Lci Industries · NYSE:LCII
Lci Industries — Q2 2023 Earnings Presentation
31 slides from Lci Industries's earnings presentation, August 2023
Slide 1: LCI Industries Investor Presentation
LCI Industries Investor Presentation May 2022 LCI INDUSTRIES INVESTOR PRESENTATION August 2023 1
Slide 2: Forward-Looking Statements
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 manag
Slide 3: LCI at a Glance
LCI AT A GLANCE A leading supplier of highly engineered components primarily to the OEMs of RVs, buses, trailers, trucks, boats, trains, manufactured housing, and their related aftermarkets Key Metrics YOY Q2 Full Year Q2 2023 Change 2022 Net Sales $1,015M (34)% $5,207M Diluted EPS $1.31 (78)% $15.4
Slide 4: LCI at a Glance
LCI AT A GLANCE Over the last three decades, LCI has strategically diversified operations into the RV adjacent market, aftermarket and marine industry; leaning into outdoor lifestyle movement * See the Appendix to this presentation for reconciliation of non-GAAP financial measures to the most direct
Slide 5: LCI Overview
LCI OVERVIEW Industry-Leading Brands and Core Competencies Applicable Across a Number of Customer Segments 7 Core Competencies Recreational Vehicle Metal Fabrication & Welding Marine Lamination Transit & School Bus Glass Fabrication Equestrian & Cargo Trailers Cut & Sew Heavy & Light Trucking Power
Slide 6: LCI Overview
LCI OVERVIEW Since LCI was founded, we have always focused on the following: Building the best • Experienced leadership team with substantial industry knowledge teams with the • Centralized base in Indiana keeps leadership close with best leaders team members, supporting cohesive culture • 100,000+
Slide 7: Key Strategic Opportunities
KEY STRATEGIC OPPORTUNITIES Our long-term growth is guided by execution against four strategic pillars: INNOVATION QUALITY LEADERSHIP & CUSTOMER AS A CULTURE CULTURE EXPERIENCE 7
Slide 8: Leadership & Culture
LEADERSHIP & CULTURE We strive to drive superior returns to all of our teams...our PEOPLE, our CUSTOMERS and our SHAREHOLDERS Striving to Lead • A passion to win, coupled with a robust growth strategy, drives us to be a leader in every market we enter • Strong cultural underpinning has helped reduce
Slide 9: Innovation as a Culture
INNOVATION AS A CULTURE Constant innovation continues to drive content expansion Lewmar® Electric ABS (Anti-Lock Braking CURT® Enhanced Pin OneControl® Auto Independent Powered Shallow System) Box Solutions featuring True Course™ Suspension Water Anchor Furrion® 18K Chill Cube Solera® 3000 Off-Grid
Slide 10: Leader in Customer Experience
LEADER IN CUSTOMER EXPERIENCE Improving the Customer Experience for all • Proven, always-on listening methodology connecting end user feedback to the Lippert team to create meaningful and desired improvements to products, processes, and services • Engaged with all Customers via Care Center forecasti
Slide 11: Dedication to Quality
DEDICATION TO QUALITY Committed to delivering high-quality products, supported by ongoing focus on operational improvements Reputation for safe and reliable products enabling continued market share growth • Quality of our products leads to strong customer relationships, helping us win new business a
Slide 12: ESG Focus Areas
ESG FOCUS AREAS Driving long-term value creation through progress on ESG initiatives. Commitment to Sustainability Environmental, Health & Safety Data monitoring and clean energy investment Addressing top priorities of our stakeholders • Disclosure of Scope 1 and 2 greenhouse gas emissions and • Com
Slide 13: Our Business
OUR BUSINESS
Slide 14: RV OEM: Growth Drivers & Trends
RV OEM Growth Drivers & Trends Key Drivers • Growth within the outdoor lifestyle continuously fuels long term outlook • North American RV OEM revenues down 61% YTD through June 2023 vs the same period in the prior year driven by softened demand, partially offset by increased content Content per Whol
Slide 15: Marine OEM: Growth Drivers & Trends
MARINE OEM Growth Drivers & Trends Key Drivers • Benefits from secular tailwinds within the outdoor recreation space • Focused on continued innovation in the marine markets with products anchor system, thrusters, windshields, seating and biminis • Building out our Captain’s customer support group, b
Slide 16: Aftermarket: Growth Drivers & Trends
AFTERMARKET Growth Drivers & Trends Key Drivers • Represents one of the strongest value drivers for LCI due to long runway for growth, counter-cyclicality, strong margin profile, and premium brands • Innovation driving ongoing portfolio expansion through sophisticated products, catering to the new g
