Lci Industries · NYSE:LCII
Lci Industries — Q3 2020 Earnings Presentation
37 slides from Lci Industries's earnings presentation, Nov 9, 2020
Slide 1: LCI Industries Investor Presentation November 2020
LCI INDUSTRIES LCI Industries Investor Presentation November 2020 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: Operational and Industry Update
LCI INDUSTRIES Operational and Industry Update Taking steps to ensure the safety of team members while meeting increased demand brought on by COVID-19 Health and Safety Measures Increased Demand ◦ Heightened health and safety measures continued ◦ Increased demand for RVs and outdoor recreational thr
Slide 4: LCI at a Glance
LCI INDUSTRIES LCI at a Glance Third Quarter 2020 Year-over-Year Key Metrics Growth A leading supplier of highly engineered components primarily to the OEMs of recreational $827.7M +41% vehicles, buses, trailers, trucks, boats, trains, IN NET SALES manufactured housing, and their related aftermarket
Slide 5: Investment Case
LCI INDUSTRIES Investment Case Leading market share with unmatched depth and breadth of products Strong track record of financial performance Leadership team of 27 senior leaders with over 350 years aggregate experience at LCI Deep culture rooted in innovation, technology, and operational excellence
Slide 6: Business Overview
LCI INDUSTRIES Business Overview Applicable across a number With 7 core of customer segments competencies LCI serves 3 critical Recreational Metal Fabrication Vehicle customer needs & Welding High Variation / Small batch Marine Short Runs at manufacturing with Lamination Transit & School Scale the b
Slide 7: Breadth and Depth of Product Offerings
LCI INDUSTRIES Breadth and Depth of Product Offerings Product Lines Industries • Towable RV Chassis • Steps • RV • Heavy & Light Truck • Furniture • Leveling Systems • Aftermarket • Manufactured Homes • Windows and Windshields • Suspension • Marine • Modular Housing • Entry and Baggage Doors Enhance
Slide 8: Financial Performance
LCI INDUSTRIES Sales Trend ($M) EBITDA* ($M) 2,476 2,577 290 14% CAGR 2,374 15% CAGR 269 266 273 2,148 247 1,679 1,403 158 Financial 1,191 128 Performance 2014 2015 2016 2017 2018 2019 LTMQ320 2014 2015 2016 2017 2018 2019 LTMQ320 Diluted EPS, Adjusted in 2017 - 2020 • Q3 2020 net sales were up 41%
Slide 9: Vision and Values
LCI INDUSTRIES Vision and Values To be a leading supplier for component parts manufacturing in the markets 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, th
Slide 10: Culture of Innovation and Technology
LCI INDUSTRIES Culture of Innovation and Technology • R&D expertise and innovation remains a core component of LCI's long-term strategy • Demand for OneControl building as it becomes more frequently requested and adopted amongst customers • Launched Vela pop-up roof system for Class B vans in Q3 202
Slide 11: World-Class Operations Driven by a Culture of Caring
LCI INDUSTRIES World-Class Operations Driven by a Culture of Caring Our Social Impact Philosophy • Bringing our core values to life through leadership development and the LCI Dream Achiever program • Supporting hundreds of nonprofit organizations by donating our time and talents • Encouraging our te
Slide 12: Driving Sustainability Through Eco-Friendly Operations
LCI INDUSTRIES Driving Sustainability Through Eco-Friendly Operations We are committed to the safety of our environment and our communities through conscious resource selection and process improvements that aim to lessen the impact of manufacturing 400 1.0m processes. Tons of toxic chemicals Solar K
Slide 13: Expanding Our Growth Potential
