Lci Industries · NYSE:LCII
Lci Industries — Drew Industries — Investor Presentation (February 2006)
35 slides from Lci Industries's investor presentation, Feb 24, 2006
Slide 1: A Leading National Supplier of Components for RVs and Manufactured Homes
bw Fa) NYSE A Leading National Supplier of a Wide Variety of Components for RV’s and Manufactured Homes Drew Industries (NYSE:DW)
Slide 2: Forward Looking Statements
Forward Looking Statements prev/ TH This presentation contains certain “iorwarcoaking statements" within the meaning of the Private Securties Litigation Reform Act of 1898 wh respect to financial cancion resus of operations, busiess <¥ateges, operating efficiencies oF synergies, compeltive pasion, g
Slide 3: About Drew Industries
About Drew Industries ® A leading national manufacturer of quality components for Recreational Vehicles (RV) and Manufactured Homes (MH) [ListED] NYSE.
Slide 4: Drew's Companies
Drew’s Companies prev/ = Kinro, Inc. — Acquired 1980 {including Better Bath - acquired in 2001) = Aluminum windows for RVs = Doors for RVs = Aluminum and vinyl windows and screens for MHs = Bath and shower units for MHs and RVs = Lippert Components, Inc. — Acquired 1997 (including Zieman Manufacturi
Slide 5: Drew's Products
Drew’s Products prev/ De Sales - $669 million 12 Months Ended December 31, 2005 MH Windows, Doors & Screens: $94 million RY Chassis and Chassis Parts: MH Chassis & $194 million 29% Speciatty Trailers: $33 milion Other: $20 million axtes & RY Slide-outs: $90 milion Rv Windows & Doors: $412 milion DW
Slide 6: Drew's Segments - 2005
Drew’s Segments - 2005 Revenues - $669 million MH 33% Approximately 95% of RV revenues . _ are for towable RVs Segment Operating Profit- $66 million NYSE
Slide 7: Supplier to Industry Leaders
Supplier to Industry Leaders prev/ = Outstanding customer service and national coverage, with 48 production facilities (approximately 3.2 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
Slide 8: Business Strategy
Business Strategy previ ™ 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 hi
Slide 9: Drew's Management Team
Drew’s Management Team prev/ = Highly respected and experienced Innovative & management: Experienced = Drew Management Leigh Abrams, CEO, 35+ years Fred Zinn, CFO, 25+ years = Kinro David Webster, CEO, Chairman, 30+ years = Lippert Doug Lippert, Chairman, 30+ years Jason Lippert, CEO, 12+ years = Ex
Slide 10: Content Per Vehicle - RV
Content Per Vehicle - RV prev/ = Peak potential is $980 $2,200 to $2,500 per RV Operating 1999 2000 2001 2002 2003 2004 2005 profitmargin 11.3% 6.8% 8.6% 9.4% 11.3% 9.2% 9.3% pw Excludes sales of specialty trailers HS @) Margin in 2004 and 2005 impacted by inoreases in steel and other material costs
Slide 11: Content Per Home - MH
Content Per Home - MH prev/ = Peak potential is $2,600 to $3,000 per home 1999 2000 2001 2002 2003 2004 2005 Operating Profit margin 15.5% 9.8% 10.8% 11.0% 10.7% 10.1%) 10.8% (2) Margin in 2004 and 2005 impacted by increases in stee! and other material costs and an aaverse jury award in a work place
Slide 12: New Product Introductions
New Product Introductions prev/ irket rent intial res Slide-out mechanisms for motorhomes $65 25% Leveling devises for motorhomes 65 <5% Axles for towables 80 15% - 20% Steps for towables 10 30% - 40% Bath products for RVs 30 <5% Thermoformed exterior parts 25 0% Specialty trailers 200 15% - 20% Axl
Slide 13: New Product Introductions (Continued)
New Product Introductions (Continued) prev/ = Increased market penetration for 11 new, innovative products developed by LTM Manufacturing, which was acquired in July 2003. = Expanded specialty trailer products through the May 2004 acquisition of Zieman. Consists of specialty trailers for boats, pers
