Lci Industries · NYSE:LCII
Lci Industries — Investor Presentation (March 2021)
36 slides from Lci Industries's investor presentation, Mar 4, 2021
Slide 1: LCI Industries Investor Presentation March 2021
LCI INDUSTRIES 1 LCI Industries Investor Presentation March 2021
Slide 2: Forward-Looking Statements
LCI INDUSTRIES 2 Forward-Looking Statements This presentation 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 ob
Slide 3: Operational and Industry Update
LCI INDUSTRIES 3 Operational and Industry Update Taking steps to ensure the safety of team members while meeting increased demand brought on by COVID-19 Increased DemandHealth and Safety Measures ◦ Heightened health and safety measures continued through the fourth quarter • Screening team members fo
Slide 4: LCI at a Glance: Fourth Quarter 2020 Key Metrics
LCI INDUSTRIES 4 8% OPERATING MARGIN $1.92 DILUTED EPS $783.0M IN NET SALES $88.1M ADJUSTED EBITDA* LCI at a Glance Fourth Quarter 2020 Key Metrics A leading supplier of highly engineered components primarily to the OEMs of recreational vehicles, buses, trailers, trucks, boats, trains, manufactured
Slide 5: Investment Case
LCI INDUSTRIES 5 Leading market share with unmatched depth and breadth of products Strong track record of financial performance Leadership team of 27 senior leaders with over 350 years aggregate experience at LCI Deep culture rooted in innovation, technology, and operational excellence Compelling in
Slide 6: Business Overview
LCI INDUSTRIES 6 High Variation / Short Runs at Scale Specialized / Engineered Components Mid-Spec Requirements Small batch manufacturing with the benefits of scale Products require some level of design / engineering Non-commoditized products that meet mid-spec tolerances Metal Fabrication & Welding
Slide 7: Breadth and Depth of Product Offerings
LCI INDUSTRIES 7 Breadth and Depth of Product Offerings • Towable RV Chassis • Furniture • Windows and Windshields • Entry and Baggage Doors • Mattresses • Slide-Out Mechanisms • Awnings • Axles • Steps • Leveling Systems • Suspension Enhancements • Showers and Sinks • Electronic Components • Brande
Slide 8: Financial Performance
LCI INDUSTRIES 8 EBITDA* ($M) 158 247 269 266 276 321 2015 2016 2017 2018 2019 2020 Sales Trend ($M) 1,403 1,679 2,148 2,476 2,371 2,796 2015 2016 2017 2018 2019 2020 Free Cash Flow* ($M) 66 159 68 37 211 174 2015 2016 2017 2018 2019 2020 Financial Performance • FY 2020 net sales were up 18% year-ov
Slide 9: LCI Leadership
LCI INDUSTRIES 9 • Our passion to win, coupled with a robust growth strategy, drive us to be a leader in every market we enter • We believe our industry-leading innovation, the quality of our products, and customer relationships will drive sales and profitability • We strive to leverage the manufact
Slide 10: Culture of Innovation and Technology
LCI INDUSTRIES 10 • R&D expertise and innovation remains a core component of LCI's long-term strategy • Expanding OneControl capabilities to integrate into customer support; success continues as customers increasingly seek technologically sophisticated products • Announced new Vice President of Inno
Slide 11: World-Class Operations Driven by a Culture of Caring
LCI INDUSTRIES 11 World-Class Operations Driven by a Culture of Caring Our Social Impact Philosophy • Bringing our core values to life through leadership development and the LCI Dream Achiever program • Supporting hundreds of nonprofit organizations by donating our time and talents • Encouraging our
Slide 12: Driving Sustainability Through Eco-Friendly Operations
LCI INDUSTRIES 12 Driving Sustainability Through Eco-Friendly Operations We are committed to the safety of our environment and our communities through conscious resource selection and process improvements that aim to lessen the impact of manufacturing processes. Current environmental initiatives inc
