Lci Industries · NYSE:LCII
Lci Industries — Q2 2024 Earnings Presentation
32 slides from Lci Industries's earnings presentation, Aug 7, 2024
Slide 1: LCI Industries Investor Presentation August 2024
LCI Industries Investor Presentation May 2022 1 LCI INDUSTRIES INVESTOR PRESENTATION August 2024
Slide 2: Forward-Looking Statements
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 objectives of manag
Slide 3: LCI at a Glance
LCI at a Glance A leading supplier of highly engineered components primarily to the OEMs of RVs, buses, trailers, trucks, boats, trains, manufactured housing, and their related aftermarkets * See the Appendix to this presentation for reconciliation of non-GAAP financial measures to the most directly
Slide 4: LCI at a Glance
LCI at a Glance Over the last three decades, LCI has strategically diversified operations into the RV adjacent market, aftermarket and marine industry; leaning into outdoor lifestyle movement * See the Appendix to this presentation for reconciliation of non-GAAP financial measures to the most direct
Slide 5: LCI Overview: Brands and Core Competencies
LCI Overview Our industry-leading brands and core competencies 7 Core Competencies Metal Fabrication & Welding Lamination Glass Fabrication Cut & Sew Power & Motion Systems Electronics Plastics Forming Applicable Across a Number of Customer Segments Recreational Vehicle Marine Transit & School Bus E
Slide 6: LCI Overview: Multiple key differentiators
LCI Overview 6 Multiple key differentiators advancing our leading position throughout our markets • Experienced leadership team with substantial industry knowledge • Centralized base in Indiana keeps leadership close with team members, supporting cohesive culture • 100,000+ retail customer interacti
Slide 7: Key Strategic Opportunities
Key Strategic Opportunities Our long-term growth is guided by execution against five strategic pillars: 7
Slide 8: Leadership & Culture
Leadership & Culture We strive to drive superior returns to all of our teams...our PEOPLE, our CUSTOMERS and our SHAREHOLDERS 8 Striving to Lead • A passion to win, coupled with a robust growth strategy, drives us to be a leader in every market we enter • Strong cultural underpinning has helped redu
Slide 9: Innovation Driving Growth
Innovation Driving Growth Continued focus on innovation driving an ongoing increase in new product introductions 9 Touring Coil Suspension Furrion® 18K Chill Cube Air Conditioner Solera® 3000 Off-Grid Series Solar awning Titan Leveling Systems Towable & Motorized CURT® HeluxTM Series Coil Spring Pin
Slide 10: Improving the Customer Experience for all
Improving the Customer Experience for all • Employing listening strategies across various customer touch points including end consumer, dealer, and OEM to create meaningful and desired improvements to products, processes, and services • Supporting nearly two million interactions through our Customer
Slide 11: Dedication to Quality
Dedication to Quality Reputation for safe and reliable products enabling continued market share growth • Quality of our products leads to strong customer relationships, helping us win new business and increase our market share Focus on automation to maintain quality while supporting profitability •
Slide 12: Prioritization of Health & Safety
Utilizing "Take 5" safety rally cry across Lippert • Company-wide initiative for all Lippert team members to take 5 seconds to Stop, Identify, and Assess hazards within daily duties • Emphasizes importance of controlling and communicating risk at all levels, creating a safer working environment and
Slide 13: ESG Focus Areas
ESG Focus Areas Driving long-term value creation through progress on ESG initiatives. Commitment to Sustainability Data monitoring and clean energy investment • Disclosure of scope 1 and 2 greenhouse gas emissions and data on energy consumption, waste management and recycling; CSR reported with refe
Slide 14: Our Business
OUR BUSINESS
Slide 15: RV OEM Net Sales
RV OEM Net Sales (in thousands) 15 RV OEM Key Drivers • North American RV OEM revenues up 20% YoY in the second quarter of 2024, primarily driven by a 15% increase YoY in industry wholesale shipments of towable units for the second quarter • Our current full year 2024 North American forecast is 315
Slide 16: Marine OEM Net Sales
Content per Wholesale Unit • Content per power boat of $1,249 for the full year 2023 16 Marine OEM - Net Sales Key Drivers • Marine industry pressured by current dealer inventory levels, inflation, and elevated interest rates impacting retail customers • Focused on continued innovation in the marine
Slide 17: Aftermarket Key Drivers
