Lci Industries · NYSE:LCII
Lci Industries — Q3 2017 Earnings Presentation
50 slides from Lci Industries's earnings presentation, Nov 6, 2017
Slide 1: lippertcomponents.com
lippertcomponents.com > LU rz 600 ~~) O a Lu or Lu r ” Z Oo Lu m
Slide 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 objectives of management, markets for the Comp
Slide 3: Team play with trust, caring about people
8AIRISOd team play with trust =r caring about = people 3 2
Slide 4: Net Sales and EBITDA
Net Sales OEM net sales Aftermarket net sales <4 EBITDA” EBITDA Net Sales and EBITDA (in mitlions) (1) EBITDA is net income plus income taxes, interest expense, depreciation and amortization (see supplemental schedule) Lc! INDUSTRIES:
Slide 5: Year over year growth
Year over year growth Year over year growth Year over year growth Year over year growth Year over aE growth $573 $681 $901 $1,016 $1,191 $1,403 $1,679 $2,004 19% 82% 18% 17% 18% 20% 24H . + Furrion sales were over $74M for the LTM 9/17 + LTM 2017 percentage growth is compared to LTM 2016. + Prior pe
Slide 6: Sales excluding OEM Towables
Wa WA VA Y [28% | = _ a Sales for the year ended December 31, 2010 compared to the last twelve months ended September 30, 2017. Both periods exclude the Company's net sales of components for OEM Towables, which made up 75% and 64% of consolidated net sales, respectively. Lc! INDUSTRIES:
Slide 7: Pro forma acquisitions, organic and industry growth
LI INDUSTRIES Proforma impact of acquisitions completed in 2016 and 2017, assuming each of these had been completed at the beginning of the twelve-month period ended September 30, 2017. Sales for acquisitions represent the trailing twelve month sales at the date of acquisition. Any post- acquisition
Slide 8: OEM and Aftermarket Industries
OEM and Aftermarket Industries
Slide 9: RV Shipments and economic indicators
® RV Shipments Charts updated through September 2017. Federal Interest Rate Consumer Confidence U.S. Monthly Average Truck Production Lc! INDUSTRIES:
Slide 10: Factors affecting RV demand
*Interest Rates *New Private Housing *Fuel Prices *Fuel Availability *Consumer Sentiment **Wholesale & Retail Credit Availability *Wages & Employment — _—_—_ “Car & Light Truck Sales —, Dedelvanitvic >">
Slide 11: Product Lines & Volumes
> Product Lines & Volumes FURNITURE APPLIANCES SHOWERS AUDIO-VISUAL 5,000 + RV & MARINE PIECES DAILY AWNINGS MATTRESSES ELECTRONICS SINKS oo ares 2,800 MATTRESSES DAILY ELECTRONICS WINDOWS ew” PROS DAY 2,000+ ee DAILY ey sists | omnes, tevetne 3,100 + RV & TRAILER AXLES DAILY 3,500+ PIECES DAILY 300
Slide 12: Product Breadth
Product Breadth It would take a competitor substantial investments to be able to manufacture the breadth of products that we offer Investment into R&D We make significant investments in R&D and our facilities Customer Relationships We strive to have the best customer relationships in the industry (2
Slide 13: Millennials Fueling Growth
| Millennials Fueling Growth 31% of the total US population 38% of all campers 51% intend to increase the frequency in which they camp Willing to try RVs at the same rate as tents More apt to camp in groups
Slide 14: Campers by type
(EP 60, Tent Campers 6 6% = 33.5 million Camp Every Year 37.1 million 44..\ Jey 22s | 2% = | JB *cive campers J \ Seems] Svcanpes | cherie gr 55.9 million: = e 8 milli fA “an 1 T% “nBD% , 14.0 million Cabin Campers 9.5 million Igy * Estimates based on 126 million households. All other (1%) 0.6 milli
Slide 15: Manufacturing capabilities
Fabric and Electronics and Steel and Lamination Steel and Motion- Woodworking Plastic Forming Aluminum and Glass Aluminum Systems Fabrication Fabrication Welding | € 16 ek _f W Wy
Slide 16: 2015 - 2017 Acquisitions
> 2015 — 2017 Acquisitions” Purchase Historical (S in millions) Price Sales Description Custom steel and aluminum parts and provider of electro- EA Technologies deposition (‘e-coat’) and power coating services Manufacturer of furniture solutions for fresh water boat Si | g n at ure Sea ti n gl?) man
Slide 17: RV Content
RV Content $1,830 (1) Amounts (in millions) represent Management's estimate of the size of the addressable market, excluding the Company's current net sales to those markets. (2) Includes products to be released during 2017. Lc! INDUSTRIES:
Slide 18: Travel Trailer and Fifth-Wheel content
