Lci Industries · NYSE:LCII
Lci Industries — Investor Presentation (December 2019)
33 slides from Lci Industries's investor presentation, Dec 2, 2019
Slide 1: LCI Industries Investor Presentation December 2019
LCI INDUSTRIES LCI Industries Investor Presentation December 2019 1
Slide 2: Forward-Looking Statements
LCI INDUSTRIES 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 obje
Slide 3: LCI at a Glance
LCI INDUSTRIES LCI at a Glance A leading supplier of highly engineered FISCAL PERIOD LTM Q319 components to the OEMs of recreational vehicles, KEY METRICS buses, trailers, trucks, boats, trains, and manufactured housing and their related aftermarkets. $2.3B $5.48 IN NET SALES DILUTED EPS 8% $5.50 OP
Slide 4: Investment Case
LCI INDUSTRIES Investment Case Leading market share with unmatched depth and breadth of products Strong track record of financial performance Deep culture rooted in innovation, technology, and operational excellence Compelling industry tailwinds, including high-margin growing aftermarket, robust mil
Slide 5: Business Overview
LCI INDUSTRIES Business Overview Applicable across a number With 7 core of customer segments competencies LCI serves 3 critical Recreational Metal Fabrication Vehicle customer needs & Welding High Variation / Small batch Marine Short Runs at manufacturing with Lamination Transit & School Scale the b
Slide 6: Vision and Values
LCI INDUSTRIES Vision and Values To be a leading supplier for component parts manufacturing in the segments in which we compete • Our passion to win, coupled with a robust growth strategy, drive us to LCI Leadership be a leader in every market we enter • We believe our industry-leading innovation, t
Slide 7: Breadth and Depth of Product Offerings
LCI INDUSTRIES Breadth and Depth of Product Offerings Product Lines Industries • Towable RV Chassis • Steps • RV • Heavy Truck • Furniture • Leveling Systems • Aftermarket • Manufactured Homes • Windows and Windshields • Suspension • Marine • Modular Housing • Entry and Baggage Doors Enhancements •
Slide 8: Financial Performance
LCI INDUSTRIES Sales Trend ($M) EBITDA* ($M) 2,476 2,344 17% CAGR 269 15% CAGR 2,148 247 266 266 1,679 1,403 158 Financial 1,191 128 Performance 2014 2015 2016 2017 2018 LTMQ319 2014 2015 2016 2017 2018 LTMQ319 Diluted EPS, Adjusted in 2017 - 2019 Free Cash Flow* ($M) • LTMQ319 net sales down 5% and
Slide 9: Culture of Innovation and Technology
LCI INDUSTRIES Culture of Innovation and Technology • Invested over $16 million in 2018 development, engineering, and product testing • 107 team members across 19 locations dedicated to research and development • Patent protected technology; over 300 active patents • Driving product development coll
Slide 10: Expanding Our Growth Potential
LCI INDUSTRIES Expanding Our Growth Potential(1) 10 (1) Amounts in millions. "Opportunity"a. Amounts amounts (inrepresentmillions) Management'srepresent estimateManagement’ of the sizes of estimatethe addressableof the marketsize basedof the on currentaddressable products as of Q319, excluding the C
Slide 11: Growing End Markets to Reduce Cyclicality
LCI INDUSTRIES Growing End Markets to Reduce Cyclicality 2016 Sales 2018 Sales 2022E Sales North America RV - OEM Adjacent Industries Aftermarket Europe / International Goal is to grow adjacent, aftermarket, and international to be approximately 11 60% of sales by 2022 to reduce cyclical impacts of
Slide 12: Positioned to Capitalize on Industry Tailwinds
