Lci Industries · NYSE:LCII
Lci Industries — Drew Industries — Investor Presentation (November 2014)
53 slides from Lci Industries's investor presentation, Nov 10, 2014
Slide 1: A Leading National Supplier of Components for RVs and Manufactured Homes
ff A Leading National Supplier of a Wide Variety of DW Components for RVs and Manufactured Homes NYSE.
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: Overview
vervie L SECTION @
Slide 4: Drew's Segments — LTM 9/2014
> Drew’s Segments — LTM 9/2014 ‘Net Sales -
Slide 5: Drew's Products — Components for RVs and Manufactured Homes
> Drew’s Products — Components for RVs and Manufactured Homes Net Sales of $1,126 Million for the 12 Months Ended September 30, 2014 RN ene oo RV Chassis, Slide-outs and Mattresses: is Side outs 125 million er Chassis Parts: MH Chassis and $ ieee Chassis Paris: $34 million Other Products: «ae $82 mi
Slide 6: Financial Performance
> Financial Performance Net Sales == RV Segment net sales MH Segment net sales = EBITDA EBITDA 1,200 125 : Net Sales and EBITDA ") (in mitions) sare] § { $1,016 } $1,000 i $901 V y $100 Zz { a0 $729 { $669 My S669 $681 | $75 ao $573 es cen 7 | 4 s724 | sso J $398 $400 $354 $492 $574] it $349 $477 if
Slide 7: Consolidated Sales Growth
> Consolidated Sales Growth Sales for the twelve months ended D nber 31 for each yé ($ in millions) 2009 2010 2011 2012 2013 TIM 9/14 a) Sales for acquisitions represent the trailing twelve month sales at the date of acquisition. Any post-acquisition change is includedin organic or industry accordin
Slide 8: Management Team
JASON LIPPERT, CEO ? | he > 19+ years with Drew INDUSTRIES INCORPORATED MANAGEMENT TEAM SCOTT MERENESS, PRESIDENT > 19+ years with Drew JOE GIORDANO, CFO & TREASURER > 11+ years with Drew > Average tenure of senior management 14+ years with Drew “7
Slide 9: RV Industry
RV Industry
Slide 10: Towable RVs and Motorhomes
Towable RVs (Approximately 00% 6 of industry 2013 unit sales RV Segmentnet sales) of 2013 wholesale dollar sales, or $8.1 billion Retail cost $4,000 to $100,000 per unit. Average about $29,000 Motorhomes (Approximately 6% of Drew's RV Segmentnet sales) of industry 2013 unit sales of 2013 wholesale d
Slide 11: RV campers statistics
(BE 5A, tye Tent Campers 3414000 agp Ever Other Year Heel Ai 21,340,800 38. === ; Active Campers RV Campers by 39,520,000- 9,089,600 Cabin Campers 7,508,800 * Estimates based on 104 million households. All other (4%) 1,580,800, Statistics provided by KOA 2014. 10-
Slide 12: Typical RV family vacation is less expensive
+ Typical RV family vacation is 23 to 59 percentless expensive for a family of four * College and NFL football games + NASCAR events + More active, shorter, “greener”, & family oriented vacations The number of consumers between the ages of 55 and 70 is projected to total 56 million by 2020, 27 perce
Slide 13: RVs - Industry Wholesale Shipments
> RVs - Industry Wholesale Shipments Approximately 80% of Drew's RV Segment net sales are for Travel Trailer and 5" Wheel RVs 500 m= Notorhomes (industry units in thousands} = Other Towables Travel Trailers & 5th Wheels 400 370 Bee 300 a 257 0 200 zi i wom tse 254 262 vag || 28 24 213 100 + 157 ae 1
Slide 14: RV Shipments
> RV Shipments Compound Annual Growth Rate from 1980 to 2014(p) 450 18% g - RV Shipments es RV Shipments vs Federal es % as0 2 % a0 K Interest Rate Alas £0 | A plvat AG us B oso LI ey 8 oso HE WAS = 20 1 AS v = 200 A v a 190 ty 10 +), = 1D oh 3 LEPGPMPP Rag hah PO Sos oe # 1 a 5 400 A a 5 Hes A 20%
Slide 15: RV Industry Trends