Approximately 71% of OEM Segment net sales are for Travel Trailer and Fifth-Wheel OEMs 100% market share in existing products would yield an estimated $7,400 per Towable RV, 43% penetration For 9/17, Travel Trailer unit volume was up 18% y/y due in part to an increase of entry-level units Growth in
Slide 19: Motorhome content
Approximately 8% of OEM Segment net sales are for Motorhome OEMs 100% market share in existing products would yield an estimated $6,000 per Motorhome RV, 36% penetration $1,227 $1,272 $669 $705 At industry production levels for the 12 months ended September 2017, each $100 increase in content adds a
Slide 20: Supplemental Schedules
Supplemental Schedules
Slide 21: Three Months Ended September Financial Performance
Three Months Ended September 30 FINANCIAL PERFORMANCE
Slide 22: Nine Months Ended September Financial Performance
Nine Months Ended September 30 FINANCIAL PERFORMANCE
Slide 23: Three Months Ended September Financial Performance
Three Months Ended September 30 FINANCIAL PERFORMANCE | Operating Profit as a Percentage of Net Sales: Aftermarket Segment = 141% 167%
Slide 24: Nine Months Ended September Financial Performance
Nine Months Ended September 30 FINANCIAL PERFORMANCE Net Sales: Aftermarket Segment 129.9 Operating Profit as a Percentage of Net Sales: Aftermarket Segment 140% 1618
Slide 25: Financial Performance: dividends paid
FINANCIAL PERFORMANCE On December 20, 2012, January 6, 2014 and April 10, 2015, the Company paid special dividends of $2.00 per share of the Company's Common Stock, or an aggregate of $45 million, $47 million and $48 million, respectively. On June 17, April 15 and September 2, 2016, the Company paid
Slide 26: Financial Performance ($ in millions)
($ in millions) FINANCIAL PERFORMANCE
Slide 27: Operating cash flow from 2009 to present
FINANCIAL PERFORMANCE Operating cash flow from 2009 to present ($ in millions) (1) Cash dividend of $2.00 per share, or $47 million, declared in December 2013 and paid in January 2014. Lc! INDUSTRIES:
Slide 28: Financial Performance: working capital metrics
FINANCIAL PERFORMANCE Tenses SOS AF SS TOS 5 comemvedmens 10) = a (1) Days Sales in A/R is the most recent month's net sales divided by accounts receivable, net, at the end of the period. December 31 is the seasonal low point. (2) Inventory Turns is cost of goods sold for the last twelve months divi
Slide 29: Financial Performance: ROIC and EBITDA
FINANCIAL PERFORMANCE a a a a ae eemmermeme | ae | at | a | ase oe | a | josossweron® on | om | oe | oe | a | a | < (1) ROIC is operating profit over average invested capital (total stockholders equity + indebtedness) — (cash, cash equivalents and short-term investments). \ (2) EBITDA is net income
Slide 30: Financial Performance
FINANCIAL PERFORMANCE oe
Slide 31: Financial Performance: segment operating profit
FINANCIAL PERFORMANCE Sone § 1oise |s 11908 § Lacs § 178s Total Segment Operating ; ; Fgeoretomeinn ee ae | a) | ane | aor Soleofexmuionoset =) © Lc! INDUSTRIES.
Slide 32: Shares outstanding and market capitalization
= LCl Industries has 24.9 million shares outstanding and a market capitalization of approximately $3.1 billion as of October 31, 2017 * Dates noted above are as of December 31, unless noted. . * Stock prices above are not adjusted for dividends. Lc! INDUSTRIES:
Slide 33: Industry Statistics Summary: Towable RVs
LC Industries Industry Statistics Summary TOWABLE RECREATIONAL VEHICLES (RV) Towastes™™ Wholesale Units 16 Horan Unis lt Dealer Invertory Imect Dexis, 314,400 314,400. Teor 17%. Sivais aie —S17,175 11,309 (27ts) 2715) Jan-16 26.200 ‘316.800 Feb-16 ‘56.300 319,000 Mar16. 90,800 323.400 Apr 16 724,500
Slide 34: Industry Statistics Summary: Motorized RVs
LCI Industries Industry Statistics Summa MOTORIZED RECREATIONAL VEHICLES (RV) MOTORZED™ Wholesale Units Lf Retail Unies 1_I Dealer Inventory Impact Tone wa} TIM cal TIM Toaih- wal} cM Deets Be00 S16. 47,300 6% 47,300 715% 42,020 1,593 ‘5.280 Jan-16. “47.900. 71.89% 42,318. 1364 1.368 Feb-16 “48,600
Slide 35: Market Shift
Market Shift Share of new light-vehicle buyers by age 50% a Birth years 40 =—=—____ 1946- ~~ «1964 30 1977- @ 1994 » 1965- 20 1976 10 i Before 1945 O : <= @ 1995- 2010 ‘11 112 13 14 ‘15° 2014 “Through Nov. Source: J.D. Power THE WALL STREET JOURNAL.
