Lci Industries · NYSE:LCII
Lci Industries — Drew Industries — Investor Presentation (November 2010)
44 slides from Lci Industries's investor presentation, Nov 15, 2010
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 EXHIBIT 99.1 Drew Industries Incorporated (NYSE: DW)
Slide 2: 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 position, growth opportunities
Slide 3: Section I: Overview
SECTION I Overview
Slide 4: Drew's Products – Components for RVs and Manufactured Homes
Drew’s Products – Components for RVs and Manufactured Homes $571 Million of Sales for the12 Months Ended September 30, 2010 RV Chassis, Slide-outs and Other Chassis Parts: $265 million RV Windows and Doors: $110 million Other Products: $4 million Bath Products: $19 million Specialty Trailers: $4 mil
Slide 5: Drew's Segments – LTM 9/2010
MH = $96 million 17% RV = $475 million 83% 90+% for towable RVs RV = $44 million 82% MH = $10 million 18% Drew’s Segments – LTM 9/2010 Revenues - $571 million Segment Operating Profit - $54 million
Slide 6: Financial Performance: Sales and EBITDA
(1) EBITDA is operating profit plus depreciation, amortization and goodwill impairment (see page 37). (2) Includes sales related to RVs and manufactured homes purchased by FEMA of approximately $40 million in 2005, and approximately $20 million in 2006. MH Segment sales RV Segment sales EBITDA Finan
Slide 7: Financial Performance – Quarterly
(1) EBITDA is operating profit plus depreciation, amortization and goodwill impairment (see page 38). (2) The Company’s operations are somewhat seasonal, as sales in the second and third quarters are traditionally stronger than the first and fourth quarters, consistent with the industries which the
Slide 8: Section II: Industries
SECTION II Industries
Slide 9: RV Market
TOWABLE RVS (90+% of Drew’s RV Segment revenues) MOTORHOMES (3% of Drew’s RV Segment revenues) 92% of industry 2009 unit sales 69% of 2009 wholesale dollar sales, or $2.8 billion Retail cost $4,000 to $100,000 per unit. Average about $24,000 RV Market 8% of industry 2009 unit sales 31% of 2009 whole
Slide 10: How RVs Are Used
Shift in U.S. culture toward more RV-related activities College and NFL football games NASCAR events More active, shorter, “greener”, & family oriented vacations More economical family vacations Typical RV family vacation is less expensive Many RVs are “parked” over the long-term as second homes How
Slide 11: RVs - Industry Wholesale Shipments
90 + % of Drew’s RV product sales are for Travel Trailers and 5 th Wheel RVs (1) Projection for 2010 is the latest published by the RVIA (September 2010). During the first nine months of 2010, the industry produced 160,200 travel trailer and fifth-wheel RVs. (Units in thousands, Sales in millions) T
Slide 12: Recent RV Industry Trends
Wholesale Retail Recent RV Industry Trends All data includes both US and Canada. Final data for Q3 2010 is not yet available Dealer Inventory Change 17,087 (27,312) (23,623) (7,439) (4,103) (25,426) (8,440) 12,070 18,446 (6,283)
Slide 13: Manufactured Housing (MH) Market
Cost per sq. ft. is $41 for MH vs. $89 for site-built homes Average retail price of $64,900 for a 1,570 sq. ft. MH 9 million manufactured homes across the U.S. Improved quality, appearance and safety Studies have shown that MHs built since 1995 sustain no more damage in hurricanes than site-built ho
Slide 14: MH – Industry Production
65% 70% 75 % 78% 80% 74% 72% 63% 68% 63% 60% MH – Industry Production Single-Sect ion Multi-Sections Drew’s MH Sales $177 $220 $221 $185 $134 $154 $147 $152 $191 $196 (Units in thousands, Dollars in millions) Industry Units Drew’s Sales $142 $85 $96 There are no industry forecasts for the manufactur
Slide 15: MH: Favorable Factors
MH: Favorable Factors INDUSTRY: Demand Demand for quality, affordable housing is likely to increase Baby boomers retiring in increasing numbers Dealer and manufacturer inventory levels are reasonable Financial Subprime market woes could help MH Pre-2003, MH was 20+% of Single Family housing starts I
