Lci Industries · NYSE:LCII
Lci Industries — Investor Presentation (January 2021)
38 slides from Lci Industries's investor presentation, Jan 11, 2021
Slide 1: LCI Industries Investor Presentation January 2021
LCI INDUSTRIES 1 LCI Industries Investor Presentation January 2021
Slide 2: Forward-Looking Statements
LCI INDUSTRIES 2 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 ob
Slide 3: Operational and Industry Update
LCI INDUSTRIES 3 Operational and Industry Update Taking steps to ensure the safety of team members while meeting increased demand brought on by COVID-19 Increased DemandHealth and Safety Measures ◦ Heightened health and safety measures continued through the third quarter • Screening team members for
Slide 4: LCI at a Glance: Third Quarter 2020 Key Metrics
LCI INDUSTRIES 4 11% OPERATING MARGIN $2.72 ADJUSTED EPS* $827.7M IN NET SALES $119.4M ADJUSTED EBITDA* LCI at a Glance Third Quarter 2020 Key Metrics A leading supplier of highly engineered components primarily to the OEMs of recreational vehicles, buses, trailers, trucks, boats, trains, manufactur
Slide 5: Investment Case
LCI INDUSTRIES 5 Leading market share with unmatched depth and breadth of products Strong track record of financial performance Leadership team of 27 senior leaders with over 350 years aggregate experience at LCI Deep culture rooted in innovation, technology, and operational excellence Compelling in
Slide 6: Business Overview
LCI INDUSTRIES 6 High Variation / Short Runs at Scale Specialized / Engineered Components Mid-Spec Requirements Small batch manufacturing with the benefits of scale Products require some level of design / engineering Non-commoditized products that meet mid-spec tolerances Metal Fabrication & Welding
Slide 7: Breadth and Depth of Product Offerings
LCI INDUSTRIES 7 Breadth and Depth of Product Offerings • Towable RV Chassis • Furniture • Windows and Windshields • Entry and Baggage Doors • Mattresses • Slide-Out Mechanisms • Awnings • Axles • Steps • Leveling Systems • Suspension Enhancements • Showers and Sinks • Electronic components • Brande
Slide 8: Financial Performance
LCI INDUSTRIES 8 EBITDA* ($M) 128 158 247 269 266 273 290 2014 2015 2016 2017 2018 2019 LTMQ320 Sales Trend ($M) 1,191 1,403 1,679 2,148 2,476 2,374 2,577 2014 2015 2016 2017 2018 2019 LTMQ320 Free Cash Flow* ($M) 65 66 159 68 37 211 233 2014 2015 2016 2017 2018 2019 LTMQ320 Financial Performance •
Slide 9: LCI Leadership
LCI INDUSTRIES 9 • Our passion to win, coupled with a robust growth strategy, drive us to be a leader in every market we enter • We believe our industry-leading innovation, the quality of our products, and customer relationships will drive sales and profitability • We strive to leverage the manufact
Slide 10: Culture of Innovation and Technology
LCI INDUSTRIES 10 • 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 2020 • Tire Linc® Tire Pressure and T
Slide 11: World-Class Operations Driven by a Culture of Caring
LCI INDUSTRIES 11 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
Slide 12: Driving Sustainability Through Eco-Friendly Operations
LCI INDUSTRIES 12 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 processes. Current environmental initiatives inc
Slide 13: Expanding Our Growth Potential
LCI INDUSTRIES 13 a. Amounts (in millions) represent Management’s estimate of the size of the addressable market, excluding the Company’s current net sales to those markets. (1) Amounts in millions. "Opportunity" amounts represent Managem nt's estim te of the size of the addr ssable market based on
