LCI Industries · NYSE:LCII
LCI Industries — Q1 2023 Earnings Presentation
31 slides from LCI Industries's earnings presentation, May 2023
Slide 1: LCI Industries Investor Presentation
LCI Industries Investor Presentation May 2022 LCI INDUSTRIES INVESTOR PRESENTATION May 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 Q1 Full Year Q1 2023 Change 2022 Net Sales $973M (41)% $5,207M Diluted EPS $0.29 (96)% $15.48
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: 6
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 Innovation Propelling our Differentiation Strategy Independent Suspension ABS (Anti-Lock Braking System) The Fort Rockerball Cushion Hitch Quick Drop Stabilizer 5th Wheel Sliders OneControl Gooseneck Ball Continuously developing new product innovations to meet increasing dema
Slide 10: Leader in Customer Experience
LEADER IN CUSTOMER EXPERIENCE Curated Communities both online and in-person activations • 21,000 Consumer members in our online communities (Facebook groups + Community App) • Attending over 20 events to engage directly with Consumers, including our very own Lippert Getaway • Leverage extended follo
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, Reducing the environmental impact in our Health & Safety operations Adhering to the highest standards of environmental • 734,169 KWh of energy generated through solar in
Slide 13: Our Business
OUR BUSINESS
Slide 14: RV OEM
RV OEM Growth Drivers & Trends North American RV OEM Key Drivers • Strong secular trends towards the outdoor lifestyle $3,200M R led by peer to peer rentals and pricing advantage 13% CAG $2,400M • North American RV OEM revenues down 64% vs $1,600M the same period in the prior year driven by softened
Slide 15: Marine OEM
MARINE OEM Growth Drivers & Trends North American Marine OEM Key Drivers $500M CA GR • Benefits from secular tailwinds within the outdoor $400M 47% recreation space, driving heightened long-term demand $300M • Marine market’s historically stable production $200M schedules will lead to less volatilit
Slide 16: Aftermarket
AFTERMARKET 2022 Growth Drivers & Trends NA AM Net Sales $1,000M $800M GR Key Drivers CA 11% 39% • Represents one of the strongest value drivers for LCI 7% $600M due to long runway for growth, counter-cyclicality, 50% $400M strong margin profile, and premium brands 32% • Innovation driving ongoing p
Slide 17: International Business & Other Adjacencies
INTERNATIONAL BUSINESS & OTHER ADJACENCIES Growth Drivers & Trends $700M $700M AG R $600M $600M 16 %C Key Drivers $500M $500M • International: $400M GR $400M CA ◦ Inventories are replenishing as supply chain % $300M 54 $300M constraints ease, enabling European customers $200M $200M to begin meeting
Slide 18: Financial Overview
FINANCIAL OVERVIEW Diversification and content expansion enabling market share gains and ample cash generation Sales Trend ($M) EBITDA* ($M) $6,000M $800M AGR $5,207 AGR 21% C $682 $4,473 $600M 18% C $511 $4,000M $2,796 $2,476 $2,371 $400M $321 $2,148 $269 $266 $276 $2,000M $200M $0M $0M 2017 2018 2
Slide 19: Q1 2023 Financial Performance
Q1 2023 FINANCIAL PERFORMANCE Consolidated Net Sales Operating Margin (in thousands) $1,644,568 16.4% $973,310 2.1% First Quarter First Quarter First Quarter First Quarter 2022 2023 2022 2023 Consolidated Net Income EBITDA* $196,181 (in thousands) (in thousands) $301,513 $52,542 $7,259 First Quarter
Slide 20: Expanding Addressable Markets
EXPANDING ADDRESSABLE MARKETS Unlocking value through diversification: Additional LCI Current 2022 Net Market Market (1) (1) Sales Opportunity Share $11 billion in combined RV OEM $2,800 $2,250 ~55% growth opportunity Marine OEM $493 $565 ~47% through various markets as we expand our Aftermarket $82
Slide 21: Growth Strategy
GROWTH STRATEGY Prioritizing ample liquidity and investments back into the business Allocating Capital to Areas with the Continue Execution of our Highest Growth Return Diversification Strategy • Reduce leverage • Lessen the impact from RV down cycles by further expanding market share in our Non-RV
Slide 22: Financial Overview: Strong Balance Sheet & Financial Flexibility
FINANCIAL OVERVIEW Strong Balance Sheet & Financial Flexibility First Quarter First Quarter 2023 2022 Cash and Cash Equivalents $23M $55M Remaining Availability under Revolving $318M $130M Credit Facility Net Debt/EBITDA (TTM)* 2.4x 1.8x Cash Provided by Operating Activities (YTD) $75M $135M Healthy
Slide 23: Capital Deployment Strategy
FINANCIAL OVERVIEW Capital Deployment Strategy Historical Use of Cash Cash Priorities Future Use of Cash 20% Reduce leverage Disciplined reinvestment to drive growth Acquisitions that align to strategy and financial targets 60% Return capital to shareholders Attractive dividend yield 20% Opportunist
Slide 24: Acquisition Strategy
FINANCIAL OVERVIEW Acquisition Strategy Over 50 acquisitions in the Revenue Profile Recent last 20 years $6,000 Acquisitions • Majority of last 20 acquisitions focused R outside of North American RV industry $5,000 CAG an ic Looking for: % Org 9.2 $4,000 1 • Great leadership (in millions) • Product
Slide 25: Appendix
APPENDIX
Slide 26: Appendix: Consolidated Financials
APPENDIX Consolidated Financials ($ 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: Appendix: 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 March 31, Year Ended December 31, ($ in thousands) 2023 2022 2017 2018 2019 2020 2021 2022 Net Income $ 7,259 $ 196,181 $ 132,884 $ 148,551 $ 146,509 $ 158,440 $ 287,739 $ 394,974 Interest Expense, Net 10,394 6,252 1,437 6,436 8,
Slide 29: Reconciliation of Non-GAAP Measures: Leverage Ratio
APPENDIX Reconciliation of Non-GAAP Measures Leverage ratio (net debt to EBITDA) As of and for the Twelve Months Ended ($ in millions) March 31, 2023 March 31, 2022 Long-term Indebtedness $ 1,056 $ 1,265 Current Portion of Long-Term Debt 25 21 Total Debt 1,081 1,286 Less: Cash and Cash Equivalents 2
Slide 30: Reconciliation of Non-GAAP Measures: 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) Tora | Wholesalo Units 7 LI Retail Unite |_[7 eater inventory impact Wionth YD Tat Tenth YD. Tint Wonth YD LM Doe di W4s7 Om Boe 210 38% B00.240 Big -1aee Buse B60.748 46087-30482 TE “Tan 32 ean ‘S361 Heh 607 661 Se