Lci Industries · NYSE:LCII
Lci Industries — Drew Industries — Investor Presentation (March 2009)
37 slides from Lci Industries's investor presentation, Mar 16, 2009
Slide 1: A Leading National Supplier of a Wide Variety of Components for RVs and Manufactured Homes
2003 2003 A Leading National Supplier of a Wide Variety of Components for RVs and Manufactured Homes Exhibit 99.1
Slide 2: Forward-Looking Statements
This presentation may contain 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 position, growth opportuniti
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: Financial Performance: Sales and EBITDA
(1) EBITDA is operating profit plus depreciation, amortization and goodwill impairment (see page 35). MH Segment sales RV Segment sales EBITDA (1) Financial Performance Sales and EBITDA (in millions)
Slide 5: 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 Thermoformed exterior panels for RVs Lippert Components, Inc. - Acquired 1997 Chassis and chassis parts for RVs and MHs RV slide-
Slide 6: Drew's Management Team
LIPPERT - KINRO DREW Drew’s Management Team INNOVATIVE & EXPERIENCED MANAGEMENT Jason D. Lippert, CEO, President and Chairman of Lippert and Kinro 13+ years Jason Lippert Highly respected and experienced management: Leigh J. Abrams, Chairman 35+ years Fredric M. Zinn, President and CEO 25+ years Lei
Slide 7: Drew's Segments – 2008
MH = $11 million 28% RV = $29 million 72% Drew’s Segments – 2008 Revenues - $511 million Segment Operating Profit - $40 million
Slide 8: Drew's Products
Drew’s Products Sales - $511 million 12 Months Ended December 31, 2008 RV Chassis, Slide-outs and Other Chassis Parts: $228 million RV Windows and Doors: $79 million Other: $3 million MH and RV Bath Products: $21 million Specialty Trailers: $14 million RV and MH Axles and Tires: $34 million MH Chass
Slide 9: Supplier to Industry Leaders
Forest River (owned by Berkshire Hathaway – largest customer) Heartland Recreational Vehicles, LLC (privately owned) Jayco/Starcraft (privately owned) Skyline (NYSE: SKY) Thor (NYSE: THO) – 2 nd largest customer Champion (NYSE: CHB) Clayton (owned by Berkshire Hathaway – largest customer) Palm Harbo
Slide 10: Economic and Market Conditions
Economic and Market Conditions
Slide 11: Business Strategy
Increase sales and profitability through Market share growth New product introductions Strategic acquisitions Operational efficiencies This strategy accomplished through Outstanding customer service Motivating management through strong profit incentives Low cost manufacturing: Optimizing production
Slide 12: Content Per Vehicle - RV
Content Per Vehicle - RV Operating profit margin 8.7% 10.0% 11.6% 9.8% 9.7% 8.6% 12.8% 7.8% (1) Includes historical sales for acquisitions assuming the acquisition was made at the beginning of the period. See Page 18 for Industry Information Peak potential is $3,500 to $3,800 per RV 90+% of RV Segme
Slide 13: Content Per Home - MH
Peak potential is $3,600 to $4,000 per home Content Per Home - MH Operating Profit margin 10.8% 10.9% 10.8% 10.5% 10.6% 9.1% 8.5% 7.7% See Page 21 for Industry Information
Slide 14: Acquisitions and Product Line Extension
Acquisitions and Product Line Extension Drew is a disciplined and patient acquirer Replace competitors and other suppliers which have ceased operations by acquiring their assets Complimentary to our core RV (including specialty trailers) and MH markets Seek products or technologies that we can expan
Slide 15: New Product Introductions
Began production of entry doors for RVs Introduce RV slide out mechanisms Began Production of axles for towable RVs ACQUIRE LIPPERT COMPONENTS: Primarily steel chassis & parts for MH ACQUIRE BETTER BATH: Adding thermo- formed products ACQUIRE HAPPIJAC: Adding patented bed lifts for RVs ACQUIRE EXTRE
Slide 16: Investments
Investments Kinro and Lippert have extensive R&D departments Since January 1998 Invested over $155 million in plant and equipment Invested nearly $161 million for acquisitions Invested $28 million for stock repurchases at an average price of $5.85 per share through December 31, 2008
Slide 17: RV Market
TOWABLE RVS (90+% of Drew’s RV Segment revenues) MOTORHOMES (5% of Drew’s RV Segment revenues) 88% of industry 2008 unit sales 47% of 2007 wholesale dollar sales, or $5.5 billion Retail cost $4,000 to $100,000 per unit. Average about $20,000 RV Market 12% of industry 2008 unit sales 53% of 2007 whol
Slide 18: RV Industry Wholesale Shipments
90+% of Drew’s RV product sales are for Travel Trailers and 5 th Wheel RVs Excludes emergency living units purchased by FEMA in 2005 and 2006. Projection for 2009 is the latest published by the RVIA. (Units in thousands, Sales in millions) Travel Trailers & 5 th Wheel Other Towables Motorhomes Drew’
Slide 19: Positive Demographic Trends
Positive Demographic Trends Americans 50 and over are a prime market for RVs According to March 2004 census projections, there are expected to be 20 million more people over 50 by 2014 Industry Advertising Campaign Target Market 25 and over Airport security hassles and high airline ticket prices inc