LCI INDUSTRIES Expanding Our Growth Potential(1) 13 (1) Amounts in millions. "Opportunity"a. Amounts amounts (inrepresent millions) Management's represent estimate Management’s of the size of estimatethe addressable of the market size based of the on current addressable products as of Q419, excludin
Slide 14: Growing End Markets to Reduce Cyclicality
LCI INDUSTRIES Growing End Markets to Reduce Cyclicality 2016 Sales Q320 LTM Sales 2022E Sales North America RV - OEM Adjacent Industries Aftermarket Europe / International Our goal is to grow adjacent, aftermarket, and international to be approximately 14 60% of sales by 2022 to reduce cyclical imp
Slide 15: Positioned to Capitalize on Industry Tailwinds
LCI INDUSTRIES Positioned to Capitalize on Industry Tailwinds LTMQ320 SALES BY END MARKET RV MARKET SHARE BY AGE 25-34 35-44 45-54 55-64 65-74 75+ N.A. RV International North American Outdoor recreation Outdoor Recreation 20% industryIndustry Aftermarket $734$734 billion billion Adjacent Markets * —
Slide 16: RV Industry Trends
LCI INDUSTRIES RV Industry Trends Strong Recovery in Retail Demand - Record High Revenue and Run Rates in June through October 2020 RV Wholesale/Retail/Inventory Change 200,000 60,000 175,000 40,000 150,000 20,000 125,000 — 100,000 (20,000) 75,000 (40,000) 50,000 25,000 (60,000) — (80,000) Q117 Q217
Slide 17: Growing Aftermarket Segment
LCI INDUSTRIES Growing Aftermarket Segment • Multiple channels including wholesale distributors, direct to $600.0 dealer, and direct to consumer (e-commerce) • Multiple product categories including functional accessories, repair parts, replacement parts, and upgrades $400.0 • Strong service departme
Slide 18: 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 19: Global Expansion Opportunity
LCI INDUSTRIES Global Expansion Opportunity • Grew year-over-year International sales by 69% in Q3 2020 • Working closely with Erwin Hymer Group, owned by Thor Industries, to further expand LCI products and technologies in European markets • Europe is second to U.S. in RV unit production (approx. 21
Slide 20: Shade Solutions, Windshields, Truck Accessories, Towing Products
LCI INDUSTRIES Shade Solutions Windshields Truck Accessories Towing Products 20 20
Slide 21: Track Record of Acquisitions and New Product Offerings
LCI INDUSTRIES Track Record Starting 2019 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 $32m North Americ
Slide 22: Financial Overview
LCI INDUSTRIES L C I I N D U S T R I E S Financial Overview 22
Slide 23: Q3 2020 Financial Performance
LCI INDUSTRIES Consolidated Net Sales by Market Q3 2020 Financial Performance +32% Consolidated Net Sales Operating Margin RV OEM (in thousands) +11% $827,729 11.4% $586,221 8.4% ADJACENT OEM Third Quarter 2019 Third Quarter 2020 Third Quarter 2019 Third Quarter 2020 +149% Consolidated Net Income Ad
Slide 24: Consolidated Financials
LCI INDUSTRIES Consolidated Financials LTM ($ in millions except per 2014 2015 2016 2017 2018 2019 share data) Q320 Net Sales $ 1,191 $ 1,403 $ 1,679 $ 2,148 $ 2,476 $ 2,371 $ 2,577 Operating Profit $ 96 $ 116 $ 201 $ 214 $ 199 $ 200 $ 197 % of sales 8.1 % 8.3 % 12.0 % 10.0 % 8.0 % 8.4 % 7.6 % Net I
Slide 25: OEM Segment
LCI INDUSTRIES OEM Segment LTM Key Drivers $ in millions 2014 2015 2016 2017 2018 2019 Q320 • COVID-19 pandemic caused five week shutdown Sales $ 1,127 $ 1,300 $ 1,548 $ 1,977 $ 2,243 $ 2,092 $ 2,037 starting in late March 2020, negatively impacting Operating $ 89 $ 105 $ 181 $ 190 $ 167 $ 165 $ 144
Slide 26: OEM Content Per Vehicle
