Lci Industries · NYSE:LCII
Lci Industries — Drew Industries — Investor Presentation (September 2005)
37 slides from Lci Industries's investor presentation, Sep 27, 2005
Slide 1: A Leading National Supplier of Components for RVs and Manufactured Homes
A Leading National Supplier of a Wide Variety of Components for RV’s and Manufactured Homes Drew Industries (NYSE:DW ) 2003 A Leading National Supplier of a Wide Variety of Components for RV’s and Manufactured Homes 2003
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive posi
Slide 3: About Drew Industries
About Drew Industries A leading national manufacturer of quality components for Recreational Vehicles (RV) and Manufactured Homes (MH)
Slide 4: Drew's Companies
Drew’s Companies Kinro, Inc. – Acquired 1980 (including Better Bath) Aluminum windows for RVs Doors for RVs Aluminum and vinyl windows and screens for MHs Bath and shower units for MHs and RVs Lippert Components, Inc. – Acquired 1997 (including Zieman Manufacturing) Chassis and chassis parts for RVs
Slide 5: Drew's Products
Drew’s Products RV Chassis and Chassis Parts: $174 million MH Chassis & Chassis Parts: $78 million MH Windows & Screens: $85 million RV Windows & Doors: $102 million 12 Months Ended June 30, 2005 Sales - $599 million Other: $38 million MH Bath Products: $18 million Specialty Trailers: $28 million RV
Slide 6: Drew's Segments
RV 66% MH 34% MH 38% RV 62% Drew’s Segments Revenues (LTM 6/05 - $599 million) Segment Operating Profit (LTM 6/05 - $52 million) LTM 6/05 (last 12 months ended June 20, 2005) revenues and segment operating profit equal those results for the second half of 2004 and the first half of 2005.
Slide 7: Supplier to Industry Leaders
Supplier to Industry Leaders Outstanding customer service and national coverage , with 51 production facilities (approximately 2.9 million sq. ft.), make us a key partner with our customers. Supply most of the Leading Producers of RVs and MHs: Both RV and MH Fleetwood (NYSE:FLE) Skyline (NYSE: SKY)
Slide 8: Business Strategy
Business Strategy Increase sales and profitability through: Market share growth New product introductions Strategic acquisitions This strategy accomplished through: Outstanding customer service Motivating management through profit incentives and training programs Maintaining highly efficient factori
Slide 9: Drew's Management Team
Drew’s Management Team Innovative & Experienced Management Highly respected and experienced management: Drew Lei gh Abrams, CEO, 35+ years Fred Zinn, CFO, 24+ years Kinro David Webster, CEO, Chairman, 30+ years Lippert Doug Lippert, Chairman, 30+ years Jason Lippert, CEO, 12+ years Excellent managem
Slide 10: Content Per Vehicle - RV
Content Per Vehicle - RV Peak potential is $2,200 to $2,500 per RV Operating profit margin 11.3% 6.8% 8.6% 9.4% 11.3% 9.2% (a) 8.2% (a) ( a) Margin in 2004 and 2005 impacted by increases in steel and other costs. Excludes sales of specialty trailers
Slide 11: Content Per Home - MH
Content Per Home - MH Peak potential is $2,600 to $3,000 per home Operating Profit margin 15.5% 9.8% 10.8% 11.0% 10.7% 10.1% (a) 9.9% (a) (a) Margin in 2004 and 2005 impacted by increases in steel costs and an adverse jury award in a work place injury lawsuit.