Slide 20: How RVs Are Used
How RVs Are Used Shift in U.S. culture toward more RV-related activities College and NFL football games NASCAR events More economical family vacations Typical RV family vacation up to 74% less expensive Many RVs are “parked” over the long-term as second homes STRONG LONG-TERM GROWTH PROSPECTS
Slide 21: MH – Industry Production
61% 65% 70% 75 % 78% 80% 74% 64% 72% 63% 68% MH – Industry Production Drew’s MH Segment remained profitable every quarter since 1998. Single-Sect ion Multi-Sections Drew’s MH Sales $177 $220 $221 $183 $134 $154 $147 $152 $191 $196 (Units in thousands, Dollars in millions) Industry Units Drew Sales $
Slide 22: Manufactured Housing (MH) Market
Manufactured Housing (MH) Market Cost per sq. ft. is $40 for MH vs. $92 for site-built homes Average retail price of $64,200 for a 1,600 sq. ft. MH 9 million manufactured homes across the U.S. Improved quality, appearance and safety Studies have shown that MHs built since 1995 sustain no more damage
Slide 23: MH: Other Favorable Factors
MH: Other Favorable Factors Affordability and quality Baby Boomers retiring in increasing numbers Dealer and manufacturer inventory levels are reasonable Favorable HUD code revisions Improved industry image Advertising campaign may begin in 2009 STRONG LONG-TERM GROWTH PROSPECTS
Slide 24: MH: Industry Financing Trends
MH: Industry Financing Trends Improved lending practices The American Recovery Act of 2009 authorizes a tax credit of up to $8,000 for qualified first time home buyers Recently passed legislation increased FHA insured chattel loan limits (home only) on manufactured homes from $48,600 to $69,678 Pres
Slide 25: Financial Performance: Stock Price History
Financial Performance (December 31 unless noted) Stock Price History Drew has 22 million shares outstanding and a market capitalization of approximately $137 million as of March 12, 2009 During 2008, Drew repurchased 447,400 shares of its common stock at an aggregate of $8.3 million, or an average p
Slide 26: Operating Results
Operating Results Year Ended December 31, (except as noted) FINANCIAL PERFORMANCE (1) Sales declines due to reductions in industry-wide shipments of RVs and Manufactured Homes. (2) Adjusted 2008 excludes goodwill impairment and executive retirement charges (see page 36). (3) EBITDA is operating prof
Slide 27: Results By Segment
Results By Segment (1) Sales declines due to reductions in industry-wide shipments of RVs and Manufactured Homes. See page 37 for a reconciliation to consolidated results. FINANCIAL PERFORMANCE
Slide 28: Operating Results – Three Months Ended December 31
Operating Results Three Months Ended December 31, FINANCIAL PERFORMANCE (1) Excludes impairment and executive retirement charges (see page 36).
Slide 29: Results By Segment – Three Months
Results By Segment Three Months Ended December 31, See Press Release dated February 11, 2009 for a reconciliation to consolidated results. FINANCIAL PERFORMANCE (1) Sales declines due to reductions in industry-wide shipments of RVs and Manufactured Homes.
Slide 30: Balance Sheet
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 twelve months.
Slide 31: Financial Strength
Financial Strength (1) EBITDA is operating profit plus depreciation, amortization and goodwill impairment (see page 35). (2) Includes a goodwill impairment of $5.5 million and executive retirement charges of $2.7 million. FINANCIAL PERFORMANCE
Slide 32: Peer comparison
Peer comparison Source: Capital IQ, Mach 12, 2009, data obtained from Yahoo! Finance, which is provided by Thomson Financial and is based on fiscal 2009 analyst projections. FINANCIAL PERFORMANCE
Slide 33: Analyst Coverage
Analyst Coverage Avondale Partners, LLC Kathryn Thompson – (615) 467-5637 Sidoti & Company, LLC Scott Stember – (212) 453-7017 CJS Securities Torin Eastburn – (914) 287-7600 Janney Montgomery Scott LLC John T. G. Rogers – (202) 955-4316
Slide 34: Thank you!
Thank you! Joseph S. Giordano III Chief Financial Officer 914-428-9098 joe@drewindustries.com OR VISIT OUR WEBSITE: www.drewindustries.com For more information contact: Fredric M. Zinn President and CEO 914-428-9098 fred@drewindustries.com
Slide 35: Reconciliation of Operating Profit to EBITDA
Reconciliation of Operating Profit to EBITDA FINANCIAL PERFORMANCE
Slide 36: Reconciliation of Adjusted Results to Actual
Reconciliation of Adjusted Results to Actual FINANCIAL PERFORMANCE (1) Includes goodwill impairment of $5.3 million after direct impact on incentive compensation and executive retirement charges of $2.7 million.
Slide 37: Reconciliation of Segment Results to Consolidated
FINANCIAL PERFORMANCE Other non-segment items for the twelve months ended 12/31/08 include a $5.5 million goodwill impairment and a $2.7 million charge for executive retirement. Reconciliation of Segment Results to Consolidated