Lci Industries · NYSE:LCII
Lci Industries — Drew Industries — Investor Presentation (November 2007)
37 slides from Lci Industries's investor presentation, Nov 13, 2007
Slide 1: A Leading National Supplier of a Wide Variety of Components for RV's and Manufactured Homes
2003 2003 A Leading National Supplier of a Wide Variety of Components for RV’s and Manufactured Homes
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: 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 and Financial Performance
Company Overview Financial Performance Headquartered in White Plains, New York – 10 employees 36 manufacturing facilities in the U.S. Approximately 4,000 employees nationwide Organic growth from 2001 through 9/30/07 was over $168 million or a 9% average annual growth, excluding price increases, acqu
Slide 5: Drew's Companies
Kinro, Inc. - Acquired 1980 Aluminun windows for RVs Doors for RVs and MHs 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 for RVs and MHs Slide-out mechanisms a
Slide 6: Drew's Segments – LTM 9/30/07
MH = $186 million 28% RV = $483 million 72% MH = $14 million 19% RV = $59 million 81% Drew’s Segments – LTM 9/30/07 Segment Operating Profit - $73 million Revenues - $669 million
Slide 7: Drew's Products
Drew’s Products Sales - $669 million 12 Months Ended September 30, 2007 RV Chassis and Chassis Parts: $201 million RV Windows and Doors: $107 million Other: $6 million MH and RV Bath Products: $23 million Specialty Trailers: $20 million RV Slide-out mechanisms: $109 million RV and MH Axles and Tires
Slide 8: Supplier to Industry Leaders
Supplier to Industry Leaders Outstanding customer service and national coverage, with 36 production facilities (nearly 3 million sq. ft.), make us a key partner with our customers. Supply most of the Leading Producers of RVs and MHs: Fleetwood (NYSE: FLE) Skyline (NYSE: SKY) Coachmen (NYSE: COA) For
Slide 9: 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 factories by optimizing p
Slide 10: 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 (1) Excludes sales of specialty trailers. (2) Excludes sales of Emergency Living Units (“ELU’s”) purchased by FEMA. Operating profit margin 8.6% 9.4% 11.3% 9.2% 9.6% 8.6% 12.2% (1) (1)(2) (
Slide 11: Content Per Home - MH
Content Per Home - MH Peak potential is $3,300 to $3,600 per home Operating Profit margin 10.8% 11.0% 10.7% 10.1% 10.2% 9.5% 7.7% See Page 21 for Industry Information Est.
Slide 12: New Product Introductions
(in millions) Market Potential Drew Annualized Sales Level New Product Introductions Annualized sales of these products increased from about $105 million in the 3rd quarter of 2006. (a) Including recent acquisitions. Slide-out mechanisms for motorhomes $ 65 $10-$12 Windows for people movers $3 Axles
Slide 13: Drew is a disciplined and patient acquirer
Drew is a disciplined and patient acquirer Target price less than 6 times pro forma EBITDA Immediately accretive Complementary to our core RV and MH markets Seek to acquire products or technologies that we can introduce through our nationwide customer base and factory network Become a more extensive
Slide 14: Acquisition History
May 2004 Zieman RV and MH chassis, and specialty trailers. Annual sales of over $40 million July 2007 Extreme Engineering Custom boat trailers. Annual Sales of $12 million 2001 Better Bath Bath and shower products for MH. Annual sales of $20 million 14 Acquisitions 1980 – 2003 Including Kinro (1980)
Slide 15: Drew's Management Team
Drew’s Management Team Leigh J. Abrams, CEO 35+ years Fredric M. Zinn, CFO 25+ years Leigh Abrams Innovative & Experienced Management David L. Webster, CEO, Chairman 30+ years Jason D. Lippert, CEO, Chairman 12+years Jason Lippert David Webster Highly respected and experienced management: Excellent
Slide 16: Investments
Investments Kinro and Lippert have extensive R&D departments Since January 1997: Invested over $159 million in plant and equipment Invested over $189 million for acquisitions Invested $40 million for stock repurchases at an average price of $5.37 per share These investments have been accretive to ea
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 (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 31,400 ELU’s in 2006 purchased by FEMA.