> RV Industry Trends noe Travel Trailer and 5 Wheel RVs, Drew’s primary RV market 300 Wholesale == Retail 278 (Units in thousands) 268.0 a pars 250.8 226.4 226.6 225 212.9 wee 214.4 223.4 tee 208.0 207: 200 “195.1 186.0 175 164.3 150 138.3 125 100 75 50 25 ° "2008 2008 2010 2011 2012 2013 SepYTD‘13
Slide 16: Number of U.S. Households that Own an RV
> Number of U.S. Households that Own an RV (in Millions) 10 9 6 a 7 | 4 | dl | Bs ee a : B | 1980 1984 1988 1993 1997 2001 2005 2011 prew Statistics provided by RVIA Industry Profile 2013. 15
Slide 17: Demographics
> Demographics Number of U.S. households that own an RV 7.9 million 8.9 million Household ownership rates of RVs 80% 85% Average age of all RVs 12.7 years 14.2years Average time consumers have owned their 6.6 years 8.4 years current RV Age of typical RV owner A9 years A8 years Average income of RV o
Slide 18: Our RV Segment
ur RV Segment L SECTION @
Slide 19: RVs - Industry Wholesale Shipment (Compared to Drew's Performance)
» RVs - Industry Wholesale Shipment (Compared to Drew’s Performance) Approximately 80% of Drew’s RV Segment net sales are for Travel Trailer and 5" Wheel RVs 800 Industry unitsin thousands, net sales in millions) at on mm Motorhomes = $1,011 $1,000 Other Towables: | Travel Trailers & 5th Wheels m’$8
Slide 20: Content Per New Towable RV
> Content Per New Towable RV -Approximately 80% of RV Segment net sales are for Travel Trailer and Fifth-Wheel RVs = 100% market share in existing be products would yield an estimated 2a! $5,000 per Towable RV - Growth in RV “features” drives content increases of oo ors Gas eae 2001 2002 2003 2004 2
Slide 21: Content Per New Motorhome RV
> Content Per New Motorhome RV -Approximately 6% of RV Segment net sales are for Motorhome RVs ae z 1,227 $1,252 - 100% market share in eee : existing products would yield oe an estimated $5,000 per ae Motorhome RV 1 29° $669 $199 “a oul — 2007 RV Segment — 2004 2009 «2010-2011. 2012, «-2013-:LIM 9/
Slide 22: RV Segment Net Sales by Type
>» RV Segment Net Sales by Type LTM 9/14- $1,011 Million $104 million — 10% ae LTM 9/13- $867 Million $62 million Gs — $89 million bane $24 mill 10% million 80% $44 million, 3% 5% $710 million 82% = Travel Trailer & Fifth-Wheel - OEM ™ Motorhome - OEM Aftermarket » Adjacent Industries -21-
Slide 23: Manufactured Housing Industry
SECTION @ Manufactured Housing Industry
Slide 24: Manufactured Housing (MH) Market
> Manufactured Housing (MH) Market a” Cost per sq. ft. is $41 for MH vs: $83 for site-built homes a _ Average retail price of $60,600 for a 1,470 sq. ft. MH a 9 million manufactured homes acrossithe U.S: ” Improved quality, appearance and safety ” Studies have shown MHs built since 1995 sustain no m
Slide 25: Manufactured Housing — Industry Production
> Manufactured Housing — Industry Production Industry Units 28 [Industry unitsin thousands} Multi'Sections =x Single-Section 193 2001 2002 2003 2004 2005 2006 2007-2008 ©2009-2010 2011 2012 2013 LTM arta Mi Share 75% 78% 79% + «74% «5% «72% «—«BBK_:CIM«CGIH:««SOH: SI «53H SIH Held by Mut-Sections Th
Slide 26: MH: Favorable Factors
> MH: Favorable Factors a” Industry Demand > Demand for quality, affordable housing is likely to increase > Baby boomers retiring in increasing numbers > Dealer and manufacturer inventory levels are reasonable > Availability of financing is still an issue, as is the weak overall housing market a” Dr
Slide 27: Our Manufactured Housing Segment
SECTION @ Our Manufactured Housing Segment
Slide 28: Manufactured Housing — Industry Production (Compared to Drew's Performance)
> Manufactured Housing — Industry Production (Compared to Drew's Performance) Industry a x, Drew's Une Industry units in thousands, net sales in millions) Net ecies - Multi:Sections == Single-Section Drew's MH net sales 20 $250 S22SRS 20 200 ue $200 pa $177 168 154 160 x $142 $150 te 331 $120 $122 "