17 Key Drivers • Represents one of the strongest value drivers for LCI due to long runway for growth, counter-cyclicality, strong margin profile, and premium brands • Innovation driving ongoing portfolio expansion through sophisticated products, catering to the new generation of RV enthusiasts • Foc
Slide 18: International Business & Other Adjacencies - Net Sales
18 International Business & Other Adjacencies - Net Sales Background • International: ◦ Tailored products in RV, marine, cargo trailers, and high-speed trains • Adjacencies: ◦ Building Products: Components for the manufactured and modular housing markets ◦ Transportation Products: Components for aut
Slide 19: Financial Overview
Diversification and content expansion enabling market share gains and strong cash generation Financial Overview * See the Appendix to this presentation for reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures. 19
Slide 20: Q2 2024 Financial Performance
Q2 2024 Financial Performance * Additional information regarding EBITDA, as well as reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure, is provided in the Appendix. 20 +4% +320 bps +83% +39%
Slide 21: Expanding Addressable Markets
Expanding Addressable Markets $12 billion in combined growth opportunity through various markets as we focus on innovation, optimize our footprint, and diversify our offerings Unlocking value through diversification: (1) "Market Opportunity" amounts represent Management's estimate of the size of the
Slide 22: Leveraging Strengths to Win Market Share
Leveraging Strengths to Win Market Share • Delivering innovative products through leading, nimble manufacturing capabilities • Building upon long-term customer relationships to expand product offering and bundle multiple product categories • Focusing on long-term content per unit growth in all marke
Slide 23: Financial Overview: Healthy balance sheet
Financial Overview Healthy balance sheet with ample liquidity enables execution of strategic priorities * See the Appendix to this presentation for reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures. 23 As of and for the six months ended June 30 202
Slide 24: Capital Deployment Strategy
Capital Deployment Strategy Financial Overview Reduce leverage Disciplined reinvestment to drive growth Acquisitions that align to strategy and financial targets Return capital to shareholders Attractive dividend yield Opportunistic share repurchases Target net debt / EBITDA leverage of 1.5x Histori
Slide 25: Acquisition Strategy
Over 75 acquisitions • Majority of last 30 acquisitions focused outside of North American RV industry Looking for: • Great leadership • Product innovation • Consistency with our core manufacturing disciplines • Niche markets • Favorable competitive landscape Typical synergies to improve EBITDA turns
Slide 26: Appendix
APPENDIX
Slide 27: Consolidated Financials
Consolidated Financials Appendix ($ in millions except per share data) 2017 2018 2019 2020 2021 2022 2023 Net Sales $ 2,148 $ 2,476 $ 2,371 $ 2,796 $ 4,473 $ 5,207 $ 3,785 Operating Profit $ 214 $ 199 $ 200 $ 223 $ 398 $ 553 $ 123 % of Sales 10.0% 8.0% 8.4% 8.0% 8.9% 10.6% 3.3% Net Income $ 133 $ 14
Slide 28: Balance Sheet
Balance Sheet Appendix *Debt increase in 2019, 2020, and 2021 due to funding acquisitions and liquidity for COVID-19 shutdowns. ($ in millions) 2017 2018 2019 2020 2021 2022 2023 Cash & Equivalents $ 26 $ 15 $ 35 $ 52 $ 63 $ 47 $ 66 Accounts Receivable 82 122 200 269 320 214 215 Inventory 275 341 39
Slide 29: EBITDA Reconciliation of Non-GAAP Measures
EBITDA Reconciliation of Non-GAAP Measures Appendix EBITDA is a non-GAAP performance measure included to illustrate and improve comparability of its results from period to period. EBITDA is defined as net income before interest expense, provision for income taxes, and depreciation and amortization e
Slide 30: Leverage ratio (net debt to EBITDA)
Leverage ratio (net debt to EBITDA) Reconciliation of Non-GAAP Measures Appendix The Leverage Ratio (or Net Debt to EBITDA ratio) is a non-GAAP measure of the use of debt. The Leverage Ratio is calculated by dividing the total of long-term indebtedness, plus current portion of long-term debt, less c
Slide 31: Free cash flow
Free cash flow Reconciliation of Non-GAAP Measures Appendix Free cash flow is a non-GAAP measure of liquidity, calculated by subtracting capital expenditures from net cash flows provided by operating activities. The Company considers free cash flow to be a profitability and liquidity measure that pr
Slide 32: Industry Statistics Summary
Appendix LCI Industries Industry Statistics Summary TOTAL RECREATIONAL VEHICLES (RV) TOTAL Wholesale Units 7 Retail Units @ [ Dealer Inventory Impact im a0) tm Month Y1o uM = 493,268 448.626 -21% 448.626 - 47 44,642" 44,642 460.322 21,360 “34% 441,806 _ (955) 18.516 432.875 47,288 434.434 ~“(657) (1