Lci Industries · NYSE:LCII
Lci Industries — Q3 2018 Earnings Presentation
50 slides from Lci Industries's earnings presentation, Nov 6, 2018
Slide 1: lippertcomponents.com
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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
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Slide 4: Net Sales and EBITDA
Net Sales OEM net sales Aftermarket net sales cq 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 $681 $901 $1,016 $1,191 $1,403 $1,679 $2,148 $2,486 19% 32% 13% 17% 18% 20% 28% 27H ° * Sales of Furrion products were over $85M for 2017 \ + Prior periods have been recast to conform to the Company's current rep
Slide 6: Sales excluding OEM Towables
Sales for the year ended December 31, 2010 compared to the last twelve months ended September 30, 2018. Both periods exclude the Company's net sales of components for OEM Towables, which made up 75% and 60% of consolidated net sales, respectively. Lc! INDUSTRIES
Slide 7: Pro forma impact of acquisitions
Pro forma impact of acquisitions completed in 2017 and 2018, assuming each of these had been completed at the beginning of the period ended September 30, 2018. Sales for acquisitions represent the trailing twelve month sales at the date of acquisition. Any post- acquisition change is included in org
Slide 8: OEM and Aftermarket Industries
OEM and Aftermarket Industries
Slide 9: RV Shipments
® RV Shipments Charts updated through September 2018. Federal Interest Rate Consumer Confidence U.S. Monthly Average Truck Production Lc! INDUSTRIES
Slide 10: Product Lines & Volumes
> Product Lines & Volumes FURNITURE APPLIANCES SHOWERS AUDIO-VISUAL 5,000 + RV & MARINE PIECES DAILY AWNINGS MATTRESSES ELECTRONICS a Sint 7 Ata unNes Gaky 2,800 MATTRESSES DAILY i ELECTRONICS WINDOWS 22,000 + RV, BUS, & RESIDENTIAL PIECES DAILY DOORS ~@ 2,000+ ENTRY DOORS DAILY AEP Ret SLIDE-OUT s
Slide 11: 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
Slide 12: Millennials Fueling Growth
| Millennials Fueling Growth 31% of the total US population 37% of all campers 49% 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 13: Younger Market
| Younger Market Almost 10% shift in market share from Baby Boomers to Millennials Millennials are the largest age group and have doubled their market share since 2014
Slide 14: Demographic expected to grow through 2030
From 2018 through 2030, this demographic is expected to grow by an additional 6.4 million individuals Sources: Euromonitor, BofA Merrill Lynch Global Research Lc! INDUSTRIES
Slide 15: Active campers
(EE 61, Tent Campers 6 6% A= 34.1 million Camp Every Year 38.6 million 46. | (e \24s | 2% SS) RV Campers Other Year “Se 7 13.4 million 5.0 million TP me 1 4., “nZD% 14.6 million Active Campers & 58.1 million: Cabin Campers 7.8 million * Estimates based on 126.2 million households. All other (1%) 0.6
Slide 16: Manufacturing capabilities
Fabric and Electronics and Steel and Lamination Steel and Motion- Woodworking Plastic Forming Aluminum and Glass Aluminum Systems Fabrication Fabrication Welding he c Lc! INDUSTRIES
Slide 17: 2016 – 2018 Acquisitions
> 2016 — 2018 Acquisitions” Purchase Historical (S in millions) Price Sales Description Pontoon furniture manufacturing operation of Highwater Highwater Furniture 10.0 20 Marine, part of the largest manufacturer of pontoon boats in the U.S. 2) Italian manufacturer of bed lifts and retractable steps,
Slide 18: RV Content
RV Content $2,100 (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. Lc! INDUSTRIES
Slide 19: Travel Trailer and Fifth-Wheel content per unit
Approximately 66% 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 $3,456 eC $3,263 Content has increased $434 or 14% since 2016, up : $2,987 $3,022 $2,690§2,713 92816 from the
Slide 20: Motorhome content per unit
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, 41% penetration Content has increased $469 or 23% since 2016, up from the average of $165 per year ('04 -'16) $1,227 $1,272 $669 $705 At industry
Slide 21: Supplemental Schedules
Supplemental Schedules
Slide 22: Three Months Ended September Financial Performance
Three Months Ended September 30 FINANCIAL PERFORMANCE
Slide 23: Nine Months Ended September Financial Performance
Nine Months Ended September 30 FINANCIAL PERFORMANCE
Slide 24: Three Months Ended September Financial Performance
Three Months Ended September 30 FINANCIAL PERFORMANCE | | Net Sales: Aftermarket Segment Operating Profit as a Percentage of Net Sales: AftermarketSegment = 18.1%) 141
Slide 25: Nine Months Ended September Financial Performance
Nine Months Ended September 30 FINANCIAL PERFORMANCE | | Net Sales: Aftermarket Segment 182.1 129.9 Operating Profit as a Percentage of Net Sales: Aftermarket Segment 18.6% 140
Slide 26: Financial Performance: dividends
FINANCIAL PERFORMANCE In December 2012, January 2014 and April 2015, 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. In June, April and September 2016, paid dividends of $0.30 per share and in Decemb
Slide 27: Financial Performance ($ in millions)