Slide 14: Growing End Markets to Reduce Cyclicality
LCI INDUSTRIES 14 Growing End Markets to Reduce Cyclicality Our goal is to grow adjacent, aftermarket, and international to be approximately 60% of sales by 2022 to reduce cyclical impacts of North American RV industry 2022E Sales2016 Sales North America RV - OEM Adjacent Industries Aftermarket Euro
Slide 15: Positioned to Capitalize on Industry Tailwinds
LCI INDUSTRIES 15 Positioned to Capitalize on Industry Tailwinds • Great American Outdoors Act signed into law in August 2020 to provide needed maintenance for facilities and infrastructure in national parks, forests, wildlife refuges and recreation areas, as well as annual funding to invest in cons
Slide 16: RV Industry Trends
LCI INDUSTRIES 16 RV Wholesale/Retail/Inventory Change Retail Wholesale Inventory Linear (Inventory) Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 — 25,000 50,000 75,000 100,000 125,000 150,000 175,000 200,000 (80,000) (60,000) (40,000) (20,000) — 20,000 4
Slide 17: Growing Aftermarket Segment
LCI INDUSTRIES 17 (in m ill io ns ) AFT Segment 2012 2013 2014 2015 2016 2017 2018 2019 LTMQ320 $— $200.0 $400.0 $600.0 Growing Aftermarket Segment • Multiple channels including wholesale distributors, direct to dealer, and direct to consumer (e-commerce) • Multiple product categories including func
Slide 18: Attractive Aftermarket Growth Opportunities
LCI INDUSTRIES 18 $210 $230 $238 $248 $254 $268 2014 2015 2016 2017 2018 2019 • Truck and towing aftermarket is a combined $7.5 billion+ addressable market, expected to grow further • CURT has a 17-year history of consistent annual sales growth; 5-year sales CAGR of 6% • Enables distribution channel
Slide 19: Global Expansion Opportunity
LCI INDUSTRIES 19 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.
Slide 20: Truck Accessories, Towing Products, Shade Solutions, Windshields
LCI INDUSTRIES 20 20 Truck Accessories Towing Products Shade Solutions Windshields
Slide 21: Acquisitions and New Product Offerings Track Record
LCI INDUSTRIES 21 Track Record • Over 50 acquisitions in the last 20 years ◦ Majority of last 20 acquisitions focused outside of North American RV industry • Look for: ◦ Great leadership ◦ Product innovation ◦ Consistency with our core manufacturing disciplines ◦ Niche markets ◦ Favorable competitiv
Slide 22: Recent Acquisitions
LCI INDUSTRIES 22 Recent Acquisitions Challenger Door, LLC • Manufacturer and distributor of branded doors for the RV industry and products for specialty and cargo trailers • Expands LCI market share and provides additional manufacturing capacity • Strong innovation pipeline for non-RV markets • $80
Slide 23: Financial Overview
LCI INDUSTRIES 23 Financial Overview L C I I N D U S T R I E S
Slide 24: Q3 2020 Financial Performance
LCI INDUSTRIES 24 Consolidated Net Sales $586,221 $827,729 Third Quarter 2019 Third Quarter 2020 Operating Margin 8.4% 11.4% Third Quarter 2019 Third Quarter 2020 Q3 2020 Financial Performance Consolidated Net Sales by Market (in thousands) +32% RV OEM +11% ADJACENT OEM +149% AFTERMARKET SEGMENT +69
Slide 25: Consolidated Financials
LCI INDUSTRIES 25 Consolidated Financials ($ in millions except per share data) 2014 2015 2016 2017 2018 2019 LTM 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 % Ne
Slide 26: OEM Segment
LCI INDUSTRIES 26 $ in millions 2014 2015 2016 2017 2018 2019 LTM Q320 Sales $ 1,127 $ 1,300 $ 1,548 $ 1,977 $ 2,243 $ 2,092 $ 2,037 Operating Profit $ 89 $ 105 $ 181 $ 190 $ 167 $ 165 $ 144 % of Sales 7.9 % 8.1 % 11.7 % 9.6 % 7.4 % 7.9 % 7.1 % OEM Segment Key Drivers • COVID-19 pandemic caused five
