LCI Industries · NYSE:LCII
LCI Industries — Drew Industries — Investor Presentation (May 2007)
36 slides from LCI Industries's investor presentation, May 11, 2007
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
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: Company Overview Financial Performance
Company Overview Financial Performance Headquartered in White Plains, New York – 10 employees 42 manufacturing facilities in the U.S. and 1 facility in Canada Approximately 4,000 employees nationwide Organic growth from 2001 through 3/31/07 was over $210 million or a 12% average annual growth, exclu
Slide 5: Drew's Companies
Drew’s Companies Kinro, Inc. – Acquired 1980 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 Chassis and chassis parts for RVs and MHs Slide out mechanisms for RVs Leveling devices fo
Slide 6: Drew's Segments – LTM 3/31/07
MH = $18 million 28% RV = $46 million 72% MH = $205 million 30% RV = $489 million 70% Drew’s Segments – LTM 3/31/07 Revenues - $694 million 90% of RV segment revenues are for towable RVs Segment Operating Profit - $64 million
Slide 7: Drew's Products
Drew’s Products RV Chassis and Chassis Parts: $205 million RV Windows and Doors: $112 million 12 Months Ended March 31, 2007 Sales - $694 million Other: $7 million MH and RV Bath Products: $23 million Specialty Trailers: $22 million RV Slide-out mechanisms: $105 million RV and MH Axles and Tires: $5
Slide 8: Supplier to Industry Leaders
Supplier to Industry Leaders Outstanding customer service and national coverage , with 43 production facilities (approximately 3 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) RV
Slide 9: 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 10: Content Per Vehicle - RV
Content Per Vehicle - RV Peak potential is $2,400 to $2,700 per RV (a) Excludes sales of specialty trailers. (b) Excludes sales of Emergency Living Units (“ELU’s”) purchased by FEMA. 90% of RV segment sales are for Towable RVs See Page 17 for Industry Information Operating profit margin 8.6% 9.4% 11
Slide 11: Content Per Home - MH
Content Per Home - MH Peak potential is $3,200 to $3,500 per home Operating Profit margin 10.8% 11.0% 10.7% 10.1% 10.2% 9.5% 8.7% See Page 21 for Industry Information 3/31/07
Slide 12: New Product Introductions
(in millions) New Product Introductions Annualized sales of these products increased from about $85 million in the 1st quarter of 2006. (a) New product line in connection with the January 2007 acquisition of Trailair and Equa-Flex.
Slide 13: Acquisition Criteria
Acquisition Criteria Drew is a disciplined and patient acquirer Target less than 6 times pro forma EBITDA Immediately accretive Complementary to our core RV and MH markets Strategic Acquisitions Seek to acquire products or technologies that we can introduce through our nationwide customer base and f
Slide 14: Acquisition History
July 2003 LTM Manufacturing Slide-out mechanisms, specialty slide-out storage trays and decks, and electric stabilizer jacks for RVs. Annual sales of $4 million Acquisition History Strategic Acquisitions June 2006 Happijac Bed lifts for “toy haulers”. Annualized sales of $15 million May 2004 Zieman
Slide 15: Drew's Management Team
Drew’s Management Team Highly respected and experienced management: Drew Leigh Abrams, CEO, 35+ years Fred Zinn, CFO, 25+ years Kinro David Webster, CEO, Chairman, 30+ years Lippert Jason Lippert, CEO, Chairman 12+ years Excellent management training and incentive programs Innovative & Experienced M
Slide 16: Investments
Investments Kinro and Lippert have extensive R&D departments Since January 1997: Invested over $154 million in plant and equipment Invested approximately $175 million for acquisitions Invested $40 million for stock repurchases at an average price of $5.37 per share These investments have been accret
Slide 17: RVs - Industry Wholesale Shipments
41 57 42 56 RVs - Industry Wholesale Shipments (Thousands of Vehicles) 90% of Drew’s current RV product sales are for Travel Trailers and 5th Wheel RVs (1) Includes approximately 13,500 RVs purchased by FEMA for emergency housing for 2004 hurricane victims. (2) Excludes 38,900 ELU’s in 2005 and 31,4
Slide 18: Towable RVs and Motorhomes RV Market
TOWABLE RVS (90% of Drew RV revenues) MOTORHOMES RV Market 86% of industry 2006 unit sales 54% of wholesale dollar sales Retail cost $4,000 to $100,000 per unit. Average about $20,000 14% of industry 2006 unit sales 46% of wholesale dollar sales Retail cost $41,000 to $400,000+ per unit. Average abo
Slide 19: Growth In RV Market
Growth In RV Market Positive Demographic Trends Primary owners of RVs are 50 and over According to census projections, there are expected to be 20 million more people over 50 by 2014 Strong Growth Prospects Industry Advertising Campaign Target Market 30 and over Post 9/11 security concerns and high
Slide 20: How RVs Are Used
How RVs Are Used Shift in U.S. culture toward more RV-related activities NASCAR events College and NFL football games “Toy Haulers” More economical family vacations Typical RV family vacation up to 74% less expensive Strong Growth Prospects Many RVs are “parked”over the long-term Travel Trailer
Slide 21: MH - Industry Production
47% 61% 59% 52% 49% 49% 47% 47% 75% 70% 65% 78% 74% 80% 72% 64% 71% MH - Industry Production (Thousands of Homes) (1) (1) Includes approximately 3,500, 15,000 and 3,000 for 2004, 2005 and 2006, respectively, MHs purchased by FEMA for emergency housing for hurricane victims. (2) Projected by MHI. (1)
Slide 22: Manufactured Housing (MH) Market
Manufactured Housing (MH) Market Cost per sq. ft. is $39 for MH vs. $91 for site-built homes Average retail price of $62,300 for a 1,595 sq. ft. MH 9 million manufactured homes across the U.S. Strong Growth Prospects Improved quality, appearance and safety Studies have shown that MH built since 1995
Slide 23: MH: Return to Growth
MH: Return to Growth Strong Growth Prospects ???