Slide 12: New Product Introductions
New Product Introductions Sales of slide-out mechanisms for towable RVs introduced in 2002, grew to over $75 million in the 12 months ended June 2005. Recently introduced slide-out for motorhomes . Increased market penetration for 11 new, innovative products developed by LTM, which was acquired in J
Slide 13: New Product Introductions (Continued)
New Product Introductions (Continued) Acquired 2 patents through the acquisition of Venture Welding, expanding our MH chassis manufacturing capabilities Cold “Cambering” Basement Chassis Recently introduced a wide variety of RV products These developments achieved through cooperation with our custom
Slide 14: New Product Introductions
New Product Introductions 2% $150 million Axles for specialty trailers 0% $25 million Thermoformed exterior parts 20%-30% $10 million Steps for towables 15% $200 million Specialty trailers <5% $30 million Bath products for RVs 5%-10% $80 million Axles for towables <5% $65 million Leveling devices fo
Slide 15: Acquisition Criteria
Acquisition Criteria Complementary to our core RV and MH markets Target less than 6 times pro forma EBITDA Immediately accretive Seek to acquire products or technologies that we can introduce through our nationwide customer base and factory network; become a more extensive supplier to our customers
Slide 16: Acquisition History
Acquisition History Strategic Acquisitions 2001 – Better Bath Bath and shower products for MH. Annual sales of $20 million July 2003 – LTM Manufacturing Slide-out systems, specialty slide-out storage trays and decks, and electric stabilizer jacks for RVs. Annual sales of $4 million Oct 2003 – ET&T F
Slide 17: Zieman Acquisition – May 2004
Zieman Acquisition – May 2004 Purchase price of $20.7 million plus assumption of $5.2 million of debt Zieman Operating Results: Immediately accretive Sales for 2003 of about $40 million About half Specialty Trailers About half RV and MH Chassis Expands RV and MH chassis on West Coast Plan to take sp
Slide 18: Venture Acquisition – May 2005
Venture Acquisition – May 2005 Strategic Acquisitions Purchase price of approximately $18.5 million, or less than 6 times pro forma EBITDA Venture Operating Results: Immediately accretive Pro forma sales of approximately $18 million Primarily MH chassis Increases market share in MH chassis Includes
Slide 19: Investments
Investments Innovative & Experienced Management Kinro and Lippert have extensive R&D department s Since January 1997: Invested over $110 million in plant and equipment Invested over $135 million for acquisitions Invested $40 million for stock repurchases at an average price of $5.37 per share These
Slide 20: RVs - Industry Shipments
RVs - Industry Shipments (Thousands of Vehicles) Travel Trailers and 5th Wheel RVs (1) Includes approximately 13,000 RVs purchased by FEMA for emergency shelter for 2004 hurricane victims.
Slide 21: RV Market
RV Market RV Categories Towable RVs - 81% of industry unit sales and about 40% of industry dollar sales Motorhomes - 19% of industry unit sales and about 60% of industry retail dollar sales Since 1995, the travel trailer and 5 th wheel towable segment of the RV market has grown at an annual rate of
Slide 22: Growth In RV Market
Growth In RV Market Positive Demographic Trends Primary owners of RVs are 50 and over According to census reports, there are expected to be 20 million more people over 50 in the next 10 years Industry Advertising Campaign Target Market 35 and over RV Vacations Strengthen Family Ties Post 9/11 Air Tr
Slide 23: MH - Industry Production
47% 47% 49% 49% 52% 59% 61% 65% 70% 75% 78% 80% 47% 74% MH - Industry Production (Thousands of Homes) (1) Includes 3,000 to 5,000 MHs purchased by FEMA for emergency shelter for 2004 hurricane victims.
Slide 24: Manufactured Housing (MH) Market
Manufactured Housing (MH) Market 10 million manufactured homes across the U.S. Improved quality and image should drive MH growth Industry production down 65% since 1998, but Drew’s sales are down much less Drew’s MH segment remained profitable every quarter since the downturn began in 1998 Strong Gr
Slide 25: MH: Strong Future