Slide 18: RV Market: Towable RVs and Motorhomes
TOWABLE RVS (90% of Drew’s RV revenues) MOTORHOMES 86% of industry 2006 unit sales 50% of 2006 wholesale dollar sales or $5.9 billion Retail cost $4,000 to $100,000 per unit. Average about $20,000 From 1998 to 2006 the travel trailer and 5 th wheel market grew at an annual rate of approximately 8%,
Slide 19: Growth In RV Market
Retail sales of Travel Trailers up this year Positive Demographic Trends: Primary owners of RVs are 50 and over According to census projections in March 2004, there are expected to be 20 million more people over 50 by 2014 Industry Advertising Campaign: Target Market 30 and over Post 9/11 security c
Slide 20: How RVs Are Used
How RVs Are Used 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 long-term as second homes Strong Growth Prospects
Slide 21: MH – Industry Production
MH – Industry Production (Thousands of Homes) (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) Estimate by Company management. Drew’s MH segment remained profitable every quarter since 19
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. Improved quality, appearance and safety Studies have shown that MH built since 1995 sustain no more damage i
Slide 23: MH: Industry Financing Trends
Improved lending practices Conventional financing more common than chattel; improves collateral Subprime market woes could help MH Pressure on Fannie Mae/Freddie Mac to support MH loans MH: Industry Financing Trends Strong Growth Prospects
Slide 24: MH: Other Favorable Factors
MH: Other Favorable Factors Baby Boomers retiring in increasing numbers Appropriate dealer and manufacturer inventory levels Potential for rebuilding the Gulf Coast Affordability and quality New HUD code Improved industry image Advertising campaign being developed Berkshire investments Strong Growth
Slide 25: Drew's Ownership and Governance
Executives and Directors currently own 10% Drew’s Corporate Governance Program Ranked in the 86 th percentile of all Russell 3000 Companies by Institutional Shareholder Services. Added to S&P SmallCap 600 Index in October 2005 Drew’s Ownership and Governance
Slide 26: Financial Performance: Stock Price History
Financial Performance Stock Price History The price of Drew’s Common stock is more than 13 times the price as of December 31, 2000 Drew has 21.9 million shares outstanding and a market capitalization of approximately $875 million as of October 30, 2007 Drew effected a 2-for-1 stock split on 9/7/05 t
Slide 27: Operating Results
($ in millions, except EPS) 2004 2005 2006 (1)(2) LTM 9/07 (2) LTM 9/07 vs 2006 Sales $ 531 $ 669 $ 729 $ 669 -8% Operating Profit $ 44.0 $ 57.7 $ 55.3 $ 62.8 +14% % of Sales 8.3% 8.6% 7.6% 9.4% Net Income $ 25.1 $ 33.6 $ 31.0 $ 36.9 +19% Diluted EPS (1) $ 1.18 $ 1.56 $ 1.42 $ 1.68 +18% EBITDA (3) $
Slide 28: Results By Segment
($ in millions) 2004 2005 2006 (3) LTM 9/07 (3) Results By Segment Net sales RV Segment $ 346.2 $ 447.7 $ 508.8 $ 483.3 MH Segment $ 184.7 $ 221.5 $ 220.4 $ 185.6 Operating Profit RV Segment $ 32.6 $ 43.1 $ 43.9 $ 59.0 MH Segment $ 17.7 (1) $ 22.6 (1) $ 21.0 (2) $ 14.3 Operating Profit as a Percenta