($ in millions) FINANCIAL PERFORMANCE
Slide 28: Operating cash flow from 2010 to present
FINANCIAL PERFORMANCE / Y Operating cash flow from 2010 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 29: Financial Performance: working capital metrics
FINANCIAL PERFORMANCE feamawveimons | To) 66) es |e (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 divided by average
Slide 30: Financial Performance: ROIC and debt to EBITDA
FINANCIAL PERFORMANCE Return on Invested ; Total Debt to : , ' i (2) EBITDA is net income plus income taxes, interest expense, depreciation and amortization (see 0 (1) ROIC is operating profit over average invested capital (total stockholders equity + indebtedness) — (cash, cash equivalents and shor
Slide 31: Financial Performance: net income, EBITDA, capex
FINANCIAL PERFORMANCE Netncome $290, $0 | $979) $501, $52 $749 $1207, $1029 45 JoteretSieerse| 02/09/03) 04/04, 19) 7) 1a a8 sree gas oo e888 a8 STB 2200 Capital _ _ _ Expenditures 10.1 243) 32.0 326) 425 447 || 87.2|| 119.4
Slide 32: Financial Performance: segment operating profit
FINANCIAL PERFORMANCE Total Segment Operating - aan ; aoe - igeeresonmre | os m2) m4) imo mie | 249) 204 Saleofexmsionasels I) Lc! INDUSTRIES
Slide 33: Shares outstanding and market capitalization
= LCl Industries has 25.2 million shares outstanding and a market capitalization of approximately $1.7 billion as of October 31, 2018 * Dates noted above are as of December 31, unless noted. . * Stock prices above are not adjusted for dividends. Lc! INDUSTRIES
Slide 34: Industry Statistics Summary: Towable RVs
LC Industries Industry Statistics Summary TOWABLE RECREATIONAL VEHICLES (RV) Towastes™™ Wholesale Units 16 Bora Unis 1. Dealer Invertory Inmect Jan-17 28.100 "364.600 16.463 355.756 Feb-17 1.200 37.831 358.812 Mantz, 73,072 362/875 ABE IT 115,507 367.493 May-17 164,008 374,084 Jun-17 212,300 379,308
Slide 35: 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 Mone wa} TIM ran) Toni beets 220017196. 54600 16% 54,800 46,789 1,816 ‘8017 Jan-17. 4,900 149%. ‘4.900 14%. 55,400. 2.763 2.137 3.284, Feb-17 3.600 179%
Slide 36: Analyst coverage
Citi Research Gregory Badishkanian — CJS Securities Dan Moore — CL King & Associates Scott Stember — Sidoti & Company Stephen O’Hara — Thompson Research Group Kathryn Thompson — @ *Planning to initiate coverage Lc! INDUSTRIES Baird Craig Kennison — Northcoast Research Seth Woolf — Wells Fargo* Marc
Slide 37: Appendix
Appendix
Slide 38: Watch the video
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Slide 39: Management Team
JASON LIPPERT, CEO 20+ years with LCI Industries LCI INDUSTRIES Management SCOTT MERENESS, PRESIDENT Team ' 20+ years with LCI Industries BRIAN HALL, CFO 5+ years with LCI Industries Average tenure of LCI’s members of senior management is 15+ years with the company Base
Slide 40: OEM RV
OEM RV Net Sales Industry Units Approximately 66% of LCIl’s OEM Segment net sales are for Travel Trailer and 5'° Wheel RVs (Industry units in thousands, net sales in millions) Projections for 2018 and 2019 are the latest published by the RVIA (Fall 2018). OEM RV Segment Net Sales for 2009 and prior
Slide 41: Towable RVs and Motorhomes
Towable RVs (Approximately 66% of LCl’s OEM Seqne aa Motorhomes ‘Approximately 8% of LCl’s.. _ Pp y OEM Segment net sales) of industry 2017 unit sales of 2017 wholesale dollar sales, or $12.4 billion Retail cost $4,000 to $100,000+ per unit. Average about $30,000 of industry 2017 unit sales of 2017
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 oy Lc! INDUSTRIES The number of consumers between the ages of55and70 . is projected to total 56 million by 2020 Generation X and Millennials are a source of industry growth mainly in the entr
Slide 43: Travel Trailer and 5th Wheel RVs wholesale and retail
Travel Trailer and 5** Wheel RVs, LCl’s primary RV market Wholesale = Retail (Units in thousands) vi Cumulative dealer inventory change from 2006 to 2016 is estimated to be a net increase of 2, which indicates dealer inventories recently reached pre-recession levels. Industry wholesale production da
Slide 44: RV Consumer Demographic Profile
Statistics provided by RV Consumer Demographic Profile — 2011 Lc! INDUSTRIES
Slide 45: RV Consumer Demographic Profile
(RV CONSUMER DEMOGRAPHIC PROFILE — 201 1) 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 purchase either a new or used RV plan to purchase in about five years on average.
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 a_ Europe is second to U.S. in unit production a Acquired Project 2000 in 2016 — European | footprint expanding bed-lifts 3 a Acquired Sessa Klein in 2017 — Train windows . providing entry-point for caravan windows a Acquired Metallarte in 2017 — Entry and compartment doors
Slide 48: Research and Development
NNN NN Research and Development Focus on innovation Invested over $14 million in 2017 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: Lc! INDUSTRIES
Lc! INDUSTRIES
Slide 50: Heavy Truck, Fleet, Marine, Cargo
Heavy Truck Fleet Marine Cargo