MH: Strong Future Strong Growth Prospects Demographics - 1st time home buyers and retirees Affordability: Significant cost advantage over site-built homes MH - $34 per sq. ft. compared to $79 per sq. ft. for site-built homes Improved Quality in conjunction with Land Ownership Leads to Home Value App
Slide 26: MH: Return to Growth in 2005
MH: Return to Growth in 2005 Signs of Improvement in the Manufactured Housing Industry Low inventory levels at retail dealers Slowing of repossessions Improved lending practices have made new loans more secure Berkshire Hathaway acquired Clayton, Oakwood and 21st Mortgage; raised more than $4 billio
Slide 27: Drew's Ownership and Governance
Drew’s Ownership and Governance Ownership by Executives and Directors aligns our interest with other stockholders; Insiders own 22%, including Drew’s Chairman with 12% of shares and Chairman of Lippert with 6% of shares Innovative & Experienced Management Drew’s Corporate Governance Program – ranked
Slide 28: Financial Performance
Financial Performance The price of Drew’s common stock is 8 times the price as of December 31, 2000 Drew has 21 million shares outstanding and a market capitalization in excess of $500 million (Dec 31 unless noted) Stock Price History Drew effected a 2-for-1 stock split on 9/7/05 to holders of recor
Slide 29: Full Year Operating Results
2002 (1) 2003 2004 (3) Sales $325.4 $353.1 $530.9 Operating Profit $ 29.2 $ 34.3 $ 44.0 % Sales 9.0% 9.7% 8.3% Net Income (1) $ 15.6 $ 19.4 $ 25.1 Diluted EPS (1) EBITDA (2) $ . 78 $ 36.5 $ . 94 $ 42.1 $ 1 . 18 $ 53.3 Operating Results Full Year Operating Results ($ in millions, except EPS) Financia
Slide 30: Results By Segment
200 3 200 4 Net sales RV Segment MH Segment $219.5 $ 1 33.6 $ 347.6 $ 183.3 + 5 8 % + 37 % Operating Profit RV Segment MH Segment $ 24.8 $ 14.4 $ 31.8 $ 1 8.5 (a) + 28 % +29 % Operating Profit as a P ercentage of Net Sales RV Segment MH Segment 11.3 % 1 0.7 % 9.2 % 1 0.1 % (a) Results By Segment Yea
Slide 31: Operating Results Six Months Ended June 30
200 4 200 5 (a) Sales $ 249.7 $ 317.6 + 27 % Operating Profit $ 24.6 $ 25.6 +4% % Sales 9.9 % 8.1 % Net Income $ 14.1 $ 14.5 +2 % Diluted EPS $ . 67 $ . 68 +1 % Operating Results Six Months Ended June 30, ($ in millions, except EPS) Financial Performance (a) 2005 first half results were impacted by
Slide 32: Results By Segment Six Months
200 4 200 5 Net sales RV Segment MH Segment $167.0 $ 82.7 $ 216.3 $ 101.3 + 30 % + 22 % Operating Profit RV Segment MH Segment $ 18.3 $ 9.1 $ 18.9 (a) $ 10.5 (b) + 4 % +16 % Operating Profit as a P ercentage of Net Sales RV Segment MH Segment 10.9 % 1 0.9 % 8.7 % (a) 10.3 % (b) Results By Segment Si
Slide 33: Balance Sheet
12/31/03 12/31/04 6 /30 /05 Total assets $ 160 $ 238 $ 2 84 Total debt $ 42 $ 71 $ 81 Stockholders’ equity $ 94 $ 122 $ 1 42 RATIOS Days sales in a ccts receivabl e (1) Inventory turns (2) 19 days 7.3 turns 21 days 5.6 turns 25 days 6.8 turns Balance Sheet ($ in millions, except percents) Financial
Slide 34: Financial Strength
12/30/02 12/31/03 12/31/04 LTM 6 /05 Return on Equity (1) 24 % 24% 23 % 21 % Return on Assets (1) 11 % 13 % 12 % 1 0 % Total Debt to Equity 0.7 0.4 0.6 0. 6 Total Debt to EBITDA (2) 1.3 0.8 1.3 1. 5 Financial Strength Financial Performance (1) Based on income from continuing operations. (2) EBITDA i
Slide 35: Peer Comparison
10% 6% 11.1 20.7 Spartan (SPAR) -53% -3% 13.6 N/A Fleetwood (FLE) 20% 11% 14.7 20.9 Drew (DW) ROE ROA Forward P/E Trailing P/E 6% 5% 14.2 24.5 Monaco (MNC) 26% 6% 15.0 46.7 Champion (CHB) 23% 15% 12.8 15.3 Thor (THO) 13.2 14.8 Winnebago (WGO) 33% 15% Peer Comparison Source: Capital IQ, September 19,
Slide 36: Summary
Summary Why is Drew a Good Investment Highly experienced and motivated management Outstanding customer service Low-cost producer Continued product line expansion History of successful strategic acquisitions History of strong operating profit and cash flow Strong Balance Sheet Highly experienced and
Slide 37: Thank You
Thank You Analyst coverage BB&T Capital Markets -John Diffendal (615) 340-8284 Morgan Joseph - Richard Paget: (212) 218-3894 Sidoti & Company LLC – Scott Stember: (212) 453-7017 For more information contact: Leigh J. Abrams, President and CEO 914-428-9098 leigh@drewindustries.com Fredric M. Zinn, Ex
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