Slide 17: International Business & Other Adjacencies
INTERNATIONAL BUSINESS & OTHER ADJACENCIES Growth Drivers & Trends Key Drivers • International: ◦ Inventories are replenishing as supply chain constraints ease, enabling European customers to begin meeting pent-up demand ◦ Leveraging popular European products for introduction in North American marke
Slide 18: Financial Overview
FINANCIAL OVERVIEW Diversification and content expansion enabling market share gains and strong cash generation * See the Appendix to this presentation for reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures. 18
Slide 19: Q2 2023 Financial Performance
Q2 2023 FINANCIAL PERFORMANCE * Additional information regarding EBITDA, as well as reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure, is provided in the Appendix. 19
Slide 20: Expanding Addressable Markets
EXPANDING ADDRESSABLE MARKETS Unlocking value through diversification: Additional LCI Current 2022 Net Market Market Sales(1) Opportunity(1) Share $11 billion in combined RV OEM $2,800 $1,500 ~59% growth opportunity Marine OEM $493 $475 ~47% through various markets as we expand our Aftermarket $825
Slide 21: Growth Strategy
GROWTH STRATEGY Prioritizing ample liquidity and investments back into the company Balanced Capital Allocation Strategy Continue Execution of our • Reduce leverage Diversification Strategy • Investment in the business, with focus on automation • Lessen the impact from RV down cycles by further proje
Slide 22: Financial Overview: Strong Balance Sheet
FINANCIAL OVERVIEW Strong Balance Sheet & Financial Flexibility Second Second Quarter 2023 Quarter 2022 Cash and Cash Equivalents $22M $55M Remaining Availability under Revolving $270M $287M Credit Facility Net Debt/EBITDA (TTM)* 3.4x 1.3x Cash Provided by Operating Activities (YTD) $274M $348M Heal
Slide 23: Capital Deployment Strategy
FINANCIAL OVERVIEW Capital Deployment Strategy Historical Use of Cash Cash Priorities Future Use of Cash Reduce leverage Disciplined reinvestment to drive growth Acquisitions that align to strategy and financial targets Return capital to shareholders Attractive dividend yield Opportunistic share rep
Slide 24: Acquisition Strategy
FINANCIAL OVERVIEW Acquisition Strategy Over 50 acquisitions in the Recent last 20 years Acquisitions • Majority of last 20 acquisitions focused outside of North American RV industry Looking for: • Great leadership • Product innovation • Consistency with our core manufacturing disciplines • Niche ma
Slide 25: Appendix
APPENDIX
Slide 26: Consolidated Financials
APPENDIX Consolidated Financials ($ in millions except per share data) 2016 2017 2018 2019 2020 2021 2022 Net Sales $ 1,679 $ 2,148 $ 2,476 $ 2,371 $ 2,796 $ 4,473 $ 5,207 Operating Profit $ 201 $ 214 $ 199 $ 200 $ 223 $ 398 $ 553 % of Sales 12.0% 10.0% 8.0% 8.4% 8.0% 8.9% 10.6% Net Income $ 130 $ 1
Slide 27: Balance Sheet
APPENDIX Balance Sheet ($ in millions) 2016 2017 2018 2019 2020 2021 2022 Cash & Equivalents $ 86 $ 26 $ 15 $ 35 $ 52 $ 63 $ 47 Accounts Receivable 57 82 122 200 269 320 214 Inventory 189 275 341 394 494 1,096 1,030 Other Assets 455 563 766 1,234 1,483 1,809 1,956 Total Assets $ 787 $ 946 $ 1,244 $
Slide 28: Reconciliation of Non-GAAP Measures: EBITDA
APPENDIX Reconciliation of Non-GAAP Measures EBITDA Three Months Ended June 30, Year Ended December 31, ($ in thousands) 2023 2022 2017 2018 2019 2020 2021 2022 Net Income $ 33,426 $ 154,530 $ 132,884 $ 148,551 $ 146,509 $ 158,440 $ 287,739 $ 394,974 Interest Expense, Net 10,249 6,191 1,437 6,436 8,
Slide 29: Reconciliation: Leverage Ratio
APPENDIX Reconciliation of Non-GAAP Measures Leverage ratio (net debt to EBITDA) As of and for the Twelve Months Ended ($ in millions) June 30, 2023 June 30, 2022 Long-term Indebtedness $ 916 $ 1,102 Current Portion of Long-Term Debt 28 21 Total Debt 944 1,123 Less: Cash and Cash Equivalents 22 55 N
Slide 30: Reconciliation: Free Cash Flow
APPENDIX Reconciliation of Non-GAAP Measures Free cash flow ($ in millions) 2017 2018 2019 2020 2021 2022 Net Cash Flows Provided by (Used in) Operating $ 155.1 $ 156.6 $ 269.5 $ 231.4 $ (111.6) $ 602.5 Activities Less: Capital Expenditures 87.2 119.8 58.2 57.3 98.5 130.6 Free Cash Flow $ 67.9 $ 36.
Slide 31: Industry Statistics Summary
APPENDIX LCI Industries Industry Statistics Summary TOTAL RECREATIONAL VEHICLES (RV) TOTAL l Wholesale Units © L_ | Retail Units Dealer Inventory Impact Month YTD LT™M YTD Month YTD LIM ‘Dec-21 40,497 0% 600,240 ~_ 600,240 569,748 9% 16,097. 30,492 30,492 Jan-22 $3,351 16% 53,351 607,661 28.178 -13%