Slide 14: Acquisition Criteria
Acquisition Criteria = Complementary to our core RV and MH markets = Target less than 6 times pro forma EBITDA = Immediately accretive ™ Seek to acquire products or technologies that we can introduce through our nationwide customer base and factory network; become a more extensive supplier to our cu
Slide 15: Acquisition History
Acquisition History prev/ Strategic July 2003 - LTM Manufacturin: tel éy. uf 0 Acquisitions 2001 — Better Bath Slide-out systems, specialty slide-out storage trays and decks, and electric Bath and shower products stabilizer jacks for RVs. Annual sales May 2006 - Venture for MH. Annual sales of of $4
Slide 16: Investments
Investments prev/ = Kinro and Lippert have innovative & extensive R&D departments Experienced * Since January 1997: Management = Invested over $125 million in plant and equipment = Invested over $135 million for acquisitions = Invested $40 million for stock repurchases at an average price of $5.37 p
Slide 17: RVs - Industry Shipments
RVs - Industry Shipments prev/ Travel Tri lers and 5th Wheel RVs - market for 95% of our current RV products (Thousands of Vehicles) mg Travel Tailers & 5th Wheel mOther Towables GMotor Homes 423 197 19981999 00 ao. 22003 2004(1)_2005(2) (7) Includes aoproximately 13,500 RVs purchased by FEMA for em
Slide 18: RV Market
RV Market = RV Categories = Towable RVs - 85% of industry unit sales and about 40% of industry dollar sales. Retail prices - $4,000 to $65,000. = Motorhomes - 15% of industry unit sales and about 60% of industry retail dollar sales. Retail prices - $48,000 to $400,000. = Since 1995, the travel trail
Slide 19: Growth In RV Market
Growth In RV Market prev/ = Positive Demographic Trends Strong Growth = Primary owners of RVs are 50 and over Prospects = According to census reports, there are expected to be 20 million more people over 50 in the next 10 years = Industry Advertising Campaign = Target Market 30 and over = RV Vacatio
Slide 20: MH - Industry Production
MH - Industry Production prev/ (Thousands of Homes) | Mukti-Section B Single Section 373 383 353 349 1ge1 | 1992 1993 | 1994 1995 | 1955 | 1997 1998 1999” 2000 2001 202 | 2003 ‘Moat }2NEL2) (7) Includes aoproximately 3,500 MHs purchased by FEMA for emergency Shelter tor 2004 hurricane victims. (2) I
Slide 21: Manufactured Housing (MH) Market
Manufactured Housing (MH) Market prev! * 10 million manufactured homes Strong Growth across the U.S. ™ Improved quality and image should drive MH growth ™ Industry production down 61% since 1998, but Drew's sales are down much less ™ Drew's MH segment remained profitable every quarter since the down
Slide 22: MH: Return to Growth
MH: Return to Growth = Signs of Improvement in the Manufactured Housing Industry = Low inventory levels at retail dealers = Slowing of repossessions = Improved lending practices have made new loans more secure = Berkshire Hathaway acquired Clayton, Oakwood and 21st Mortgage; raised more than $4 bill
Slide 23: MH: Strong Future
MH: Strong Future = Demographics - 1st time home buyers and retirees = Affordability: Significant cost advantage over site-built homes (2004 data) = MH - $36 per sq. ft. compared to $86 per sq. ft. for site-built homes = Average retail price of $58,100 for a 1,625 sq. ft. manufactured home = Improve
Slide 24: Drew's Ownership and Governance
Drew’s Ownership and Governance prev/ ™ Ownership by Executives and Directors aligns our interest with other stockholders. Currently own 18%; after sale of the balance of the shares included in a recently filed Form S-3, insiders will own 13% of shares. ™ Drew’s Corporate Governance Program — ranked