Slide 27: OEM Content Per Vehicle
LCI INDUSTRIES 27 OEM Content Per Vehicle At industry production levels for the period ended September 2018, each $100 increase in content adds approximately $43 million in sales for LCII. New Towable RV • Approximately 60% of OEM Segment net sales are for Travel Trailer and Fifth-Wheel OEMs • 100%
Slide 28: Aftermarket Segment
LCI INDUSTRIES 28 Aftermarket Segment $ in millions 2014 2015 2016 2017 2018 2019(1) LTM Q320(1) Sales $ 64 $ 103 $ 131 $ 171 $ 233 $ 279 $ 540 Operating Profit(2) $ 9 $ 15 $ 20 $ 24 $ 31 $ 35 $ 53 % of Sales 14.1 % 14.6 % 15.3 % 14.0 % 13.3 % 12.5 % 9.8 % Key Drivers • Robust Aftermarket is estimat
Slide 29: Balance Sheet Supports Growth
LCI INDUSTRIES 29 $ 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 $ 787 $ 946 $ 1,244 $ 1,863
Slide 30: Capital Deployment Strategy
LCI INDUSTRIES 30 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 1.0x to 1.5x Capital Deployment Strategy
Slide 31: Operating Cash Flow and Net Debt / EBITDA
LCI INDUSTRIES 31 Operating Cash Flow ($M) 32.26 84.91 63.26 36.83 82.68 95.02 155.08 156.61 269.50 272.50 2004 2006 2008 2010 2012 2014 2016 2018 LTM Q320 Net Debt / EBITDA* 0.82 -0.45 3.06 -0.10 -0.63 0.24 0.09 1.05 2.16 1.96 2004 2006 2008 2010 2012 2014 2016 2018 LTM Q320 *See the Appendix to th
Slide 32: Appendix
LCI INDUSTRIES 32 Appendix L C I I N D U S T R I E S
Slide 33: Reconciliation of Non-GAAP Measures: Adjusted EBITDA
LCI INDUSTRIES 33 Reconciliation of Non-GAAP Measures Adjusted EBITDA Three Months Ended September 30, Nine Months Ended September 30, Last Twelve Months 2020 2019 2020 2019 September 30, 2020 (In thousands) Net income $ 68,347 $ 35,809 $ 109,747 $ 117,702 $ 138,554 Interest expense, net 1,948 1,900
Slide 34: Reconciliation of Non-GAAP Measures: Adjusted Net Income
LCI INDUSTRIES 34 Reconciliation of Non-GAAP Measures Adjusted Net Income and Adjusted Diluted Net Income Per Common Share Three Months Ended September 30, Nine Months Ended September 30, Last Twelve Months 2020 2019 2020 2019 September 30, 2020 (In thousands, except per share amounts) Net income $
Slide 35: Reconciliation of Non-GAAP Measures: Adjusted Diluted EPS
LCI INDUSTRIES 35 $ in millions, except per share amounts Income before income taxes Provision for income taxes Net income Effective tax rate Diluted earnings per share Year ended December 31, 2018 As reported GAAP $ 192.4 $ 43.8 $ 148.6 23 % $ 5.83 Impact of TCJA(1) — (0.6) 0.6 (1)% 0.03 Adjusted n
Slide 36: Net Debt and Adjusted EBITDA Reconciliation
LCI INDUSTRIES 36 $ in millions 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 LTM Q320 Long-term indebtedness $ 59.3 $ 62.1 $ 46.0 $ 18.4 $ 2.9 $ — $ — $ — $ — $ — $ 15.7 $ 50.0 $ 49.9 $ 49.9 $ 293.5 $ 612.9 $ 616.1 Current portion of long-term debt — — — — — — — —
Slide 37: Reconciliation of Non-GAAP Measures: Free Cash Flow
LCI INDUSTRIES 37 $ in millions 2014 2015 2016 2017 2018 2019 LTM 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 $ 64.5 $ 66.0 $ 158.7 $ 67.9 $ 36.8 $ 211.3 $ 23
Slide 38: Industry Statistics Summary
® LCI INDUSTRIES Industry Statistics Summary Lclindustries ‘TOTAL RECREATIONAL VEHICLES (RV) Wholesale Unie ™ 1 1 Dealer ventory Inpact Toh Tm Worn _—_YID om ~ “P4002 mr ar ec ET) 25540 40% 486349 3.9683 968 18 329 56421 agai 9.900 i3.88 ant 34,000 ae 8 963 480578 (2.880) 90.996 Gu 037 r 40 300 29.5
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