Lci Industries · NYSE:LCII
Lci Industries — Drew Industries — Investor Presentation (August 2007)
38 slides from Lci Industries's investor presentation, Aug 10, 2007
Slide 1: A Leading National Supplier of Components for RVs and Manufactured Homes
A Leading National Supplier of a Wide Variety of Components for RV’s and Manufactured Homes Drew Industries (NYSE:DW ) 2003
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive posi
Slide 3: About Drew Industries
About Drew Industries A leading national manufacturer of quality components for Recreational Vehicles (RV) and Manufactured Homes (MH)
Slide 4: Company Overview Financial Performance
Company Overview Financial Performance Headquartered in White Plains, New York – 10 employees 41 manufacturing facilities in the U.S. Approximately 4,000 employees nationwide Organic growth from 2001 through 6/30/07 was over $180 million or a 10% average annual growth, excluding price increases, acq
Slide 5: Drew's Companies
Drew’s Companies Kinro, Inc. – Acquired 1980 Aluminum windows for RVs Doors for RVs and MHs Aluminum and vinyl windows and screens for MHs Bath and shower units, and sinks for MHs and RVs Exterior panels for RVs Lippert Components, Inc. – Acquired 1997 Chassis and chassis parts for RVs and MHs Slide
Slide 6: Drew's Segments – LTM 6/30/07
MH = $16 million 23% RV = $52 million 77% MH = $194 million 29% RV = $482 million 71% Drew’s Segments – LTM 6/30/07 Revenues - $676 million 90% of RV segment revenues are for towable RVs Segment Operating Profit - $68 million
Slide 7: Drew's Products
Drew’s Products RV Chassis and Chassis Parts: $200 million RV Windows and Doors: $109 million 12 Months Ended June 30, 2007 Sales - $676 million Other: $7 million MH and RV Bath Products: $23 million Specialty Trailers: $20 million RV Slide-out mechanisms: $107 million RV and MH Axles and Tires: $57
Slide 8: Supplier to Industry Leaders
Supplier to Industry Leaders Outstanding customer service and national coverage , with 41 production facilities (more than 3 million sq. ft.), make us a key partner with our customers. Supply most of the Leading Producers of RVs and MHs: Both RV and MH Fleetwood (NYSE:FLE) Skyline (NYSE: SKY) RV Coa
Slide 9: Business Strategy
Business Strategy Increase sales and profitability through: Market share growth New product introductions Strategic acquisitions This strategy accomplished through: Outstanding customer service Motivating management through profit incentives and training programs Maintaining highly efficient factori
Slide 10: Content Per Vehicle - RV
Content Per Vehicle - RV Peak potential is $2,500 to $2,800 per RV (a) Excludes sales of specialty trailers. (b) Excludes sales of Emergency Living Units (“ELU’s”) purchased by FEMA. 90% of RV segment sales are for Towable RVs See Page 17 for Industry Information Operating profit margin 8.6% 9.4% 11
Slide 11: Content Per Home - MH
Content Per Home - MH Peak potential is $3,300 to $3,600 per home Operating Profit margin 10.8% 11.0% 10.7% 10.1% 10.2% 9.5% 8.2% See Page 21 for Industry Information 6/30/07
Slide 12: New Product Introductions
(in millions) New Product Introductions Annualized sales of these products increased from about $100 million in the 2nd quarter of 2006. (a) Including recent acquisitions.
