Lci Industries · NYSE:LCII
Lci Industries — Drew Industries — Investor Presentation (February 2008)
37 slides from Lci Industries's investor presentation, Feb 21, 2008
Slide 1: A Leading National Supplier of Components for RV's and Manufactured Homes
A Leading National Supplier of a Wide Variety of Components for RV's and Manufactured Homes
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains certain "forward-looking statements" within the meaning of the Private Secutities Litigation Reform Act of 1995 with respect fo 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
Company Overview ® Headquartered in White Plains, New York — 10 employees 33 manufacturing facilities in the U.S. Approximately 3,700 employees nationwide Organic growth from 2001 through 12/31/07 was over $162 million or a 9% average annual growth, excluding price increases, acquisitions, and FEMA
Slide 5: Drew's Companies
Drew's Companies ® Kinro, Inc. - Acquired 1980 > Aluminum windows for RVs iy > Doors for RVs and MHs Mo” > Aluminum and vinyl windows and screens for MHs >» Bath and shower units, and sinks for MHs and RVs > Exterior panels for RVs © Lippert Components, Inc. - Acquired 1997 Chassis and chassis parts
Slide 6: Drew's Management Team
Drew's Management Team < q INNOVATIVE & EXPERIENCED Highly respected and experienced MANAGEMENT management: yLeigh J, Abrams, CEO 35+ years ~Fredric M. Zinn, CFO 25+ years David L. Webster, CEO, Chairman 30+ years David Webster Jason D. Lippert, CEO, Chairman 13+years Excellent management training a
Slide 7: Drew's Segments — 2007
Drew's Segments — 2007 Revenues - $669 million
Slide 8: Drew's Products
Drew's Products Sales - $669 million 12 Months Ended December 31, 2007 11% 32% l RV Chassis and Chassis Parts; $206 million MH Windows, Doors and Screens: $73 million 10% MH Chassis and Chassis Parts: $70 million 3% MH and RV Bath Products: $23 million ‘ 3% ar "RY slide-out Specialty Trailers: 4d me
Slide 9: Supplier to Industry Leaders
Supplier to Industry Leaders ® Outstanding customer service and national coverage, with 33 production facilities (approximately 2.8 million sq. ft.), make us a key partner with our customers, including: >» Fleetwood (NYSE: FLE) > Skyline (NYSE: SKY) >» Coachmen (NYSE: COA) > Forest River (owned by B
Slide 10: 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 Low cost manufacturing
Slide 11: Content Per Vehicle - RV
Content Per Vehicle - RV Peak potential is $2,500 to $2,800 per RV 90+% of RV segment sales are for Towable RVs $1126 (2) Operating 2001 2002 2003 2004 2005 2006 2007 profitmargin 8.7% 10.0% 11.6% 9.8% 9.7% 8.6% 12.8% (1) Excludes sales of specialty trailers, which are included in the RV segment. (2
Slide 12: Content Per Home - MH
Content Per Home - MH Peak potential is $3,300 to $3,600 per home Operating 2001 2002 2003 2004 2005 2006 2007 Profit margin 10.87% 10.97% 10.8% 10.5% 10.6% 9.1% 8.5% See Page 21 for Industry Information alge
Slide 13: Recent Product Introductions
Recent Product Introductions Slide-out mechanisms for motorhomes “Market Potential Drew Annualized ‘Sales Level $11-$13 fim irket 17% 20% Windows for people movers $3 30% Axles for fowables | 75 | $33-$38 44%-51% Steps for RVs 25 $6-$8 24%-32%, Bed lifts for “toy hauler" RVs. 20 $14-$17 70%-85% Ramp
Slide 14: Acquisition Criteria
Acquisition Criteria STRATEGIC ACQUISITIONS ® Drew is a disciplined and patient acquirer ® Target price less than 6 times pro forma EBITDA ® Immediately accretive ® Complementary to our core RV (including specialty trailers) and MH markets ® Seek to acquire products or technologies that we can intro