LCI INDUSTRIES Positioned to Capitalize on Industry Tailwinds 2018 SALES BY END MARKET RV MARKET SHARE BY AGE 25-34 35-44 45-54 N.A. RV 55-64 65-74 75+ 30% Outdoor recreation International industry 20% Aftermarket North American Outdoor$734 Recreat billionion Industry 10% Adjacent Markets * $734 bil
Slide 13: Industry Trends
LCI INDUSTRIES Industry Trends RV Wholesale/Retail/Inventory Change Industry vs Consumer Confidence 200,000 60,000 900,000 200 175,000 800,000 175 40,000 700,000 150,000 150 600,000 125 125,000 20,000 500,000 100 100,000 400,000 — 75 75,000 300,000 50 (20,000) 50,000 200,000 100,000 25 25,000 (40,00
Slide 14: Recent Events
LCI INDUSTRIES Recent Events • Agreed to acquire CURT Group, a leading aftermarket manufacturer of branded towing products and truck accessories • Purchase price of $340M with LTMQ319 sales of approximately $255M • Immediately accretive to growth, profit margins and EPS CURT Group • Advances LCI’s d
Slide 15: High-Margin, Growing Aftermarket Segment
LCI INDUSTRIES High-Margin, Growing $2,500.0 Aftermarket Segment 15% $2,000.0 • LCI sells over $1.5 billion in RV OEM components annually 10% $1,500.0 • Strong service department established on the supply side • Dealers rely on us as a key technical resource to provide a (i n millions) $1,000.0 high
Slide 16: Attractive Aftermarket Growth Opportunities
LCI INDUSTRIES Attractive Aftermarket Growth Opportunities • Truck and towing aftermarket is a combined $7.5 billion+ Expansive Distribution Network addressable market, expected to grow further • CURT has a 17-year history of consistent annual sales growth; 5-year sales CAGR of 6% • Enables distribu
Slide 17: CURT Brings Revenue Diversification
LCI INDUSTRIES CURT Brings Revenue Diversification In-line with LCI’s long-term growth strategy, this transaction doubles the revenues of the aftermarket business and diversifies the business, further mitigating the industry cyclicality of the RV space Increases Aftermarket % of Revenue by total rev
Slide 18: Global Expansion Opportunity
LCI INDUSTRIES Global Expansion Opportunity • Europe is second to U.S. in RV unit production (approx. 210,000 units) • Acquired Project 2000 in 2016 - European footprint expanding bed-lifts and steps • Acquired Sessa Klein in 2017 - Train windows • Acquired Metallarte in 2017 - Entry and compartment
Slide 19: Riverdale Steel 1980: LCI
1950 1960 1970 1980 1990 2000 2010 2020 Riverdale Steel 1980: LCI goes public x $2.0b Works (chassis eats Bin yufacture) ° oe man ) ae UCieucceeabillg executes Ga aoacintions 1956: LCI is founded as 1969: B&L Industries 1994: LCI starts F ite B&L Industries ‘Becomes Lippert manufacturing RV Componen
Slide 20: Track Record: Acquisitions and New Product Offerings
LCI INDUSTRIES Track Record Starting 2018 Acqusitions and New Product Offerings • Over 50 acquisitions in the last 20 years Revenue Revenue Company Acquisitions ◦ Majority of last 20 acquisitions focused outside of Q2 2006 HappiJac New product offering and bed lift systems for $15m $36m North Americ
Slide 21: Financial Overview
LCI INDUSTRIES L C I I N D U S T R I E S Financial Overview 21
Slide 22: Financial Performance
LCI INDUSTRIES Financial Performance Consolidated Net Sales Operating Margin (in thousands) $604,244 $586,221 7.5% 8.4% Third Quarter 2018 Third Quarter 2019 Third Quarter 2018 Third Quarter 2019 Consolidated Net Sales by Market (9%) +3% +16% +32% 22 RV OEM ADJACENT OEM AFTERMARKET INTERNATIONAL SEG
Slide 23: Consolidated Financials