Slide 13: Acquisition Criteria
Acquisition Criteria Drew is a disciplined and patient acquirer Target less than 6 times pro forma EBITDA Immediately accretive Complementary to our core RV and MH markets Strategic Acquisitions Seek to acquire products or technologies that we can introduce through our nationwide customer base and f
Slide 14: Acquisition History
Acquisition History Strategic Acquisitions May 2004 Zieman RV, MH and specialty trailers. Annual sales of over $40 million Each of our RV and MH acquisitions has expanded geographic markets or broadened product lines July 2007 Extreme Engineering Custom boat trailers. Annual Sales of $12 million 200
Slide 15: Drew's Management Team
Drew’s Management Team Highly respected and experienced management: Drew Leigh Abrams, CEO, 35+ years Fred Zinn, CFO, 25+ years Kinro David Webster, CEO, Chairman, 30+ years Lippert Jason Lippert, CEO, Chairman 12+ years Excellent management training and incentive programs Innovative & Experienced M
Slide 16: Investments
Investments Kinro and Lippert have extensive R&D departments Since January 1997: Invested over $157 million in plant and equipment Invested nearly $179 million for acquisitions Invested $40 million for stock repurchases at an average price of $5.37 per share These investments have been accretive to
Slide 17: RVs - Industry Wholesale Shipments
41 57 42 56 RVs - Industry Wholesale Shipments (Thousands of Vehicles) 90% of Drew’s current RV product sales are for Travel Trailers and 5th Wheel RVs (1) Includes approximately 13,500 RVs purchased by FEMA for emergency housing for 2004 hurricane victims. (2) Excludes 38,900 ELU’s in 2005 and 31,4
Slide 18: RV Market
TOWABLE RVS (90% of Drew’s RV revenues) MOTORHOMES RV Market 86% of industry 2006 unit sales 50% of wholesale dollar sales Retail cost $4,000 to $100,000 per unit. Average about $20,000 From 1998 to 2006 the travel trailer and 5 th wheel market grew at an annual rate of approximately 8%, compared to
Slide 19: Growth In RV Market
Growth In RV Market Positive Demographic Trends Primary owners of RVs are 50 and over According to census projections, there are expected to be 20 million more people over 50 by 2014 Strong Growth Prospects Industry Advertising Campaign Target Market 30 and over Post 9/11 security concerns and high
Slide 20: How RVs Are Used
How RVs Are Used Shift in U.S. culture toward more RV-related activities NASCAR events College and NFL football games “Toy Haulers” More economical family vacations Typical RV family vacation up to 74% less expensive Strong Growth Prospects Many RVs are “parked”over the long-term as second homes Tra
Slide 21: MH - Industry Production
47% 61% 59% 52% 49% 49% 47% 47% 75% 70% 65% 78% 74% 80% 72% 64% 71% MH - Industry Production (Thousands of Homes) (1) (1) Includes approximately 3,500, 15,000 and 3,000 for 2004, 2005 and 2006, respectively, MHs purchased by FEMA for emergency housing for hurricane victims. (2) Estimate by Company m
Slide 22: Manufactured Housing (MH) Market
Manufactured Housing (MH) Market Cost per sq. ft. is $39 for MH vs. $91 for site-built homes Average retail price of $62,300 for a 1,595 sq. ft. MH 9 million manufactured homes across the U.S. Strong Growth Prospects Improved quality, appearance and safety Studies have shown that MH built since 1995
Slide 23: MH: Industry Financing
MH: Industry Financing Trends Improved lending practices Conventional financing more common than chattel; improves collateral Recent increase in loan applications Recent increase in manufacturer order backlogs Subprime market woes could help MH Pressure on Fannie Mac/Freddie Mac to support MH loans
Slide 24: MH: Other Favorable Factors
MH: Other Favorable Factors Baby Boomers retiring in increasing numbers Appropriate inventory levels Affordability and quality New HUD code Potential for rebuilding the Gulf Coast Strong Growth Prospects Improved industry image Advertising campaign being developed Berkshire investments
Slide 25: Drew's Ownership and Governance
Drew’s Ownership and Governance Executives and Directors currently own 11%. Drew’s Corporate Governance Program – ranked in the 87 th percentile of all Russell 3000 Companies by Institutional Shareholder Services. Added to S&P SmallCap 600 Index in October 2005
Slide 26: Financial Performance
Financial Performance The price of Drew’s common stock is nearly 14 times the price as of December 31, 2000 Drew has 21.8 million shares outstanding and a market capitalization of more than $850 million as of August 6, 2007 (December 31 unless noted) Stock Price History Drew effected a 2-for-1 stock
Slide 27: Operating Results
($ in millions, except EPS) 2004 2005 200 6 (2) LTM 6/07 (2) LTM 6/07 vs 2006 Sales $ 531 $ 669 $ 7 29 $ 676 - 7% Operating Profit $ 44.0 $ 57.7 $ 55.3 $ 57.4 +4% % of Sales 8.3 % 8 . 6 % 7 . 6 % 8.5% Net Income $ 25.1 $ 33.6 $ 3 1.0 $ 32.7 +6% Diluted EPS (1 ) (3 ) $ 1 .18 $ 1 .56 $ 1 .42 $ 1.49 +5
Slide 28: Results By Segment
10.8% 8.2% 8.6% 9.5% 9.6% 10.2% 9.4% 9.6% Operating Profit as a Percentage of Net sales RV Segment MH Segment $ 52.1 $ 15.8 $ 43.9 $ 21.0 (b) $ 43.1 $ 22.6 (a) $ 32.6 $ 17.7 (a) Operating Profit RV Segment MH Segment $ 482.5 $ 193.7 $ 508.8 $ 220.4 $ 447.7 $ 221.5 $ 346.2 $ 184.7 Net Sales RV Segmen
Slide 29: Operating Results – Three Months Ended June 30
($ in millions, except EPS) Operating Results Three Months Ended June 30, Financial Performance (a) Sales during the second quarter of 2007 were negatively impacted by weakness in both the RV and MH industries.