Slide 15: Acquisition History
Acquisition History — 22 Acquisitions STRATEGIC ACQUISITIONS 2001 May 2005 June 2006 , Venture Welding Happljac May 2007 MH Chassis. Bed lifts for Coach Step Annual sales of “toy haulers” Electric steps for $18 million Annualized sales motorhomes. Annual of $15 million sales of $2 million Better Bat
Slide 16: Investments
Investments ® Kinro and Lippert have extensive R&D departments ® Since January 1998: > Invested over $150 millions in plant and equipment > Invested over $132 million for acquisitions > Invested $19 million for stock repurchases at an average price of $4.53 per share ® These investments have been ac
Slide 17: RVs - Industry Wholesale Shipments
RVs - Industry Wholesale Shipments 90% of Drew's current RV product sales are for Travel Trailers and 5th Wheel RVs @ Travel Trailers & Sth Wheel @ Other Towables ® Motorhomes: [Thousands of Vehicles} (2113) 99171! yin 304 994 1998 1999 ©2000» 2001-««- 2002S 2003» 2004» 2005 © 2008 -« 2007 -~—« 2008
Slide 18: RV Market
RV Market TOWABLE RVS (90+% of Drew's RV segment revenues © 86% of industry 2006 unit sales wey & = Se 5 50% 0f 2006 wholesale dollar Travel trailer Fifth wheel travel trailer sales, or $5.9 billion x * © Retail cost $4,000 to $100,000 per pl al unit. Average about $20,000 ee SoHE From 1998 to 2006
Slide 19: Trends In RV Market
Trends In RV Market STRONG LONG-TERM GROWTH PROSPECTS ® Positive Demographic Trends: > Americans 50 and over is a prime market for RVs > According to census projections in March 2004, there are expected to be 20 million more people over 50 by 2014 —=, © Industry Advertising tt. Campaign: > Target Ma
Slide 20: How RVs Are Used
How RVs Are Used STRONG LONG-TERM GROWTH PROSPECTS ® Shift in U.S. culture toward more RV-related activities: > College and NFL football games > NASCAR events > “Toy Haulers” ® More economical family vacations: > Typical RV family vacation up to 74% less expensive ® Many RVs are “parked” over the lo
Slide 21: MH — Industry Production
MH — Industry Production @ Multi-Section @ Single Section (Thousands of Homes) 400 seni ao Fo) 233 49 300 2 250 4 211 200 4 =) 4171 168 () 160 gaze iy 400 4 s296459% 26) 96 90 50 147%| Co) ELLE PEFELE ESE EES EEE (1) Includes approximately 3,500, 15,000 and 3,000, for 2004, 2005 and 2006, respective
Slide 22: Manufactured Housing (MH) Market
Manufactured Housing (MH)Market (0) © STRONG LONG-TERM GROWTH PROSPECTS 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. Improved quality, appearance and safety Studies have shown that MH b
Slide 23: MH: Industry Financing Trends
MH: Industry Financing Trends STRONG LONG-TERM GROWTH PROSPECTS Improved lending practices Conventional financing more common than chattel; improves collateral Subprime market woes could help MH New proposed legislation would increase FHA chattel loan limits (home only)on manufactured homes from $48
Slide 24: MH: Other Favorable Factors
MH: Other Favorable Factors STRONG LONG-TERM GROWTH PROSPECTS ® Affordability and quality © Baby Boomers retiring in increasing numbers ® Dealer and manufacturer inventory levels are reasonable ® Potential for continued rebuilding in the Gulf Coast ® Favorable HUD code revisions ® Improved industry
Slide 25: Drew's Ownership and Governance
Drew's Ownership and Governance ® Executives and Directors currently own 10% © Drew's Corporate Governance Program > Ranked in the 87" percentile of all S&P 600 Companies by RiskMetrics Group (formerly ISS) ® Included in S&P SmallCap 600 Index and Russell 2000 Index a8
Slide 26: Financial Performance
