the associated warranty accrual. The accounting for warranty accruals requires us to make assumptions and judgments, and to the extent actual

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results differ from original estimates, adjustments to recorded accruals may be required. 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.

Fair Value of Intangible Assets of Acquired Businesses

We value the intangible assets associated with the acquisitions of businesses on the respective acquisition dates. Depending upon the type of intangible asset acquired, we use different valuation techniques in determining the fair value. Those techniques include comparable market prices, long-term sales, profitability and cash flow forecasts, assumptions regarding future industry-specific economic and market conditions and a market participant’s weighted average cost of capital, as well as other techniques as circumstances require. By their nature, these assumptions require judgment, and if management had chosen different assumptions, the fair value of intangible assets of acquired businesses would have been different. For further information on acquired intangible assets, see Note 4 of the Notes to Consolidated Financial Statements.

New Accounting Pronouncements

Information required by this item is included in Note 2 of the Notes to Consolidated Financial Statements.

INFLATION

The prices of key raw materials, consisting primarily of steel and aluminum, and components used by us which are made from these raw materials, are influenced by demand and other factors specific to these commodities, as well as by inflationary pressures. 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 2024, and at this time, we expect commodity prices to be generally stable in 2025; however, recent tariff activity could have an adverse impact. 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, 2024.

While we experienced deflation in the prices of our key raw materials in 2024, inflation on consumer products and elevated interest rates in 2024 impacted retail consumers' discretionary spending, which we believe contributed to our decline in sales, especially in our RV OEM and certain adjacent industries OEM markets, such as marine. Additionally, elevated interest rates in 2023 and through the first half of 2024 impacted retail dealers' cost of floorplan financing, which elevates the carrying cost of inventory on retail dealer lots. Interest rate reductions began in the last four months of 2024, and we expect potential further interest rate reductions in 2025, which we believe would favorably impact retail consumers, as well as retail dealers' floorplan financing.