Slide 36: Analyst coverage
Citi Research Baird Gregory Badishkanian — Craig Kennison — CJS Securities Wells Fargo* Dan Moore — Marc Torrente — CL King & Associates Scott Stember — Sidoti & Company Stephen O’Hara — Thompson Research Group Kathryn Thompson — @ *Planning to initiate coverage
Slide 37: Appendix
Appendix
Slide 38: Watch the video
my atch the video
Slide 39: Management Team
JASON LIPPERT, CEO 20+ years with LCI Industries LC! INDUSTRIES Management ) SCOTT MERENESS, PRESIDENT Team 20+ years with LCI Industries BRIAN HALL, CFO - Average tenure of LCl’s members of senior management is 15+ years with the company =28} =
Slide 40: OEM RV
OEM RV Net Sales Industry Units Approximately 71% of LCI’s OEM Segment net sales are for Travel Trailer and 5'° Wheel RVs (Industry units in thousands, net sales in millions) Projections for 2018 are the latest published by the RVIA (Fall 2017). OEM RV Segment Net Sales for 2009 and prior include an
Slide 41: Towable RVs and Motorhomes
Towable RVs (Approximately 71% of LCl’s Motorhomes (Approximately 8% of LCI’s x. OEM Segment net sales) of industry 2016 unit sales of estimated 2016 wholesale dollar sales, or $10.9 billion Retail cost $4,000 to $100,000+ per unit. Average about $30,000 of industry 2016 unit sales of estimated 2016
Slide 42: RV family vacation cost and demographics
) Typical RV family vacation is 23 to 59 percent less expensive for a family of four according to RVIA studies 2 Lc! INDUSTRIES: The number of consumers between the ages of 55 and 70 is projected to total 56 million by 2020 Generation X and Millennials are a source of industry growth mainly in the e
Slide 43: Travel Trailer and 5th Wheel RVs, primary RV market
Travel Trailer and 5** Wheel RVs, LCl’s primary RV market Wholesale = Retail (Units in thousands) littl Cumulative dealer inventory change from 2006 to 2016 is estimated to be a net increase of 5, which indicates dealer inventories recently reached pre-recession levels. Industry wholesale production
Slide 44: RV Consumer Demographic Profile - 1
Statistics provided by RV Consumer Demographic Profile — 2011 Lc! INDUSTRIES:
Slide 45: RV Consumer Demographic Profile - 2
(RV CONSUMER DEMOGRAPHIC PROFILE — 2071) Number of U.S. households that own an RV 7.2 million Average age of all RVs 12.7 years 14.2 years * Seven-in-ten RV owners plan to purchase another RV to replace their current unit, with 37% of these expecting to purchase a new RV. Current owners intending to
Slide 46: What's Next...
What’s Next... International RV Innovation/R&D - Aftermarket OEM Adjacent Markets + Acquisitions - Additional Addressable Market
Slide 47: International RV Markets
International RV Markets Europe is second to U.S. in unit production Acquired Project 2000 in 2016 — European footprint expanding bed-lifts Acquired Sessa Klein in 2017 — Train windows wn providing entry-point for caravan windows Acquired Metallarte in 2017 — Entry and compartment doors for the cara
Slide 48: Research and Development
NN NN ON Research and Development Focus on innovation Invested over $9 million in 2016 Development, engineering, product testing We have inventors on staff Patent protected technology Pushing product development collaboratively with our customers We are an integral part of our customers’ R&D teams
Slide 49: LCI Industries
2) Lc! INDUSTRIES:
Slide 50: Marine Cargo Train
Marine Cargo Train