Slide 29: Content Per New Manufactured Home
> Content Per New Manufactured Home 100% market share in existing products $1,666 would yield an estimated $4,500 perhome cans oes $1,493 §1 465 $1,368 $1,330 $1,332 Affordability of the homes ge $1,307 ae constrains content growth - $871 $796 ill 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20
Slide 30: MH Segment Net Sales by Type
> MH Segment Net Sales by Type LTM 9/14- $115 Million LTM 9/13 - $124 Million $76 million 66% $82 million 66%
Slide 31: Strategy
trategy § SECTION @
Slide 32: Business Strategy
> Business Strategy a Maximize profitability and return on assets through > New product introductions > Market share growth > Operational efficiencies > Diversification to related industries > Strategic acquisitions a This strategy accomplished through > Outstanding customer service > Motivating man
Slide 33: Expanding Our Growth Potential
> Expanding Our Growth Potential Opportunities 2011 — Newly Developed Line of RV Awnings $ 100 million 2011 -Doors and indows for Truck Caps, Horse Trailers and Buses $ 100 million 2011 - Cross Sell Existing Products to Boat, Livestock, Equipment, Utility and Cargo Trailer $ 400 million Markets, as
Slide 34: Acquisition Criteria
> Acquisition Criteria a Drew is a disciplined and patient acquirer a Gain market share or add products from other suppliers through acquisitions a Seek products or technologies that we can expand through our nationwide customer base and factory network a Become an even more extensive supplier to ou
Slide 35: New Products & Acquisitions
> New Products & Acquisitions Acaure TRaL AR Began Adding RV production suspension of entry products doors for AcaUiRE RVs Coach Step: ‘Adding electric steps for ‘motorhomes | { v ‘ACQUIRE SEATING AcaurrE TECHNOLOGY: HAPPUAC: ‘Adding furniture Adding for RVs in patented bed AcaurRE Midwest market li
Slide 36: New Products & Acquisitions
> New Products & Acquisitions ACQUIRE MIDSTATES: ‘ACQUIRE POWER Adding Tool & GEAR & KWIKEE: Die and Expanding RV leveling systems, ACQUIREMEM FABRICATORS: ACQUIRE tec: ‘Adding components fr Expanding customization slo capabilities slideouts and store operation ACQUIRE STAR ACQUIRE EA TECHNOLOGIES:
Slide 37: Power Gear & Kwik acquisition
Power Gear & Kwik 7 $9 $108.1 (1) Plus contingent consideration payable on future sales. IDS had annual sales of approximately $19 million in 2013, of which $13 million were to the Company. (2) Plus contingent consideration payable on future sales.
Slide 38: The Future
> The Future Increasing RV content RV industry growth Demographic tailwind Expanding into adjacent industries, aftermarket and international a Affordable housing recovery u MWY
Slide 39: Thank You
Jason D. Lippert Chief Executive Officer JasonL@lci1.com THANK YOU | siveor= . ‘ ScottM@lci1.com For more information contact Joseph S. Giordano Ill CFO & Treasurer Joe@drewindustries.com @ Witter www.drewindustries.com @ Youtube www.lci1.com @ Facebook 574-535-1125
Slide 40: Supplemental Schedules
SECTION @ Supplemental Schedules -39-
Slide 41: Operating Results
> Operating Results Three Months Ended September 30, FINANCIAL PERFORMANCE (Sin mi except EPS) 2014) 2013 Change Net Sales $ 2943 $ 250.9 17% Operating Profit $ 23.1 $ 228 1% % of Sales 7.8% 9.1% Net Income $ 15.5 $ 14.8 5% Diluted EPS $ 064 $ 0.62 3% (1) Facility start-up and realignment costs as w
Slide 42: Nine Months Ended September 30