Slide 24: MH: Industry Trends
MH: Industry Trends Low inventory levels at retail dealers Slowing of repossessions Conventional financing now more common than chattel financing Improved industry lending practices should lead to fewer repossessions Berkshire Hathaway acquired Clayton, Oakwood, Southern Energy and 21st Mortgage; ra
Slide 25: MH: Strong Future
MH: Strong Future Baby Boomers retire and relocate to warmer climate Affordability Home appreciation due to greater ownership of land along with home Possible rebuilding of hurricane-damaged areas during late 2007 Improved industry image Industry wide Advertising Campaign needed Strong Growth Prospe
Slide 26: Drew's Ownership and Governance
Drew’s Ownership and Governance Ownership by Executives and Directors: Currently own 16% Filed Form S-3 on October 3, 2005. All insider sales are complete except for one Director. After his sale, insiders ownership will be 12%. Drew’s Corporate Governance Program – ranked in the 96 th percentile of
Slide 27: Financial Performance
Financial Performance The price of Drew’s common stock is 12 times the price as of December 31, 2000 Drew has 21.8 million shares outstanding and a market capitalization of more than $750 million as of May 7, 2007 (December 31 unless noted) Stock Price History Drew effected a 2-for-1 stock split on
Slide 28: Operating Results – Year Ended December 31
($ in millions, except EPS) Operating Results Year Ended December 31, Financial Performance (1) Excluding the estimated impact of hurricane-related sales from both 2006 and 2005, the Company estimates that diluted EPS would have been approximately $1.33 in 2006, compared to approximately $1.40 in 20
Slide 29: Results By Segment – Year Ended December 31
($ in millions) Results By Segment Year Ended December 31, Financial Performance (a) After a charge of $0.8 million related to legal proceedings, net of related incentive compensation. (b) After a gain of $0.8 million related to the sale of closed facilities, net of related incentive compensation. (
Slide 30: Operating Results – Three Months Ended March 31
($ in millions, except EPS) Operating Results Three Months Ended March 31, Financial Performance (a) Excluding the estimated impact of hurricane-related sales, the Company estimates that diluted EPS would have been approximately $0.38 in the first quarter of 2006. (b) Sales during the first quarter
Slide 31: Results By Segment – Three Months Ended March 31
($ in millions) Results By Segment Three Months Ended March 31, Financial Performance See Press Release dated April 30, 2007 for a reconciliation to consolidated results.
Slide 32: Reconciliation of Operating Profit to EBITDA
($ in millions) 2001 2002 2003 2004 2005 2006 LTM 3/07 Operating Profit $20.3 $29.2 $34.3 $44.0 $57.7 $55.3 $54.1 Depreciation and Amortization $8.4 $7.3 $7.8 $9.3 $12.0 $15.7 $16.6 EBITDA $28.7 $36.5 $42.1 $53.3 $69.7 $71.0 $70.8 Capital Expenditures $8.2 $ 10.5 $5.1 $27.1 $26.1 $22.3 $15.1 Reconci
Slide 33: Balance Sheet
($ in millions) Balance Sheet Financial Performance (1) Total debt was $99 million at June 30, 2006, subsequent to the acquisition of Happijac. (2) Days sales in accounts receivable is the most recent month’s net sales divided by accounts receivable, net, at the end of the period. (3) Inventory turn
Slide 34: Financial Strength
12/31/04 12/31/05 12/31/06 LTM 3/07 Return on Equity 23% 24% 16 % 15 % Return on Assets 12% 12% 9 % 9 % Total Debt to Equity 0.6 0.4 0. 3 0. 2 Total Debt to EBITDA (1) 1.3 1.1 0 . 8 0 . 7 Financial Strength Financial Performance ( 1) EBITDA is operating profit plus depreciation and amortization (see
Slide 35: Peer Comparison
20% 12% 19.1 30.2 Spartan (SPAR) (32%) (3%) 436.0 N/A Fleetwood (FLE) 15% 11% 16.8 24.9 Drew (DW) ROE ROA Forward P/E Trailing P/E (2%) 1% 19.1 N/A Monaco (MNC) 24% 16% 13.0 14.0 Thor (THO) 17.6 27.5 Winnebago (WGO) 16% 8% Peer Comparison Source: Capital IQ, May 8, 2007, except forward P/E, which is
Slide 36: Thank You
Analyst coverage: For more information contact: Or visit: www.drewindustries.com Thank You Avondale Partners, LLC: Kathryn Thompson (615) 467-5637 BB&T Capital Markets: John Diffendal (615) 340-8284 Ferris, Baker Watts, Inc. John T. G. Rogers (410) 659-4645 Sidoti & Company LLC: Scott Stember (212)