Slide 13: Expanding Our Growth Potential
LCI INDUSTRIES 13 a. Amounts (in millions) represent Management’s estimate of the size of the addressable market, excluding the Company’s current net sales to those markets. (1) Amounts in millions. "Opportunity" amounts represent Managem nt's estim te of the size of the addr ssable market based on
Slide 14: Growing End Markets to Reduce Cyclicality
LCI INDUSTRIES 14 Growing End Markets to Reduce Cyclicality Our goal is to grow adjacent, aftermarket, and international to be approximately 60% of sales by the end of 2022 to reduce cyclical impacts of North American RV industry 2022E Sales2016 Sales North America RV - OEM Adjacent Industries After
Slide 15: Positioned to Capitalize on Industry Tailwinds
LCI INDUSTRIES 15 Positioned to Capitalize on Industry Tailwinds • Great American Outdoors Act signed into law in August 2020 to provide needed maintenance for facilities and infrastructure in national parks, forests, wildlife refuges, and recreation areas, as well as annual funding to invest in con
Slide 16: RV Industry Trends
LCI INDUSTRIES 16 RV Wholesale/Retail/Inventory Change Retail Wholesale Inventory Linear (Inventory) Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 — 25,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000 (80,000) (60,000) (40,000) (20,000) — 20
Slide 17: Growing Aftermarket Segment
LCI INDUSTRIES 17 (in m ill io ns ) AFT Segment Net Sales 2012 2013 2014 2015 2016 2017 2018 2019 2020 $— $200.0 $400.0 $600.0 Growing Aftermarket Segment • Multiple channels including wholesale distributors, direct to dealer, and direct to consumer (e-commerce) • Multiple product categories includi
Slide 18: CURT Aftermarket Growth Opportunities
LCI INDUSTRIES 18 • CURT has an 18-year history of consistent annual sales growth; 5-year sales CAGR of 6% • Truck and towing aftermarket is combined $7.5 billion+ addressable market, expected to grow • Enables distribution channel diversification, with significant opportunities in e-commerce Expans
Slide 19: Global Expansion Opportunity
LCI INDUSTRIES 19 Global Expansion Opportunity • Grew year-over-year International sales by 60% in Q4 2020 • Working closely with Erwin Hymer Group, owned by Thor Industries, to further expand LCI products and technologies in European markets • Acquired Lavet in 2019 - Expanding European presence •
Slide 20: Acquisition Strategy
LCI INDUSTRIES 20 Acquisition Strategy • Over 50 acquisitions in the last 20 years ◦ Majority of last 20 acquisitions focused outside of North American RV industry • Look for: ◦ Great leadership ◦ Product innovation ◦ Consistency with our core manufacturing disciplines ◦ Niche markets ◦ Favorable co
Slide 21: Financial Overview
LCI INDUSTRIES 21 Financial Overview L C I I N D U S T R I E S
Slide 22: Q4 2020 Financial Performance
LCI INDUSTRIES 22 Consolidated Net Sales $564,021 $783,002 Fourth Quarter 2019 Fourth Quarter 2020 Operating Margin 6.7% 8.1% Fourth Quarter 2019 Fourth Quarter 2020 Q4 2020 Financial Performance Consolidated Net Sales by Market (in thousands) +29% RV OEM +20% ADJACENT OEM +129% AFTERMARKET SEGMENT
Slide 23: Consolidated Financials
LCI INDUSTRIES 23 Consolidated Financials ($ in millions except per share data) 2015 2016 2017 2018 2019 2020 Net Sales $ 1,403 $ 1,679 $ 2,148 $ 2,476 $ 2,371 $ 2,796 Operating Profit $ 116 $ 201 $ 214 $ 199 $ 200 $ 223 % of sales 8.3 % 12.0 % 10.0 % 8.0 % 8.4 % 8.0 % Net Income $ 74 $ 130 $133 $ 1
Slide 24: OEM Segment
LCI INDUSTRIES 24 $ in millions 2015 2016 2017 2018 2019 2020 Sales $ 1,300 $ 1,548 $ 1,977 $ 2,243 $ 2,092 $ 2,168 Operating Profit $ 105 $ 181 $ 190 $ 167 $ 165 $ 156 % of Sales 8.1 % 11.7 % 9.6 % 7.4 % 7.9 % 7.2 % OEM Segment Key Drivers • Surge in retail demand, as new consumers and their famili
Slide 25: OEM Content Per Vehicle