y Nine Months Ended September 30, FINANCIAL PERFORMANCE Excludes loss on sale of extrusion assefs. Actual 2014 operating profit was $78.3 million which was 8.7% of sales. Actual 2014 net income was $50.3 million , or diluted EPS of $2.07. Facility star-up and realignment costs as well as higher heal
Slide 43: a < “a © Q a =| 0) i iN) on a an “
a 2 < “a © Q a =| 0) i iN) on a an “ N o ° ND a (1) Facility start-up and realignment costs. as well as higher health insurance and material costs, had a negative impact on operating profitin the third quarter of 2014 as compared fo the same period of 2013. For further information, please refertothe
Slide 44: Operating profit footnote
(1) Facility start-up and realignment costs. as well as higher health insurance and material costs, had a negative impact on operating profit in the fist nine months of 2014 as compared fo the same period of 2013. For further information, please refer 43 to the Company's Form 10-@ for the period end
Slide 45: Debt Position
> Debt Position FINANCIAL PERFORMA\ Cash and Net Cash eater ae (Sin milions) Investments (Debt) YTD Period 12/31/10 $ = $ 440) $ 440) $ OD) 12/31/11 $ - $ 7 $ 7 $ 50 12/31/12 ||$ 7 $ 10 $102) $ ] 12/31/13 $ - $ 66 $ 66 $ 5 09/30/14 $ 40 $$ - $ (40) $ 100 (1) On December 28, 2010, the Company paid a
Slide 46: Balance Sheets
> Balance Sheets ($ in millions, 1/12 12/31/13 09/30/14 Total Assets $307 $ 351 374 $453 $549 Total Debt $ = $ zs Cash & Investments $ 448) §$ v Stockholders’ Equity $ 243° §$ 277 104 $ 66 § = 2841 $ 314) $ 3778 Days Sales in a/R" 12 days 17 days 14 days 16 days 20 days Inventory Turns”) 6.5 turns 6
Slide 47: Cash Flow
> Cash Flow FINANCIAL PERFORMANCE Significant use of cash items since December 31, 2009 Acquisitions (17) Capital expenditures Special dividends Stock repurchases Total $192 million $129 million $125 million $ 2million $ 448 million = 4b-
Slide 48: Cash Flow
> Cash Flow mmm Dividends (Capital Expenditures FINANCIAL PERFORMANCE OED SAcauisitions $130 SED * Operating Cash Flow $120 $120 $100 $100 $80 $80 $60 $63 $60 $40 $10 $40 $20 $20 55 $24 $30 $- = $0 2009 2010 2014 2012 2013 (1) 2014 YTD ‘Cumulative operating cash flow from 2009 to present [in million
Slide 49: Financial Strength
> Financial Strength FINANCIAL PERFORMANCE (12 months en ) 12/31/10 12/31/11 12/31/12 12/31/13 09/30/14 Return on Equity 11% 11% 13% 16% 18% Return on Assets 9% 9% 10% 12% 13% Mee Diets) 0.00 0.00 0.00 0.00 oO Equity ie to 0.00 0.00 0.00 0.00 0.33 (1) EBIDA is operating profit plus depreciation, amo
Slide 50: Reconciliation of Operating Profit to EBITDA
> Reconciliation of Operating Profit to EBITDA FINANCIAL PERFORMANCE LM (S in millions) 2010-2011, 2012, 2013 9/14 Operating $45.2 $48.5 $58.1 $783 $94.4 Profit Depreciation & Amnoteaton $17.1 $20.5 $25.7 $27.5 $30.6 EBITDA. $625 $69.0 $83.8 $1058 $125.0 Capital Expenditures $10.1 $24.3 | $32.0 $32.
Slide 51: Net Sales and Operating Profit by Segment
Net Sales: RV Segment $ 4772 $ 570. ¥ $ 780.9 $ 893.7 §$ MH Segment 95.6 110. 120.2 121.9 Operating Profit: RV Segment 3 f 47.2 MH Segment 12.4 Sale of extrusion assets (2.0) _ Total Operating Profit 454 § 48.5 § 58.1 $ 783 $ 94.4 —
Slide 52: Stock Price History
> Stock Price History Drew has 23.7 million shares outstanding and a market capitalization of approximately $1.1 billion as of November 7, 2014 $51 $32 $18 2001 2002 2003 2004 2005 2006 10/5/07 2007 2008 3/9/09 2009 2010 2011 2012 2013 11/7/14 (December 31, unless noted)
Slide 53: Analyst Coverage
> Analyst Coverage a” Citi Research > Gregory Badishkanian — (212) 816-2720 a CJS Securities > Dan Moore — (914) 287-7600 a” Sidoti & Company, LLC > Scott Stember — (212) 453-7017 ” Thompson Research Group > Kathryn Thompson — (615) 891-6206
Drew Industries — Investor Presentation (November 2014) on 6ix