Lci Industries · NYSE:LCII
Lci Industries — Investor Presentation (August 2019)
31 slides from Lci Industries's investor presentation, Aug 27, 2019
Slide 1: LCI Industries Investor Presentation August 2019
LCI INDUSTRIES LCI Industries Investor Presentation August 2019 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: LCI at a Glance
LCI INDUSTRIES LCI at a Glance A leading supplier of premium engineered FISCAL YEAR 2018 components to the OEMs of recreational vehicles, KEY METRICS buses, trailers, trucks, boats, trains, and manufactured housing and their related aftermarkets. $2.5B $5.83 IN ANNUAL SALES EPS 8% $5.86 OPERATING MA
Slide 4: Investment Case
LCI INDUSTRIES Investment Case Leading market share with unmatched depth and breadth of products Strong track record of financial performance Deep culture rooted in innovation, technology, and operational excellence Compelling industry tailwinds, including high-margin growing aftermarket, robust mil
Slide 5: Dividend Adjusted Share Price and Russell 2000 Index
LCI INDUSTRIES Dividend Adjusted Share Price and Russell 2000 Index*, Jan 2000 - April 2019, Indexed to Jan 2000 5 * Adjusted for both dividends and splits **Peer Group Average includes Patrick, Brunswick, Spartan, Thor, Winnebago, TriMas, and Cavco Source: CapIQ
Slide 6: Applicable across a number of customer segments
LCI INDUSTRIES Applicable across a number With 7 core of customer segments competencies LCI serves 3 critical Recreational Metal Fabrication Vehicle customer needs & Welding High Variation / Small batch Marine Short Runs at manufacturing with Lamination Transit & School Scale the benefits of scale S
Slide 7: Vision and Values
LCI INDUSTRIES Vision and Values To be a leading supplier for components parts manufacturing in the segments in which we compete • Our passion to win, coupled with a robust growth strategy, drive us to LCI Leadership be a leader in every market we enter • We believe our industry-leading innovation,
Slide 8: Breadth and Depth of Product Offerings
LCI INDUSTRIES Breadth and Depth of Product Offerings Product Lines Industries • Towable RV Chassis • Steps • RV OEM • Heavy Truck • Furniture • Leveling Systems • RV Aftermarket • Manufactured Homes • Windows and Windshields • Suspension • Marine • Modular Housing • Entry and Baggage Doors Enhancem
Slide 9: Financial Performance and Balanced Capital Allocation
LCI INDUSTRIES 20% CAGR 20% CAGR Financial Performance Balanced Capital Allocation ($M) • 2018 Net Sales of $2.5B – highest in company history and up 15% from 2017 23% CAGR • Net sales from M&A completed in 2018 totaled $231 million 9 * See the Appendix to this presentation for reconciliation of non
Slide 10: Culture of Innovation and Technology
LCI INDUSTRIES Culture of Innovation and Technology • Invested over $16 million in 2018 development, engineering, and product testing • 107 team members across 19 locations dedicated to research and development • Patent protected technology; over 200 active patents • Driving product development coll
Slide 11: Expanding Our Growth Potential
LCI INDUSTRIES Expanding Our Growth Potential(1) 11 a. Amounts (in millions) represent Management’s estimate of the size of the addressable (1) Amounts in millions. "Opportunity"market, amounexcludingts representhe tCompany’ Managemens currentt's estinetmatesales of theto those size ofmarkets. the a
Slide 12: Growing End Markets to Reduce Cyclicality
LCI INDUSTRIES Growing End Markets to Reduce Cyclicality Goal is to grow adjacent, aftermarket, and international to be approximately 12 60% of sales by 2022 to reduce impacts of cyclical North American RV industry
Slide 13: Positioned to Capitalize on Industry Tailwinds
LCI INDUSTRIES Positioned to Capitalize on Industry Tailwinds Outdoor recreation industry North American Outdoor$734 Recreat billionion Industry $734 billion • Millennials continue to fuel growth, making up 31% of the total U.S. population and 37% of all campers • 49% of KOA's polling population int
Slide 14: Industry Trends
LCI INDUSTRIES Industry Trends 14 Retail provided by Statistical Surveys, Wholesale/RV provided by RVIA, Marine provided by Statistical Surveys, Trucks provided by Bureau of Economic Analysis U.S. Department of Commerce, and Consumer Confidence provided by The Conference Board Inc.