Slide 16: Section III: Strategy
SECTION III Strategy
Slide 17: Business Strategy
Maximize profitability and return on assets through This strategy accomplished through Business Strategy Strategic acquisitions New product introductions Market share growth Operational efficiencies Outstanding customer service Motivating management through strong profit incentives Low cost manufact
Slide 18: Acquisition Criteria
Acquisition Criteria Drew is a disciplined and patient acquirer Gain market share or add products from other suppliers through asset acquisitions Complimentary to our core RV (including specialty trailers) and MH markets Seek products or technologies that we can expand through our nationwide custome
Slide 19: New Product Introductions
Began production of entry doors for RVs Introduce RV slide-out mechanisms Began Production of axles for towable RVs ACQUIRE BETTER BATH: Adding thermo- formed products ACQUIRE HAPPIJAC: Adding patented bed lifts for RVs ACQUIRE EXTREME ENGINEERING: Expanding specialty trailer product line ACQUIRE CO
Slide 20: What Drew Has Done - Acquisitions and Growth
What Drew Has Done - Acquisitions and Growth
Slide 21: Content Per New Towable RV
Content Per New Towable RV RV Segment operating profit margin 8.7% 10.0% 11.6% 9.7% 9.6% 8.3% 12.2% 6.7% 5.0% 9.3% See Page 10 for Industry Information - 90+% of RV Segment sales are for Travel Trailers and Fifth-Wheel RVs - 100% market share in existing products would yield $3,900 to $4,300 per Tow
Slide 22: Content Per New Manufactured Home
- 100% market share in existing products would yield $3,600 to $4,000 per home - Affordability of the homes constrains content growth Content Per New Manufactured Home MH Segment operating profit margin 10.4% 10.7% 10.5% 10.4% 10.3% 8.7% 8.1% 7.2% 3.8% 10.0% See Page 13 for Industry Information
Slide 23: What Drew Has Done - Cost Reductions
Consolidated more than 35 production facilities into other existing facilities since 2006, improving operating efficiencies Cautiously added back $1 million of annualized fixed costs as demand improved. These facility consolidations, along with reductions in salaried staff, changes in insurance, IT
Slide 24: What Drew Has Done - Strengthened Balance Sheet
What Drew Has Done - Strengthened Balance Sheet (1) The Company completed four acquisitions in the first nine months of 2010 which utilized $22 million in cash.
Slide 25: Section IV: Operating Results
SECTION IV Operating Results
Slide 26: Operating Results – Three Months Ended September 30
Operating Results Three Months Ended September 30, FINANCIAL PERFORMANCE (1) Excludes certain “extra expenses” recorded by the Company during the three months ended September 30, 2009, resulting primarily from plant closings and staff reductions. These expenses were largely due to the unprecedented
Slide 27: Results By Segment – Three Months
Results By Segment Three Months Ended September 30, FINANCIAL PERFORMANCE (1) Excludes certain “extra expenses” recorded by the Company during the three months ended September 30, 2009, resulting primarily from plant closings and staff reductions. These expenses were largely due to the unprecedented
Slide 28: Operating Results – Nine Months Ended September 30
Operating Results Nine Months Ended September 30, FINANCIAL PERFORMANCE (1) Excludes certain “extra expenses” recorded by the Company during the nine months ended September 30, 2009, resulting primarily from plant closings, staff reductions, increased bad debts, and obsolete inventory and tooling. T
Slide 29: Results By Segment – Nine Months
Results By Segment Nine Months Ended September 30, FINANCIAL PERFORMANCE (1) Excludes certain “extra expenses” recorded by the Company during the nine months ended September 30, 2009, resulting primarily from plant closings, staff reductions, increased bad debts, and obsolete inventory and tooling.
