Lci Industries · NYSE:LCII
Lci Industries — Drew Industries — Investor Presentation (March 2016)
46 slides from Lci Industries's investor presentation, Mar 21, 2016
Slide 1: Your Journey Begins Here
YOUR JOURNEY BEGINS HERE © drewindustries.com lippertcomponents.com
Slide 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 objectives of management, markets for the Comp
Slide 3: Management Team
JASON LIPPERT, CEO > 20+ years with Drew prew INDUSTRIES INCORPORATED SCOTT MERENESS, PRESIDENT > 20+ years with Drew Management Team DAVID SMITH, CFO > Average tenure of Drew’s members of senior managementis 14+ years with the company
Slide 4: Financial Performance: Net Sales and EBITDA
Net S $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 Financial Performance ales == RV Segmentnet sales © MH Segmentnet sales m= EBITDA Net Sales and EBITDA ") (in mitions) $1,016 soot JY 669 069 = La s3 = $531 $511 J = a i 5298 ms $325 $354 e a $255 B iy Sy ie HHH RMR RHA Eo 2001 2002 2003 2004
Slide 5: i(S in millions,
i(S in millions, RV Towable $428 $498 $653 $728 $844 $932 Total $573 $681 $901 $1,016 $1,191 $1,403
Slide 6: Sales for the year ended December 31, 2010 compared to the year ended December
Sales for the year ended December 31, 2010 compared to the year ended December 31, 2015. Both periods exclude the Company's net sales of components for Towable eee omco VS, which made up 75% and 67% of consolidated net sales, respectively.
Slide 7: Sales growth: acquisitions, organic and industry
Sales for acquistions represent the traling twelve month sales at the date of acquisition. Any postacquiston change is included in organic orindustry accordingly. Organic growth consistsprimariy of gains in market share, price increases, increased adjacentindustry sales and new product sales. Indust
Slide 8: RV and Manufactured Housing Industries
RV and Manufactured Housing Industries
Slide 9: RVs - Industry Wholesale Shipments
RVs - Industry Wholesale Shipments (Compared to Drew’s Performance) ingust Approximately 73% of Drew’s RV Segment net sales are for Travel Trailer and 5 Wheel RVS yor euies 800 yz $1400 Industry unitsin thousands, net sales in millions) i ar = Motorhomes ™ $1,285 Other Towables, $1,200 on Travel Tra
Slide 10: RV Shipments
RV Shipments g a RV Shipments g e RV Shipments vs Federal & 3 a = IN Interest Rate\_ = 3 A 3 \\ ele § 300 &% 7 \ Hos AI = & 200 Wa . V 200 m 10 150 x 100 tt \/Ga\ = 0 1% : od om ee LLL ES HF SPS KS i = pee ot Re rz Lt : WY ‘ ae Pi 100 Vv ax RV Shipments Anmoche hee a OK 0 6 ooh coh cA GP gh ch ooh o
Slide 11: ad » eS
ad » eS FURRION Doors APPLIANCES awnings @ tes FURNITURE ES ELECTRONICS a a ~ FURRION ~~ ) ELECTRONICS °, winpows ‘SHOWERS: & SINKS ‘SLIDE-OUTS ma *s é ‘SUSPENSION =¥ Ef ENHANCEMENTS AXLES. LEVELING lippertcomponents.com -10-
Slide 12: Manufacturing capabilities
Fabric and Electronics and Steel and Lamination Steel and Motion- Woodworking Plastic Forming Aluminum and Glass Aluminum Systems Fabrication Fabrication Welding
Slide 13: Towable RVs and Motorhomes
Towable RVs (Approximately 73% of Drew's RV Segmentnet sales) _o— Motorhomes (Approximately 7% of Drew's RV Segmentnet sales) prew of industry 2015 unit sales of 2014 wholesale dollar sales, or $9.4 billion Retail cost $4,000 to $100,000 per unit. Average about $30,000 of industry 2015 unit sales of
Slide 14: Camping and RV campers
(EE™ 5A,, ii Tent Campers _ Aim 25.0 milion w i] 14... i \21% } Active Campers . — RV Campers ys 46.2 million- WS 9.7 million —~\21% = Cabin Campers = 9.7 million = * Estimates based on 108 million households. All other (4%) 1.8 milion. 59x, Camp Every Year 27.4 million 11% Camp Every Other Year 48
Slide 15: RV lifestyle and demographic trends