Slide 15: High-Margin, Growing Aftermarket Segment
LCI INDUSTRIES High-Margin, Growing Aftermarket Segment • LCI sells over $1.5 billion in RV OEM components annually • Strong service department established on the supply side • Dealers rely on us as a key technical resource to provide a higher level of satisfaction to customers • Used RV market is e
Slide 16: Global Expansion Opportunity
LCI INDUSTRIES Global Expansion Opportunity • Europe is second to U.S. in RV unit production (approx. 210,000 units) • Acquired Project 2000 in 2016 - European footprint expanding bed-lifts and steps • Acquired Sessa Klein in 2017 - Train windows • Acquired Metallarte in 2017 - Entry and compartment
Slide 17: Company history timeline
1950 1960 1970 1980 1990 2000 2010 2020 Riverdale Steel 1980: LCI goes public x $2.0b Works (chassis eats Bin yufacture) ° oe man ) ae UCieucceeabillg executes Ga aoacintions 1956: LCI is founded as 1969: B&L Industries 1994: LCI starts F ite B&L Industries ‘Becomes Lippert manufacturing RV Componen
Slide 18: Track Record of Acquisitions and New Product Offerings
LCI INDUSTRIES Track Record Starting 2018 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 $36m North Americ
Slide 19: Financial Overview
LCI INDUSTRIES L C I I N D U S T R I E S Financial Overview 19
Slide 20: Financial Performance: Consolidated Net Sales by Market
LCI INDUSTRIES Financial Performance (in thousands) Consolidated Net Sales by Market (14%) Flat +12% +21% 20 RV OEM ADJACENT OEM AFTERMARKET INTERNATIONAL SEGMENT MARKETS
Slide 21: Consolidated Financials
LCI INDUSTRIES Consolidated Financials ($ in millions except per share data) 2014 2015 2016 2017 2018 Q119 Q219 Net Sales $ 1,191 $ 1,403 $ 1,679 $ 2,148 $ 2,476 $ 592 $ 629 • Four-year sales CAGR of 20% Operating Profit 96 116 201 214 199 48 66 • Operating Profit more than % of sales 8.1 % 8.3 % 12
Slide 22: Furrion Transition
LCI INDUSTRIES Furrion Transition The Company announced on August 23, 2019 that, effective January 1, 2020, Furrion will take over the sale and distribution of Furrion products previously handled by LCI. Additional information as follows: • Current Furrion product margins are dilutive to the Company
Slide 23: OEM Segment Q219 Key Drivers
LCI INDUSTRIES OEM Segment Q219 Key Drivers $ in millions 2014 2015 2016 2017 2018 YTD • Steady growth in RV Wholesale shipments with Sales $ 1,127 $ 1,300 $ 1,548 $ 1,977 $ 2,243 $ 1,085 recent temporary correction of dealer inventories Operating 89 105 181 190 167 93 Profit • Adjacent Industries n
Slide 24: Increasing OEM Content Per Vehicle
LCI INDUSTRIES Increasing OEM Content Per Vehicle New Towable RV • Approximately 61% 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, 47% penetration New Motorhome RV • Approximately 8% of OE
Slide 25: Aftermarket Segment Q219 Key Drivers
LCI INDUSTRIES Aftermarket Segment Q219 Key Drivers $ in millions 2014 2015 2016 2017 2018 YTD • Robust Aftermarket is estimated to be double the Sales $ 64 $ 103 $ 131 $ 171 $ 233 $ 136 size of the new RV market each year with higher Operating Profit 9 15 20 24 31 20 margins % of Sales 14.1 % 14.6
Slide 26: Balance Sheet Supports Growth
LCI INDUSTRIES Balance Sheet Supports Growth $ in millions 2014 2015 2016 2017 2018 Q219 Cash & Equivalents $ — $ 12 $ 86 $ 26 $ 15 $ 15 Accounts Receivable 38 42 57 82 122 143 Inventory 132 171 189 275 341 301 Other Assets 374 398 455 563 766 871 Total Assets 544 623 787 946 1,244 1,330 Accounts Pa
Slide 27: Capital Deployment Strategy
LCI INDUSTRIES Capital Deployment Strategy Historical Use of Cash Cash Priorities Future Use of Cash Disciplined Reinvestment to Drive Growth Repurchases Acquisitions that Align to Strategy and Financial Targets Dividends - 30% Dividends Return Capital to Shareholders Acquisitions Acquisitions - 40%
Slide 28: $600 million credit facility
LCI INDUSTRIES $600 million credit facility with $191 million drawn at 06/30/19 primarily to fund M&A activity 28 *See the Appendix to this presentation for reconciliation of non-GAAP financial measures to the most directly compareable GAAP financial measures.
Slide 29: Appendix
LCI INDUSTRIES L C I I N D U S T R I E S Appendix 2928
Slide 30: Reconciliation of Non-GAAP Measures: Adjusted Net Income and 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 31: Reconciliation of Non-GAAP Measures: Leverage Ratio
LCI INDUSTRIES Reconciliation of Non-GAAP Measures Leverage Ratio (Net Debt to EBITDA) LTM $ in millions 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q219 Long-term indebtedness $ 24.8 $ 59.3 $ 62.1 $ 46.0 $ 18.4 $ 2.9 $ — $ — $ — $ — $ — $ 15.7 $ 50.0 $ 49.9 $ 49.