Slide 30: Operating Results – Year Ended December 31
Operating Results Year Ended December 31, (except as noted) FINANCIAL PERFORMANCE (1) Sales declines in 2008 and 2009 due to reductions in industry-wide shipments of RVs and Manufactured Homes. (2) Excludes certain “extra expenses” recorded by the Company during 2009 and 2008, resulting primarily fr
Slide 31: Results By Segment – Year
Results By Segment (1) Sales declines due to reductions in industry-wide shipments of RVs and Manufactured Homes. (2) Excludes certain “extra expenses” recorded by the Company during 2009 and 2008, resulting primarily from plant closings and start-ups, staff reductions and relocations, increased bad
Slide 32: Balance Sheet
Balance Sheet FINANCIAL PERFORMANCE (1) Days sales in A/R is the most recent month’s net sales divided by accounts receivable, net, at the end of the period. (2) Inventory Turns is cost of goods sold for the last twelve months divided by average inventory for the last twelve months.
Slide 33: Financial Strength
Financial Strength (1) EBITDA is operating profit plus depreciation, amortization and goodwill impairment (see page 35). (2) Excludes a goodwill impairment charge of $5.5 million ($3.4 million after tax). (3) Excludes a goodwill impairment charge of $45.0 million ($29.4 million after tax). FINANCIAL
Slide 34: The Future
Increasing RV Content RV recovery from recession Demographic tailwind Exploring related industries Affordable housing The Future -33-
Slide 35: Stock Price History
Stock Price History Drew has 22 million shares outstanding and a market capitalization of approximately $450 million as of November 5, 2010 (December 31, unless noted)
Slide 36: Analyst Coverage
Analyst Coverage CJS Securities Torin Eastburn – (914) 287-7600 Thompson Research Group Kathryn Thompson – (615) 891-6206 Janney Montgomery Scott LLC Liam D. Burke – (202) 955-4305 Sidoti & Company, LLC Scott Stember – (212) 453-7017 Avondale Partners, LLC Bret Jordan – (617) 314-0487
Slide 37: Thank you!
Thank you! Joseph S. Giordano III CFO & Treasurer 914-428-9098 joe@drewindustries.com OR VISIT OUR WEBSITE: www.drewindustries.com For more information contact: Fredric M. Zinn President and CEO 914-428-9098 fred@drewindustries.com
Slide 38: Reconciliation of Operating Profit to EBITDA
Reconciliation of Operating Profit to EBITDA FINANCIAL PERFORMANCE
Slide 39: Reconciliation of Operating Profit to EBITDA - Quarterly
Reconciliation of Operating Profit to EBITDA - Quarterly FINANCIAL PERFORMANCE
Slide 40: Reconciliation of Adjusted Results to Actual
Reconciliation of Adjusted Results to Actual FINANCIAL PERFORMANCE (1) During 2009 and 2008, the Company recorded “extra” expenses resulting primarily from plant closings and start-ups, staff reductions and relocations, increased bad debts and obsolete inventory and tooling. These expenses were larg
Slide 41: Reconciliation of Adjusted Results to Actual
Reconciliation of Adjusted Results to Actual FINANCIAL PERFORMANCE (1) During 2009 and 2008, the Company recorded “extra” expenses resulting primarily from plant closings and start-ups, staff reductions and relocations, increased bad debts and obsolete inventory and tooling. These expenses were larg
Slide 42: Reconciliation of Segment Adjusted Operating Profit to Actual
Reconciliation of Segment Adjusted Operating Profit to Actual FINANCIAL PERFORMANCE (1) During 2009 and 2008, the Company recorded “extra” expenses resulting primarily from plant closings and start-ups, staff reductions and relocations, increased bad debts and obsolete inventory and tooling. These e
Slide 43: Reconciliation of Segment Adjusted Operating Profit to Actual
Reconciliation of Segment Adjusted Operating Profit to Actual FINANCIAL PERFORMANCE (1) During 2009 and 2008, the Company recorded “extra” expenses resulting primarily from plant closings and start-ups, staff reductions and relocations, increased bad debts and obsolete inventory and tooling. These e
Slide 44: Reconciliation of Segment Results to Consolidated
FINANCIAL PERFORMANCE Reconciliation of Segment Results to Consolidated
Drew Industries — Investor Presentation (November 2010) on 6ix