LCI INDUSTRIES OEM Content Per Vehicle Content per New Towable RV New Towable RV $3,428 $3,230 $3,346 $2,987 $3,022 $3,106 • Approximately 60% of OEM Segment net sales $2,690 $2,713 $2,816 $2,337 are for Travel Trailer and Fifth-Wheel OEMs $2,148 • 100% market share in existing products, excluding F
Slide 27: Aftermarket Segment
LCI INDUSTRIES Aftermarket Segment LTM Key Drivers $ in millions 2014 2015 2016 2017 2018 2019(1) Q320(1) • Robust Aftermarket is estimated to be double the Sales $ 64 $ 103 $ 131 $ 171 $ 233 $ 279 $ 540 size of the new RV market each year with higher Operating margins $ 9 $ 15 $ 20 $ 24 $ 31 $ 35 $
Slide 28: Balance Sheet Supports Growth
LCI INDUSTRIES Balance Sheet Supports Growth $ in millions 2014 2015 2016 2017 2018 2019 Q320 Cash & Equivalents $ — $ 12 $ 86 $ 26 $ 15 $ 35 $ 68 Accounts Receivable 38 42 57 82 122 200 313 Inventory 132 171 189 275 341 394 369 Other Assets 374 398 455 563 766 1,234 1,361 Total Assets $ 544 $ 623 $
Slide 29: Capital Deployment Strategy
LCI INDUSTRIES Capital Deployment Strategy Historical Use of Cash Cash Priorities Future Use of Cash Reduce Leverage Repurchases Disciplined Reinvestment to Drive Growth Dividends - 30% Dividends Acquisitions that Align to Strategy and Financial Targets Return Capital to Shareholders Acquisitions Ac
Slide 30: Operating Cash Flow and Net Debt / EBITDA
LCI INDUSTRIES Operating Cash Flow ($M) Net Debt / EBITDA* 269.50 3.06 272.50 2.16 1.96 156.61 1.05 0.82 155.08 0.24 84.91 82.68 0.09 63.26 95.02 -0.10 -0.45 32.26 -0.63 36.83 2004 2006 2008 2010 2012 2014 2016 2018 LTM 2004 2006 2008 2010 2012 2014 2016 2018 LTM Q320 Q320 30 *See the Appendix to th
Slide 31: Appendix
LCI INDUSTRIES L C I I N D U S T R I E S Appendix 31
Slide 32: Reconciliation of Non-GAAP Measures: Adjusted EBITDA
LCI INDUSTRIES Reconciliation of Non-GAAP Measures Adjusted EBITDA Three Months Ended Nine Months Ended Last Twelve September 30, September 30, SeptemberMonths 30, 2020 2019 2020 2019 2020 (In thousands) Net income $ 68,347 $ 35,809 $ 109,747 $ 117,702 $ 138,554 Interest expense, net 1,948 1,900 10,
Slide 33: Reconciliation of Non-GAAP Measures: Adjusted Net Income and EPS
LCI INDUSTRIES Reconciliation of Non-GAAP Measures Adjusted Net Income and Adjusted Diluted Net Income Per Common Share Three Months Ended Nine Months Ended Last Twelve September 30, September 30, SeptemberMonths 30, 2020 2019 2020 2019 2020 (In thousands, except per share amounts) Net income $ 68,3
Slide 34: Reconciliation of Non-GAAP Measures: Adjusted Diluted 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 Year ended December 31, 2018 As report
Slide 35: Reconciliation of Non-GAAP Measures: Leverage Ratio
LCI INDUSTRIES Reconciliation of Non-GAAP Measures Leverage Ratio (Net Debt to EBITDA) LTM $ in millions 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q320 Long-term indebtedness $ 59.3 $ 62.1 $ 46.0 $ 18.4 $ 2.9 $ — $ — $ — $ — $ — $ 15.7 $ 50.0 $ 49.9 $ 49.9 $ 293
Slide 36: Reconciliation of Non-GAAP Measures: Free Cash Flow
LCI INDUSTRIES Reconciliation of Non-GAAP Measures Free cash flow LTM $ in millions 2014 2015 2016 2017 2018 2019 Q320 Net cash flows provided by operating activities $ 107.0 $ 95.0 $ 203.4 $ 155.1 $ 156.6 $ 269.5 $ 272.5 Less: Capital expenditures 42.5 29.0 44.7 87.2 119.8 58.2 39.1 Free cash flow
Slide 37: Industry Statistics Summary
® LCI INDUSTRIES. 37 LCI industries Industry Statistics Summary TOTAL RECREATIONAL VEHICLES (RV) TOTAL Wholesate Unie ™ Retail Uae ™ ‘Dealer Inventory Impact Tort Merih__Y1D TM e463 760 Tc CE CET) “40% 467 0009 5893 3ar_— ari 799.328) 61.961 27% 460,344 26,4885. 3903 73.aa a 67 99.961 27% 446 541 40