Slide 29: Operating Results – Three Months Ended September 30
($ in millions, except EPS) 2006 2007 (1) Operating Results Sales $ $ -4% Operating Profit $ 12.9 $ 18.3 +42% % of Sales 7.1% 10.5% Net Income $ 6.9 $ 11.1 +60% Diluted EPS $ 0.32 $ 0.50 +56% Three Months Ended September 30, Financial Performance (1) Sales during third quarter of 2007 were negativel
Slide 30: Results By Segment – Three Months Ended September 30
($ in millions) 2006 2007 Results By Segment Net sales RV Segment $ 126.4 $ 127.2 -1% MH Segment $ 54.3 $ 46.2 -15% Operating Profit RV Segment $ 10.7 $ 17.6 +65% MH Segment $ 5.2 (1) $ 3.6 (1) -30% Operating Profit as a Percentage of Net Sales RV Segment 8.4% 13.8% MH Segment 9.5% (1) 7.9% (1) Fina
Slide 31: Operating Results – Nine Months Ended September 30
($ in millions, except EPS) 2006 (1) 2007 (1) Operating Results Financial Performance Nine Months Ended September 30, Sales $ $ -10% Operating Profit $ 48.3 $ 55.8 +16% % of Sales 8.2% 10.5% Net Income $ 27.4 $ 33.3 +22% Diluted EPS (1) $ 1.25 $ 1.51 +20% (1) Sales during the latter half of 2006 and
Slide 32: Results By Segment – Nine Months Ended September 30
($ in millions) 2006 (1) 2007 (1) Results By Segment Net sales RV Segment $ 415.7 $ 390.2 -6% MH Segment $ 175.4 $ 140.6 -20% Operating Profit RV Segment $ 38.0 $ 53.2 +40% MH Segment $ 17.5 $ 10.7 -39% Operating Profit as a Percentage of Net Sales RV Segment 9.1% 13.6% MH Segment 10.0% 7.6% Financi
Slide 33: Balance Sheet
($ in millions) 12/31/05 12/31/06 9/30/06 9/30/07 Balance Sheet Total assets $ $ $ $ Total debt $ $ $ $ Invested cash $ - $ 3 $ - $ Stockholders’ equity $ $ $ $ RATIOS Days sales in accounts receivable (1) 21 days 16 days 20 days 22 days Inventory turns (2) 6.5 turns 5.6 turns 5.9 turns 6.1 turns Fi
Slide 34: Financial Strength
12/31/04 12/31/05 12/31/06 LTM 9/07 Financial Strength Return on Equity 23% 24% 16% 17% Return on Assets 12% 12% 9% 11% Total Debt to Equity 0.6 0.4 0.3 0.2 Total Debt to EBITDA 1.3 1.1 0.8 0.5 Financial Performance (1) EBITDA is operating profit plus depreciation and amortization (see page 37)
Slide 35: Peer comparison
Trailing P/E Forward P/E ROA ROE Peer comparison Drew (DW) 26.9 18.6 10% 16% Fleetwood (FLE) N/A 67.3 (4%) (71%) Monaco (MNC) N/A 17.7 1% (1%) Spartan (SPAR) 22.6 13.1 13% 20% Thor (THO) 20.4 14.7 11% 18% Winnebago (WGO) 19.6 12.6 9% 19% Financial Performance Source: Capital IQ, October 30, 2007, ex
Slide 36: Thank you!
Thank you!
Slide 37: Reconciliation of Operating Profit to EBITDA
($ in millions) 2001 2002 2003 2004 2005 2006 LTM 9/07 Operating Profit $ 20.3 $29.2 $ 34.3 $ 44.0 $ 57.7 $ 55.3 $ 62.8 Depreciation & Amorti zation $ 8.4 $ 7.3 $ 7.8 $ 9.3 $ 12.0 $ 15.7 $ 17.5 EBITDA $ 28.7 $ 36.5 $ 42.1 $ 53.3 $ 69.7 $ 71.0 $ 80.3 Capital Expenditures $8.2 $ 10.5 $ 5.1 $ 27.1 $26.
Drew Industries — Investor Presentation (November 2007) on 6ix