LCI INDUSTRIES 25 OEM Content Per Vehicle At industry production levels for the period ended September 2018, each $100 increase in content adds approximately $43 million in sales for LCII. New Towable RV • Approximately 61% of OEM Segment net sales are for Travel Trailer and Fifth-Wheel OEMs • 100%
Slide 26: Aftermarket Segment
LCI INDUSTRIES 26 Aftermarket Segment $ in millions 2015 2016 2017 2018 2019(1) 2020(1)(2) Sales $ 103 $ 131 $ 171 $ 233 $ 279 $ 628 Operating Profit(2) $ 15 $ 20 $ 24 $ 31 $ 35 $ 67 % of Sales 14.6 % 15.3 % 14.0 % 13.3 % 12.5 % 10.6 % Key Drivers • Robust Aftermarket is estimated to be double the s
Slide 27: Balance Sheet Supports Growth
LCI INDUSTRIES 27 $ in millions 2015 2016 2017 2018 2019 2020 Cash & Equivalents $ 12 $ 86 $ 26 $ 15 $ 35 $ 52 Accounts Receivable 42 57 82 122 200 269 Inventory 171 189 275 341 394 494 Other Assets 398 455 563 766 1,234 1,483 Total Assets $ 623 $ 787 $ 946 $ 1,244 $ 1,863 $ 2,298 Accounts Payable $
Slide 28: Capital Deployment Strategy
LCI INDUSTRIES 28 Reduce Leverage Disciplined Reinvestment to Drive Growth Acquisitions that Align to Strategy and Financial Targets Return Capital to Shareholders Attractive Dividend Yield Opportunistic Share Repurchases Target Net Debt / EBITDA Leverage of 1.0x to 1.5x Capital Deployment Strategy
Slide 29: Operating Cash Flow and Net Debt / EBITDA
LCI INDUSTRIES 29 Operating Cash Flow ($M) 82.68 95.02 155.08 156.61 269.53 231.40 2012 2014 2016 2018 2020 Net Debt / EBITDA* -0.63 0.24 0.09 1.05 2.16 2.14 2012 2014 2016 2018 2020 *See the Appendix to this presentation for reconciliation of non-GAAP financial measures to the most directly compara
Slide 30: Appendix
LCI INDUSTRIES 30 Appendix L C I I N D U S T R I E S
Slide 31: Reconciliation of Non-GAAP Measures: Adjusted EBITDA
LCI INDUSTRIES 31 Reconciliation of Non-GAAP Measures Adjusted EBITDA Three Months Ended December 31, Twelve Months Ended December 31, 2020 2019 2020 2019 (In thousands) Net income $ 48,693 $ 28,807 $ 158,440 $ 146,509 Interest expense, net 2,610 2,290 13,453 8,796 Provision for income taxes 12,150
Slide 32: Reconciliation of Non-GAAP Measures: Adjusted Net Income
LCI INDUSTRIES 32 Reconciliation of Non-GAAP Measures Adjusted Net Income and Adjusted Diluted Net Income Per Common Share Twelve Months Ended December 31, 2020 2019 (In thousands, except per share amounts) Net income $ 158,440 $ 146,509 Non-cash charge for inventory fair value step-up 7,286 — Incom
Slide 33: Reconciliation of Non-GAAP Measures: Adjusted Net Income 2017-2018
LCI INDUSTRIES 33 Reconciliation of Non-GAAP Measures Adjusted Net Income and Adjusted Diluted Net Income Per Common Share $ in millions, except per share amounts Income before income taxes Provision for income taxes Net income Effective tax rate Diluted earnings per share Year ended December 31, 20
Slide 34: Net Debt and EBITDA Reconciliation
LCI INDUSTRIES 34 $ in millions 2012 2013 2014 2015 2016 2017 2018 2019 2020 Long-term indebtedness $ — $ — $ 15.7 $ 50.0 $ 49.9 $ 49.9 $ 293.5 $ 612.9 $ 720.4 Current portion of long-term debt — — — — — — 0.6 17.9 17.8 Total Debt — — 15.7 50.0 49.9 49.9 294.1 630.8 738.2 Less: Cash and cash equival
Slide 35: Reconciliation of Non-GAAP Measures: Free Cash Flow
LCI INDUSTRIES 35 $ in millions 2015 2016 2017 2018 2019 2020 Net cash flows provided by operating activities $ 95.0 $ 203.4 $ 155.1 $ 156.6 $ 269.5 $ 231.4 Less: Capital expenditures 29.0 44.7 87.2 119.8 58.2 57.3 Free cash flow $ 66.0 $ 158.7 $ 67.9 $ 36.8 $ 211.3 $ 174.1 Reconciliation of Non-GAA
Slide 36: Industry Statistics Summary
® LCI INDUSTRIES 36 LCI Industries Industry Statistics Summary TOTAL RECREATIONAL VEHICLES (RV) TOTAL hoteare oe Taras 1 Tae ieaayia YTD u UTM. ynth 406.112 406.112. 455.001 455,001 9471 (62.775) (48.889)} 33,003, 413,515, A591 455,018 M412 11,412 (41,443) se Tt ar Tee 33 itnsoe oss ae? fee Bony 2 a