LCI INDUSTRIES Consolidated Financials ($ in millions except per share data) 2014 2015 2016 2017 2018 Q119 Q219 Q319 Net Sales $ 1,191 $ 1,403 $ 1,679 $ 2,148 $ 2,476 $ 592 $ 629 $ 586 • Four-year sales CAGR of 20% Operating Profit 96 116 201 214 199 48 66 49 • Operating Profit more than % of sales
Slide 24: OEM Segment Q319 Key Drivers
LCI INDUSTRIES OEM Segment Q319 Key Drivers $ in millions 2014 2015 2016 2017 2018 YTD • Steady growth in RV Wholesale shipments with Sales $ 1,127 $ 1,300 $ 1,548 $ 1,977 $ 2,243 $ 1,597 recent temporary correction of dealer inventories Operating 89 105 181 190 167 131 Profit • Adjacent Industries
Slide 25: OEM Content Per Vehicle
LCI INDUSTRIES OEM Content Per Vehicle New Towable RV • Approximately 61% of OEM Segment net sales are for Travel Trailer and Fifth-Wheel OEMs • 100% market share in existing products, excluding Furrion, would yield an estimated $5,800 per Towable RV, 56% penetration New Motorhome RV • Approximately
Slide 26: Aftermarket Segment Q319 Key Drivers
LCI INDUSTRIES Aftermarket Segment Q319 Key Drivers $ in millions 2014 2015 2016 2017 2018 YTD • Robust Aftermarket is estimated to be double the Sales $ 64 $ 103 $ 131 $ 171 $ 233 $ 211 size of the new RV market each year with higher Operating Profit 9 15 20 24 31 31 margins % of Sales 14.1 % 14.6
Slide 27: Balance Sheet Supports Growth
LCI INDUSTRIES Balance Sheet Supports Growth $ in millions 2014 2015 2016 2017 2018 Q319 Cash & Equivalents $ — $ 12 $ 86 $ 26 $ 15 $ 27 Accounts Receivable 38 42 57 82 122 186 Inventory 132 171 189 275 341 334 Other Assets 374 398 455 563 766 868 Total Assets 544 623 787 946 1,244 1,415 Accounts Pa
Slide 28: Capital Deployment Strategy
LCI INDUSTRIES Capital Deployment Strategy Historical Use of Cash Cash Priorities Future Use of Cash Disciplined Reinvestment to Drive Growth Repurchases Acquisitions that Align to Strategy and Financial Targets Dividends - 30% Dividends Return Capital to Shareholders Acquisitions Acquisitions - 40%
Slide 29: Operating Cash Flow and Net Debt / EBITDA
LCI INDUSTRIES Operating Cash Flow ($M) Net Debt / EBITDA* 3.06 258.50 156.61 1.05 0.82 0.93 155.08 0.38 0.24 84.91 82.68 0.09 63.26 95.02 -0.10 -0.45 31.54 32.26 -0.63 36.83 2003 2005 2007 2009 2011 2013 2015 2017 LTM 2003 2005 2007 2009 2011 2013 2015 2017 LTM Q319 Q319 $600 million credit facilit
Slide 30: Appendix
LCI INDUSTRIES L C I I N D U S T R I E S Appendix 30
Slide 31: Reconciliation of Non-GAAP Measures: Adjusted Net Income and EPS
LCI INDUSTRIES Reconciliation of Non-GAAP Measures Adjusted Net Income and Adjusted Diluted Earnings per Share Income before Provision for Diluted earnings $ in millions, except per share amounts income taxes income taxes Net income Effective tax rate per share Twelve Months Ended September 30, 2019
Slide 32: Reconciliation of Non-GAAP Measures: Leverage Ratio
LCI INDUSTRIES Reconciliation of Non-GAAP Measures Leverage Ratio (Net Debt to EBITDA) LTM $ in millions 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q319 Long-term indebtedness $ 24.8 $ 59.3 $ 62.1 $ 46.0 $ 18.4 $ 2.9 $ — $ — $ — $ — $ — $ 15.7 $ 50.0 $ 49.9 $ 49.
Slide 33: Reconciliation of Non-GAAP Measures: Free Cash Flow
LCI INDUSTRIES Reconciliation of Non-GAAP Measures Free cash flow $ in millions 2014 2015 2016 2017 2018 LTM Q319 Net cash flows provided by operating activities $ 107.0 $ 95.0 $ 203.4 $ 155.1 $ 156.6 $ 258.5 Less: Capital expenditures 42.5 29.0 44.7 87.2 119.8 75.1 Free cash flow $ 64.5 $ 66.0 $ 15
LCI Industries — Investor Presentation (December 2019) on 6ix