+ Typical RV family vacation is 23 to 59 percentless expensive for a family of four The number of consumers between the ages of 55 and 70 is projected to total 56 million by 2020 Generation X and Millennials are a source of industry growth mainly in the entry- level market College and NFL football g
Slide 16: RV Industry Trends
RV Industry Trends Units 325 300 275 250 225 200 175 150 125 100 Travel Trailer and 5" Wheel RVs, Drew’s primary RV market 314.4 316.5 Wholesale === Retail 298.9 (Units in thousands} ( ) 20 277.0 8) 250.8 228.4 os 199.2 “20.0 85.1 186.0 164.3 138.3 2008 2009 2010 2011 2012 2013 2014 2015 (28.0) 13.2
Slide 17: Number of U.S. Households that Own an RV
Number of U.S. Households that Own an RV (in Millions) 10 6 | i Z a = : we L 1980 1984 1988 1993 1997 2001 2005 2011 Statistics provided by RV Consumer Demographic Profile — 2011
Slide 18: Demographics
Demographics Number of U.S. households that own an RV 7.9 million 8.9 million Household ownership rates of RVs 80% 85% Average age of all RVs 12.7 years 14.2years Average time consumers have owned their 6.6 years 8.4 years current RV Age of typical RV owner A9 years A8 years Average income of RV own
Slide 19: Manufactured Housing - Industry Production
Manufactured Housing — Industry Production (Compared to Drew's Performance) mast Industry units in thousands, net sales in millions) eDrewe - Mulfi-Sections == Single-Section Drew'sMH Segment sa net sales $250 S220Rez20 200 193 $200 aie $177 1 magn $142 $150 $134 4 $120 $122 $116 5148 100 $100 50 $5
Slide 20: What's Next...
What’s Next... International RV Innovation/RD +. Aftermarket RV + Adjacent Markets - Acquisitions + Additional North American RV Growth/Content
Slide 21: International RV Markets
| International RV Markets
Slide 22: Slide 22
Slide 23: Slide 23
Slide 24: Marine, Bus, Truck, Fleet, Cargo
Marine Bus Truck Fleet Cargo
Slide 25: 2016 2015 2012 = 2013
2016 2015 4 2012 = 2013
Slide 26: Recent acquisitions
EA Technologies Glasho-depostion (e-coa ond powercoatng. Signature Seating” $ 16.0 ese ikl bien tel Flair Interiors 8.1 $ 25 Manufacturerof RV furniture and mattresses re, or (1) Plus contingent consideration payable based on future sales.
Slide 27: Acquisition Discipline and History
Acquisition Discipline and History Have made nearly 40 acquisitions over the past 16 years We are experienced at integrating acquisitions Acquisitions have come in the form of intellectual property, small start ups and larger businesses 7 out of last 9 acquisitions have had substantial revenue outsi
Slide 28: RV Content
RV Content $1,460 (1) Amounts (in millions) represent Management's estimate of the size of the addressable market, excluding the Company’s current net sales to those markets. 2 (2) Furtion includes products to be released during 2016 and 2017
Slide 29: Expanding Our Growth Potential
Expanding Our Growth Potential Chassis and Axles 120 Ee es) Adjacent: Axles 400 Se Marine Furniture 115 CE International 715, (1) Amounts (in millions) represent Management's estimate of the size of the addressable market, excluding the Company’s current net sales to those markets. =28- (2) Furtion
Slide 30: Additional growth opportunities emanating from our core
Additional growth opportunities emanating from our core POTENTIAL SOURCES OF GROWIH Capabilities Core Industries: Business é Core of 2 Extensions % Adjacencies Core extensions vary on one dimension from existing core business and can be managed within the existing operating model Lowest execution ri
Slide 31: Content Per New Towable RV
Content Per New Towable RV + Approximately 73% of RV Segment net sales are for Travel Trailer and Fifth-Wheel RVs + 100% market share in existing products would so yield an estimated $7,400 per Towable RV Eek $2,987 ceo? $2,816 mm + Growth in RV “features” drives content ent $2,690 $2,713 increases
Slide 32: Content Per New Motorhome RV