Slide 25: Financial Performance
Financial Performance prev/ Stock Price History = The price of Drew's common stock is about 12 times the price as of December 31, 2000 = Drew has 21 million shares outstanding and = a market capitalization of $750 million 2000 2001 2002 2003 2004 2116106 (ec 31 unless noted) DW. Drew effected a 2-fo
Slide 26: Operating Results
Operating Results ener eee Full Year Operating Results Financial (8 in millions, except EPS) Performance Sales Operating Profit % Sales Net Income Diluted EPs” EBITDA"? (2) 2004 results were impacted by charges related to litigation that reduced operating profit bp $1.5 million and reduced net incom
Slide 27: Operating Results
Operating Results j ener eee Three Months Ended December 31, Financial (3 in millions, except EPS) Performance Sales $132.3 Operating Profit $ 6.4 % Sales 4.8% Net Income $ 3.5 Diluted EPS™ $ 0.16 (@) 2004 quarterly results were impacted by charges related to litigation that reduced operating profit
Slide 28: Results By Segment
Results By Segment HE ener eee Year Ended December 31, Financial (3 in millions) Performance Net sales RV Segment $347.6 $447.9 MH Segment $ 183.3 $221.3 Operating Profit RV Segment $318 $4170 MH Segment $ 18.50) $ 24.0") Operating Profit as a Percentage of Net Sales RV Segment 92% 9.3%) MH Segment
Slide 29: Results By Segment
Results By Segment DREV ener eee Three Months Ended December 31, Financial (3 in millions) Performance Net sales RV Segment $847 MH Segment $47.6 Operating Profit RV Segment $ 52 MH Segment $ 30° Operating Profit as a Percentage of Net Sales. RV Segment 6.2% 8.6% MH Segment 6.4% 12.3%'9 See Press Re
Slide 30: Reconciliation of Operating Profit to EBITDA
Zz , REVS Reconciliation of Operating Profit to EBITDA Financial (3 in millions) Performance Di 2004 Operating Profit 34.3 $44.0 $ 57.7 Depreciation and Amortization 7.8 $ 9.3 $ 12.0 EBITDA 42.1 $ 53.3 $ 69.7 (1) See press release dated February 15, 2006 for a reconciliation to consolidated results
Slide 31: Balance Sheet
Zz Balance Sheet DREW Ew (8 in millions, except percents) Financial Performance 1 1/04 12/3105 Total assets $ 238 $ 307 Total debt $ 71 $ 73 Stockholders’ equity $122 $ 168 RATIOS Days sales in accts receivable” 19days 21days 21 days Inventory turns ? 7.3turns 5.6turns 6.1 turns (i) Days sales in ac
Slide 32: Financial Strength
Financial Strength Financial Performance Return on Equity “ 24% 24% 23% Return on Assets “ 11% 13% 12% Total Debt to Equity 0.7 0.4 0.6 Total DebttoEBITDA® 1.3 0.8 4.3 (1) Based on income from continuing operations. (2) EBITDA is operating profit plus depreciation and amortization. DW. NYSE.
Slide 33: Peer Comparison
Peer Comparison prev/ Financial Performance Fleetwood (FLE) 3% -58% Monaco (MNC) 1% 1% Spartan (SPAR) 6% 11% Thor (THO) 14% 22% Winnebago (WGO) 14% 26% Source’ Capital 10, February 16, 2006, except forward P/E, which Is provided by Thomson Financial, DW. NYSE.
Slide 34: Summary
Summary prev/ = Why is Drew a Good Investment = Highly experienced and motivated management = Outstanding customer service = Low-cost producer = Continued product line expansion History of successful strategic acquisitions History of strong operating profit and cash flow Strong Balance Sheet Highly
Slide 35: Exhibit 99.1 full text
Exhibit 99.1 [LOGO OF DREW] [GRAPHIC APPEARS HERE] A Leading National Supplier of a Wide Variety of Components for RV’s and Manufactured Homes Drew Industries (NYSE:DW) [LOGO OF DW LISTED NYSE] Forward Looking Statements [LOGO OF DREW] • This presentation contains certain “forward-looking statements
Drew Industries — Investor Presentation (February 2006) on 6ix