Slide 30: Results By Segment – Three Months Ended June 30
($ in millions) Results By Segment Three Months Ended June 30, Financial Performance See Press Release dated July 31, 2007 for a reconciliation to consolidated results.
Slide 31: Operating Results – Six Months Ended June 30
($ in millions, except EPS) Operating Results Six Months Ended June 30, Financial Performance (a) Sales during the first six months of 2007 were negatively impacted by weakness in both the RV and MH industries, while sales in the first six months of 2006 included approximately $20 million of hurrica
Slide 32: Results By Segment – Six Months Ended June 30
($ in millions) Results By Segment Six Months Ended June 30, Financial Performance See Press Release dated July 31, 2007 for a reconciliation to consolidated results. (a) Sales during the first six months of 2007 were negatively impacted by weakness in both the RV and MH industries, while sales in t
Slide 33: Balance Sheet
($ in millions) Balance Sheet Financial Performance (1) Days sales in accounts receivable is the most recent month’s net sales divided by accounts receivable, net, at the end of the period. (2) Inventory turns is cost of goods sold for the last twelve months divided by average inventory for the last
Slide 34: Financial Strength
12/31/04 12/31/05 12/31/06 LTM 6 /07 Return on Equity 23% 24% 16 % 16 % Return on Assets 12% 12% 9 % 10 % Total Debt to Equity 0.6 0.4 0. 3 0. 2 Total Debt to EBITDA (1) 1 .3 1 .1 0. 8 0. 6 Financial Strength Financial Performance ( 1) EBITDA is operating profit plus depreciation and amortization (s
Slide 35: Peer Comparison
20% 13% 10.7 19.1 Spartan (SPAR) (69%) (4%) 28.7 N/A Fleetwood (FLE) 16% 11% 19.0 27.4 Drew (DW) ROE ROA Forward P/E Trailing P/E (1%) 1% 16.0 N/A Monaco (MNC) 18% 11% 15.5 19.2 Thor (THO) 16.8 25.1 Winnebago (WGO) 16% 8% Peer Comparison Source: Capital IQ, August 7, 2007, except forward P/E, which
Slide 36: Thank You
Analyst coverage: For more information contact: Or visit: www.drewindustries.com Thank You Avondale Partners, LLC: Kathryn Thompson (615) 467-5637 BB&T Capital Markets: John Diffendal (615) 340-8284 Ferris, Baker Watts, Inc. John T. G. Rogers (410) 659-4645 Sidoti & Company LLC: Scott Stember (212)
Slide 37: Reconciliation of Operating Profit to EBITDA
($ in millions) 2001 2002 2003 2004 2005 2006 LTM 6 /07 Operating Profit $20.3 $29.2 $34.3 $44.0 $57.7 $55.3 $57 . 4 Depreciation and Amortization $8.4 $7.3 $7.8 $9.3 $12.0 $15.7 $ 1 7 . 3 EBITDA $28.7 $36.5 $42.1 $53.3 $69.7 $71.0 $7 4 . 7 Capital Expenditures $8.2 $ 10.5 $5.1 $27.1 $26.1 $22.3 $ 1
Slide 38: Results By Segment
($ in millions) Last 12 Months Ended June 30, 2007 2006 Net sales RV Segment MH Segment $ 482.5 193.7 $ 520.8 241.2 Total Net Sales $ 676.2 $ 762.0 Operating Profit RV Segment MH Segment $ 52.1 15.8 $ 50.6 25.4 Total Segment Operating Profits 67.9 76.0 Amortization of intangibles ( 3.5 ) ( 1.7 ) Cor
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