Financial Performance © Stock Price History > The price of Drew's Common stock is 8 times the price as of December 31, 2000 > Drew has 22 million shares outstanding and a market capitalization of approximately $570 million as of February 15, 2008 20 $24 $14 T 2000 2001 2002 2003 2004 2005 2006 10/5/
Slide 27: Operating Results
Operating Results enianciac Parana Year Ended December 31, (except as noted) (Sin millions, except EPS) 2007 2004 2005 =. 006") 20077) vs 2006 Operating Profit "Rofo ma recone at ae i so98 | 125% [1] Excluding the estimated impact of hurricane-related sales from both 2006 and 2005, the Company estim
Slide 28: Results By Segment
Results By Segment Year Ended December 31, |(Sin millions) FINANCIAL PERFORMANCE 2006 2007” Net sales RV Segment MH Segment Operating Profit RVSegment || $ 340 | $ 433 | § 436 | $631] +45% MH Segment RV Segment MH Segment 1) Sales during the latter part of 2006 and all of 2007 were negatively impact
Slide 29: Results By Segment
Results By Segment (Sin millions) FINANCIAL PERFORMANCE Net Sales: RV Segment MH Segment $491.8 __Total Net Sales Operating Profit: RV Segment MH Segment Total Segment Operating Profits Amortization of intangibles Corporate and other Other items Total Operating Profit _ 29+
Slide 30: Operating Results
Operating Results Three Months Ended December 31, Operating Profit $ 7.0 Net Income ky FINANCIAL PERFORMANCE +45% +78% =30-
Slide 31: Results By Segment
Results By Segment Three Months Ended December 31, CNAME IMC ER SO ANGE ($in millions) 2006 2007 Operating Profit | MHsegment |g a5 | $29 | iy al as |_RVSegment | 4.2% | 9.8% | | U ner ee See Press Release dated February 13, 2008 for a reconciliation to consolidated results. +31.
Slide 32: Balance Sheet
Balance Sheet FINANCIAL PERFORMANCE ($in millions) 12/31/05 12/31/06 12/31/07 Stockholders’ equity $168 $252 Days sales in accounts | : receivable!” 1é6days | 15 days 1) Days sales in accounts receivable is the most recent month's net sales divided by accounts receivable, net, at the end of the peri
Slide 33: Financial Strength
Financial Strength FINANCIAL PERFORMANCE Return on Assets 12% 12% 9% 12% Total Debt to EBITDA. 1 qd 0.8 0.3 1) EBITDA is operating profit plus depreciation and amortization (see page 35) 133+
Slide 34: Peer comparison
Peer comparison FINANCIAL PERFORMANCE RO/ RO! Drew (DW) 14.7 0.1 11% 17% Champion (CHB) 38.9 67 3% 5% Fleetwood (FLE) N/A 419.0 (2%) (61%) Monaco (MNC) 24.6 16.7 3% 4% Spartan (SPAR) 15.6 26 10% 18% Thor (THO) 12.1 0.4 12% 21% Winnebago (WGO) 13.6 0.4 10% 21% Source: Capital IQ, February 19, 2008, e
Slide 35: Analyst Coverage
Analyst Coverage Avondale Partners, LLC: Kathryn Thompson - (615) 467-563 BB&T Capital Markets: John Diffendal - 615 340-8284 Ferris, Baker Watts, Inc: John T. G. Rogers - 410 659-4645 RBC Capital Markets: Edward Aaron - 303 595-1127 Sidoti & Company, LLC: Scott Stember - 212 453-7017 Susquehanna Fi
Slide 36: Thank you!
Thank you! For more information contact: Leigh J. Abrams President & CEO 914-428-9098 leigh@drewindustries.com Fredric M. Zinn Executive VP and CFO 914-428-9098 fred@drewindustries.com OR VISIT OUR WEBSITE: www.drewindustries.com
Slide 37: Reconciliation of Operating Profit to EBITDA
Reconciliation of Operating Profit to EBITDA FINANCIAL PERFORMANCE (Sin millions) 2001 ©2002 »~=— 200: 2005 ©2006 \ $ 44.0 sail diss) $ 66.0 | Mt | | Operating Profit i i i i Depreciation & Amortization $ 23°) $120) $15.7) $17.6 Capital Expenditures I 51 $27.1 $25.1 $22.3 $ a8 $8.2 | $10.5 -37-
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