Content Per New Motorhome RV + Approximately 7% of RV Segment $1,810 net sales are for Motorhome RVs. eo noe” $1,602 * 100% market share in existing eee products would yield an estimated ne 6,000 per Motorhome RV xen $6, per Motorhome = co $1,227 $1,272 2 wel y00ee ome ee w 9 io) = Qo oO $669 & S °
Slide 33: Supplemental Schedules
Supplemental Schedules
Slide 34: Operating Results (Quarter)
Operating Results Three Months Ended December31 FINANCIAL PERFORMANCE (Sin millions, except EPS) 2015() 2014 Change Net Sales $ 334.2 $ 289.4 15% Operating Profit $ 261 $$ 172 52% % of Sales 7.8% 5.9% Net Income $ 17.8 $ 12.0 48% Diluted EPS 8 O72) Wz 47% (1) Excludes severance costs. Actual Q4 2015
Slide 35: Operating Results (Year)
Operating Results Years Ended December 31 FINANCIAL PERFORMANCE (Sin mi except EPS) 2015) 20140) Change Net Sales $ 1,403.1 $ 1,190.8 18% Operating Profit $ 120.0 $ 97.5 23% % of Sales 8.6% 8.2% Net Income $ 76.7 $ 63.6 21% Diluted EPS S Sl] 3 2 19% (1) Excludes severance costs. Actual 2015 operatin
Slide 36: MH Segment / RV Segment
MH Segment RV Segment
Slide 37: Twelve Months RV and MH Segments
Twelve M RV Segment MH Segment RV Segment
Slide 38: Debt Position
Debt Position FINANCIAL PERFORMA\ Cashand — Net Cash accvisitons During the in millions) Debt Investments (Debt) 12/31/11 $ - $ 7 $ A $ 50 12/31/12 $ & $ 100) $ 100) $ 1 12/31/13 $ = $ 66 $ 66 $ 5 12/31/14 $ 16 $ $ (16)(2) $ 107 12/3115 $ 50 $ 12 $ (38)0) $l (1) On December 20, 2012, the Company pai
Slide 39: Balance Sheets
Balance Sheets 1 1 Total Assets col be 374 $ 453 $ 544 $ 623 Total Debt $ - $ - $ - $ 16 $ 50 Cash & Investments $ a $ 104) $ 66 $ - $ (2 Stockholders’ Equity $- 27 $ 2848 $ 3144 $ 395 $ 43915) Days Sales in a/R" 17 days 14 days 16 days 15 days 14 days Inventory Turns”) 6.2 turns 7.8 turns 7.9 turns
Slide 40: Cash Flow
Cash Flow FINANCIAL PERFORMANCE Significant use of cash items since December 31, 2009 Acquisitions (23) $262 million Capital expenditures $171 million Special dividends $173 million Stock repurchases $ 2million Total $ 608 million {1} Includes QI 2016 acquisitions totaling $18.1 million
Slide 41: Cash Flow
Cash Flow mmm Dividends Capital Expenditures. FINANCIAL PERFORMANCE $160 ee Acquisitions $149 $160 * Operating Cash Flow $140 ‘ $140 $120 $120 $100 $100 $85 $80 hm $80 $65 Vag io] soo + of al $33 $60 $40 $10 $40 $20 ey $20 35 $33 $- $ $0 2009 2010 2014 2012 2013 (1) 2014 2015 Operating cash flow fro
Slide 42: Financial Strength
Financial Strength FINANCIAL PERFORMANCE 12/31/11 12/31/12 12/31/13 12/31/14 12/31/15 Return on Equity 11% 13% 16% 17% 18% Return on Assets 9% 10% 12% 12% 12% Meet eerie 0.00 0.00 0.00 0.04 oO Equity ae se 0.00 0.00 0.00 0.12 0.32 (1) EBIDA is operating profit plus depreciation and amortization.
Slide 43: EBIDA
$93 $120 $157 EBIDA $287 $175 $17.1 $185 $17.1 $205 $257 $326 $416 $365 $421 $533 $4697 $710 $835 $425 $279 $69.0 $638 $1058 $128.1 $1578 $5.1 $27.1 $261 $223 $88 $42 $31 $101 $243 $320 $326 = $425 $29.0 -42-
Slide 44: Net Sales and Operating Profit by Segment
Net Sales: RV Segment $ 5706 $ MH Segment 110.6 Operating Profit: RV Segment g$ 37.7 $ MH Segment Severance 780.9 $ 893.7 $ 1,074.5 $ 1,2 120.2 121.9 116.3 -43-
Slide 45: Stock Price History
Stock Price History Drew has 24.5 million shares outstanding and a market capitalization of approximately $1.5 billion as of February 29, 2016 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2/29/16 + Datesnoted above are as of December 31, unless noted. + Stock prices above ar
Slide 46: Analyst Coverage
Analyst Coverage a” Citi Research > Gregory Badishkanian — (212) 816-2720 a CJS Securities > Dan Moore — (914) 287-7600 a CL King & Associates > Scott Stember — (212) 364-1806 ” Sidoti & Company > Tristan Thomas — (212) 453-7019 ” Thompson Research Group > Kathryn Thompson — (615) 891-6206